Polymers for Better Living™
Itaconix plc
Annual Report & Accounts 2021
Science and nature
combine for
SUSTAINABLE
LIVING
to satisfy the
most demanding
consumers
1 Adjusted for interest, tax, depreciation, amortization, and exceptional items
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HIGHLIGHTS
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
STRATEGIC REPORT
OPERATIONAL HIGHLIGHTS
• Highlights
• Chairman’s Statement
• Chief Executive Officer’s Statement
• Our Strategy
• Financial Review
• Principal Risks and Uncertainties
• Sustainability
• Section 172 Statement
GOVERNANCE
• Board of Directors
• Corporate Governance Report
• Directors’ Remuneration Report
• Audit Committee Report
• Directors’ Report
• Statement of Directors’ Responsibilities
FINANCIAL STATEMENTS
• Independent Auditor’s Report
• Consolidated Income Statement
• Consolidated Statement of Other
Comprehensive Income
• Consolidated and Company Balance
Sheets
• Consolidated and Company Statements of
Change in Equity
• Consolidated and Company Statements of
Cash Flows
• Notes to Financial Statements
Appendix to the annual report
• Corporate Information
• Expanded commercial base with more uses in more brands, sold
in more retail outlets.
• Revenues were lower in 2021 than 2020 due to order cycles from
the stocking and rebalancing of customer inventories in response
to the Covid‐19 pandemic.
• Revenues from 2018 to 2021 grew at a compound annual growth
rate of 43.4%.
• Fundraise with gross proceeds of $1.6m.
FINANCIAL HIGHLIGHTS
Itaconix plc (AIM: ITX) (OTC: ITXXF), the world leader in polymers of
itaconic acid and its derivatives, announced final results for the year
ended 31 December 2021.
Revenues ($’000)
$2,596
‐21.1%
Gross profits ($’000)
$700
‐39.3%
Adjusted EBITDA1 ($’000)
$(1,640)
‐65.2%
Net loss ($’000)
$(455)
+72.4%
Diluted loss per share (¢)
$(0.001)
+80.0%
1 Adjusted for interest, tax, depreciation, amortization, and exceptional items
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CHAIRMAN’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Polymers for Better Living™
2021 was a year of marked and important progress for Itaconix. We retained our current customers, added new
customers, found new applications for our products, expanded our technology platform, and built a broader
base of recurring revenues.
These advances continue to strengthen our ability to contribute meaningfully to the decarbonization of
consumer products. Our polymers’ commercial base is now well‐established, and they are currently used in over
130 consumer products. Our patent‐protected processes, used to produce the plant‐based polymers we sell, are
unique and valuable. In simple terms: they use and sequester carbon dioxide. Through our large technology
platform, we continue to monetize our intellectual property in three core areas: cleaning, hygiene, and beauty.
Our progress on these many fronts, however, did not translate into higher revenues and our financial results did
not meet our plans for 2021. As detailed in our Chief Executive Officer’s statement, cleaning customer ordering
patterns in late 2020 and early 2021 responded to the Covid‐19 pandemic, creating high demand and
overstocking, followed in the middle of 2021 by rebalancing of inventories and consequently low order volumes.
Although volumes did recover and are continuing to grow nicely, this temporary decline in cleaning revenues
caused a 21.1% decline in revenues overall.
As our technology platform and polymers lead to new generations of more sustainable everyday products, our
efforts are recognised by the London Stock Exchange. Itaconix was awarded the LSE’s Green Economy Mark in
May 2021, which identifies companies that are contributing to environmental objectives. We are very proud of
this achievement, and this pride is shared by all our employees. I would like to extend special thanks to them for
their valuable work and devotion to our mission of decarbonising the planet with proprietary plant‐based
products that enhance consumer products.
In 2021, we continued to strengthen the foundation of our business through new customers, applications, and
products. This progress is already manifesting itself in the current financial year and we look forward to the rest
of the year and beyond with continued confidence and optimism. Thank you to all our stakeholders for your
ongoing support. Together we are making a real difference.
James Barber
Chairman
7 June 2022
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CHIEF EXECUTIVE OFFICER’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Overview
Itaconix has a deep, diverse IP‐protected technology platform that enables new generations of consumer
products which are more environmentally sustainable without compromising on performance or cost. Our core
business model is to use the competitive value of our technology platform to build a broad base of recurring
revenues from brands that rely on our ingredients for the success of their products. We are currently focused
on three key retail areas with large and growing market potential: cleaning, hygiene, and beauty.
We added major new customers and retained existing customers to expand our commercial base in 2021. With
new successes across all applications in North American and Europe, our plant‐based polymers are now essential
ingredients in an estimated 130 brands around the world. Most of the largest brands that we work with are
growing as they expand into more retailers. Brands that rely on our ingredients are found in many of the largest
retail groups across North America and Europe.
2021 was a challenging year for translating this momentum in our customer base into growth in revenues. While
our hygiene revenues grew substantially, lower cleaning and beauty sales resulted in a 21.1% decline in overall
revenues. While we believe underlying consumer demand grew, customers ordered substantial volumes of our
cleaning polymers in late 2020 and early 2021 to ensure supply during the Covid‐19 pandemic and restock
depleted retail shelves, then followed with lower monthly volumes from July through October 2021 as they
rebalanced their inventories. Despite these months of lower volumes, we continued to add new customers and
expand our base of recurring revenues as brands looked to us to improve the competitive position of their
products with new performance and sustainability claims.
As we grow our customer base with our existing products, we are selectively reaching into and expanding our
proprietary technology platform in response to new customer needs. We completed a production trial for our
plant‐based superabsorbent (SAP) in 2021 and supplied a customer with materials in early 2022 for an initial
consumer product trial and testing. Additionally, we filed two patent applications for new plant‐based
ingredients. One is for a new biodegradable hair care ingredient that we expect to launch in 2022. The other is
to increase the plant‐based content in composites. This product is early stage and will take several years of
further development and testing. We believe these initiatives increase our potential addressable market from
$750 million to $2.3 billion, and that significant opportunity exists within our technology platform to further
expand our addressable market.
We were extremely proud that our work at decarbonising everyday products is acknowledged by the London
Stock Exchange, who awarded us its Green Economy Mark in May 2021 to recognise our contributions to the
global green economy with over 95% of our 2021 revenues derived from plant‐based products. The Green Mark,
first introduced in 2019, was created to highlight companies and investment funds listed on all segments of the
London Stock Exchange’s Main Market and AIM, that are driving the global green economy. We are just starting
to tap into the potential of our proprietary plant‐based technologies to accelerate the transition of brands and
consumers to a low carbon economy. The Green Economy Mark is an important recognition for our work and
will support our efforts to communicate our green credentials to investors and other stakeholders. It is a real
honour and achievement for Itaconix to be recognised as an early leader for the Mark in the Advanced Materials
industry sector.
Funding
We continued to strengthen our balance sheet and broaden our shareholder base. In June 2021 we announced
a successful placing to raise $1.6 million by way of direct subscription with a new institutional investor together
with existing institutional shareholder, IP Group plc.
Recently, and after the reporting period, we announced the placement of new ordinary shares to raise
approximately $0.4 million by way of a direct subscription with IP Group plc and our management. The proceeds
of the fundraise are being used for general growth working capital, predominantly to strengthen finished goods
inventories held in the EU to assure reliable and ready delivery times to our expanding base of EU customers.
Financial Overview
Revenues for the year were $2.6m, representing a compound annual growth rate of 43.4% over the last 4 years.
These revenues were a 21.1% decrease year over year from 2020, mainly due to large stocking orders for our
cleaning and beauty products in late 2020 combined with slow reorders in the middle of 2021. We believe this
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CHIEF EXECUTIVE OFFICER’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
order pattern reflected customer and retailer uncertainty in managing inventories during the pandemic. We
retained current customers and added new customers while underlying consumer demand remained strong.
Despite a rise in our operating expenses and raw material costs, we managed to maintain an overall gross margin
of 27.0% (2020: 35.1%). The increase in operating expenses was mainly due to growing our executive team as
we positioned the Company for broader revenue potential and growth from our proprietary technology
platform. While these additional costs had a direct impact on adjusted EBITDA, we believe the operating losses
of the business remain manageable and that development spending on new revenue potential will deliver
attractive returns and profitability in the future.
Net cash balances as at year end were $0.7m. As noted above, the Group successfully completed a placing of
$1.6m during the year.
Although the Company did not experience overall revenue growth in 2021, the Group is well positioned for its
next phase of growth with an expanded customer base, a sizeable pipeline of customer projects, and key
personnel in place.
Operating Review
Growing our customer base and developing new applications for our technology platform were essential in 2021.
We were successful at retaining our current customers, adding significant new customers, and increasing our
addressable market with new products and applications. This expansion in our customer base did not
immediately translate into overall revenue growth due to the specific order cycle conditions described above.
Overall revenues were $2.6m in 2021 compared to $3.3m in 2020 and $1.3m in 2019.
Cleaning
Cleaning revenues were $1.8 million in 2021 compared to $2.6 million in 2020, representing a 29.5% decline.
As previously discussed, orders were strong in late 2020 and early 2021 to ensure supply and build customer
and retailer inventories. Volumes declined from July through October as customers and retailers adjusted their
inventories as previous uncertainties around the Covid‐19 pandemic receded. In addition, some customers
delayed deliveries on their orders while they overcame supply disruptions for other needed detergent
ingredients, such as surfactants.
We did add new brands to our profitable base of recurring revenues and made significant progress in establishing
Itaconix® TSI™ 322 polymer as the new standard for performance, cost, and sustainability in non‐phosphate
dishwashing detergents. In early 2021, a major North American brand launched a new dishwashing detergent
that drew attention to the potential to have high bio‐based content without compromising on performance. By
late 2021, we added two additional North American dishwashing detergent brands. We expect this momentum
to continue into Europe in 2022. In September, we announced our first European order for Itaconix® TSI™ 322
with an established and well‐respected European brand that is recognized by both the dishwashing detergent
industry and consumers as a leader in product innovation, performance, and sustainability. The new product is
expected to be on retail shelves in H2 2022.
We completed development of our new Itaconix® ONZ 075 product by combining the cleaning performance of
our Itaconix® DSP 2K™ polymer with our odour neutralising technology. We are launching this product in 2022
for use in laundry applications.
Order volumes for our cleaning polymers recovered in late 2021 and have continued to grow in the first half of
2022.
Hygiene
Hygiene revenues were $0.5 million in 2021 compared to $0.3 million in 2020, representing a 70.2% increase.
Order volumes were particularly strong and ahead of expectations from new odour control customers and
applications in North America, Europe, and Asia. We have placed an emphasis on expanding usage into new
applications, including development work with a major North American pulp and paper company.
In homecare odour control, our ZINADOR™ polymers, sold through Croda the global specialty chemicals leader,
continue to be used widely. Building on the progress we reported last year, demand for this product has
continued to grow with expanding adoption in existing brands and initial usage by new brands. We continue to
see increased focus on home odour control and growing demand.
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CHIEF EXECUTIVE OFFICER’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
In personal odour control, our VELAFRESH™ polymers are also continuing to gain important initial adoption as
key ingredients in personal care and pet care. While volumes are not yet substantial, the ground is set for
meaningful growth in the coming years.
As described above, we expanded our addressable market in hygiene applications with our new plant‐based
superabsorbent polymer (SAP), VELAFRESH® SAP80. The worldwide market for superabsorbent polymers was
estimated at $9.0 billion in 2020 and is supplied almost entirely by fossil‐based polymers due to the high cost or
poor performance of current plant‐based polymers. We believe that VELAFRESH® SAP80 offers a superior level
of performance, cost, and availability for consumers that are seeking more sustainable hygiene products.
Although VELAFRESH® SAP80 revenues are not expected until 2023, we are achieving important milestones. We
completed an initial trial to produce the polymer in 2021. In February this year, post the reporting period, we
announced that we had supplied product from this first production trial for testing by a potential customer for
possible use in baby diapers, feminine hygiene products, adult diapers, and industrial absorption products.
Beauty
Beauty revenues were $0.2 million in 2021 compared to $0.4 million in 2020, representing a 48.2% decline.
Year‐to‐year revenues for the Company’s hair styling ingredient sold through Nouryon were skewed by a large
re‐stocking order delivered in late 2020 that met a significant portion of Nouryon’s needs for much of 2021.
Orders began to recover in late 2021 and early 2022.
Pressure from consumers for more sustainable products continues to grow and create opportunities for our
ingredients. As described above, we see an attractive market in hair care for our technology platform and have
filed a patent application for new plant‐based hair care technology that we plan to launch as VELASOFT® BR 300
later in 2022.
Intermediates
We did not have any meaningful revenues in 2021 from our intermediates.
We do see opportunities to develop our BIO*Asterix™ line of functional additives into sizable new revenue
potential based on new bio‐based chemistries derived from itaconic acid. These additives address a wide range
of applications, from composites to additives in biodegradable plastics. We expect the potential from our
technology platform to grow in line with the need for more sustainable solutions across many consumer
markets, but expect that we will need several years and collaboration partners to realise major revenues.
After the reporting period, we announced a major new patent filing in composite applications. Market and
materials research led by Dr. Yvon Durant, Itaconix's CTO, have created a path to making certain composite
materials that may allow a safer process for products that also have higher plant‐based content. If granted, the
patent will protect a new family of intellectual property for Itaconix. The review process for the filing is expected
to take at least two years and the next steps would be to ensure product safety and efficacy.
We continue to develop and test potential additives for biodegradable packaging. Although we see some specific
opportunities emerging, we expect that progress will remain slow without any revenue expectation to at least
2024.
Innovation
We are working on broadening the applications addressed by our Itaconix® DSP 2K™ polymer beyond its current
use in cleaning. An important milestone in these efforts was our first order for use in sustainable fashion, which
we view as a new and potentially major application. The customer is a leading European supplier to companies
that produce materials for the fashion and related industries. As a plant‐based alternative to fossil‐based
polymers currently used in the production process, Itaconix® DSP 2K™ is expected to create new opportunities
for consumers to buy more sustainable products. Although the initial order in 2021 was small and intended only
for consumer sampling, we have already received a large reorder in early 2022. We expect to set new standards
for performance and sustainability in other new generations of consumer products.
Intellectual Property
We have increased our addressable market for our current and new products from $750 million to $2.3 billion.
VELAFRESH® SAP80 is our new plant‐based SAP for more sustainable hygiene applications. We filed new patent
applications for plant‐based composites in 2021 and for plant‐based hair care in early 2022.
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CHIEF EXECUTIVE OFFICER’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Covid‐19
The broad effects of the Covid‐19 pandemic continue to be a factor in our operations. We have maintained our
production capabilities and customer deliveries but have faced extended transport times for incoming raw
materials and outgoing customer shipments. We work closely with our customers to overcome Covid‐related
disruptions.
Ukraine
In March 2022, we reviewed all activity with the Russian Federation and Republic of Belarus. We do not have
direct customers in these regions nor in Ukraine, and do not expect the war to have a direct impact on our
business. As with all manufacturers, we do expect and are closely monitoring secondary effects of the war on
energy prices, other commodity prices, supply chains, capital markets, and overall economic activity.
Shareholder Engagement
We work closely with our advisers to update current and potential shareholders regularly on our commercial
progress and potential, including through virtual meeting providers. We resumed direct meetings in March 2022,
but plan to continue to also use virtual meetings for ready access and engagement with our shareholders.
A significant portion of our shares are held by US‐based investors. Despite our listing on the US OTC market, US
securities regulations and practices create obstacles for the free trading of low‐priced shares such as ours. We
are working to improve access to share trading in the US, which we believe will benefit all shareholders.
Outlook
Even with a growing commercial base and expanding technology platform, 2021 showed that we are not immune
to the macro forces affecting consumer product industries. Customer inventory cycles accelerated as companies
overstocked leading to an extended destocking period. Incoming raw materials and outgoing customer
shipments had longer delivery times and higher costs. The supply of other ingredients into our customers’
products had major supply disruptions that delayed the use of our products.
We worked hard in 2021 to mitigate these factors and entered 2022 in a much better position to succeed in this
new environment. We prepared our major customers for price increases needed as a result of the higher raw
material costs, whilst also assisting them to maintain strong competitive positions. We have implemented these
increases and plan to continue to do so should our costs continue to increase. We also prepared our customers
for the lead times needed to ensure supply of their products. As supply chain disruptions persist, availability of
consumer products on the actual or virtual retail shelf is a key emerging competitive advantage.
The most exciting change and opportunity we face is the increased urgency that consumers, retailers, and brands
place on climate change and the global low‐carbon economy. The spotlight is now firmly on the need for more
sustainable products, which is exactly where we stand with our plant‐based ingredients.
Our current products are winning new customers that are in turn expanding our base of recurring revenues. Our
success with new customers is also generating interest in our ingredients from other brands that is improving
the size and quality of our customer pipeline. At the same time, continued innovation within our technology
platform is expanding our revenue horizons into new larger applications that have pushed our current
addressable market to over $2.3 billion.
Although market volatility will continue in 2022, our achievements on major customer projects in 2021, are
generating substantial commercial progress in 2022 that will add to our expanding base of recurring revenues.
We look forward to continued success at commercialising the Itaconix technology platform.
John R. Shaw
Chief Executive Officer
7 June 2022
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OUR STRATEGY
Principal Activities
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Itaconix plc is a leading innovator in plant‐based ingredients for improving the safety and performance of
consumer and industrial products. Its proprietary polymer technologies generate a growing range of new
specialty ingredients with unique functionalities that meet consumer demands for value and sustainability.
The Group’s principal activities are the development of plant‐based polymers and the production and sale of
these materials globally, both directly and through partners as ingredients in product formulations.
Most of the Group’s efforts are focused on home and personal care applications where consumer interest and
desires for safer and more sustainable products are particularly high.
Proprietary Ingredients with Unique Functionality
The Group has conducted many years of exploratory research and holds an extensive patent portfolio related to
the production and use of polymers made from itaconic acid. The commercial potential for these materials as
ingredients in consumer products stems from the unique functionalities available through the chemical structure
of itaconic acid and from the production of itaconic acid through fermentation using plant‐based sugar.
The Group’s technology platform has commercial momentum in cleaning, hygiene, and beauty as a result of the
process of identifying a market need and then developing a product to meet that need. As these products gain
success, Itaconix is working on new products to emerge from its technology platform.
Progress in 2021
The Group advanced its development and commercial activities in its core cleaning, beauty, and hygiene
applications, as detailed in the Chief Executive Officer’s Statement.
Products Using Itaconix Ingredients
The Group’s products are formulated as key ingredients in a
growing range of consumer product. They are now used in over
130 brands worldwide across a widening variety of uses and
sold in more retailers. This increase in use, however, did not
translate into higher revenues in 2021. Hygiene revenues
increased but revenues in cleaning and beauty declined. The
most significant issue was in the cleaning segment, where the
impact of pandemic‐driven inventory stocking by customers in
late 2020 and early 2021 was followed by rebalancing of
inventories later in 2021. These actions created low monthly
volumes in the middle of 2021, which have since recovered as
more regular order patterns have returned.
While revenues lagged for the year, the Group continued to add
important new brands and new uses to its commercial base. A
major North American consumer brand
launched a new
dishwashing detergent that set a new level for sustainability and
performance. A leading European sustainable dishwashing detergent brand is using Itaconix® TSI™ 322 in its new
formulation that will launch in 2022. New uses for Itaconix polymers include initial orders in a sustainable fashion
application to replace fossil‐based polymers. Although 2021 revenues were down, the Group is well positioned
for growth in the coming years.
Key Performance Indicators (KPIs)
The Directors believe that the key performance indicators for the Group are:
Revenues
Adjusted EBITDA, the earnings before interest, tax, depreciation, amortization, and exceptional items
Cash
The Group seeks to monetise its technology platform through revenues generated by a growing number of
commercial products. Revenue performance is detailed above in the Chief Executive Officer’s Statement.
The Directors measure these commercial activities against the Group’s rate of cash expenditure and its effect
on cash resources. Cash used for operating activities in 2021 was $2.0m compared to $1.2m in 2020. Details of
cash flows are set out in the Group’s Consolidated Cash Flow Statement on page 46 and note 21 on page 67.
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FINANCIAL REVIEW
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Key performance metrics were impacted by temporary interruption in revenues due to short‐term external
issues in consumer supply chains, as noted above. Revenues for the year decreased by 21.1% from 2020. The
gross profit margin was 27.0% in 2021 compared to 35.1% in 2020 as cost of goods sold was affected by higher
production overhead costs from lower volumes and some increases in raw material costs that were not passed
through to customers until early 2022. Cash used in operations increased from $1.2m in 2020 to $2.0m in 2021,
with approximately $0.7m of the increase for current year operations and approximately $0.2m for working
capital. This was supported by the Group’s successful fundraise in June 2021. Below is a table showing the
Group’s key performance metrics:
2021
$’000
2,596
700
27.0%
(1,640)
(2,023)
683
2020
2019
$’000
3,292
1,154
35.1%
(993)
(1,157)
1,448
$’000
1,288
450
34.9%
(2,457)
(1,831)
765
2018
$’000
881
140
15.9%
(5,370)
(6,973)
2,655
Revenue
Gross profit
Gross profit margin
Adjusted EBITDA1
Cash used from operating activities
Net cash at year‐end
Financial Performance
Revenue
Total revenues for the 12‐month period ended 31
December 2021 were $2.6m, representing a 21.1%
decrease from 2020 revenues of $3.3m. Although there was
a decrease year over year, revenues over the last four years
have a compounding annual growth rate of 43.4%.
Revenues lagged across cleaning and beauty, while hygiene
experienced considerable growth. Cleaning decreased by
29.5% from 2020, the decrease being due to exceptionally
large orders in late 2020 and early 2021 to build customer
stocks and rebalancing of customer and retailer inventories
in the middle of 2021. While this reduction in orders caused
lower cleaning revenues in the second half of 2021, the
base of customers and brands using Itaconix ingredients
continued to grow, and cleaning polymers remain the
largest area for near‐term growth potential.
Beauty decreased by 48.2% from 2020, which was due to a
large stocking order fulfilled in November 2020.
Hygiene increased by 70.2% from 2020, due to both
recurring orders and new orders in new uses and new
brands. New brands in Europe and Asia used Itaconix
ingredients in odour neutralization products. New uses
included fabric refreshers and pet care.
Revenues in all geographical regions decreased. North
America represents 92.8% of the Group’s revenue and
decreased by 16.0%. North America revenue contracted
largely due to the external issues of customer supply chains.
Revenues 2018 – 2021 (H1 v H2)
Revenues 2018 – 2021 (Segment)
H2
H1
Beauty
Cleaning
Hygiene
1 Adjusted for interest, tax, depreciation, amortization, and exceptional items.
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FINANCIAL REVIEW
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Europe represents 7.2% of the Group’s revenue and decreased by 56.0%. European revenue suffered largely due
to the large stocking order placed in November 2020 for the Group’s hair styling polymers.
Gross Profit and Adjusted EBITDA1
Gross profit margin was 27.0% in 2021 compared to 35.1% in 2020. There were significant increases in the raw
material costs due to inflation, increased shipping costs, prices of corn stock in China, and energy restrictions
placed on Chinese companies. These global factors affected many companies including Itaconix. The Group was
able to implement pricing increases to offset these factors and protect the Group’s gross margins while
selectively supporting initial uses in new applications and the competitive position of a major cleaning customer
to gain future volumes.
Adjusted EBITDA is a non‐IFRS measure but is widely recognised in financial markets and it is used within the
Group as a key performance indicator. Adjusted EBITDA was a loss of $1.6m in 2021 (2020: loss $1.0m) which
was worse by 65.2%. Since the 2018 Group reorganization, the Group’s EBITDA trajectory has improved.
Below is a reconciliation of Loss for the Year to Adjusted EBITDA:
Loss for the year
Taxation
Depreciation
Amortization
Exceptional revaluation of contingent
consideration
Exceptional organizational restructuring
Finance income
Movement on investment in associate
2021
$’000
(455)
7
167
201
(1,560)
‐
‐
‐
2020
2019
2018
$’000
(1,646)
7
200
198
339
(91)
‐
‐
$’000
(1,358)
1
223
198
(1,474)
‐
(1)
(46)
$’000
(9,868)
(187)
296
‐
3,323
1,190
(4)
(120)
Adjusted EBITDA
(1,640)
(993)
(2,457)
(5,370)
Administrative Expenses
Administrative expenses consist of sales, marketing, operations, research and development, and public company
costs such as legal, finance and the Group Board. These expenses were $2.9m in 2021 up from $2.6m in 2020.
The increase in administrative expense was largely due to increased staffing to support the Group’s growth
plans.
Costs and Available Cash
As at 31 December 2021, the Group held cash of $0.7m. Net Cash outflows from operating activities of $2.0m in
2021 were used to add key personnel and support working capital needs compared to $1.2m in 2020 as the
Group built inventories to support new customer product volumes. The Group successfully completed a $1.6m
placing with a large shareholder, IP Group entities and a new institutional investor in June 2021.
Working capital
At year end, working capital had decreased and the most significant change in working capital was trade and
other payables. Trade and other payables decreased to $1.0m in 2021 from $1.4m in 2020. Inventories remained
flat at $1.4m in 2021 and 2020 to support current customer demand. Working capital as a per cent of revenues
decreased to 50.5% in 2021 from 56.7% in 2020.
Financial Position
At 31 December 2021, the Group had equity of $0.6m as compared to ($0.6m) in 2020, primarily as a result of a
revaluation of the deferred consideration (note 17) net of the equity raise.
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FINANCIAL REVIEW
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Revaluation of Deferred Consideration
As a result of revaluing deferred consideration related to the acquisition of Itaconix Corporation in 2016, per
note 17, there was an exceptional non‐cash income of $1.6m in 2021, which offsets the exceptional non‐cash
expense of $0.3m (excluding foreign exchange) from 2020. In addition to the revaluation of the liability the
Group issued 1,923,389 shares to certain Sellers of Itaconix Corporation on 12 April 2021 in settlement of the
contingent consideration payment for 2020.
Financial Reporting
There were no new reporting standards adopted for the year end 31 December 2021 that have a material impact
on the financial statements.
Going Concern
The financial statements have been prepared on a going concern basis. The Directors have reviewed the Parent
Company’s and the Group’s going concern position taking account its current business activities, budgeted
performance and the factors likely to affect its future development, set out in the Annual Report, and including
the Group’s objectives, policies and processes for managing its working capital, its financial risk management
objectives and its exposure to credit and liquidity risks.
The Directors have also taken into consideration the impact of the Covid‐19 pandemic and the war in Ukraine
on the Group’s revenues and supply chain. While there has not been a significant negative impact through the
report date on the Group revenues or supply chain due to the pandemic, the Directors have applied
sensitivities to the timing, quantum, and growth of new customer projects in revenue models and have
assessed alternate supply chains that have been developed by the Group to mitigate any issues in deliveries
to our customers.
As further detailed in the Directors’ Report on page 29 and note 2 to the Annual Report, the Directors have
reviewed the Group’s cash flow forecasts covering a period of at least 12 months from the date of approval of
the financial statements, which foresee that the Group will be able to meet its liabilities as they fall due.
However, the success of the business is dependent on customer adoption of our products to increase revenues
and profits. Inability to deliver this could result in the requirement to raise additional funds.
Shareholdings and Earnings per Share
Itaconix had 443,462,757 shares in issue as at 31 December 2021. The undiluted weighted average number
of shares for the period to 31 December 2021 was 438,808,097. The difference in the two numbers is the result
of an issuance of new shares in satisfaction of the contingent consideration in April 2021 (see note 17) and an
issuance of new shares in June 2021 (see note 20). The undiluted weighted average number of shares was
used to calculate the loss per share presented in note 10.
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PRINCIPAL RISKS AND UNCERTAINTIES
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Effective risk management is a priority for the Group to sustain the future success of the business. Therefore,
the Directors have overall responsibility for the Group’s risk management process but have delegated
responsibility for its implementation, the system of controls which reduce risk and for reviewing their
effectiveness to the management team. The risk of uncertainties that the Group face evolve over time, therefore
the management team review and monitor the emerging risks and update mitigation effort. The results are
reported to the Board.
Commercialisation Activities
There were some challenges due to the lingering pandemic that affect the Group’s commercial activities. These
included over stocked supply chains of consumer goods, limited supplies of certain other detergent components
due to emergency plant shutdowns in Texas and Delaware, and shipping delays from Asia to North America.
These challenges were temporary and ultimately the success of the business relies upon Itaconix products
reaching sufficient quantities for the Group to generate an overall profit.
Management of risk: The Group has sought to manage this commercialisation risk by partnering with market
leaders for the worldwide promotion of our leading products, continued development of end‐user formulas to
provide customers with packaged solutions, and continuous review of the market needs for Itaconix products.
Dependence on Key Personnel
The Group depends on its ability to retain highly qualified managerial and scientific personnel. There are a
limited number of candidates with the experience and skills to replace these key personnel. Attracting the best
candidates can be highly competitive. While the Group has conventional employment arrangements with key
personnel aimed at securing their services for minimum terms, their retention cannot be guaranteed.
Management of risk: The Group expanded its management team to support operations and has service contracts
in place for John R. Shaw as Chief Executive Officer and Dr. Yvon Durant as Chief Technology Officer. In addition,
the Group seeks to retain key personnel in the US using an Equity Incentive Plan for share option grants, 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
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PRINCIPAL RISKS AND UNCERTAINTIES
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
advantages of Itaconix polymers. In addition, the staff monitors technologies and patents through publications,
scientific conferences, and collaborations with other organisations to identify new risks and opportunities.
Covid‐19 Risk
The Group faces continued volatility due to Covid‐19 related disruptions in the demand for its products, the
supply of raw materials, and the supply of other ingredients going into customer products. Our operations
continued to operate while implementing recommended CDC guidance to protect our employees and provide a
safe work environment. Supply chain issues emerged in early 2021 due to extended shipping times and the
availability of other ingredients going into customer products.
Management of risk: Management closely monitors Covid‐19 regulatory developments and expected demand
from customers. Management and staff actively communicate with all major suppliers and customers about
upcoming demand and reliability of the supply chain. We also hold significant stock of long lead time raw
materials from Asia.
Liquidity Risk
Itaconix seeks to manage financial risk by ensuring adequate liquidity is available to meet foreseeable needs and
to invest cash assets safely and profitably. In June 2021, the Group completed a $1.6m fundraise to support
general working capital and new product development to further the Company’s commercial progress. In
addition, short‐term flexibility is achieved by holding significant cash balances in Itaconix’s functional currencies,
notably UK Sterling and US Dollars.
Credit Risk
The principal credit risk for Itaconix arises from its trade receivables. To manage credit risk, new customers are
subject to credit review and all customer accounts are regularly reviewed for debt aging and collection history.
As at 31 December 2021, there were no significant credit risk balances.
Inflation Risk
Global economies have experienced significant inflation during 2021. The cost of raw materials increased as
costs for shipping, energy and ingredients increased. These increases were partially recovered in selling price
increases to customers.
Foreign Exchange Risk
Itaconix Plc is a publicly traded holding company on the London Stock Exchange. The Group’s primary operations
are in the US. These US based operations transact trades with customers in North America and internationally.
Revenue and costs are exposed to variations in exchange rates and therefore reported losses. In 2019, the Group
elected to convert the reporting currency from UK Sterling to US Dollars. The US Dollar transactions represent a
significant portion of the functional currency transactions and therefore reduces the Group's overall exposure
to translation exchange risk.
Government Risk
The Group has potential exposure to government activities related to Covid‐19, the war in Ukraine, and US‐China
trade relations. Risks related to Covid‐19 are detailed above.
Regarding the war in Ukraine, we reviewed all activity with the Russian Federation and Republic of Belarus. We
have no direct customers in these regions nor in Ukraine and do not expect the war to have a material direct
impact on our business other than the overall supply chain and economic effects experienced by manufacturers.
Limited availability and extended delivery times have combined to trigger major increases to certain raw
material costs and may continue to cause volatility. These disruptions have created a steady need to monitor
raw material sourcing, assess alternative suppliers, and adjust the pricing of the Group’s products.
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SUSTAINABILITY
Polymers for Better Living™
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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
Cleaning
Itaconix® DSP 2K™
Itaconix® TSI™ 322
Itaconix® TSI™ 122
Itaconix® ONZ 075
Hygiene
ZINADOR™ (Croda)
VELAFRESH™ ZP20/30
VELAFRESH™ SAP80
Beauty
Amaze™ SP (Nouryon)
VELASOFT™ NE 100
VELASOFT™ BR 300
Plant‐based carbon
Plant‐Based
Carbon
Decarbonisation
Energy
Efficiency
Lighter
Products
100%
>75%
>80%
>99%
80‐100%
80‐100%
>98%
100%
100%
100%
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
The renewable carbon in the itaconic acid we use to make Itaconix products is captured as carbon dioxide by
plants. Corn plants convert carbon dioxide into carbon in sugars that are used to produce itaconic acid via
fermentation. We bring this itaconic acid into our patented process at our US operations to produce polymers
that have 75‐100% plant‐based carbon.
Decarbonisation
The increase of carbon dioxide as a greenhouse gas in our atmosphere is a major cause of climate change.
Carbon dioxide is sequestered as carbon in Itaconix products for a period of time until, depending on the
circumstances, they degrade. During this period, the amount of carbon held contributes to a reduction of
carbon dioxide in the atmosphere.
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SUSTAINABILITY
Energy efficiency
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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.
Direct and indirect emissions
Intensity ratio: tCO2e per $m Net Revenue
Energy consumption
(kWh)
GHG emissions
(tCO2e)
2021
2020
(Restated)
394,475
408,296
2021
212.32
81.66
2020
(Restated)
218.13
66.10
We have selected an intensity metric based on tonnes of carbon dioxide emissions (tCO2e) per $m Net
Revenue. We will use this ratio to monitor and extend our energy efficiency efforts further into our operations
and practices. Although our estimated direct and indirect GHG emissions declined in 2021, the intensity ratio
increased due to lower overall production levels.
Water efficiency
Improving water consumption is a major sustainability goal for Itaconix and within the chemical industry.
Itaconix was able to reduce its water consumption in production through re‐engineering its facilities cooling
operations in early 2021, saving over half the annual usage from the prior year.
Direct consumption
Intensity ratio: gallons per $m Net Revenue
Lighter products
Water consumption
(gal)
2021
2020
336,540
129.44
829,312
251.31
The multifunctional performance of Itaconix ingredients offers the potential for more compact consumer
products, particularly in detergents. Compact products are lighter and can reduce greenhouse gas emissions by
using less chemicals, less packaging, and more efficient transportation.
Revenues from Advanced Sustainable Materials
Itaconix plc is dedicated to reducing the planet’s carbon footprint and addressing climate change with plant‐
based polymers that are essential ingredients in a new generation of safer, more sustainable consumer products.
Our financial results demonstrate that commercial and environmental progress can advance equally through the
value and adoption of our ingredients. We are pleased to announce that 95% of our 2021 revenues (2020: 96%)
were derived from advanced sustainable materials. This means that 95% of our revenues are related specifically
to the design, development, and manufacture of materials that during their manufacture or through their use
allow for considerable increases in the efficiency of resource usage.
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SECTION 172 STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Statement of Compliance with Section 172 of the Companies Act 2006
The Directors are required to include a separate statement in the Annual Report that explains how they have
considered broader stakeholder needs when performing their duty under Section 172(1) of the Companies Act
2006. This duty requires that a director of a company must act in the way he or she considers, in good faith,
would be most likely to promote the success of the company for the benefit of its members as a whole, and in
doing so have regard (amongst other matters) to:
the likely consequences of any decision in the long term;
the interests of the company’s employees;
the need to foster the company’s business relationships with suppliers, customers, and others;
the impact of the company’s operations on the community and the environment;
the desirability of the company to maintain a reputation for high standards of business conduct; and
the need to act fairly between members of the company.
In connection with its statement, the Board describes in general terms how key stakeholders, as well as issues
relevant to key decisions are identified, and also the processes for engaging with key stakeholders including
employees and suppliers, and understanding those issues. It is the board’s view that these requirements are
predominantly addressed in the corporate governance disclosures we have made in the directors’ report, which
are themselves discussed more extensively on the company’s website.
A more detailed description is limited to matters that are of strategic importance in order to remain meaningful
and informative for shareholders. The Board believes that three decisions taken during the year fall into this
category, and engaged with internal and external stakeholders on these decisions:
2021 Fundraise – The Directors, along with the Group’s NOMAD and broker, assessed the placement
by direct subscription with a new institutional shareholder together with existing institutional
shareholder IP Group entities, to support the Group’s fundraising efforts. The proceeds of the fundraise
were used for general working capital purposes and new product development to further the
Company’s commercial progress.
Appointment of New Nominated Advisor and Broker – The Directors continually assess the evolving
needs of the Group. The Group interviewed several NOMAD and brokers to determine the best fit for
the Group and made the ultimate decision to change to a new NOMAD and broker in August 2021.
Covid‐19 – The Group continually assesses the impact Covid‐19 has on customer orders, supply chain
and employees. Efforts have been put in place to support customer demand, ensure safety stock, and
safeguard employees’ wellness as the pandemic continues and perhaps is entering an endemic stage.
The Strategic Report encompassed on pages 8 through 15 was approved by the Board of Directors on 7 June
2022 and signed on behalf of the Board of Directors by:
James Barber
Chairman
John R. Shaw
Chief Executive Officer
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BOARD OF DIRECTORS
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Dr. James (“Jim”) Joseph Barber (aged 68) – Independent
Non‐Executive Chairman
Jim joined the Board on 12 September 2016 and became Chairman on
21 December 2018. Since 2007, he has run his own business
consultancy practice Barber Advisors LLC. Prior to this, Jim served as
President and CEO of Metabolix, Inc. from January 2000 to May 2007,
leading the transformation of Metabolix from a research boutique to
a world renowned, highly regarded leader in “clean tech” and
industrial biotechnology, with a market cap of over $500m. Prior to
joining Metabolix, he had senior commercial
the
Organometallics and Catalysts business of Albemarle Corporation,
Ethyl Corporation, and a number of other chemicals businesses. Jim is
a non‐executive director of Graham Corporation.
roles at
He has a BS degree in Chemistry from Rensselaer Polytechnic Institute
and a PhD in Organic Chemistry from the Massachusetts Institute of
Technology.
John Roger Shaw (aged 62) – Chief Executive Officer
John joined the Board on 12 July 2018, when he assumed the role of
Chief Executive Officer. As a founder, John has driven the direction and
growth of Itaconix Corporation since 2008. He has over 25 years of
experience in senior management roles in
the pharmaceutical,
biomedical, and specialty chemical sectors and brings significant
marketing, strategy, and business management expertise along with
a broad technical understanding to Itaconix’s management team.
John began his career holding a number of increasingly senior roles at
SmithKline Beecham, Westaim, and Mitek Systems, Inc.
He has a BA in Economics from Pomona College and an MBA from
Harvard Business School.
Dr Bryan Crawford Dobson (aged 69) – Independent
Non‐Executive Director (Retired)
Bryan joined the Board on 13 September 2012 and resigned from the
Board 15 April 2022. He has more than 30 years’ experience in the
chemicals industry: 28 years with ICI and 5 years with the Croda Group,
where he was most recently President Global Operations for Croda
International. He was a member of the executive management
teams in Croda and in a number of large specialty chemicals
businesses in ICI and has extensive management experience running
regional and global business units in the UK, US, Belgium, and The
Netherlands. He also has expertise in developing new business in the
specialty chemicals sectors; extensive functional experience in R&D
and operations, and significant M&A experience. He is also currently
Non‐Executive Chairman of Applied Graphene Materials Plc.
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BOARD OF DIRECTORS
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
John Ingalls Snow III (aged 61) – Independent Non‐Executive
Director
John joined the Board and became Audit Committee Chair on 2 October
2018. He has 30 years’ experience in the private equity market. He is
currently a Managing Director at Quabbin Capital, Inc., a Boston based
alternative investment firm. John is a non‐executive director of Upper
Crust Holdings, LLC, Winchester Savings Bank, Advanced Duplication
Services, Endowment
for Health, and Mary Snow Designs,
Incorporated.
He has a BA in Economics from Amherst College and an MS in
Accounting from New York University. John is a Chartered Financial
Analyst and a non‐practicing Certified Public Accountant.
Charlean Gmunder (aged 58) – Independent Non‐Executive
Director
Charlean joined the Board as a Non‐Executive Director on April 15, 2022.
She is Blue Apron’s Chief Operating Officer. Before joining Blue Apron in
November 2020, Charlean was the vice president of catering operations
with United Airlines, where she was responsible for six company‐owned
direct food‐related manufacturing sites and all third‐party manufacturing
worldwide. Prior to United Airlines, Charlean was Vice President,
Operations, Prepared Meat for Maple Leaf Foods, the largest meat
processor in Canada.
Charlean has held leadership responsibilities in both large multinationals
and smaller North American food processing operations. A large portion of
her career was spent with the Wm. Wrigley Jr. Company in a variety of
leadership roles in Manufacturing, Engineering, Quality Assurance,
Logistics, and Sales. As President of the wholly‐owned subsidiary, L. A.
Dreyfus Company, Charlean was also responsible for global gum base
operations for the Wrigley Company.
Charlean holds a bachelor’s degree in Chemical Engineering and an MBA,
both from Rutgers University.
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CORPORATE GOVERNANCE REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Board is committed to ensuring that the Group has the people, strategy, and structure to deliver value to
customers and shareholders in the near and long term. We recognise that effective corporate governance is
essential to meeting this commitment and fundamental to the success of the Group.
Solid corporate governance starts with the calibre and talents of the Directors. Biographies of the Directors are
presented on page 17 and 18 in this Annual Report and reveal a range of relevant experience that brings a high
level of independent judgement to Itaconix’s business.
Under AIM Rule 26, AIM‐quoted companies are required to adopt and give details of the corporate governance
code which they have adopted and to show how they are following it. Of the recognised codes generally
adhered to by AIM companies, the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small
and mid‐size quoted companies (the “QCA Code”) was drafted with smaller businesses using a pragmatic and
principles‐based approach. The Board deemed the QCA Code as the most suitable for the Group and adopted
it with effect from 29 September 2018.
As Chair, I am responsible for leading the overall effectiveness of the Board, for ensuring that the Board
maintains effective corporate governance processes, and for promoting open communication and debate
within the Board and across the Group to foster a positive governance culture. I am pleased with the continued
application of the QCA Code and the Company’s approach to complying with the QCA Code which is set out
below.
Compliance with the Quoted Companies Alliance Corporate Governance Code
The QCA Code identifies ten principles that focus on the pursuit of medium‐ to long‐term value for shareholders
without stifling entrepreneurial spirit. Itaconix’s adoption of the QCA principles is summarised below. Further
details are available on our website.
1. Establish a strategy and business model which promote long‐term value for shareholders
Over the last ten years, Itaconix developed a polymer technology platform for producing specialty
ingredients from renewable resources. The Group uses its novel chemistries to create new ingredients with
unique functionality that create value and meet customer needs in homecare, personal care, and industrial
products. We utilise direct sales efforts to acquire initial customers and confirm the value for a new
product and may elect to scale globally with appropriate marketing partners. The long‐term revenue and
profit potential of each new product relative to its near‐term development cost can generate many years
of attractive returns and shareholder value. Our near‐term strategy is to balance aggressive sustained
product innovation from our polymer technology platform with a focus on profitable product lines and
long‐term financial stability. Additional information on our strategy and business model is presented in the
Strategic Report on pages 8 to 15.
2. Seek to understand and meet shareholder needs and expectations
The Board is committed to communicating and having constructive dialogues with current and potential
shareholders on a regular basis. Shareholders are encouraged to attend the Company’s Annual General
Meeting and any other General Meetings that may be held during the year. Information on significant
Group milestones and developments is readily available in news releases, investor presentations, interim
reports, and annual reports issued directly, broadcast widely, and posted to the Group’s website. Our CEO
is the primary contact for current and potential investors and works closely with our Nominated Advisor
(NOMAD) and others to interact with the broader investment community on a regular basis.
3. Take into account wider stakeholder and social responsibilities and their implications for long‐term
success
The Board is committed to the Group developing and maintaining open communications and dialogues
with employees, customers, suppliers, regulators, investors, and partners. In addition to the investor
activities described above, key practical elements of this commitment include a flat organization with
ready employee access to management and the Board, regular direct contact with customers, quality
assessments and reviews with vendors, and leadership roles in industry and scientific associations.
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CORPORATE GOVERNANCE REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
4. Embed effective risk management, considering both opportunities and threats, throughout the
organization
The Board and management use a framework that effectively identifies, assesses, and manages the risks
to the business that allows the Group to achieve its corporate objectives. The risk management process is
embedded in monthly reporting and quarterly meetings. The risks that the Board considers to be most
significant to the Group’s business are set out on pages 12 to 13.
5. Maintain the Board as a well‐functioning, balanced team led by the Chairman
The QCA Code requires that Boards have an appropriate balance between Executive and Non‐Executive
Directors and that each Board should have at least two Independent Directors. The Board is made up of
one Executive Director and three Independent Non‐Executive Directors. The three Independent Non‐
Executive Directors are experienced and independent persons who have each succeeded in their own
businesses and are not dependent upon income from the Group. They have a strong and detailed
understanding of the business, and are prepared and able to intervene and challenge the Executive
Director and management.
6. Ensure that between them the Directors have the necessary up‐to‐date experience, skills and
capabilities
All members of the Board bring relevant experience to the Board’s responsibilities and duties. The Board
believes its blend of experience, skills, and personal capabilities are well‐suited for governing the success
of the Group. Details of the background and experience of the Directors are set out in their biographies.
These demonstrate that the Board collectively has extensive specialty chemical industry knowledge and
relevant experience on the challenges of technology‐based growth businesses and publicly‐traded
companies.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Board performed a formal self‐assessment in 2021 to evaluate various aspects of its structure,
performance, and interaction with management. This self‐assessment contributed to the Board’s search
for new directors. The Board will continually review its needs and assess opportunities for improvement
as the Group’s commercial activities develop.
8. Promote a corporate culture that is based on ethical values and behaviours
Itaconix’s core values are embedded in its quality system, which commits the Group to consistently deliver
customer value, satisfaction and service through continual improvement and employee development. Key
pillars of the culture are curiosity to use new approaches and technology to meet a need, accuracy of
scientific analyses, the safety of our products and our processes, data‐driven product claims that
encourage customers to reformulate, reliable order fulfilment with quality product, compliance with all
laws and regulations, and respect for the livelihoods of all stakeholders. These values and pillars are
introduced and reinforced through daily routines and periodic activities that instil ethical and rewarding
behaviour into each employee’s work practices and experience.
9. Maintain governance structures and processes that are fit for purpose and support good decision‐
making by the Board
Formal Board meetings are held at least quarterly to review strategy, management, and performance of
the Group, with additional meetings between those dates convened as necessary. We have three Board
committees, the Audit Committee, the Remuneration Committee, and the Nominations Committee. The
terms of reference of these committees of the Board are available on our website.
10. Communicate how Itaconix is governed and is performing by maintaining a dialog with shareholders and
other relevant stakeholders
The Company’s approach to investor and shareholder engagement is described under Principle 2 above.
Annual reports, Annual General Meeting notices, regulatory announcements, trading updates and other
governance related materials since the year 2016 are available on our website.
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GOVERNANCE
FINANCIAL STATEMENTS
The Board of Directors
The Board of Directors is responsible for the proper management of the Group by formulating, reviewing and
approving the Group's strategy, budgets, and corporate actions. In order to achieve its objectives, the Board
has adopted the ten principles of the QCA Code. Through successfully implementing these principles, the Board
aims to deliver long‐term growth for shareholders and maintain a flexible, efficient and effective management
framework within an entrepreneurial environment.
It is important that the Board itself contains the right mix of skills and experience in order to deliver the strategy
of the Group. As such, the Board is comprised of:
An Independent Non‐Executive Chair, whose primary responsibility is the delivery of the Group's
corporate governance model. The Chair has a clear separation from the day‐to‐day business of the
Group which allows him to make independent decisions;
One Executive Director; and
Two Independent Non‐Executive Directors.
The Board has not appointed a Senior Independent Director after taking into account the Group's size and
development stage.
Each Director serves on the Board subject to re‐election on a three‐year rotation at the Annual General
Meeting. The Board generally meets at least four times a year.
Corporate Governance
In compliance with UK best practice, the Board has established the following committees to help the Board
discharge its responsibilities with formally delegated duties and responsibilities.
1.
Audit Committee
The purpose of the Audit Committee is to monitor the integrity of the financial statements of the Group and
to assist the Board in its oversight of risk and risk management processes.
Some of the Audit Committee's duties include:
Reviewing the Group's accounting policies and adoption of new accounting standards;
Reviewing reports from the external auditor;
Considering whether the Group has followed appropriate accounting standards and made appropriate
estimates and judgments, taking into account the views of the external auditor;
Reporting its views to the Board of Directors if it is not satisfied with any aspect of the proposed financial
reporting by the Group;
Reviewing the adequacy and effectiveness of the Group’s internal financial controls and internal control
and risk management systems;
Reviewing the adequacy and effectiveness of the Group's anti‐money laundering systems and controls
for the prevention of bribery and receive reports on non‐compliance; and
Overseeing the appointment of and the relationship with the external auditor.
The Audit Committee currently has three members, all of whom are Independent Non‐Executive Directors and
at least one member who has recent and relevant financial experience. As at 7 June 2022, the Audit Committee
is comprised of John Snow as Chair, James Barber, and Charlean Gmunder.
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CORPORATE GOVERNANCE REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2.
Remuneration Committee
The purpose of the Remuneration Committee is to develop and propose to the Board the framework and
policies for the remuneration of the Group’s Executive Directors and senior management.
The Committee normally meets at least twice a year and is responsible for determining and reviewing the policy
for the remuneration of the Executive Directors and such other members of the executive management as it is
designated to consider. Within the terms of the agreed policy, it determines the total individual remuneration
of the Executive Directors. The Committee also approves the design of, and determines targets for, any
performance‐related pay schemes, reviews the design of any share incentive plans, determines the awards to
the Executive Directors and sets the policy for, and scope of, pension arrangements for each Executive Director,
as appropriate. Finally, the Committee approves the design and principles of the remuneration schemes for
the employees of the business outside of the management team, which are implemented by the Executive
Directors.
As at 7 June 2022, the Remuneration Committee is comprised of James Barber as Chair, John Snow, and
Charlean Gmunder, each of whom is an Independent Non‐Executive Director.
3.
Nominations Committee
The Nominations Committee is normally required to meet at least once a year and is responsible for reviewing
the structure, size and composition of the Board and recommending to the Board any changes required, for
succession planning, and for identifying and nominating for approval of the Board candidates to fill vacancies
as and when they arise, with a view to ensuring that the Board is composed of individuals with the necessary
skills. The Committee is also responsible for succession planning for Directors and Executives, reviewing the
leadership needs of the organisation, reviewing Board performance, making recommendations to the Board
concerning suitable candidates for the role of senior independent Director (if applicable) and the membership
of the Board’s committees, and the election or re‐election of Directors at the annual general meeting.
As at 7 June 2022, the Nominations Committee is comprised of James Barber as Chair, John Snow, and Charlean
Gmunder, each of whom is an Independent Non‐Executive Director.
Terms of Reference
All Board committees operate within defined terms of reference and sufficient resources are made available
for them to undertake their duties. The terms of reference for each committee are available on the Company’s
website (in the Investor Relations section and under Corporate Governance).
Corporate Social Responsibility
The Board recognises the critical role of ethics, the growing concerns for social and environmental matters, and
the need to take into account the interests of the Group’s stakeholders, including its investors, employees,
suppliers and business partners, when operating the business.
Employment
The Board recognises its legal responsibility to ensure the well‐being, safety and welfare of its employees and
maintain a safe and healthy working environment for them and for its visitors.
Itaconix recognizes the value of gender and ethnic diversity in its Board and Company. The Group is committed
to diversity and inclusion of its governance and work force.
Relations with Shareholders
Itaconix attaches a high priority to effective communication with both institutional and private shareholders.
The AGM is the principal forum for dialogue with private shareholders. A business presentation is made after
the AGM and there is an opportunity for shareholders to put questions to the Directors. Itaconix aims to
maintain regular contact with institutional shareholders through a programme of one to one presentations,
group meetings, and briefings scheduled around the announcement of significant commercial developments in
the business and the preliminary and interim financial results.
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CORPORATE GOVERNANCE REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Share Dealing Code
The Company has adopted a share dealing code to ensure directors and certain employees do not abuse and
do not place themselves under suspicion of abusing inside information of which they are in possession and to
comply with its obligations under the Market Abuse Regulation ("MAR") which applies to the Company by virtue
of its shares being traded on AIM. Furthermore, the Company's share dealing code is compliant with the AIM
Rules for Companies, published by the London Stock Exchange (as amended from time to time).
Under the share dealing code, the Company must:
Keep a list of each person who is in possession of inside information relating to the Group;
Procure that all persons discharging managerial responsibilities and certain employees are given
clearance by the Group before they are allowed to trade in Company securities; and
Procure that all persons discharging managerial responsibilities and persons closely associated to them
notify both the Company and the Financial Conduct Authority of all trades in Company securities that
they make.
Internal Control
The Board has overall responsibility for ensuring that the Group maintains a system of internal control to provide
its members with reasonable assurance regarding the reliability of financial information used within the business
and for publication and that the Group’s assets are safeguarded. There are inherent limitations in any system of
internal control and accordingly even the most effective system can provide only reasonable, and not absolute,
assurance with respect to the preparation of accurate financial information and the safeguarding of assets. The
key features of the internal control system that operated throughout the year are described under the following
headings:
Control environment: particularly the definition of the organisation structure and the appropriate
delegation of responsibility to operational management.
Identification and evaluation of business risks and control objectives: particularly through a formal
process of consideration and documentation of risks and controls which is periodically undertaken by
the Board.
Main control procedures: which include the setting of annual and longer term budgets and the monthly
reporting of performance against them, agreed treasury management and physical security procedures,
formal capital expenditure and investment appraisal approval procedures, and the definition of
authorisation limits (both financial and otherwise).
Monitoring: particularly through the regular review of performance against budgets and the progress
of research activities undertaken by the Board. The Board reviews the operation and effectiveness of
this framework on a regular basis. The Directors consider that there have been no weaknesses in
internal controls that have resulted in any losses, contingencies or uncertainties requiring disclosures
in the financial statements.
Annual General Meeting
The Annual General Meeting of the Group will take place on 1 July 2022. Full details are included in the Notice
of Meeting that accompanies this Annual Report and is published on our website (www.itaconix.com).
James Barber
Chairman
7 June 2022
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DIRECTORS’ REMUNERATION REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
I am pleased to present the report on behalf of the Remuneration Committee.
The Committee is responsible for setting the remuneration policy of the Executive Directors and other senior staff,
including terms of employment, salaries, any performance bonuses and share option awards.
Committee Composition
The members of the Remuneration Committee as at 7 June 2022 are James Barber as Chair, John Snow, and
Charlean Gmunder. We are all Non‐Executive Directors.
Committee Duties
The Company has established a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual Directors. No Director is involved in deciding
his own remuneration.
Remuneration Policy
The key principles of the Remuneration Policy include:
The need to attract, retain, and motivate executives who have capability to ensure the Group achieves
its strategic objectives;
The need to ensure that short term benefits and long term incentive plans are aligned with the interests
of shareholders;
The need to take into account the competitive landscape in the North American and European specialty
chemicals industry and current best practices in setting appropriate levels of compensation; and
The Committee to meet at least twice per year.
Director’s Remuneration
The following table summarises the total gross remuneration for the qualifying services of the directors who
served during the year to 31 December 2021.
Directors’ Remuneration and Transactions
The Directors’ emoluments in the year ended 31 December 2021 were:
Basic salary
Retirement
Bonus
2021 Total
2020 Total
Executive Director
John R. Shaw
Non‐Executive Directors
James Barber
Bryan Dobson*
John Snow III
Total
*Retired April 15, 2022
$’000
237
60
45
46
388
Benefits in
kind
$’000
$’000
$’000
$’000
$’000
‐
‐
‐
‐
‐
7
‐
‐
‐
7
18
262
244
‐
‐
‐
60
45
46
60
45
46
18
413
395
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DIRECTORS’ REMUNERATION REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Directors’ Interests
The interests of the Directors in the share capital of the Company are disclosed below.
Directors’ Interests
31 December 2021
Number of ordinary shares of 1p each
31 December 2020
Number of ordinary Shares of 1p each
John R. Shaw
John Snow III
James Barber
Bryan Dobson
44,961,686
2,576,841
2,557,727
1,038,045
44,076,733
2,576,841
2,557,727
1,038,045
None of the Directors has a service contract with the Group requiring more than twelve months’ notice of
termination to be given. None of the Directors had, either during or at the end of the year, any material interest
in any contract of significance with the Company or its subsidiaries.
Executive Directors’ Service Contracts
The Executive Director signed service contracts on his appointment. These contracts are not of fixed duration.
The Chief Executive Officer’s contract is terminable by either party giving six months’ written notice.
Non‐Executive Directors
The Non‐Executive Directors signed letters of appointment with the Group for the provision of Non‐Executive
Directors’ services, which may be terminated by either party giving written notice. The remuneration of the Non‐
Executive Directors is determined by the Board as a whole.
The Committee met six times during the financial year to 31 December 2021.
James Barber
Chairman of the Remuneration Committee
7 June 2022
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AUDIT COMMITTEE REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Audit Committee is responsible for promoting the quality of internal controls and ensuring that the financial
performance of Itaconix is reviewed and reported properly.
The Committee reviews reports on the interim and annual accounts, financial announcements, the Company’s
accounting and financial control systems, changes to accounting policies, the extent of non‐audit services
undertaken by the external auditor, and the appointment of the external auditor.
During the period the Audit Committee reviewed the draft interim reports and associated announcements. The
Audit Committee considered the accounting policies and principles adopted in these accounts as well as
significant accounting issues and areas of judgement and complexity.
Committee Composition
The terms of reference for the Audit Committee require the committee to consist of preferably three members
but not less than two members and that a majority of the members shall be independent non‐executives with
at least one with recent and relevant financial experience.
The members of the Audit Committee as at 7 June 2022 are John Snow as Chair, James Barber, and Charlean
Gmunder. We are all Independent Non‐Executive Directors.
The Board is of the view that the Audit Committee has recent and relevant financial experience. John Shaw, CEO,
and relevant management may attend Committee meetings by invitation.
Role of the Committee
The main duties of the Committee are set out in its terms of reference, which are available on Itaconix’s website.
The main items of business considered by the Committee included:
Reviewing the Group's accounting policies and reports produced by internal and external audit
functions;
Considering whether the Group has followed appropriate accounting standards and made appropriate
estimates and judgements, taking into consideration the views of the external auditor;
Reporting its views to the Board of Directors if it is not satisfied with any aspect of the proposed financial
reporting by the Group;
Reviewing the adequacy and effectiveness of the Group’s internal financial controls and its internal
control and risk management systems;
Reviewing the adequacy and effectiveness of the Group's anti‐money laundering systems and controls
for the prevention of bribery and receive reports on non‐compliance, and
Overseeing the appointment of and the relationship with the external auditor.
Financial Reporting
The Committee reviews whether suitable accounting policies have been adopted and whether management has
made appropriate judgements and estimates. The Committee’s remit includes reviews of accounting papers
prepared by management providing details on the main financial reporting judgements as well as assessments
of the impact of potential new accounting standards.
The Committee has concluded that the Annual Report and financial statements are prepared appropriately and
provide the necessary information for shareholders to assess Itaconix’s strategy and performance.
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AUDIT COMMITTEE REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Risk Management and Internal Controls
Itaconix’s risk and control management framework is designed to manage rather than eliminate the risk of failure
to meet Itaconix’s objectives. The system of controls can provide reasonable but not absolute assurances
against material misstatement or loss. Itaconix faces a number of risks, the significant ones of which are set out
in the section on Principal Risks and Uncertainties on page 12 to 13.
Through the control systems outlined in the Corporate Governance Report on pages 20 to 23, Itaconix operates
an ongoing process of identifying, evaluating, and managing significant risks faced by the business. This process
includes the following:
Defined organisation structure and appropriate delegation of authority;
Clear responsibility for management to maintain good financial control and the production and review
Formal authorisation procedure for investments;
of detailed, accurate and timely financial information;
Identification of operational risks and mitigation plans developed by senior management; and
Regular reports to the Board from the Executive Directors.
Itaconix remains, in substance, in early stage development and is currently implementing appropriate internal
controls and processes to reflect its size and business complexity. The Committee has been kept up‐to‐date of
progress in implementing these processes, reviewed the Board’s processes, and the Committee is satisfied that
the risk management and internal control systems in place are currently operating effectively.
External Auditor
BDO was appointed auditor of Itaconix during 2019. The Committee considers that its relationship with the
auditor is working well and is satisfied with their effectiveness.
The Committee is responsible for implementing a suitable policy for ensuring that non‐audit work undertaken
by the auditor is reviewed so that it will not impact their independence and objectivity. The breakdown of fees
between audit and non‐audit services is provided in note 6 to Itaconix’s financial statements.
The non‐audit fees primarily relate to a read through of the interim financial statements of the Group and, as
necessary, the Committee held private meetings with the auditor to review key items within its scope of
responsibility.
For and on behalf of the Audit Committee
John I. Snow III
Chairman of the Audit Committee
7 June 2022
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DIRECTORS’ REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Directors of Itaconix plc (registered number 08024489) submit their report prepared in accordance with
Schedule 7 to the Large and Medium‐sized Companies and Groups (Accounts and Reports) Regulations 2008
(‘Schedule 7’).
Principal Activities
The principal activities of the Group are the research and production of proprietary specialty polymers that meet
significant customer needs, with a strategy of direct selling efforts to establish initial use of new polymers, with
the option to also scale global demand through partnerships where desirable, with a focus on North America
and Europe.
Most of the Group’s activities are focused on homecare and personal care applications where consumer interest
and desires for safer and more sustainable products are particularly high.
Website Publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on
a website. Financial statements are published on the Group’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation
in other jurisdictions. The maintenance and integrity of the Group’s website is the responsibility of the Directors.
The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained herein.
Financial Instruments and Liquidity Risks Information about the use of financial instruments by the Company
and its subsidiaries and the Group’s financial risk management policies are given in note 18.
Directors and their Interests
The Directors of the Group at 31 December 2021 were:
James Barber (Chairman);
John R. Shaw (Chief Executive Officer);
Bryan Dobson (Non‐Executive); and
John I. Snow III (Non‐Executive);
James Barber was re‐elected at the 2021 Annual General Meeting. In accordance with Article 90 of the
Company’s Articles of Association, John Shaw and John Snow will stand for re‐election and Charlean Gmunder
(appointed on 15 April 2022) will stand for election at the 2022 Annual General Meeting. Bryan Dobson stepped
down from the Board in April 2022. Biographical details of all the Directors as at 31 December 2021 are given
above on pages 17 to 18.
Company Secretary
Laura Denner was appointed Company Secretary on 1 September 2019.
Liability Insurance for Directors, Officers and Employees
Itaconix has purchased insurance to cover the Directors, officers and employees of Itaconix plc and its subsidiaries
against defence costs and civil damages awarded following an action brought against them in their personal
capacity whilst carrying out their professional duties for the Group.
Dividends
Itaconix is seeking primarily to achieve capital growth for its shareholders. Its intention is to retain future
distributable profits, if any, and therefore the Company does not anticipate paying any dividends in the
foreseeable future. The Directors therefore do not recommend payment of a dividend (2020: £nil).
Events after the Balance Sheet Date
22 April 2022, the Company issued 6,666,668 new ordinary shares via direct subscription for $0.4m of funding
to support general growth working capital, predominately to strengthen finished goods inventories held in the
EU to assure reliable and ready delivery times to EU customers.
Research and Development
Details of the Group’s activities on research and development during the year are set out in the Strategic Report
on pages 8 to 15 and Chief Executive Officer’s Statement on pages 4 to 7.
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DIRECTORS’ REPORT
Going Concern
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Itaconix business activities, together with the factors likely to affect its future development, performance and
position are set out in the Strategic Report and the financial position of Itaconix, its cash flows and liquidity
position are described in the notes to the financial statements, in particular in the consolidated cash flow
statement and in note 18 (financial instruments).
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.
As described in note 2, the Directors have reviewed the Group’s cash flow forecasts covering a period of at least
12 months from the date of approval of the financial statements, which foresee that the Group will be able to
meet its liabilities as they fall due. However, the success of the business is dependent on customer adoption of
our products in order to increase revenue and profit growth. Inability or delay to deliver this could result in the
requirement to raise additional funds.
The Directors have also taken into consideration the continued impact of the Covid‐19 pandemic and the war
in Ukraine on the Group’s revenues and supply chain. While the Group experienced some temporary negative
impacts on revenues in 2021, these issues are not expected to persist in the near‐term. 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 to our
customers.
The Directors have concluded that the circumstances set forth above represent a material uncertainty, which
may cast significant doubt about the Parent Company and Group’s ability to continue as a going concern.
However, they believe that taken, as a whole, the factors described above enable the Parent Company and
Group to continue as a going concern for the foreseeable future. The financial statements do not include the
adjustments that would be required if the Parent Company and the Group were unable to continue as a going
concern.
Substantial Shareholdings
In addition to the Directors’ interests, as disclosed in the Director’s Remuneration Report, the Company is aware
of the following shareholders with a percentage holding amounting to 3% or more of the ordinary share capital
based on the Company’s shareholder register as of 31 December 2021:
Shareholder
Hargreaves Lansdown Asset Management
IP Group
John R. Shaw
Interactive Investor
Halifax Share Dealing
Octopus Investments
Guy Broadbent
AJ Bell Securities
Barclay Smart Investor
Shares Held
74,867,056
50,357,638
44,961,686
35,180,655
27,494,398
20,487,288
18,275,000
15,718,325
13,592,554
% Holding
16.9%
11.4%
10.1%
7.9%
6.2%
4.6%
4.1%
3.5%
3.1%
The percentage interest has been calculated on the total voting rights of 443,462,757, being the Company’s
issued share capital on 31 December 2021. No other person has reported an interest in the ordinary shares of the
Company required to be notified to the Company.
Information Presented in Other Sections
Certain information required to be included in a directors’ report by Schedule 7, including references to future
developments, research and development, and financial instruments, can be found where applicable in the other
sections of this Annual Report. All of the information presented in those sections is incorporated by reference into
this Directors’ Report and is deemed to form part of this report.
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DIRECTORS’ REPORT
Greenhouse Gas Emissions
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The 2018 Regulations introduced requirements under Part 15 of the Companies Act 2006 for an enhanced
group of companies, which are defined as large by the Companies Act 2006, to disclose their annual energy use
and greenhouse gas emissions, and related information. Under the 2018 Regulations, the Group is not
currently defined as large and is considered a low energy user, with annual energy consumption less than 40
MWh. Based on Itaconix’s dedication to reducing the planet’s carbon footprint and addressing climate change,
the Group has chosen to disclose its US subsidiary annual energy use and greenhouse gas emissions in the
Sustainability Section on page 14.
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Directors’ Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations. Company law requires the Directors to prepare financial statements for each
financial year. Under the law the Directors have elected to prepare the Group and Parent Company financial
statements in accordance with UK adopted International Accounting Standards (“IFRS”) and applicable law.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the
Group for that period. The directors are also required to prepare financial statements in accordance with the
rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. In
preparing these financial statements, the Directors are required to:
Select suitable accounting policies and then apply them consistently;
Make judgements and accounting estimates that are reasonable and prudent;
State whether they have been prepared in accordance with UK adopted International Accounting Standards
(“IFRS”), subject to any material departures disclosed and explained in the financial statements; and
Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on
a website. Financial statements are published on the company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of
the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements
contained therein.
Information Given to the Auditor
Each of the persons who are Directors of the Company at the date when this report was approved confirms that:
So far as the Director is aware, there is no relevant audit information (as defined in the Companies Act 2006)
of which the Company’s auditor is unaware; and
The Directors have taken all steps that they ought to have taken as Directors to make themselves aware of
any relevant audit information (as defined in the Companies Act 2006) and to establish that the Company’s
auditor is aware of that information. This confirmation is given and should be interpreted in accordance with
the provisions of s418 of the Companies Act 2006.
Auditor
BDO, LLP have expressed their willingness to continue in office as auditor. A resolution concerning their re‐
appointment will be proposed at the 2022 Annual General Meeting.
Approved by the Board of Directors and signed on behalf of the Board,
John R. Shaw
Chief Executive Officer
7 June 2022
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INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Opinion on the financial statements
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 December 2021 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
the Parent Company financial statements have been properly prepared in accordance with UK adopted
international accounting standards; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements of Itaconix plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2021 which comprise the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated and company balance sheets, the consolidated and
company statements of changes in equity, the consolidated and company statements of cash flows and notes
to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted
international accounting standards and, as regards the Parent Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements which sets out the Directors considerations over going
concern and that the Group is dependent on customer adoption of the group’s products in order to increase
revenue and profit growth. Inability to deliver this could result in the requirement to raise additional funds
within the next 12 months. As stated in note 2, these events or conditions, along with the other matters as set
out in note 2, indicate that a material uncertainty exists that may cast significant doubt about the Parent
Company and Group’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. We considered going concern to be a
key audit matter based on our assessment of the significance of the risk and the effect on our audit strategy.
Our audit procedures included the following:
Review of the internal forecasting process to confirm the projections are prepared by an appropriate
level of staff that are aware of the detailed figures included in the forecast but also have an
understanding of the entity’s market, strategy and changes in the customer base and the potential
impact that Covid‐19 pandemic might have on these projections;
Reviewing management’s assessment of going concern through analysis of the Group’s cash flow
forecast and other projections through to 30 June 2023, including assessing and challenging the
assumptions as to determine whether there is adequate support for the assumptions underlying the
forecasts through comparison against post year‐end results to date;
Performing sensitivity analysis to consider cash flow requirements if the level of revenue and costs
changes. This includes, taking account of the continuing impact of the Covid‐19 pandemic and the
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
situation in Ukraine, reverse stress testing to ascertain what levels of cost increases or revenue decline
cause a cash shortage at any point in management’s post balance sheet assessment period and
considering the likelihood that those fact patterns could occur;
Reviewing the terms of the group’s existing working capital facilities and any plan management has for
future fund raising;
Making inquiries of management as to their knowledge of events or conditions beyond the period of
their assessment that impact the entity’s ability to continue as a going concern;
Reviewing post‐balance sheet results, specifically the cash flow position against that budgeted; and
Considering the adequacy of the disclosures in the financial statements against our knowledge of the client and
the requirements of the accounting standards.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Overview
Coverage
Key audit matters
100% (2020: 100%) of Group loss before tax
99% (2020: 99%) of Group revenue
100% (2020: 100%) of Group total assets
2021
X
X
X
Revenue
Recognition
Valuation of
Contingent
Consideration
Going
Concern
2020
X
X
X
Materiality
Group financial statements as a whole
$100,000 (2020: $160,000) based on 3‐year average loss before tax,
adjusted for certain non‐recurring transactions relating to the movement
in contingent consideration in the year (2020: based on 3 year average loss
before tax adjusted for certain non‐recurring transactions relating to the
movement in contingent consideration)
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the
Group’s system of internal control, and assessing the risks of material misstatement in the financial statements
at the Group level. We also addressed the risk of management override of internal controls, including assessing
whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
The Group comprises two UK incorporated companies (including Itaconix Plc) and one US trading component.
Based on our assessment of the Group, the US component was identified as a significant component and was
subject to full scope audit for Group reporting purposes. This component accounted for 99% (2020: 99%), of the
Group’s revenue and 100% of the Group’s loss before tax (2020: 100%). Full scope statutory audits were
completed on the UK incorporated entities with targeted audit procedures performed over key risks. All
procedures were performed by the Group audit team.
We also obtained an understanding of the internal control environment related to the financial reporting process
and assessed the appropriateness, completeness and accuracy of Group journals and other adjustments
performed on consolidation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter
described in the material uncertainty related to going concern section, we have determined the matters
described below to be the key audit matters.
Key audit matter
Revenue Recognition
Details of the Group’s
accounting policies
applied during the
period are given in note
2 on page 49 of the
Consolidated Financial
Statements.
The amounts reported in relation to revenue
represent information of significant interest to
many users of the financial statements. This puts
revenue at a greater risk of manipulation, bias and
misstatement.
Having regard to the potential for fraud in relation
to revenue recognition, we considered there to be a
significant audit risk arising from recognition of
revenue.
The key audit matters related to revenue recognition
are as follows:
There is a risk that Group’s revenue streams
(generated from the sale of its core products
for the homecare, industrial and personal care
sectors)
recognised
appropriately in line with their respective
performance obligations, and that the revenue
policy
in accordance with
appropriate accounting standards.
is not
been
itself
have
not
How the scope of our audit addressed the key
audit matter
With regards to the risk of material misstatement
related to the recognition of revenue we performed
the following procedures:
•
•
• We assessed whether the revenue recognition
policies adopted by the Group comply with
accounting standards by comparing
the
accounting policy to the requirements of IFRS
15 ‐ Revenue from contracts with customers;
Tested sample transactions occurring either
side of the balance sheet date to invoice and
evidence of delivery to check that they have
been recorded in the correct period;
Traced a sample of transactions throughout
the year to original customer orders (to verify
existence of sale) and despatch records signed
by courier on despatch of goods and other
supporting information including receipt of
funds and proof of delivery;
Confirmed revenue, by testing on a sample
basis, transactions around the year end have
been processed and recorded appropriately;
and
•
The risk of a material misstatement was also
focused on ensuring revenue around the year
(existence and completeness) was
end
accurately
taking account of
contracted delivery terms to customers.
recorded,
the appropriateness of revenue recognition
policy itself, as detailed in notes 3 & 4 to the
consolidated financial statements.
• We performed procedures over required
disclosures, taking account of IFRS 15 guidance,
in the Group‘s Annual Report.
Key observations:
Based on the procedures performed, we consider
that revenue has been recognised appropriately and
in accordance with the Group’s revenue recognition
accounting policy.
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INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Key audit matter
Valuation of Contingent
Consideration
Details of the Group’s
accounting policies
applied during the
period are given in
Notes 2 (page 48) and
17 (page 62) of the
Consolidated Financial
Statements.
retaining
in FY18
contingent
consideration was
The Group’s
restructured
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
and including all the revenues of the Group (which
are primarily from products based on the acquired
technology).
Revenue forecasts produced by management form
contingent
the basis of
consideration.
the valuation of
Critically, forecast revenues for the period to 2022
are a critical estimate, driving the fair value of the
liability. The
reported contingent consideration
impact on changes to fair value as a result of
variances in revenue assumptions are recognised in
the
in
Income Statement presenting volatility
reported results.
Any change in estimated revenues or the discount
rate in the period, will change the fair value of
contingent consideration, with an equal and
opposite entry recorded in the Income Statement.
How the scope of our audit addressed the key
audit matter
Since this area includes significant management
judgement, our procedures included:
in
light of historical
forecasts and
Confirming that the revenue forecast used in
the measurement of the liability is consistent
with the information approved by the board;
Evaluated forecasts,
accuracy of management’s
subsequent results;
Corroborating management’s future forecasts,
to supporting
(e.g purchase
information
orders) to support management’s calculation;
Testing the methodology applied
in the
calculations and the mathematical accuracy of
management’s model by recalculating the
inputs used by
the
applying
model,
management; and;
Engaging BDO valuation specialists to assist us
in assessing the appropriateness of discount
rate used by management;
Performing
assumptions; and
Evaluating business performance after year‐
end to understand extent of variance between
actuals and forecasts
analysis on
sensitivity
key
Key observations:
Based on the procedures performed, we noted no
instances to suggest that management’s judgements
in estimating the contingent consideration were
inappropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable users that are taken on the basis of the financial
statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
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INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Materiality
Basis
for
materiality
determining
Rationale for the benchmark
applied
Performance materiality
Basis
performance materiality
for
determining
Group financial statements
2020
2021
$160,000
$100,000
for
adjusted
Based on 5% of the 3 year average loss before
certain non‐recurring
tax,
transactions relating to the movement
in
contingent consideration in the year
This was considered to be a primary key
performance indicator as it is relevant to the
users of the financial statements which
is
evidenced by this metric being used to address
the performance of the business by the board,
and is consistently referenced within the RNS
announcements released by the group.
Parent Company financial statements
2021
$30,700
2020
$65,800
2% of Total Assets
Total Assets is considered to be a primary key
performance indicator as it is relevant to the
users of the financial statements for a holding
company.
$75,000
$120,000
$23,000
$49,300
Performance materiality was set at 75% (2020: 75%). In reaching our conclusion on the level of
performance materiality to be applied the main factor considered was our assessment of a number
of factors including the expected total value of known and likely misstatements (based on past
experience), our knowledge of the group’s internal controls and management’s attitude towards
proposed adjustments.
Component materiality
We set materiality for the significant component of the Group at 75% of Group materiality (2020: 75%) based
on the size and our assessment of the risk of material misstatement of that component. Component materiality
was $75,000 (2020: $120,000). In the audit of the component, we further applied a performance materiality
level of 75% (2020: 75%) of the component materiality to our testing to ensure that the risk of errors exceeding
component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of
$5,000 (2020: $8.000). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the Annual Report & Accounts 2021, other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic report and the Directors’ report for the financial
year for which the financial statements are prepared is consistent with the financial
statements; and
the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its
environment obtained in the course of the audit, we have not identified material
misstatements in the Strategic report or the Directors’ report.
Matters on which
we are required to
report by exception
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the Parent Company, or
returns adequate for our audit have not been received from branches not visited
by us; or
the Parent Company financial statements are not in agreement with the accounting
records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the
Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non‐compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud are
detailed below:
We have identified and assessed the potential risks related to irregularities, including fraud, by considering
the following:
o Obtaining an understanding of the legal and regulatory framework in which the Group operates.
We considered provisions of other laws and regulations that do direct effect on the financial
statements but compliance with which may be fundamental to the Group’s ability to operate. The
P a g e | 37
c119389CCL_High.pdf
INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
significant laws are considered to be international accounting standards in conformity with the
Companies Act 2006, the Companies Act 2006 and relevant UK and US tax regulations.
o The audit team received training prior to performing the audit procedures required to provide
assurance over compliance with relevant UK and US laws and regulations.
o Obtaining an understanding of how the Group is complying with those frameworks by making
enquiries of directors and management, those responsible for legal and compliance procedures
and the Company Secretary. We corroborated our enquiries through our review of board minutes
and papers provided to the Audit Committee.
o Considering the processes and controls that the Group has established and the controls in place to
mitigate risks in relation to non‐compliance with laws and regulations.
Making enquiry of Group’s directors and management and external legal counsel concerning actual
and potential litigation and claims.
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how
fraud might occur.
Our audit planning identified fraud risks in relation to
Revenue recognition ‐ existence and accuracy ‐ has been assessed as a Key Audit Matter;
Contingent consideration – valuation ‐ has been assessed as a Key Audit Matter; and
Management override.
o We made enquiry of Group management to understand where they considered there was a
susceptibility to fraud and regarding detection and response to the risk of fraud and any knowledge
of actual, suspected or alleged fraud.
o Reading the minutes of meetings of those charged with governance.
o We considered the processes and controls that the Group has established to address risks
identified, or that otherwise prevent, deter and detect fraud; and how management monitors the
processes and controls.
o Our procedures included journal entry testing, with a focus on large or unusual transactions based
on our knowledge of the business; enquiries with Group management and focused testing as
referred to in the Key Audit Matters section above.
o Third party confirmations were obtained directly from the Group’s external legal counsel to audit
the completeness of claims and legal matters;
o Review of financial statements disclosures and testing to supporting documentation;
o Assessing whether the judgements made in making accounting estimates are indicative of potential
bias; and
o Performing analytical procedures to identify any unusual or unexpected relationships which may
indicate risks of misstatement due to fraud.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and
the further removed non‐compliance with laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent
Company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Iain Henderson (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
7 June 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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P a g e | 39
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2021
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Group operating loss before exceptional items
Exceptional income / (expense) on revaluation of contingent
consideration
Exceptional income on organizational restructuring
Finance income
Operating loss before tax from operations
Taxation
Loss for the year from operations
Loss for the year
Basic and diluted loss per share
Diluted loss per share
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2021
$’000
2,596
(1,896)
700
203
(2,911)
(2,008)
2020
$’000
3,292
(2,138)
1,154
50
(2,595)
(1,391)
Notes
4
5
6
17
1,560
(339)
8
9
10
10
‐
‐
91
‐
(448)
(1,639)
(7)
(455)
(455)
(0.1)
(0.1)
(7)
(1,646)
(1,646)
(0.5)
(0.5)
The accompanying notes 1 to 26 form an integral part of the financial statements.
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CONSOLIDATED STATEMENT OF OTHER
COMPREHENSIVE INCOME
For the year ended 31 December 2021
Loss for the year
Items that will be reclassified subsequently to profit
or loss
Exchange gains in translation of foreign operations
Total comprehensive loss for the year, net of tax
Attributable to:
Equity holders of parent
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2021
2020
Notes
$’000
$’000
(455)
(1,646)
17
8
(438)
(1,638)
(438)
(1,638)
The accompanying notes 1 to 26 form an integral part of the financial statements.
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P a g e | 41
CONSOLIDATED AND COMPANY
BALANCE SHEETS
At 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Non‐current assets
Property, plant and equipment
Right‐of‐use assets
Investment in subsidiary undertakings
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Financed by
Equity shareholders’ funds
Equity share capital
Equity share premium
Own shares reserve
Merger reserve
Share based payment reserve
Foreign translation reserve
Retained deficit
Total equity
Non‐current liabilities
Contingent consideration
Note payable
Lease liabilities
Current liabilities
Trade and other payables
Notes payable
Contingent consideration
Lease liabilities
Group
Company
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
Notes
$’000
$’000
$’000
$’000
12
19
11
13
14
15
20
17
16
19
16
16
17
19
402
545
‐
947
1,369
280
683
2,332
501
746
‐
1,247
1,361
463
1,448
3,272
‐
‐
1,074
1,074
‐
17
444
461
‐
‐
1,084
1,084
‐
49
934
983
3,279
4,519
1,535
2,067
5,873
47,641
(5)
31,343
10,386
(194)
(94,395)
649
5,718
46,135
(5)
31,343
10,335
(211)
(93,940)
(625)
5,873
47,641
(5)
3,582
1,309
(2,165)
(55,965)
270
5,718
46,135
(5)
3,582
1,258
(2,150)
(55,517)
(979)
1,116
‐
348
1,464
1,020
‐
‐
146
1,166
2,707
51
476
3,234
1,404
132
146
228
1,910
1,116
‐
‐
1,116
149
‐
‐
‐
149
2,707
‐
‐
2,707
193
‐
146
‐
339
Total liabilities
2,680
5,144
1,265
3,046
Total equity and liabilities
3,279
4,519
1,535
2,067
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c119389CCL_High.pdf
CONSOLIDATED AND COMPANY
BALANCE SHEETS
At 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2008 and
has not presented its own profit and loss in these financial statements. The loss for the year for the Company
amounted to $448k (2020: $1,661). The financial statements of Itaconix plc, registered number 08024489, were
approved by the Board of Directors for issue on 7 June 2022.
John R. Shaw
Director
James Barber
Director
The accompanying notes 1 to 26 form an integral part of the financial statements
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c119389CCL_High.pdf
CONSOLIDATED AND COMPANY
STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2021
Consolidated statement of changes in equity
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
At 1 January 2020
Loss for the year
Share issuance proceeds
Share issuance expenses
Exchange differences on
translation of foreign operations
Share based payments
At 31 December 2020
Loss for the year
Contingent consideration
Share issuance proceeds
Share issuance expenses
Exchange differences on
translation of foreign operations
Share based payments
At 31 December 2021
Equity
share
capital
$’000
3,677
–
2,041
–
–
–
5,718
–
26
129
–
–
–
5,873
Company statement of changes in equity
Equity share
premium
Own shares
reserve
Merger
reserve
$’000
$’000
$’000
Share based
payment
reserve
$’000
Foreign
translation
reserve
$’000
46,135
–
205
(205)
–
–
46,135
–
120
1,428
(42)
–
–
47,641
(5)
–
–
–
–
–
(5)
–
–
–
–
–
–
(5)
31,343
–
–
–
–
–
31,343
–
–
–
–
–
–
31,343
10,317
–
–
–
–
18
10,335
–
–
–
–
–
51
10,386
Retained
deficit
$’000
(92,245)
(1,646)
–
(49)
–
–
(93,940)
(455)
–
–
–
(219)
–
–
–
8
–
(211)
–
–
–
–
17
–
(194)
–
–
(94,395)
Total
$’000
(997)
(1,646)
2,246
(254)
8
18
(625)
(455)
146
1,557
(42)
17
51
649
Equity
share
capital
Equity share
premium
Own
shares
reserve
Share based
payment
reserve
Foreign
translation
reserve
Merger
reserve
Retained
deficit
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
At 1 January 2020
Loss for the year
Share issuance proceeds
Share issuance expenses
Exchange differences on
translation of foreign operations
Share based payments
At 31 December 2020
Loss for the year
Contingent consideration
Share issuance proceeds
Share issuance expenses
Exchange differences on
translation of foreign operations
Share based payments
At 31 December 2021
3,677
–
2,041
–
–
–
5,718
–
26
129
–
–
–
5,873
46,135
–
205
(205)
–
–
46,135
–
120
1,428
(42)
–
–
47,641
(5)
–
–
–
–
–
(5)
–
–
–
–
–
–
(5)
3,582
–
–
–
–
–
3,582
–
–
–
–
–
–
3,582
1,240
–
–
–
–
18
1,258
–
–
–
–
–
51
1,309
The accompanying notes 1 to 26 form an integral part of the financial statements.
c119389CCL_High.pdf
(2,273)
–
–
–
123
–
(2,150)
–
–
–
–
(53,807)
(1,661)
–
(49)
(1,451)
(1,661)
2,246
(254)
–
–
(55,517)
(448)
–
–
–
123
18
(979)
(448)
146
1,557
(42)
(15)
51
270
(15)
–
(2,165)
–
–
(55,965)
P a g e | 44
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY
STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2021
The reserves described above have the purposes described below:
Share capital
Amount subscribed for share capital at par value.
Share premium
Amount subscribed for share capital in excess of nominal value less the cost of issuance of shares.
Own shares reserve
The reserve records the nominal value of shares purchased and held by the Employee Benefit Trust to satisfy
the future exercise of options under the Group’s share option schemes.
Merger reserve
This reserve arose as a result of a common control business combination on the formation of the Group. The
premium on the issue of shares as part of a business combination is credited to this reserve.
Share based payment reserve
This reserve records the credit to equity in respect of the share based payment cost.
Foreign exchange translation reserve
This reserve arises on the translation of the assets and liabilities of overseas subsidiaries.
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CONSOLIDATED AND COMPANY
STATEMENTS OF CASH FLOWS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Group
Company
2021
2020
2021
2020
Net cash outflow from operating activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Cash loaned to subsidiary undertakings
Net cash (outflow) / inflow from investing activities
Cash received from issue of shares
Transactions costs paid on the issue of shares
Proceeds from government secured debt
Repayment of lease liability
Interest paid ‐ leases
Net cash inflow from financing activities
Net (outflow) / inflow in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes
21
$’000
(2,023)
20
(68)
‐
(48)
1,557
(42)
‐
(167)
(42)
1,306
(765)
1,448
683
$’000
(1,157)
20
‐
‐
20
2,246
(254)
183
(327)
(28)
1,820
683
765
1,448
$’000
(78)
‐
‐
(1,350)
(1,350)
1,557
(42)
‐
‐
‐
1,515
(490)
934
444
$’000
(74)
‐
‐
(707)
(707)
2,246
(254)
‐
‐
‐
1,992
694
240
934
The accompanying notes 1 to 26 form an integral part of the financial statements
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NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
1.
General Information
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Itaconix plc ("the Parent Company") is a public limited company incorporated in England and Wales. The
address of its registered office and principal place of business is set out on page 70. The principal accounting
policies adopted by the Group are set out in note 2. The nature of the Group’s operations and its principal
activities are set out in the Strategic Report. The principal activities of the Parent Company and its subsidiaries
are described in note 4. The financial statements have been presented in US Dollars and rounded to the
nearest thousand ($’000) unless otherwise indicated.
2.
Accounting policies
Basis of presentation
The Group and parent company financial statements have been prepared in accordance with UK adopted
International Accounting Standards (“IFRS”) and the provisions of the Companies Act 2006. The financial
information has been prepared on the historical cost basis except that financial instruments are stated at their
fair value. Amounts are rounded to the nearest thousand, unless otherwise stated.
While the Parent Company’s functional currency is British Pounds Sterling, the Group’s financial statements have
been presented in US Dollars. The directors believe this better reflects the underlying nature of the business.
Approximately ninety‐five per cent of the Group’s revenue and operating costs are denominated in US Dollars.
The exchange rates used for translation of British Pounds Sterling amounts are 1.3536 US Dollars to British
Pounds Sterling as at 31 December 2021 and 1.3798 US Dollars to British Pounds Sterling as the average rate
prevailing during 2021.
Itaconix applied all standards and interpretations endorsed by the UK Endorsement Board (UKEB) that were
effective as of 1 January 2020. The accounting policies set out below have, unless otherwise stated, been applied
consistently to all years presented in this financial information.
The preparation of the financial statements, in conformity with IFRS, requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying
Itaconix’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 3.
Adoption of new and revised standards
There are no new standards impacting the Group that have been adopted in the annual financial statements
for the year ended 31 December 2021, which have given rise to material changes in the Group's accounting
policies.
Going concern
The financial statements have been prepared on a going concern basis. The Directors have reviewed the
Company’s and the Group’s going concern position taking account its current business activities, budgeted
performance and the factors likely to affect its future development, set out in the Annual Report, and including
the Group’s objectives, policies and processes for managing its working capital, its financial risk management
objectives and its exposure to credit and liquidity risks.
The Group made a loss before exceptional items for the year of $2,008k, had Net Current Assets at the period
end of $1,262k and a Net Cash Outflow from Operating Activities of $2,023k. Primarily, the Group meets its
day to day working capital requirements through existing cash resources and had on hand cash, cash
equivalents and short‐term deposits at the balance sheet date of $683k.
During the year, the Group maintain a flat cost base of expenditures and successfully raised funds of $1.5m.
Post year end, the Group successfully raised funds of $0.4m to support European inventories.
The Directors have reviewed the Group’s cash flow forecasts covering a period of at least 12 months from the
date of approval of the financial statements, which foresee that the Group will be able to meet its liabilities as
they fall due. However, the success of the business is dependent on customer adoption of our products in
order to increase revenue and profit growth and continuing to control the Group and Parent Company’s cost
base. Inability to deliver this could result in the requirement to raise additional and external working capital.
P a g e | 47
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Directors have also taken into consideration the continued impact of the Covid‐19 pandemic and the war
in Ukraine on the Group’s revenues and supply chain. While the Group experienced some temporary negative
impacts on revenues in 2021 due to the pandemic, these issues are not expected to persist in the near‐term.
The Directors have applied sensitivities to the revenue and cost models and have assessed alternate supply
chains that have been developed by the Group to mitigate any issues to our customers.
The Directors have concluded that the circumstances set forth above represent a material uncertainty, which
may cast significant doubt about the Parent Company and Group’s ability to continue as a going concern.
However, they believe that, taken as a whole, the factors described above enable the Parent Company and
Group to continue as a going concern for the foreseeable future. The financial statements do not include the
adjustments that would be required if the Parent Company and the Group were unable to continue as a going
concern.
Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 31 December each year. The Company controls an
investee if, and only if the Company has the following:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
Exposure of rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with those used by the Group.
All intra‐group transactions, balances, income and expenses are eliminated on consolidation.
In accordance with Section 408 of the Companies Act 2006, no profit and loss account is presented for the
Company.
Business combinations and contingent consideration
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred, measured at the acquisition date fair value, and the amount
of any non‐controlling interest in the acquiree. For each business combination, the Group elects whether to
measure the non‐controlling interest in the acquiree at fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition related costs are expensed as incurred and included in administrative
expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration are recognised in accordance with IFRS 9
in profit or loss.
The fair value of contingent consideration is determined by reference to the projected financial performance in
relation to the specific contingent consideration criteria for each acquisition.
c119389CCL_High.pdf
P a g e | 48
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
Revenue recognition
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Revenue is recognised to the extent that services have been delivered and the revenue can be reliably measured,
regardless of when the payment is being made. Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.
Revenue from the sale of goods is recognised when performance obligations have been satisfied. The delivery
date is usually the date on which performance obligations have been satisfied. However, where goods are
supplied when title does not irrevocably pass on delivery, it may not be appropriate to recognise all the revenue
immediately. The Group provides for potential sales returns based on its actual experience of returns from
customers in such cases. Where it has no such history it makes estimates by reference to minimum sales
commitments in the relevant contract, or by reference, where available, to customer retail sales data or customer
inventory levels at the financial year end, or based on other reasonable and relevant judgements.
Leases
Leases are accounted for under IFRS 16: Leases. The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases.
IFRS 16 requires lessees to recognize a lease liability that reflects the net present value of future lease payments
and a corresponding “right‐of‐use asset” in all lease contracts, although lessees may elect not to recognize lease
liabilities and right‐of‐use assets in respect of short‐term leases or leases of assets of low value.
The Group has elected not to recognize right‐of‐use assets and lease liabilities in respect of certain leases of office
equipment of low value or of short term. The lease payments associated with these leases is recognized as an
expense on a straight‐line basis over the lease term.
At inception of a contract, the Group assesses whether a contract is, or contains, a lease based on whether the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
The Group recognizes a right‐of‐use asset and a corresponding lease liability at the lease commencement date.
The lease liability is initially measured at the present value of the following lease payments:
fixed payments;
variable payments that are based on index or rate;
the exercise price of any extension or purchase option if reasonably certain to be exercised;
penalties for terminating the lease, if relevant; and
other payments to the landlord relating to the leased asset which are determined to be in substance
lease payments.
Judgement is applied to determine whether common area expenses paid to the landlord are determined to be
lease or non‐lease payments. (See note 3)
The lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. The Group has used its incremental borrowing rate as the
discount rate.
The right‐of‐use assets are initially measured based on the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus any initial direct costs. The right‐of‐use assets
are depreciated over the period of the lease term, or, if earlier, the useful life of the asset, using the straight‐
line method. The lease term includes periods covered by an option to extend, if the Group is reasonably certain
to exercise that option. In addition, the right‐of‐use assets may during the lease term be reduced by impairment
losses, if any, or adjusted for certain remeasurements of the lease liability.
On 28 May 2020, the IASB issued final amendments to IFRS 16 related to Covid‐19 rent concessions for lessees.
The amendments modify the requirements of IFRS 16 to permit lessees to not apply modification accounting to
certain leases where the contractual terms have been affected due to Covid‐19 (e.g. rent holidays or other rent
concessions). The amendments are effective for periods beginning on or after 1 June 2020, with earlier
application permitted. The Group did not adopt this standard as no such concessions were applicable.
P a g e | 49
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
Government funding, grants and research income
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Government grants and research income are recognised as a credit to the income statement where there is
reasonable assurance that they will be received, and all associated conditions will be complied with.
When the income relates to an expense item, it is recognised as income over the period necessary to match it
on a systematic basis to the costs that it is intended to compensate. Where the income relates to an asset, it is
recognised as deferred income and released to income in equal annual amounts over the expected useful life of
the related asset.
The Paycheck Protection Programme (‘PPP’) loan received in 2020, was initially recognised as a deferred income
liability on the balance sheet of the Group and remained as such until the loan was forgiven by the Small Business
Administration in the United States, which evidenced there was reasonable assurance that the entity complied
with the conditions associated with the terms of the PPP. At that point, the monies were released to the income
statement as an income‐related grant and presented as other operating income.
Research and development costs
Research costs are expensed as incurred. Development expenditure on an individual project is recognised as an
intangible asset only when the Group can demonstrate the technical feasibility of completing the intangible
asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset,
how the asset will generate future economic benefits, the availability of resources to complete the asset and
the ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the cost model is applied requiring
the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses.
Amortisation of the asset begins when development is complete and the asset is available for use. It is
amortised over the period of expected future benefit. During the period of development, the asset is tested
for impairment annually.
Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the year‐
end date. Non‐monetary items that are measured at historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction. Non‐monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates
different from those at which they were initially recorded are recognised in the income statement in the period
in which they arise. Exchange differences on non‐monetary items are recognised in the statement of
comprehensive income to the extent that they relate to a gain or loss on that non‐monetary item taken to the
statement of comprehensive income, otherwise such gains and losses are recognised in the income statement.
The assets and liabilities in the financial statements of foreign subsidiaries and those of the parent company
where the functional and presentational currency differ, are translated at the rate of exchange ruling at the
year‐end date. Income and expenses are translated at the actual rate. The exchange differences arising from the
retranslation of the opening net investment in subsidiaries are taken directly to the ‘Foreign currency
retranslation reserve’ in equity. On disposal of a foreign operation the cumulative translation differences
(including, if applicable, gains and losses on related hedges) are transferred to the income statement as part of
the gain or loss on disposal.
Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and any accumulated
impairment in value. Such cost includes the cost of replacing part of the plant and equipment when that cost
is incurred, if the recognition criteria are met.
c119389CCL_High.pdf
P a g e | 50
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Depreciation is calculated to write off the cost less estimated residual value of all tangible assets over their
expected useful economic life on a straight‐line basis. The rates generally applicable are:
Plant and equipment
Short leasehold improvements
Computer and office equipment
Financial assets
4‐7 years
5 years
3 years
Financial assets are recognised in Itaconix’s and the Company’s statement of financial position when Itaconix
and the Company become party to the contractual provisions of the instrument. Under IFRS 9 the classification
of financial assets is based both on the business model and cash flow type under which the assets are held.
There are three principal classification categories for financial assets: amortised cost; fair value through other
comprehensive income; and fair value through profit or loss. Itaconix has not classified any of its financial
assets as fair value through other comprehensive income.
Amortised cost
These assets are non‐derivative financial assets held under the ‘held to collect’ business model and
attracting cash flows that are solely payments of principal and interest. They comprise trade and other
receivables and cash and cash equivalents. They are initially measured at fair value plus transaction costs,
and are subsequently carried at amortised cost using the effective interest rate method, less provision for
impairment.
Impairment provisions for trade and other receivables are calculated using an expected credit loss model.
Under this model, impairment provisions are recognised to reflect expected credit losses based on
combination of historic and forward‐looking information, the amount of such a provision being the
difference between the net carrying amount and the present value of the future expected cash flows
associated with the impaired receivable. For trade receivables, which are reported net; such provisions
are recorded in a separate allowance account. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the associated provision.
Cash, cash equivalents and investments
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand.
Income taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance
sheet date.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements, with the following exceptions:
Where the temporary difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss; and
Deferred income tax assets are recognised only to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences, carried forward tax credits or
tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are
expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted
or substantively enacted at the balance sheet date.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity.
Otherwise income tax is recognised in the income statement.
P a g e | 51
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
Financial liabilities
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other
financial liabilities.
Financial liabilities at fair value through profit or loss
Financial liabilities are stated at fair value with differences taken to the consolidated income statement.
Interest on financial liabilities up to maturity is included in the finance costs line item in the consolidated
income statement.
Trade and other payables
Trade payables and other payables are not interest bearing and are stated at their full value on initial
recognition. For disclosure purposes, the fair values of trade and other payables are estimated at the
present value of future cash flows, discounted at the market rate of interest at the reporting date. As
trade payables and other payables are short term in nature as at the reporting date, the carrying value is
considered to be a reasonable approximation of fair value.
Other financial liabilities
Other financial liabilities are initially measured at fair value, net of transaction costs. They are
subsequently measured at amortised costs using the effective interest method, with interest recognised
on an effective rate basis.
Inventory valuation
Inventories are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing
each product to its present location and condition.
Share based payments
The Company issues equity‐settled share‐based payments to certain employees and these payments are
measured at fair value (excluding the effect of non‐market‐based vesting conditions) at the date of the grant
using appropriate pricing models. The fair value determined at the grant date of the equity‐settled share‐
based payments is expensed on a straight‐line basis over the vesting period, based on the Company’s estimate
of shares that will eventually vest and adjusted for the effect of non‐market‐based vesting conditions.
At the date of each statement of financial position, the Company revises its estimate of the number of equity
instruments that are expected to become exercisable. It recognises the impact of the revision of original
estimates, if any, in the income statement, and a corresponding adjustment is made to equity over the
remaining vesting period. The fair value of the awards and ultimate expense are not adjusted on a change in
market vesting conditions during the vesting period.
The value of share‐based payment is taken directly to reserves and the charge for the period is recorded in the
income statement. Itaconix’s scheme, which awards shares in the parent entity, includes recipients who are
employees in all subsidiaries. In the consolidated financial statements, the transaction is treated as an equity‐
settled share‐based payment, as Itaconix has received services in consideration for equity instruments. An
expense is recognised in the Group income statement for the fair value of share‐based payment over the
vesting year, with a credit recognised in equity.
In the parent company’s and subsidiaries’ financial statements, the awards, in proportion to the recipients
who are employees in said subsidiary, are treated as an equity‐settled share‐based payment, as the
subsidiaries do not have an obligation to settle the award. An expense for the grant date fair value of the
aware is recognised over the vesting year, with a credit recognised in equity. The credit is treated as a capital
contribution, as the parent company is compensating the subsidiaries’ employees with no cost to the
subsidiaries as there is no expectation to recharge the cost. In the parent company’s financial statements,
there is no share‐based payment charge where the recipients are employed by a subsidiary, with the parent
company recognising an increase in the investment in the subsidiaries as a capital contribution from the parent
company and a credit to equity.
P a g e | 52
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
Equity instruments
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs. Dividends and distributions relating to equity instruments are debited direct to equity.
Exceptional items
The Group has classified the finance income, movement on investment in associate, organizational restructuring,
and the fair value adjustment of the contingent consideration as exceptional items in the income statement.
These items are not considered to reoccur and are of such significance to the results that they have been
presented as exceptional to provide a fair and balanced presentation in the financial statements.
3.
Critical accounting assumptions and key sources of estimation uncertainty
The preparation of the Group’s financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the
disclosure of contingent assets and liabilities, at the end of the reporting period. However, uncertainty about
these assumptions and estimates could result in outcomes that require a material adjustment to the carrying
amount of the asset or liability affected in future periods.
Judgements and estimates
In the process of applying the Group’s accounting policies, management has made a number of judgements
and estimates. Those which have the most significant effect on the amounts recognised in the financial
statements are summarised below:
Judgements
Valuation of contingent consideration
The value of any contingent consideration is also reviewed at each period end by way of comparison to the
value of expected future payments, as estimated using appropriate methodologies, e.g. discounted cash flow
techniques. See note 17 for further details.
Fair value of Group indebtedness (Company only)
The fair value of amounts owing from Group companies is impaired in those cases where the subsidiary is, at
the balance sheet date, both illiquid and not yet generating positive cash flows, or otherwise highly unlikely to
repay such indebtedness (See note 14).
IFRS 16 – Lease Accounting ‐ lease term, non‐lease components
The determination of the lease term for some lease contracts of the Group is based on the consideration as to
whether the Group is reasonably certain to exercise lessee options.
Judgement is applied to determine whether common area expenses paid to the landlord are determined to be
lease or non‐lease payments. Consideration is made to the nature and variability of costs incurred and other
terms within such arrangements. (See note 19)
Estimates
Valuation of contingent consideration
The value of any contingent consideration is also reviewed at each period end by way of comparison to the
value of expected future payments, as estimated using appropriate methodologies, e.g. discounted cash flow
techniques. See note 17 for further details.
c119389CCL_High.pdf
P a g e | 53
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
Share based payment cost
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The estimation of share based payment costs requires the selection of an appropriate valuation model,
considerations as to the inputs necessary for the valuation model chosen and the estimation of the number of
awards that will ultimately vest, inputs for which arise from judgements relating to the probability of meeting
non‐market performance conditions and the continuing participation of employees (See note 22).
4.
Revenue
Revenue recognised in the Group income statement is analysed as follows:
Sale of goods
Geographical information
North America
Europe
The revenue information is based on the location of the customer.
Segmental information
Cleaning
Hygiene
Beauty
Other/Reserve
2021
$’000
2,596
2,596
2021
$’000
2,410
186
2,596
2021
$’000
1,812
509
220
55
2,596
2020
$’000
3,292
3,292
2020
$’000
2,869
423
3,292
2020
$’000
2,572
299
426
(5)
3,292
Net assets of the Group (being total assets less total liabilities) are attributable to geographical locations as at
31 December 2021 as follows:
North America
Europe
c119389CCL_High.pdf
2021
$’000
1,106
(457)
649
2020
$’000
932
(1,557)
(625)
P a g e | 54
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
5.
Other operating income
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Other operating income arises mainly from sale of fixed assets and government funding, grants and research
income. Since it is not considered to be part of the main revenue generating activities, the Group presents this
income separately from revenue.
Profit on sale of assets
Funding, grant and research income
6.
Group operating loss
This is stated after charging / (crediting):
Auditor’s remuneration:
Audit of the financial statements
Audit of the subsidiaries
Non‐audit services
Total fees
Equity settled share based payment expense
Employer’s national insurance (credit) associated with
vested share options
Depreciation of owned assets (note 12)
Amortisation of right‐of‐use assets (note 19)
Profit on disposal of lease liability
Research and development expenditure
Foreign exchange differences
Funding income related to Covid‐19
Profit on disposal of equipment
7.
Staff costs
Staff costs for the Group, including Directors, consist of:
Wages and salaries
Invoiced by third parties
Post‐employment benefits
Equity settled share based payment expense
2021
$’000
20
183
203
2021
$’000
10
115
‐
125
51
‐
167
201
‐
79
‐
(183)
(20)
2021
$’000
1,772
‐
41
133
1,946
Details of Directors’ fees are included in the Directors’ Remuneration Report on page 24 to 25.
Details of key management personnel fees are included in note 23.
2020
$’000
20
30
50
2020
$’000
10
121
4
135
18
‐
200
198
(91)
130
55
‐
(20)
2020
$’000
1,443
‐
34
18
1,495
P a g e | 55
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The average monthly number of Group employees, including Directors, during the year was made up as
follows:
Executive Directors
Non‐executive Directors
Research and development
Finance and administration
Sales
Production
Contract staff
Itaconix plc had no employees other than the Non‐executive Directors.
8.
Finance income
Interest receivable on bank deposits
9.
Taxation
Corporation tax credits
Prior years’ corporation tax credits
Current year corporation tax liability
Corporation tax credits
2021
No.
1
3
4
2
2
4
1
17
2021
$’000
‐
2021
$’000
‐
(7)
(7)
2020
No.
1
3
4
2
2
3
1
16
2020
$’000
‐
2020
$’000
‐
(7)
(7)
During the year ended 31 December 2021, the Group had a taxation expense of $7k (2020: $7k) of which
relates a provision of $7k for US taxation payable in respect of 2021 by the US subsidiary.
Total tax on loss on ordinary activities
The tax for the year can be reconciled to the loss per the income statement as follows:
Loss before tax
Loss on ordinary activities multiplied by standard
UK corporation tax rate of 19%
Effects of:
Disallowed expenses & non‐taxable income
Adjustments in respect of prior periods
Other timing differences
Movement in deferred tax not recognised
Total tax expense for the year
c119389CCL_High.pdf
2021
$’000
(448)
(85)
(287)
(2,904)
5
3,278
7
2020
$’000
(1,639)
(311)
80
73
‐
165
7
P a g e | 56
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Deferred tax
The Group has the following net deferred tax asset which is not recognised:
Accelerated capital allowances
Other timing differences
Tax losses carried forward
Share based payments
2021
$’000
3,043
545
14,166
‐
17,754
2020
$’000
2,304
509
9,333
‐
12,146
The net deferred tax asset is not recognised as there is insufficient evidence of future taxable profits against
which the asset will be available for offset. Certain operating losses will expire in 2030 if no profits are
generated to offset the loss carry forwards. These losses are also subject to certain regulatory restrictions.
Tax rate and tax rate changes
The main rate of UK corporation tax was 19% from 1 April 2015. An increase in the standard rate of UK
corporate tax from 19% to 25% is enacted and will take effect 1 April 2023.
The US federal tax rate is 21% as of 1 January 2018.
10.
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.
Loss
2021
$’000
2020
$’000
Loss for the purposes of basic and diluted loss per share
Weighted average number of ordinary shares for the purposes of basic
and diluted loss per share (’000)
Basic and diluted loss per share
(455)
(1,646)
438,808
(0.1)¢
344,970
(0.5)¢
The loss for the period and the weighted average number of ordinary shares for calculating the diluted
earnings per share for the period to 31 December 2021 are identical to those used for the basic earnings per
share. This is because the outstanding share options (note 22) would have the effect of reducing the loss per
ordinary share and would therefore not be dilutive.
c119389CCL_High.pdf
P a g e | 57
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
11. Investment in subsidiary undertakings
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
In prior years, management has fully impaired the intangible assets arising on acquisition of Itaconix Corporation
and has also impaired the value of the investment in Itaconix Corporation in the Company balance sheet
proportionate to its shareholding.
At 1 January 2020
Foreign translation adjustment
At 31 December 2020
Foreign translation adjustment
At 31 December 2021
Company
$000
1,053
31
1,084
(10)
1,074
Name
Principal activity
Place of
incorporation
and operation
Proportion of
ownership
interest
Direct investments
Itaconix (U.K.) Limited (1)
Itaconix EBT Limited (1)
Indirect investments
Itaconix Corporation (2)
UK operating company
Trustee of Itaconix employee benefit trust
England
England
Trading US subsidiary of Itaconix (U.K.) Ltd
USA
100%
100%
100%
(1) The registered address is Fieldfisher, LLP, Riverbank House, 2 Swan Lane, London, EC4R 3TT, UK
(2) The registered address is 2 Marin Way, Stratham, NH 03885, USA
c119389CCL_High.pdf
P a g e | 58
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
12.
Property, plant and equipment
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Group
Cost
At 1 January 2020
Additions
Impairment
Disposals
At 31 December 2020
Additions
Impairment
Disposals
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge
Eliminated on disposal
At 31 December 2020
Charge
Eliminated on disposal
At 31 December 2021
Carrying Amount
At 31 December 2021
At 31 December 2020
Computer and
office
equipment
$’000
Plant and
equipment
$’000
Short
Leasehold
improvements
$’000
25
‐
‐
‐
25
‐
‐
‐
25
25
‐
‐
25
‐
‐
25
‐
‐
1,236
‐
‐
‐
1,236
68
‐
‐
1,304
563
181
‐
744
158
‐
902
402
492
96
‐
‐
‐
96
‐
‐
‐
96
68
19
‐
87
9
‐
96
‐
9
In 2021, some assets were sold and $20k gain was recognized on the sale of the assets.
13.
Inventories
Group
Raw materials
Work in progress
Finished goods
Inventory reserve
2021
$’000
266
28
1,171
(96)
1,369
Total
$’000
1,357
‐
‐
‐
1,357
68
‐
‐
1,425
656
200
‐
856
167
‐
1,023
402
501
2020
$’000
279
6
1,111
(35)
1,361
P a g e | 59
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
14.
Trade and other receivables
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Current assets
Group
Company
Trade receivables
Other receivables
2021
$’000
247
33
280
2020
$’000
411
52
463
2021
$’000
‐
17
17
2020
$’000
‐
49
49
Trade receivables are non‐interest bearing and are generally on 30 day terms.
As at 31 December 2021, a provision of $20k (2020: $86) has been made to trade receivables that were
considered to be impaired. Amounts due from Group undertakings have been classified as current. The Company
does not consider any of the amounts due from Group undertakings to be overdue.
In respect of the Company
There is significant doubt as to the future recoverability of these balances, and as such, a provision for
bad and doubtful debts has been raised against the amounts due from Group undertakings. To the
extent the counter party is unable to do so, the Group does not intend to recall the amounts due, within
one year.
As at 31 December 2021 the balance of the fair value of debt from Group undertakings before
adjustment for impairment is $47,783k (2019: $44,696k).
The loss for the year includes a release of fair value impairment of Group indebtedness of $1,927k
resulting from a movement in provisions for this indebtedness (2020: $1,224k).
As at 31 December, the analysis of trade receivables that were past due but not impaired is as follows:
Group
2021
2020
Neither
past due
nor
impaired
$’000
‐
‐
Total
$’000
247
411
<30
days
$’000
233
404
30–60
Days
$’000
13
‐
60–90
days
$’000
‐
‐
90–120
days
$’000
‐
‐
>120
Days
$’000
1
7
The fair value of amounts owing from Group companies to the Company has been impaired to the extent the
subsidiary is, at the balance sheet date, both illiquid and not yet generating positive cash flows, or otherwise
unlikely to repay such indebtedness. The Group provides against trade receivables where there are significant
doubts as to future recoverability based on prior experience, on assessment of the current economic climate and
on the length of time that the receivable has been overdue.
Non‐current assets
Amounts owed by Group companies
Group
Company
2021
$’000
‐
‐
2020
$’000
‐
‐
2021
$’000
‐
‐
2020
$’000
‐
‐
c119389CCL_High.pdf
P a g e | 60
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
15.
Cash and cash equivalents
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Cash and cash equivalents comprise cash held by the Group and short‐term bank deposits with a maturity of
less than three months. The carrying amount of these assets approximates their fair value.
Analysis of cash and cash equivalents disclosed in the cash flow statement:
Group
Company
2021
$’000
683
2020
$’000
1,448
2021
$’000
444
2020
$’000
934
Cash at bank and in hand
Credit, liquidity and market risk
The Group’s principal financial assets are bank balances. The credit risk on these assets is limited because the
counterparties are banks with high credit ratings assigned by international credit rating agencies. The Directors
have carefully reviewed the carrying value of the Group’s financial assets and consider that at the date of this
report no impairment in those values is anticipated.
16.
Current liabilities
Current liabilities
Trade payables and other payables
Accruals
Note payable
Contingent consideration
Lease liabilities (note 19)
Group
2021
$’000
663
357
‐
‐
146
1,166
2020
$’000
1,088
316
132
146
228
1,910
Company
2021
$’000
21
128
‐
‐
‐
149
2020
$’000
57
136
‐
146
‐
339
The US Government provided support to US companies during the Covid‐19 pandemic through the Small
Business Administration (SBA) Paycheck Protection Program (SBA PPP), the US Corporation applied for support
under the SBA PPP and received a note payable for $183k in 2020. The note bears interest at one per cent
(1.00%) and is payable over 18 months beginning on 6 December 2020. In May 2021, the SBA formally forgave
the SBA PPP loan in full. The forgiveness of the loan was for the outstanding principal and any interest on the
loan amount.
The Directors consider that the carrying amount of trade payables, other payables and note payable
approximate to their fair value.
c119389CCL_High.pdf
P a g e | 61
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
17.
Contingent Consideration
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
As at 1 January
Movement in fair value and discounting unwind
Foreign exchange effect
Settlement of contingent consideration
As at 31 December
Current
Non‐current
Contingent consideration
Group
Company
2021
$’000
2,853
(1,560)
(31)
(146)
1,116
‐
1,116
2020
$’000
2,441
339
73
‐
2,853
146
2,707
2021
$’000
2,853
(1,560)
(31)
(146)
1,116
‐
1,116
2020
$’000
2,441
339
73
‐
2,853
146
2,707
As part of the purchase agreement with the previous owners of Itaconix Corporation, a contingent consideration
was agreed with certain of the sellers (the “Sellers”). This would be payable to the Sellers, subject to the
achievement of revenue targets for products based on the technology acquired for the calendar years 2017 to
2020, based on 50% of incremental annual net sales value above $3m in 2017 and in excess of the prior year for
2018 to 2020 inclusive (and no less than $3m). The deferred performance‐related consideration is capped at
$6m in aggregate. Such deferred performance consideration, if any, would be satisfied annually entirely in new
ordinary shares of Itaconix plc at the then prevailing price.
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 is intended to serve as an incentive
programme for the two members of management (John Shaw and Yvon Durant) who are 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 for the years 2018 to 2020 inclusive. 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 £0.3m which was expensed immediately.
In respect of 2021, the deferred consideration was valued using a discounted cash flow‐based assessment of the
expected sales of the relevant products extracted from the latest Board approved forecasts, consistent with the
approach in prior years. A discount rate of 10.9% was used (2020: 10.9%). 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 the latest Board approved forecasts and assumptions as
above is $1.1m (2020: $2.9m). Settlement of this liability would be issued upon approval of the Group revenues
between the Company and Sellers subsequent to year end 2022.
c119389CCL_High.pdf
P a g e | 62
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
As a result of the changed revenue forecasts, earn out period, and discount rate from the original value
assessments, the contingent consideration at 31 December 2021 was decreased to $1.1m. Sensitivity analysis
was also performed, summarised as follows:
If the sales in 2022 were reduced by $1.0m, the fair value would be reduced by approximately $0.4m
A 1% increase in the discount rate would reduce the fair value by $12k
Since the forecasts used were a conservative base case, the computed fair value was deemed appropriate.
On 12 April 2021, 1,923,389 shares were issued in settlement of the contingent consideration for 2020 sales in
excess of the threshold.
18.
Financial instruments
Financial risk management objectives and policies
Itaconix principal financial liabilities comprise trade and other payables and borrowings. The primary purpose
of these financial liabilities is to finance the operation. Itaconix has trade and other receivables and cash that
derive directly from its operations.
The Company has limited financial liabilities as its primary purpose is to hold investments in other Group
companies. The Company’s receivables largely relate to funding the operations of Itaconix.
Financial assets
Cash
Trade and other receivables
Intercompany receivable
Financial liabilities
Trade and other payables
Note payable
Lease liabilities
Contingent consideration
Group
Company
2021
$’000
683
280
‐
(1,020)
‐
(494)
(1,116)
(1,667)
2020
$’000
1,448
463
‐
(1,404)
(183)
(704)
(2,853)
(3,233)
2021
$’000
444
17
‐
‐
‐
‐
(1,116)
(655)
2020
$’000
934
49
‐
‐
‐
‐
(2,853)
(1,870)
The Directors consider that the carrying amount for all financial assets and liabilities approximates to their
fair value.
Financial risk management
The Group is exposed to market risk, which includes interest rate risk and currency risk, credit risk and
liquidity risk. The senior management oversees the management of these risks and ensures that the financial
risk taken is governed by appropriate policies and procedures and that financial risks are identified, measured
and managed in accordance with Itaconix’s policies and risk appetite.
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. Short‐term flexibility is achieved by holding significant cash
balances in Itaconix’s main operational currencies, notably UK Sterling and US Dollar.
Credit risk
The principal credit risk for Itaconix arises from its trade receivables. In order to manage credit risk, new
customers undergo credit review and customer accounts are regularly reviewed for debt ageing and
collection history. As at 31 December 2021, there were no significant credit risk balances.
P a g e | 63
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Credit risk from cash balances with banks and financial institutions is managed in accordance with group
policy. Credit risk with respect to cash is managed by carefully selecting the institutions with which cash is
deposited.
The financial assets of the Group comprise cash at banks, trade receivables and other receivables. Having
reviewed the recoverability of Itaconix’s financial assets since the reporting date, as well as the likelihood of
future losses over the next 12 months and the lifetime of the assets, the Board does not consider it necessary
to recognise any credit losses.
Interest rate risk
The Group finances its operations principally from equity funding and has no debt. Therefore the downside
risk associated with changes in interest rates is minimal. No sensitivity analysis has been presented for
changes in interest rates as these do not have a material impact on the loss before tax.
Currency risk
During the year, the Group received revenue in USD, EURO and GBP, whilst the majority of its cost base is in
USD. These receipts are currently relatively small and tend to be used first to cover costs in the same currency
before conversion to USD, and so currency risk impacting cash balances is deemed to be appropriately
managed. Intercompany loans from Itaconix plc to Itaconix Corporation to fund the US operations is
denominated in GBP and so is translated to USD each period end, potentially resulting in significant debits or
credits to the Company’s profit and loss but with no cash or other impact on the Group as the loan is
eliminated on consolidation. Management notes that such foreign exchange movements are non‐cash items.
No forward foreign exchange contracts were entered into during the period (2020: nil). At 31 December 2021
the bank balances on hand of foreign currencies were:
Currency
GBP
2021
‘000
198
2020
‘000
344
The foreign currency balances are in aggregate higher than at the end of 2020, which is due to the US‐based
Itaconix Corporation being the main operating entity. No sensitivity analysis has been presented for changes
in currency exchange rates, although management will keep the need for sensitivity analysis under regular
review going forward.
Liquidity risk
The Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs
and to invest cash assets safely and profitably. The Group’s policy through the period has been to ensure
continuity of funding by equity. The table below summarises the maturity profile of the Group’s financial
liabilities at the year‐end based on contractual undiscounted payments, specifically noting that the lease
liability total is determined as the undiscounted lease payments including interest payable.
At 31 December 2021:
Group
Trade and other payables
Contingent consideration
Lease liability
On
demand
$000
‐
‐
‐
Less than
3 months
$000
478
‐
50
3 to 12
months
$000
542
‐
143
1 to 5
years
$000
‐
1,116
301
> 5 years
$000
‐
‐
‐
‐
528
685
1,417
‐
Total
$000
1,020
1,116
494
2,630
c119389CCL_High.pdf
P a g e | 64
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
At 31 December 2020:
Group
Trade and other payables
Contingent consideration
Lease liability
Note payable
On
demand
$000
‐
‐
‐
‐
Less than
3 months
$000
974
146
63
39
3 to 12
months
$000
430
‐
189
93
1 to 5
years
$000
‐
3,301
681
51
> 5 years
$000
‐
‐
‐
‐
‐
1,222
712
4,033
‐
Total
$000
1,404
3,447
933
183
5,967
2021 was 0.25% to 1.00% per annum (2020: 0.25% to 1.00%).
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while also
maximizing the operational potential of the business. The capital structure of Itaconix consists of cash and
cash equivalents and equity attributable to equity holders of the Company, comprising issued capital and
reserves as disclosed in the consolidated statement of changes in equity. Itaconix is not exposed to externally
imposed capital requirements.
Committed facilities
The Group has no floating rate committed borrowing facilities as at 31 December 2021 (2020: nil).
There are no material differences between the fair value of financial instruments and the amount at which
they are stated in the financial statements. This is due to the fact that they are of short maturity and if
payable on demand the fair value is not materially different from the carrying value.
19.
Leases
The Group leases all its facilities from which it operates. The headquarters, production, and main offices are
located in Stratham, NH, USA. The facility is approximately 31,000 square feet and the lease runs through to
September 2024. Lease payments to September 2024 have been included in the initial recognition of the
lease liability. There was another office facility in Deeside, Flintshire, UK that expires in July 2021, but which
was surrendered to the landlord in September 2020. There was an exceptional income recognized from the
surrender of $91k due to the onerous lease liability being released.
In applying IFRS 16, the Group used practical expedients permitted by the standard:
reliance on previous assessments on whether leases are onerous;
the use of hindsight in determining the lease term where the contract contains options to extend or
terminate the lease.
Right‐of‐use asset
At 1 January 2020
Additions in year
Amortisation
Exchange differences
At 31 December 2020
Additions in year
Amortisation
Exchange differences
At 31 December 2021
Leased Building
$’000
920
24
(198)
‐
746
‐
(201)
‐
545
P a g e | 65
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Lease liability
At 1 January 2020
Additions in year
Interest expense
Lease payments
Lease termination
Exchange differences
At 31 December 2020
Interest expense
Lease payments
Exchange differences
At 31 December 2021
Leased Building
$’000
1,070
24
28
(327)
(91)
‐
704
42
(252)
‐
494
The above table also provides an evaluation of the material changes in the Group’s liabilities arising from
financial activities, as noted in the Group’s Cashflow.
At 31 December 2021, the maturity of the lease (undiscounted) is as follows:
Up to 3 months
$’000
62
1
Between 3
months and 12
months
$’000
One to two years
$’000
Two to five years
$’000
185
4
247
5
164
11
Leased building
Leased equipment
20.
Share capital
At 1 January 2020 (269,130,071 shares in issue)
Issued as a result of an exercise of options
Nil
New share issued
08/07/20 – 11,549,134
15/07/20 – 151,769,048
At 31 December 2020 (432,448,253 shares in issue)
Issued as a result of an exercise of options
Nil
New share issued
12/04/21 – 1,923,389
08/06/21 – 9,091,115
At 31 December 2021 (443,462,757 shares in issue)
Group
$000
3,677
‐
145
1,896
5,718
‐
26
129
5,873
Company
$000
3,677
‐
145
1,896
5,718
‐
26
129
5,873
Itaconix plc (previously Revolymer plc) was incorporated on 10 April 2012.
On 8 July 2020, the Company issued 11,549,134 ordinary shares with a nominal value of 1p per share for 1.1p
per share. The consideration was received in cash.
On 15 July 2020, the Company issued 151,769,048 ordinary shares with a nominal value of 1p per share for
1.1p per share. The consideration was received in cash.
On 8 April 2021, the Company issued 1,923,389 ordinary shares with a nominal value of 1p per share for 5.52p
per share. Shares were issued in settlement of the 2020 contingent consideration liability.
P a g e | 66
c119389CCL_High.pdf
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
On 8 June 2021, the Company issued 9,091,115 ordinary shares with a nominal value of 1p per share for 12.5p
per share. The consideration was received in cash.
21.
Notes to the statements of cash flow
Group
Company
Loss before tax
Depreciation of property, plant and equipment
Amortisation of right‐of‐use asset
Disposal of equipment
Impairment of Group indebtedness
Reversal of interest income
Revaluation of deferred consideration
Exceptional income on reorganization
Loss on foreign exchange
Share based payments charge
Taxation
Operating cash flows before movements in working
capital
Increase in inventories
Decrease / (increase) in receivables
(Decrease) / increase in payables
Net cash outflow from continuing operating activities
2021
$’000
(448)
167
201
(20)
‐
‐
(1,591)
‐
17
51
(7)
(1,630)
(8)
183
(568)
(2,023)
2020
$’000
(1,639)
200
198
(20)
‐
‐
412
(91)
8
18
(7)
(921)
(857)
(132)
753
(1,157)
2021
$’000
(448)
‐
‐
‐
1,927
(577)
(1,591)
‐
(4)
51
‐
(65)
‐
31
(44)
(78)
2020
$’000
(1,661)
‐
‐
‐
1,224
(517)
412
‐
92
18
‐
85
‐
(13)
(146)
(74)
22.
Share based payments
An expense is recognised for share based payments based on the fair value of the awards at the date of grant,
the estimated number of shares that will vest and the vesting period of each award.
During the year to 31 December 2021 no share options (2020: nil) were granted under the Itaconix LTIP scheme
as either approved options (under the HMRC approved EMI scheme) or unapproved options. The management
team received nil cost share options (either HMRC approved or unapproved) with market facing performance
conditions required for vesting (“Management Options”). The fair value of Management Options as at the date
of grant was therefore estimated using a Monte Carlo simulation model. UK employees did not receive share
options under the EMI scheme (and with an exercise price of the market price as at the date of grant) (“Employee
Options”). US employees did receive share options under the US Option scheme (and with an exercise price of
100% ‐ 110% of the 3‐day weighted average of the market price as at the date of grant) (“Employee Options”).
Accordingly the fair value of the Employee Options was estimated as at the date of grant using a Black Scholes
model. Both models took into account the terms and conditions upon which the options were granted using the
following assumptions.
c119389CCL_High.pdf
P a g e | 67
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Grant date
2021 Option Grant
Number of options granted
Exercise price
Expected volatility
Risk free rate
Expected dividend yield
Expected option life
2020 Option Grant
Number of options granted
Exercise price
Expected volatility
Risk free rate
Expected dividend yield
Expected option life
2017 Option Grant
Number of options granted
Exercise price
Expected volatility
Risk free rate
Expected dividend yield
Expected option life
Unapproved
Management
Options
EMI
Management
Options
EMI UK
Employee
Options
2019 US
Employee
Options
nil
£nil
nil
nil
nil
nil
nil
£nil
nil
nil
nil
nil
nil
£nil
nil
nil
nil
nil
nil
£nil
nil
nil
nil
nil
nil
£nil
nil
nil
nil
nil
nil
£nil
nil
nil
nil
nil
2,096,282
£nil
33.1%
0.4%
0%
36 months
1,582,127
£nil
33.1%
0.4%
0%
36 months
834,051
£0.235
33.1%
0.4%
0%
36 months
2,100,000
£0.075‐£0.081
224.56%
0.67%
0%
3‐4 years
4,900,000
£0.027
132.62%
0.83%
0%
3‐4 years
nil
£nil
nil
nil
nil
nil
The Employee Options have a vesting period of 36‐48 months with no performance criteria. The vesting period
of the Management Options is also 36 months but they only become exercisable if challenging market facing
performance conditions are met; namely that 50% of the grant becomes exercisable if the weighted average
ordinary share price in the 180 day period ending on 31 May 2020 of grant is £0.40. Between weighted average
ordinary share prices of £0.40 and £0.55, vesting shall be pro‐rata and on a straight line basis between 50% and
100%. Below £0.40 the grants are not exercisable and lapse in full.
The valuation methodology used in valuing share based payments includes the key assumptions shown above.
Management have revisited and amended the assumptions in respect of expected volatility and risk free rate in
the year to 31 December 2020. The charge for share based payments for the period to 31 December 2021 is
accordingly $51k (31 December 2020 $18k).
c119389CCL_High.pdf
P a g e | 68
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
Employee share option plans – unvested options
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
During the year the Company operated an employee share option plan (“the EMI plan”) for the benefit of certain
employees of the Company.
All options granted in the year are subject to the employee completing a specified period of service. All options
lapse when the employee ceases to be employed by the Company.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in,
unvested share options outstanding under the “EMI plan” during the year:
Unvested
Balance at beginning of year
Awarded during year
Lapsed during the year
2021
Number
of shares WAEP
£0.03
4,900,000
£0.08
2,100,000
£0.04
(1,650,000)
2020
Number
of shares
136,859
4,900,000
(136,859)
Unvested options at end of year
5,350,000
£0.04
4,900,000
WAEP
£0.25
£0.03
£0.25
£0.03
Unapproved share option plan – unvested options
During the year, the Company operated a share option plan for the benefit of employees who had received
grants under the EMI plan up to their personal limits.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in,
unvested share options outstanding under the Unapproved plan during the year:
Unvested
Balance at beginning of year
Awarded during year
Lapsed during the year
Unvested options at end of year
2021
Number of
2020
Number of
shares WAEP
shares WAEP
‐
-
‐
-
£nil
£nil
£nil
£nil
893,941
-
(893,941)
£nil
£nil
-
£nil
Summary of all options – vested and unvested
The following table summarises the position regarding all share options whether vested or not, including those
that vested at Admission in 2012:
Vested and unvested
Balance at beginning of year
Awarded during the year
Lapsed during the year
Balance at end of year
2021
Number
of shares WAEP
2020
Number
of shares WAEP
4,900,000
2,100,000
(1,650,000)
£0.03
£0.08
£0.04
1,030,800
4,900,000
(1,030,800)
5,350,000
£0.04
4,900,000
£0.08
£0.03
£0.08
£0.03
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NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2021
23.
Related party transactions
Transactions with key management personnel
Remuneration of key management personnel
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The remuneration of the Directors and Executives, who are considered to be the key management personnel
of the Company, is set out below in aggregate for each of the categories specified in IAS 24 ‘Related Party
Disclosures’.
2021
$’000
819
19
‐
113
951
2020
$’000
793
19
‐
13
825
Salaries and other short‐term employee benefits
Post‐employment benefits
Directors’ fees invoiced by third parties
Equity settled share based payment expense
24.
Contingent assets
There were no contingent assets in 2021 (2020 ‐ nil).
Contingent liabilities
25.
There were no contingent assets in 2021 (2020 ‐ nil).
26.
Post Balance Sheet Event
22 April 2022, the Company issued 6,666,668 new ordinary shares via direct subscription for $0.4m of funding
to support general growth working capital, predominately to strengthen finished goods inventories held in the
EU to assure reliable and ready delivery times to EU customers.
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APPENDIX TO THE ANNUAL REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Corporate Information
Advisors
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Solicitors
Fieldfisher LLP
Riverbank House
2 Swan Lane
London EC4R 3TT
NOMAD/Broker
finnCap
One Bartholomew Close
London
EC1A 7BL
Patent Agent
Grossman, Tucker, Perreault & Pfleger, LLP
55 South Commercial Street
Suite B14
Manchester, NH, USA
03101
Registered Office
Fieldfisher LLP
Riverbank House
2 Swan Lane
London EC4R 3TT
BPE Solicitors LLP
St James’ House
St James’ Square
Cheltenham
Gloucestershire GL50 3PR
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Bankers
HSBC plc
Vista
St David’s Park
Ewloe
US Operations
2 Marin Way
Unit 1
Stratham, NH, USA
03885
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