Itaconix plc
Annual Report &
Accounts 2023
STRATEGIC REPORT
Highlights
Chair’s Statement
Chief Executive Officer’s Statement
Our Strategy
Financial Review
Principal Risks and Uncertainties
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
HIGHLIGHTS
Itaconix plc (AIM:ITX) (OTC:ITXXF), a leading innovator in
sustainable plant-based polymers used to decarbonise
everyday consumer products, is pleased to announce it’s final
results for year ended 31 December 2023.
Gross profits increased by 63.9% driven by improved
volumes and margin, and higher production utilization.
Revenues increased 40.5% driven by success in the
cleaning segment in North America and Europe.
Revenues from 2019 to 2023 grew at a compound
annual growth rate of 57.2%.
February 2023, fundraise with gross proceeds
of $12.7m.
Revenues
($’000)
$7,866
+40.5%
Gross profits
($’000)
$2,437
+63.9%
Adjusted
EBITDA1 ($’000)
$(925)
+33.7%
Net loss
($’000)
$(1,536)
+37.6%
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2022
2020
2019
2023
2022
2021
2020
2019
7,866
5,600
2,596
3,292
1,288
2,437
1,487
700
1,154
450
(925)
(1,395)
(1,640)
(993)
(2,457)
(1,536)
(2,463)
(455)
(1,646)
(1,358)
Basic & Diluted
loss per shares (¢)
$(0.12)
+56.6%
1 Adjusted for interest, tax, depreciation,
amortization, share based payment charge and
exceptional items
CHAIR’S STATEMENT
For Nature With Nature
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Everyday consumer products can exist in balance and harmony with nature and protect the safety and health of
our environment.
We believe that new generations of consumer products will make the world a better and safer place by how
they are produced, how they are transported, how they are used, and how they are disposed of. They will be
less toxic to humans and the environment. They will not persist in the environment. They will contribute to
rebalancing the planet’s carbon cycle to maintain the continuity of all lifeforms.
We believe nature offers opportunities to make the world a better and safer place without placing costly new
burdens on consumers and society.
Itaconic acid is a natural ingredient produced in the human and plant world. We believe that itaconic acid has
the potential as an ingredient to displace acrylic acid or styrene across $20B of possible applications ranging
from cleaning and hygiene to paints and composites.
Our innovations in the production and use of consumer product ingredients using itaconic acid as a starting
material are enabling new generations of safer consumer products with improved levels of performance,
affordability, and sustainability.
With sixteen (16) patent families, we have by far the broadest proprietary technology platform for harnessing
the value of itaconic acid within this $20B of possible uses.
With a product line of 12 ingredients used in consumer products in households around the world, we are
pursuing the largest new market opportunities for itaconic acid.
We are dedicated to further developing the unique functionality of itaconic acid as a base for plant-based
solutions that that are safer and more sustainable without compromising on performance or cost.
Our Business Plan
Our goal is to build a large, profitable company with recurring attractive-margin revenues from a large and broad
base of customers which purchase Itaconix products as key enabling ingredients in new generations of consumer
products.
We employ our technology platform to create new itaconic acid-based ingredients that meet specific customer
needs or opportunities in leading consumer product categories such as cleaning, beauty and hygiene.
Our primary focus is on selling our products directly to consumer product brands and manufacturers in North
America and Europe. We work directly with customers and collaborate with category leaders on broader
opportunities. Increasing usage in everyday products, particularly in the 360 million North American and
European households, will form a broad growing base of recurring revenues with attractive margins from
consumer brands that rely on our ingredients for safety, performance, cost, and sustainability credentials.
Our Progress
I am pleased to report another year of sustained progress for Itaconix, validating the technology platform and
setting the stage for further growth.
Our polymers continue to be incorporated as key functional ingredients in cleaning, beauty, and hygiene
products. From detergents and air fresheners to pet care and hair sprays, our products are found in consumer
brands and major retailers across both North America and Europe.
New and recurring orders from our growing customer base increased our revenues to $7.9m in 2023 from
$5.6m in 2022. We generate a loss at these levels of revenues and need to grow gross profits while continuing
to manage our operating expenses in order to achieve profitability. With our successful fundraise in early
2023, we have the products, resources, and customer pipeline for continued growth towards profitability.
Corporate Governance
We continued to evolve our corporate structure in 2023.
Paul LeBlanc was appointed on 5 January 2023 as an independent Non-Executive Director and Chair of the Audit
Committee. Paul has valuable operating experience for the Company’s next stage of growth from his role as
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CHAIR’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Chief Financial Officer and Treasurer of Bemis Associates, a global manufacturer of specialty films and adhesives
for the apparel and industrial markets.
Jonathan Brooks was appointed on 9 February 2024 as an independent Non-Executive Director and Chair of the
Nomination Committee. Jonathan retired as Equity Capital Markets Partner at Fieldfisher LLP following a
distinguished career as a corporate lawyer in the City of London. He adds extensive capital markets and growth
company experience to the Company.
Summary
With funding in place and continued growth, 2023 marked Itaconix’s first year into a new stage of development
and growth. We have validated our vision and business plan, developed a technology platform that generates
valuable products, established a base of recurring revenues, and started expansion efforts into new applications
with higher revenue potentials. As before, we will grow with leaps and bounds but we are on an exciting path
to become a large profitable specialty ingredients business and make the world a better and safer place.
Peter Nieuwenhuizen
Chair
17 April 2024
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CHIEF EXECUTIVE OFFICER’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Safer solutions for performance, cost, and sustainability in consumer products
Introduction
FY2023 marked another year that validated both our technology and our growth potential. We have delivered
revenues in line with market expectations at $7.9m, representing 40.5% growth when compared to revenues of
$5.6m in FY2022. We also continued to improve our gross margin percentage, reduce our Adjusted EBITDA
losses, and make substantial operational and financial progress as outlined below.
Growing revenues at higher gross margins and controlling costs will allow us to cross into profitability. That is
an important goal for us to achieve. In 2023, we have built the foundations for a large, high gross margin,
specialty ingredients business.
Our balance sheet now gives us freedom to drive revenue growth from our current ingredients, the opportunity
for us to develop new ingredients and the ability to grow revenues and margins from our itaconate technology
platform.
Major purpose-driven and private label brands use our ingredients to both formulate new products and
reformulate existing ones. These new formulations boost the performance and reduce the cost of their product
while also increasing their sustainability claims. From dishwashing detergents and carpet cleaners to curl sprays
and dog shampoos, these brands form a broad base of recurring revenues which should continue to grow as
they secure placements in more retailers.
Itaconix Technology Platform
Itaconix has created a broad technology platform around the versatility and safety of itaconic acid as a building
block for ingredients that can replace acrylic acid or styrene polymers.
Itaconic acid is a natural metabolite found in the human and plant world. It is produced for commercial purposes
by fermentation using plant-based feedstock and is widely available on the open market. We purchase and
process it into key ingredients used in a wide range of consumer products.
Our ingredients compete primarily on performance, efficacy, and cost. Our technology demonstrates that
consumer brands do not need to sacrifice performance for the sake of sustainability, and do not need to increase
prices of products which deliver on those metrics either. We are the solution to creating consumer products
with efficacy and which are sustainable without an increase in price. Our goal is to create products that deliver
on performance, cost, and on sustainability, without the need for charging consumers higher prices.
The market potential for our technology platform is broadly defined by the $20B in current uses for acrylic acid
and styrene polymers in consumer care, hygiene, water solutions, agriculture, composites, and coatings. We
currently have a portfolio of 12 ingredients for formulators to use in a new generation of consumer products,
and we continuously develop new ingredients. Our products are protected by 16 patent families covering
proprietary processes, compositions, and applications.
Operating Review
Cleaning
We continued to make substantial progress in cleaning, most notably by advancing the use of our detergent
polymers in Europe. The leading cleaning polymer in our platform is Itaconix® TSI® 322. Its functionality reduces
total ingredient costs in a more compact dosage, by replacing two or more water conditioning materials. This
polymer also increases the plant-based content to improve the sustainability of the end product. This
combination is generating use across premium, value, and sustainable dishwasher detergent brands in North
America and Europe. A key ingredient in these detergents, by reducing mineral deposits it manages water
hardness and assures glasses, dishes, and utensils shine without spots or filming. The multifunctional value of
Itaconix® TSI® 322 is driving a new and exciting cohort of non-phosphate dishwashing detergents and can now
be found in consumer products across a broad range of retailers in both North America and Europe.
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CHIEF EXECUTIVE OFFICER’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Beauty
Itaconix produces polymers for hairstyling that are sold through Nouryon as Amaze® SP and by Itaconix as
VELASOFT® NE 100. These ingredients are gaining use in hair care products as alternatives to fossil-based
fixatives based on excellent curl retention, novel soft feel for “weightless” hairstyling, and high plant-based
content.
Hygiene
Itaconix produces polymers for odour neutralisation that are sold through Croda Inc. as ZINADOR® 22L and 35L
and by Itaconix as VELAFRESH® ZP20 and ZP30. These ingredients have comparable odour control performance
to incumbent ingredient, zinc ricinoleate, while offering the advantages of not leaving residues, ease of
formulating into products, and plant-based content.
Innovation
We are continuing our work to extend our technology platform with new applications and new ingredients. Our
polymers are generating increased interest for use in leather tanning as a plant-based replacement for acrylic
acid polymers. We have produced and are testing our prototypes for plant-based artist paints. Importantly, we
have advanced the performance of our plant-based superabsorbent to match current acrylic acid
superabsorbent polymers more closely. We believe some of these advances may offer opportunities to extend
our patent portfolio even further. The extension of the Itaconix technology platform is part of our work to
engage with potential customers to identify unmet needs that we can address with our plant-based solutions.
Funding
In February 2023, we announced that we had successfully raised gross proceeds of $12.7m through a placing,
subscription, and open offer. The placing and subscription were oversubscribed from new and existing
institutional investors and in the open offer we received tremendous support from existing shareholders.
The fundraising has been put to use for general working capital purposes and supporting continued revenue
growth. We have also deployed capital to accelerate the development of new products and applications.
Furthermore, we are supporting continuous improvements in our processes.
With a stronger balance sheet we are better placed to improve our profit margin, as we restructure customer
and vendor arrangements and build up inventory in Europe. The ability to place much larger amounts of product
on the ground in Europe, ready to be delivered to locations on the continent and in the UK, will give a significant
boost to our business, avoiding high spot logistics costs.
We have also made and will continue to make improvements to our production line in our US manufacturing
facility to enhance production efficiencies. We continue to have sufficient capacity at our existing facility and
have no current plans to invest in an additional production facility.
Outlook
We are focused on building a large, high gross margin, capital efficient, specialty ingredients business. Our
technology platform, and our current products are all well-positioned to play significant roles in enabling a new
generation of consumer products that offer excellent performance, safety, and sustainability.
We are focussed on structuring and building our customer base for long-term success by improving our gross
profit margins and diversifying our revenues across a broader range of customers and applications. Our raw
material prices are generally decreasing, which is offering better profitability but also a need to selectively
reduce prices in line with industry trends.
We announced on 2 April 2024 that we expect lower 2024 revenues due to not reaching satisfactory commercial
terms with an existing North American detergent merchandizing customer following extensive negotiations. We
are pursuing growth from other existing detergent customers and from new accounts in new application areas
with a view to replenishing this revised expectation with higher margin revenues.
Despite this, our balance sheet provides us with new opportunities to target higher revenue growth from our
current ingredients. There are many exciting opportunities for us to develop new ingredients and increase
revenues from our substantial itaconate technology platform. We are positioning ourselves to better capture
the commercial value of our performance ingredients with new customer wins, new volumes in non-detergent
uses, and important new product development initiatives.
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CHIEF EXECUTIVE OFFICER’S STATEMENT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
We approach the future with more commercial progress, more resources, more potential, and more optimism
than ever before.
John R. Shaw
Chief Executive Officer
17 April 2024
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FINANCIAL REVIEW
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, efficacy and
sustainability.
The Group’s principal activities are the development of plant-based polymers and the production and sale of
these materials globally, both directly and through partners as ingredients in product formulations.
Most of the Group’s efforts are focused on home and personal care applications, which is where consumer
interest and desires for safer and more sustainable products are particularly high.
Proprietary Ingredients with Unique Functionality
As the leader in itaconate polymer technology, the Group has completed many years of exploratory research
and holds an extensive patent portfolio related to the production and use of polymers made from itaconic acid.
The commercial potential for these materials as ingredients in consumer products stems from the unique
functionalities available through the chemical structure of itaconic acid and from the production of itaconic acid
through fermentation using plant-based sugar.
The Group’s technology platform has commercial momentum in cleaning, hygiene, and beauty as a result of the
process of identifying a market need and then developing a product to meet that need. As these products gain
broader use, Itaconix continues to work on new products to emerge from its technology platform.
Progress in 2023
In February, the Group completed a fundraise of gross proceeds of $12.7m to strengthen the Group’s balance
sheet and position the Group for growth. The fundraise was oversubscribed and supported by existing and new
institutional and retail investors. Funds will be used for working capital, select capital spending, and continued
investment in new revenue opportunities for the Company’s next chapter of growth.
The Group focused on growing revenue volumes in North America and Europe cleaning and recovery of gross
profit margins. As supply constraints related to the pandemic started to ease, the Group worked with suppliers
to improve reliability by increasing US warehoused raw materials and communicating projected order volumes.
These actions and the increased availability of ocean freight have improved the global supply chain cost and
reliability. The work done to improve the Group’s supply chain has supported and stabilized the gross profit
margin which is expected to improve in the coming periods.
The Group advanced its development and commercial activities in its core cleaning, beauty, and hygiene
applications, as detailed in the Chief Executive Officer’s Statement.
In August, the Company completed a 50:1 share consolidation, to support share trading through the Company’s
US OTC listing, with a more manageable number of issued ordinary shares and corresponding share price. The
consolidation supports the liquidity and accessibility to all of the Company’s shareholders.
Key Performance Indicators (KPIs)
The Directors believe there are financial and non-financial key performance indicators for the Group. These KPIs
are critical for management’s aim to monetise its technology platform through revenues generated by a growing
number of commercial products. Non-financial KPI’s are detailed above in the Chief Executive Officer’s
Statement.
Financial:
• Revenue
• Adjusted EBITDA, the earnings before interest, tax, depreciation, amortization, share based payments,
and exceptional items
• Cash
Non-Financial:
• Volumes in North America cleaning
• Volumes in Europe cleaning
• New applications
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FINANCIAL REVIEW
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Revenues for the year increased by 40.5% when compared to 2022. Adjusted EBITDA improved from a loss of
$1.4m in 2022 to a loss of $0.9m in 2023. Cash used in operations increased from $0.2m used in 2022 to $1.9m
used in 2023. Cash use in operations consisted of approximately $0.5m of operating loss and an increase in
working capital of $1.4m. This was supported by the Group’s successful fundraise in February 2023. Below is a
table showing the Group’s key performance metrics and financial highlights:
2023
2022
2021
2020
2019
$’000
7,866
2,437
31.0%
$’000
5,600
1,487
$’000
2,596
700
$’000
3,292
1,154
$’000
1,288
450
26.6%
27.0%
35.1%
34.9%
(925)
(1,395)
(1,923)
10,023
(219)
597
(1,640)
(2,023)
683
(993)
(1,157)
1,448
(2,457)
(1,831)
765
Revenue
Gross profit
Gross profit margin
Adjusted EBITDA1
Cash used from operating activities
Net cash and investments at year-end
Financial Performance
Revenue
Total revenues for the 12-month period ended 31 December 2023 were $7.9m, representing a 40.5% increase
from 2022 revenues of $5.6m. Revenues since 2019 have a compounding annual growth rate of 57.2%. Revenues
grew across all end markets of cleaning, beauty, and hygiene. Cleaning increased by 42.2% from 2022, with the
increase primarily due to strong volumes in North America and Europe. An increase with more brands and more
uses continued strong in the second half of 2023.
Revenues 2019 – 2023 (End Market)
Revenues 2019 – 2023 (H1 v H22)
Hygiene revenues improved by 8.6% from 2022, with the increase in sales attributable to more new brands in
North America using Itaconix ingredients in odour neutralization products.
Beauty revenues improved by 85.4% from 2022, with sales in North America driving the growth in the year.
1 Adjusted for interest, tax, depreciation, amortization, share based payment charge, and exceptional items.
2 Unaudited revenue by reporting period.
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FINANCIAL REVIEW
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Revenues in all geographical regions increased. North America represented 87.4% of the Group’s revenue in
2023 and increased by 35.4%. Revenue in North America largely consists of revenue generated in the cleaning
segment. Europe represents 12.6% of the Group’s revenue and increased by 89.3% compared to 2022. The
growth in European revenue was largely due to the 2022 launch of several formulas using Itaconix® TSI™ 322 in
Europe.
Gross Profit and Adjusted EBITDA1
The gross profit margin was 31.0% in 2023 compared to 26.6% in 2022. There was an improvement due to the
reduction in raw materials costs and logistics costs. Logistics costs have continued to lower as availability of
shipping containers and boat space improve throughout the year.
The increase in the Group’s Formulation Solutions, which provide technical services and ingredient supplies for
formulated products developed for customers based on Performance Ingredients, has impacted the gross profit
margin. Formulated Solutions made up 24.3% of the Group’s total revenues in 2023. Gross profit margins on
Formulated Solutions are roughly 9.4%, which are lower than the Group’s targeted gross profit margins of 35%.
These are not products that are manufactured at Itaconix but are specified in formulation to support excellent
performance in products developed for Itaconix Performance Ingredients.
Adjusted EBITDA is a non-IFRS measure but is widely recognised in financial markets and it is used within the
Group as a key performance indicator. Adjusted EBITDA was a loss of $0.9m in 2023 (2022: loss $1.4m) which
improved by 33.7%. The Group actively monitor administrative expenses and makes prudent spending decisions
to support the Group’s strategic objective.
Below is a reconciliation of Loss for the Year to Adjusted EBITDA:
Loss after tax
Taxation
Depreciation
Amortization
Share based payments
Exceptional revaluation of lease liability
Interest income
Interest expense
Exceptional revaluation of contingent
consideration
Exceptional organizational restructuring
Movement on investment in nicotine
gum entity
2023
2022
2021
2020
2019
$’000
$’000
(1,536)
(2,463)
$’000
(455)
$’000
$’000
(1,646)
(1,358)
27
194
202
229
21
(141)
79
-
-
-
8
161
202
559
-
-
-
138
-
-
7
167
201
-
-
-
-
(1,560)
-
7
200
198
-
-
-
-
339
(91)
1
223
198
-
-
(1)
-
(1,474)
-
-
-
(46)
Adjusted EBITDA
(925)
(1,395)
(1,640)
(993)
(2,457)
Administrative Expenses
Administrative expenses consist of sales, marketing, operations, research and development, and public company
costs such as legal, finance and the Group Board. These expenses were $4.1m in 2023 up from $3.8m in 2022.
The increase in administrative expenses was largely due to increased staffing to support the Group’s growth
plans.
Costs and Available Cash
As at 31 December 2023, the Group held cash of $2.6m and investments in term deposits of $7.5m. Net Cash
outflows from operating activities of $1.9m in 2023 were used to support the Group’s growth plan while
managing working capital needs, compared to $0.2m in 2022. In February 2023, the Company completed an
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FINANCIAL REVIEW
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
equity raise with gross proceeds of $12.7 million for working capital, select capital spending, and continued
investment in new revenue opportunities for the Company’s next chapter of growth.
Working capital
At year end, working capital had increased driven largely by the equity raise in February 2023. Trade and other
receivables increased to $1.3m in 2023 from $0.2m in 2022. Working capital as a percentage of revenues
decreased to 43.5% in 2023 from 0.3% in 2022.
Financial Position
At 31 December 2023, the Group had equity of $11.2m as compared to ($0.8m) in 2022, primarily as result of
share issuance, settlement of contingent consideration, operating losses, and share-based payment reserve.
Financial Reporting
The Group and parent company financial statements have been prepared in accordance with UK adopted
International Accounting Standards (“IFRS”) and the provisions of the Companies Act 2006. There were no new
reporting standards adopted for the year ended 31 December 2023 that have a material impact on the financial
statements.
Going Concern
The financial statements have been prepared on a going concern basis. The Directors have reviewed the Parent
Company’s and the Group’s going concern position, taking account of its current business activities, budgeted
performance and the factors likely to affect its future development set out in the Annual Report. Also taken
account of are the Group’s objectives, policies and processes for managing its working capital, its financial risk
management objectives and its exposure to credit and liquidity risks.
The Directors have also taken into consideration the current inflationary environment and macro-economic
uncertainties on the Group’s revenues and supply chain. While there has not been a significant negative impact
through the report date on the Group revenues or supply chain as the pandemic moved into an endemic stage,
the Directors have applied sensitivities to the timing, quantum, and growth of new customer projects in
revenue models and have assessed alternate supply chains that have been developed by the Group to mitigate
any issues in deliveries to our customers.
As further detailed in the Directors’ Report on page 25 and note 2 to the Annual Report, the Directors have
reviewed the Group’s cash flow forecasts, which take account of gross proceeds of $12.7m capital raised in
February 2023. This covers a period of at least 12 months from the date of approval of the financial statements,
which foresee that the Group will be able to meet its liabilities as they fall due. However, the success of the
business is dependent on customers continuing to purchase our products to increase revenues and profits.
Shareholdings and Earnings per Share
Itaconix had 13,486,122 shares in issue as at 31 December 2023. Effective 21 August 2023, the Company
consolidated the outstanding share capital in a 50:1 consolidation. The undiluted weighted average number
of shares for the period to 31 December 2023 was 12,862,802. The difference in the two numbers is the result
of an issuance of new shares in February 2023 (see note 21). The undiluted weighted average number of shares
was used to calculate the loss per share presented in note 9.
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PRINCIPAL RISKS AND UNCERTAINTIES
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Group is exposed to several risks in its markets and business. The Directors have overall responsibility for
the Group’s risk management process but have delegated responsibility for its implementation, for the system
of controls which reduce risk and for reviewing their effectiveness to the management team. As the uncertainties
that the Group face evolve over time, the management team reviews emerging risks and updates mitigation
measures. The results are reported to the Board.
Commercialisation Activities
The commercial activity in North America and Europe continues to progress. Meeting customer demand both
domestically and globally has remained a key focus of the Group. Forecasting volumes is important for managing
customer demand and balancing working capital needs to the business. Ultimately the success of the business
relies upon Itaconix products reaching sufficient sales volumes for the Group to generate an overall profit.
Management of risk: The Group has sought to manage this commercialisation risk by partnering with market
leaders for the worldwide promotion of our leading products, continued development of end-user formulas to
provide customers with packaged solutions, and continuous review of the market needs for Itaconix products.
Retention of Key Staff
The Group depends on its ability to retain highly qualified managerial and scientific personnel. There are a
limited number of candidates with the experience and skills to replace these key personnel. Attracting the best
candidates can be highly competitive. While the Group has conventional employment arrangements with key
personnel aimed at securing their services for minimum terms, their retention cannot be guaranteed.
Management of risk: The Group expanded its management team to support operations and has service contracts
in place for John R. Shaw as Chief Executive Officer and Dr Yvon Durant as Chief Technology Officer. In addition,
the Group seeks to retain key personnel in the US using an Equity Incentive Plan for share option grants, as
disclosed in note 23.
Recruiting of Key Staff
Our continued growth and success is dependent on attracting key staff with the appropriate skills. The Group
manages this by regular benchmarking and paying competitive salaries and benefits. It has invested in its talent
acquisition to provide the best opportunity to attract the right talent and partners with specialist external search
firms and agencies when necessary. It offers an attractive talent acquisition referral plan for employees.
Management of risk: The Group continues to assess the employment market to offer competitive compensation
and benefits. Management added new benefits for employees to be an attractive employer to work for.
Customer Concentration and Retention
The ability to retain key customers at attractive gross profit margins is critical to maintaining revenue streams.
The loss of key customers or excessive dependence on a limited number of customers could impact business
results adversely.
Management of risk: We engage regularly with current and prospective customer on the estimated value of our
ingredients in their end-product formulations and the pricing of our ingredients relative to competitive
alternatives. We monitor that our ingredients deliver the desired value, that our pricing reflects the estimated
value of our ingredients, and that our pricing achieves our target profitability for each customer. As we enter a
new stage of development, we also seek to diversify our customer base so that no concentration of customers
limits our ability to price our ingredients based on their competitive value.
Regulatory and Legislation
Regulatory bans on the use of phosphates as ingredients in detergents have transformed the consumer
detergent markets in Europe and North America over the last ten years. Phosphates are known to enter
waterways through detergent effluent and act as a nutrient for algae growth that subsequently cuts oxygen
levels in water and harms aquatic life. We believe that phosphates are likely to be phased out in other
jurisdictions around the world over time. Itaconix polymers are effective replacements for phosphates in
detergents and are used in numerous detergent products in North America and Europe for this purpose.
Management of risk: The Group closely monitors regulatory developments in the use of ingredients in consumer
and industrial products to assure compliance and find new revenue potential for Itaconix polymers. Further, the
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PRINCIPAL RISKS AND UNCERTAINTIES
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Group regularly assesses the relative performance and cost efficacy of Itaconix polymers to current and
emerging phosphate replacements to identify revenue risks and opportunities.
Competition and Technology
The production and use of Itaconix polymers are subject to technological change over time. There can be no
assurance that developments by others will not render the Group’s product offerings and research activities
obsolete or otherwise uncompetitive.
Management of risk: The Group employs experienced and highly-trained polymer chemists to develop and
protect the Group’s intellectual property. These efforts include continuous work on the performance and cost
advantages of Itaconix polymers. In addition, the staff monitors technologies and patents through publications,
scientific conferences, and collaborations with other organisations to identify new risks and opportunities.
Manufacturing Risk
Itaconix has one production facility in North America, that supports the Group’s revenues. Key raw materials
are sourced globally can result in extended supply chain.
Management of risk: The Group holds additional finished goods and raw material inventories off site at a
warehouse in North America and in Europe. Suppliers also hold additional raw materials in North America.
Liquidity Risk
Itaconix plc seeks to manage financial risk by ensuring adequate liquidity is available to meet foreseeable needs
and to invest cash assets safely and profitably. In February 2023, the Group completed a $12.7m fundraise to
support general working capital in Europe. In addition, short-term flexibility is achieved by holding significant
cash balances in Itaconix’s functional currencies, notably UK Sterling and US Dollars.
Management of risk: The Group monitors bank balances held in established financial institutions and maintains
adequate cash balances in its functional currencies.
Credit Risk
The principal credit risk for Itaconix arises from its trade receivables. To manage credit risk, new customers are
subject to credit review and all customer accounts are regularly reviewed for debt aging and collection history.
As at 31 December 2023, there were no significant credit risk balances.
Management of risk: The Group’s control environment requires new customers to establish credit terms through
providing credit references and a credit review. Trade receivables are actively monitored for collection history.
Inflation and Foreign Currency Risk
Global economies have experienced significant inflation during 2023. The cost of raw materials increased as
costs for shipping, energy and ingredients increased. These increases were partially recovered in selling price
increases to customers.
Selling price to international customers in foreign currencies has increased in 2023. This is offset by the ability
to increase pricing to these customers and the Group has the ability to receive various foreign currencies in Bank
accounts and convert them as market conditions are favourable.
Management of risk: The Group active monitors raw material costs and works with vendors to manage these
costs. Costs increases are periodically passed onto customers through pricing increases.
Foreign Exchange Risk
Itaconix plc is a publicly traded holding company on the London Stock Exchange. The Group’s primary operations
are in the US. These US based operations transact trades with customers in North America and internationally.
Revenue and costs are exposed to variations in exchange rates and therefore reported losses. In 2019, the Group
elected to convert the reporting currency from UK Sterling to US Dollars. The US Dollar transactions represent a
significant portion of the functional currency transactions and therefore reduces the Group's overall exposure
to translation exchange risk.
Management of risk: The Group manages foreign exchange risk by maintaining bank balances in major functional
currencies to control the impact on transaction costs for operational expenses. The Group will continue to
monitor appropriateness of reporting in US Dollars.
P a g e | 11
PRINCIPAL RISKS AND UNCERTAINTIES
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Government and Geopolitical Risk
The Group has potential exposure to government activities related to the war in Ukraine and US-China trade
relations.
Regarding the war in Ukraine, we reviewed all activity with the Russian Federation and Republic of Belarus. We
have no direct customers in these regions nor in Ukraine and do not expect the war to have a material direct
impact on our business other than the overall supply chain and economic effects experienced by manufacturers.
Limited availability and extended delivery times have combined to trigger major increases to certain raw
material costs and may continue to cause volatility. These disruptions have created a steady need to monitor
raw material sourcing, assess alternative suppliers, and adjust the pricing of the Group’s products.
Management of risk: The Group continues to monitor international impact of the war in Ukraine and legislation
affecting the US imports of Chinese goods on the overall business.
Cyber and Information Risk
There is a growing risk of fraudulent attacks on the business, such attack could have the potential to significantly
disrupt the Group’s operations and result in loss to the business.
Management of risk: The Group monitor IT systems in place to ensure they are up to date and regularly updated
with the latest security protection.
P a g e | 12
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 four decisions taken during the year fall into this
category, and engaged with internal and external stakeholders on these decisions:
• Appointment of new Non-Executive Directors – The Directors continually assess the evolving needs of
•
the Group and appoint individuals that will support the Group’s strategic needs.
2023 Fundraise – The Directors assessed the placement by placement, direct subscription and open
offer with new and existing institutional shareholders, the Directors, and existing retail shareholders,
to support the Group’s general working capital purposes to support revenue growth, accelerate the
development of new products and applications, and for capital spending to support continuous process
improvements.
Share consolidation - The Directors consider that it is in the best interests of the Company’s long-term
development as a public quoted company to support share trading through the Company’s US OTC
listing, with a more manageable number of issued ordinary shares and corresponding share price.
• Appointment of New Nominated Advisor and Broker – The Directors continually assess the evolving
needs of the Group. The Group interviewed several NOMAD and brokers to determine the best fit for
the Group and made the ultimate decision to change to a new NOMAD and broker in January 2024.
•
The Strategic Report encompassed on pages 6 through 12 was approved by the Board of Directors on 17 April
2024 and signed on behalf of the Board of Directors by:
Peter Nieuwenhuizen
Chair
John R. Shaw
Chief Executive Officer
P a g e | 13
BOARD OF DIRECTORS
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Dr. Peter J. Nieuwenhuizen (aged 53)
Independent Non-Executive Chair
Paul Daniel LeBlanc (aged 62)
Independent Non-Executive Director
Peter joined the Board and became Chair on 5 July 2022.
Peter started his career at AkzoNobel, the coatings &
chemicals company, where he held positions in R&D
sales & marketing, supply chain, sustainability, and
eventually as CTO & Corporate Director Sustainability for
AkzoNobel Specialty Chemicals. Peter also worked as a
strategy consultant for Arthur D. Little and as VP
Technology Deployment for Enerkem Inc. He co-founded
the European Circular Bioeconomy Fund (ECBF), a
€300m venture
the circular
fund dedicated
bioeconomy.
to
He has a Ph.D. in Chemistry from Leiden University. He
sits on the Boards of several organizations making
important contributions to the low carbon economy,
including as Chair of Change Chemistry.
Committee Membership
Chair of the Remuneration Committee and member of
the Audit and Nomination Committee.
Paul joined the Board and became Audit Committee
Chair on 5 January 2023. He has 25 years’ experience
in growing international manufacturing businesses.
He is currently a CFO and Treasurer at Bemis
Associates,
adhesives
manufacturing company.
international
Inc.,
an
He has a BA in Accounting from Thomas College and
an MBA
from University of Massachusetts
Dartmouth.
Committee Membership
Chair of the Audit Committee and member of the
Remuneration and Nomination Committee.
Jonathan Brooks (aged 60)
Independent Non-Executive Director
Jonathan joined the Board and became Nomination
Committee Chair on 9 February 2024. He has 35
years of experience advising fast-growing companies
on the London Stock Exchange and international
equity capital markets. Prior to joining the Itaconix
board, Jonathan was most recently a Partner in the
Equity Capital Markets practice at Fieldfisher LLP.
He has a Bachelor of Laws (LLB) from the University
of Bristol.
Committee Membership
Chair of the Nomination Committee and member of
the Remuneration Committee.
P a g e | 14
BOARD OF DIRECTORS
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
John Roger Shaw (aged 64)
Chief Executive Officer
Laura Elizabeth Denner (aged 41)
Chief Financial 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.
Laura joined the Board on 20 July 2022. She has
supported Itaconix growth since 2013 when she
joined the organization as Controller. Laura began
her career in public accounting with Feeley &
Driscoll, PC focused on audits for manufacturing
companies.
She has a BA in Accounting and International
Studies from Bryant University and an MS in
Accounting from Boston College. Laura is a Certified
Public Accountant.
P a g e | 15
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 14 and 15 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 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 6 to 12.
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.
P a g e | 16
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 aims to identify, assess, and manage 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 10 to 12.
5. Maintain the Board as a well-functioning, balanced team led by the Chair
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
two Executive Directors and two Independent Non-Executive Directors. The two 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. The Board plans to add at least one additional Non-Executive Director.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Board is in the process of implementing a self-assessment to evaluate various aspects of its structure,
performance, and interaction with management. The Board has identified specific areas to focus on in
2024, including to further to strengthen the alignment of resources with strategy, and to further detail the
steps towards profitability. 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, but more typically monthly, 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.
P a g e | 17
CORPORATE GOVERNANCE REPORT
STRATEGIC REPORT
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;
Two Executive Directors; and
Two Independent Non-Executive Director.
•
•
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 monthly, but 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 two members, all of whom are Independent Non-Executive Directors and
at least one member who has recent and relevant financial experience. As at 17 April 2024, the Audit
Committee is comprised of Paul LeBlanc as Chair, and Peter Nieuwenhuizen.
P a g e | 18
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 17 April 2024, the Remuneration Committee is comprised of Peter Nieuwenhuizen as Chair, Paul LeBlanc,
and Jonathan Brooks, 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 17 April 2024, the Nominations Committee is comprised of Jonathan Brooks as Chair, Peter
Nieuwenhuizen, and Paul LeBlanc, 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.
P a g e | 19
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, as implicitly articulated in management’s job
description.
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 20 May 2024. Full details are included in the
Notice of Meeting that accompanies this Annual Report and is published on our website (www.itaconix.com).
Peter Nieuwenhuizen
Chair
17 April 2024
P a g e | 20
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 17 April 2024 are Peter Nieuwenhuizen as Chair, Paul
LeBlanc, and Jonathan Brooks. We are all Independent 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 2023.
Directors’ Remuneration and Transactions
The Directors’ emoluments in the year ended 31 December 2023 were:
Basic salary
$’000
Benefits in
kind
$’000
Retirement
Bonus
2023 Total
2022 Total
$’000
$’000
$’000
$’000
237
190
Executive Director
John R. Shaw
Laura Denner
Non-Executive Directors
Peter Nieuwenhuizen
Paul LeBlanc1
James Barber2
John Snow III2
Charlean Gmunder2
Bryan Dobson3
Total
1Appointed - January 2023
2Resigned, not re-elected or not elected - July 2022
3Retired - April 2022
60
45
-
-
-
-
532
9
-
-
-
-
-
-
-
9
10
9
-
-
-
-
-
-
19
40
40
-
-
-
-
-
-
80
296
239
60
45
-
-
-
-
640
359
168
24
-
30
23
8
13
625
P a g e | 21
DIRECTORS’ REMUNERATION REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Directors’ share options
The aggregate emoluments disclosed above do not include any amounts for the value of options to acquire
shares in the Company granted to or held by Directors except for those awards vesting in the year.
Details of all options over shares in Itaconix plc for Directors who served during the year are as follows:
1 Jan
2023
Grant/
(Lapsed)
(Exercised) Consolidated
31 Dec
2023
Exercise
Price
£
Date from
with
exercisable
Expiry
Date
Name Scheme
John R. Shaw
2019
LTIP
2019
Sub total
3,951,154
602,002
1,023,214
5,576,370
Laura Denner
2019
2019
LTIP
2019
Sub total
2,000,000
3,167,592
205,772
1,097,144
6,470,508
12,046,878
Total
Directors’ Interests
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,872,131)
(589,962)
(1,002,750)
(5,464,843)
(1,960,000)
(3,104,241)
(201,657)
(1,075,202)
(6,341,100)
(11,805,943)
79,023
12,040
20,464
111,527
40,000
63,351
4,115
21,942
129,408
240,935
2.755
2.755
2.755
1.355
2.505
2.505
2.505
1/1/22
1/1/23
1/1/23
4/21/32
4/21/32
4/21/32
10/28/21 10/28/30
4/21/32
4/21/32
4/21/32
1/1/22
1/1/23
1/1/23
The interests of the Directors in the share capital of the Company are disclosed below.
Directors’ Interests
31 December 2023
Number of ordinary shares of 50p each
31 December 2022
Number of ordinary shares of 1p each
John R. Shaw
Laura Denner
Peter Nieuwenhuizen
Paul LeBlanc
1,081,441
257,000
25,457
1,950
44,961,686
12,706,636
200,000
-
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 once during the financial year to 31 December 2023.
Peter Nieuwenhuizen
Chair of the Remuneration Committee
17 April 2024
P a g e | 22
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 17 April 2024 are Paul LeBlanc as Chair, and Peter Nieuwenhuizen.
We are both Independent Non-Executive Directors.
The Board is of the view that the Audit Committee has recent and relevant financial experience. John Shaw, CEO,
Laura Denner, CFO, 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.
P a g e | 23
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 10 to 12.
Through the control systems outlined in the Corporate Governance Report on pages 16 to 20, 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 LLP 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 5 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
Paul LeBlanc
Chair of the Audit Committee
17 April 2024
P a g e | 24
DIRECTORS’ REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Directors of Itaconix plc (registered number 08024489) submit their report as follows:
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 19.
Directors and their Interests
The Directors of Itaconix plc at 31 December 2023 were:
Peter Nieuwenhuizen (Chair);
Paul LeBlanc (Non-Executive Director);
John R. Shaw (Chief Executive Officer); and
Laura Denner (Chief Financial Officer).
Jonathan Brooks was appointed as a Non-Executive Director and Chair of the Nomination Committee on 9
February 2024.
Peter Nieuwenhuizen, Laura Denner, and Paul LeBlanc were elected at the 2023 Annual General Meeting. In
accordance with Article 90 of the Company’s Articles of Association, Jonathan Brooks will stand for election at
the 2024 Annual General Meeting. Biographical details of all the Directors as at 17 April 2024 are given above
on pages 14 to 15.
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 (2022: £nil).
Events after the Balance Sheet Date
There were no events post balance sheet date.
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 6 to 12 and Chief Executive Officer’s Statement on pages 3 to 5.
P a g e | 25
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 19 (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 customers continuing
to purchase our products in order to increase revenue and profit growth.
The Directors have also taken into consideration the continued impact of the current economic environment,
global recession on the Group’s revenues and supply chain. The Directors have taken into account the gross
proceeds of $12.7m raised in February 2023. 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 believe that, taken as a whole, the factors described above enable the Parent Company and
Group to be and continue as a going concern for the foreseeable future. The financial statements do not
include the adjustments that would be required if the Parent Company and the Group were unable to continue
as a going concern.
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 2023:
Shareholder
Hargreaves Lansdown Asset Management
Octopus Investments
Canaccord Genuity Wealth Management
IP Group
John R. Shaw
Amati Global Investors
Interactive Investor
Rathbones
Halifax Share Dealing
AJ Bell Securities
Shares Held
1,690,639
1,447,146
1,186,140
1,118,262
1,081,441
784,313
753,940
503,481
474,799
428,145
% Holding
12.5%
10.7%
8.8%
8.3%
8.0%
5.8%
5.6%
3.7%
3.5%
3.1%
The percentage interest has been calculated on the total voting rights of 13,486,122, being the Company’s
issued share capital on 31 December 2023. No other person has reported an interest in the ordinary shares of the
Company required to be notified to the Company.
P a g e | 26
DIRECTORS’ REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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.
Greenhouse Gas Emissions
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.
P a g e | 27
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 2024 Annual General Meeting.
Approved by the Board of Directors and signed on behalf of the Board,
John R. Shaw
Chief Executive Officer
17 April 2024
P a g e | 28
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 2023 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 as applied in accordance with the provisions of the Companies
Act 2006; 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 2023 which comprise the consolidated income statement and other
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.
Conclusions relating to going concern
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. Our evaluation of the Directors’
assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
• 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 Group’s market, strategy and changes in the customer base;
• Reviewing Director’s assessment of going concern through analysis of the Group’s cash flow forecast
and other projections through to 31 December 2025, 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;
Making inquiries of Directors as to their knowledge of events or conditions beyond the period of their
assessment that impact the Group and Parent Company’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
Group, the Directors’ going concern assessment and the requirements of the accounting standards.
P a g e | 29
INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Overview
Coverage
100% (2022: 100%) of Group profit before tax
99% (2022: 99%) of Group revenue
100% (2022: 100%) of Group total assets
Key audit matters
Revenue Recognition
Materiality
Group financial statements as a whole
2023
2022
$156,000 (2022: $86,000) based on 2% of Group revenue (2022: based on 5% of the
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.
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 of two UK incorporated companies (including Itaconix plc) and one US trading component.
Based on our assessment of the Group, the parent company, Itaconix plc, and the US subsidiary Itaconix
Corporation, were identified as significant components and were subject to full scope audit for Group reporting
purposes (2022: Itaconix plc and Itaconix Corporation). The US component accounted for 99% (2022: 99%), of
the Group’s revenue and 100% of the Group’s loss before tax (2022: 100%). A full scope statutory audit was
completed on the other UK incorporated entity 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.
P a g e | 30
INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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) that 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. 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.
Key audit matter
Revenue
Recognition
Details of the
Group’s
accounting
policies applied
during the period
are given
in notes 2 & 4 on
pages 48 & 53 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
accelerated recognition of revenue.
The key audit matter related to
revenue recognition is as follows:
•
There is a risk that the Group’s
revenue (generated from the
sale of its core products for the
homecare, industrial and
personal care sectors) around
the year-end has not been
recognised appropriately in line
with their respective
performance obligations, taking
account of contracted delivery
terms to customers and that the
revenue policy itself is not in
accordance with appropriate
accounting standards.
How the scope of our audit addressed the key audit matter
With regards to the risk of material misstatement related to
the accelerated 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 a sample of 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 in accordance with agreed delivery
terms;
For a sample of transactions, in particular around the
year end, we assessed compliance with IFRS 15
Revenue Recognition requirements and verified
whether revenue is recorded appropriately, in line with
respective performance obligations when satisfied,
with reference to despatch records signed by courier
on despatch of goods and other supporting information
including receipt of funds and proof of delivery;
Tested the journal population posted around the year-
end to revenue by selecting a sample and agreeing to
supporting documentation.
•
•
•
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.
P a g e | 31
INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Group financial statements
Materiality
Basis for determining materiality
2023
$156,000
Based on 2% of
the Group
revenue.
for
Rationale
benchmark applied
the
Revenue is considered to be a primary
key performance indicator as it is
relevant to the users of the financial
statements.
2022
$86,000
Based on 5% of
the 3-year
average loss
before tax,
adjusted for
certain non-
recurring
transactions
relating to the
movement in
contingent
consideration in
the year (note 1).
This was
considered to be
a primary key
performance
indicator as it is
relevant to the
users of the
financial
statements.
Parent company financial
statements
2023
$141,000
2022
$21,400
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.
Performance materiality
Basis for determining performance materiality
$117,000
$64,500
$106,000
$16,000
Performance materiality was set at 75% (2022: 75%). In reaching our
conclusion on the level of performance materiality to be applied,
our analysis included 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 and parent
company’s internal controls and management’s attitude towards
proposed adjustments.
Note 1:
Given that the year-on-year loss position will decrease as Itaconix gets closer to break-even point, materiality
will also decrease if based on loss before tax despite the improving performance. Therefore, revenue is deemed
to be a more representative base.
P a g e | 32
INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group,
apart from the Parent Company whose materiality is set out above, based on a percentage of 90% (2022: 75%)
of Group materiality dependent on the size and our assessment of the risk of material misstatement of that
component. Component materiality was $141,000 (2022: $64,500). In the audit of each component, we further
applied performance materiality levels of 75% (2022: 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
$7,000 (2022: $4,300). 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 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.
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
Matters on which
we are required to
report by
exception
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.
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.
P a g e | 33
INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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 is
detailed below:
• We have identified and assessed the potential risks related to non-compliance with laws and
regulations by:
o Obtaining an understanding of the legal and regulatory framework in which the Group operates.
We considered provisions of other laws and regulations that have a direct effect on the financial
statements but compliance with which may be fundamental to the Group’s ability to operate. The
significant laws were considered to be UK adopted international accounting standards, the
Companies Act 2006 and relevant UK and US tax 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.
o Making enquiry of Group’s Directors and management and external legal counsel concerning
actual, potential litigation and claims.
o Obtaining third party confirmations directly from the Group’s external legal counsel to assess the
completeness of claims and legal matters.
o Review of financial statements disclosures and testing to supporting documentation.
• We assessed the susceptibility of the Group’s financial statements to material misstatement,
including how fraud might occur. Our procedures included:
o Our audit planning identified fraud risks in relation to:
o Revenue recognition (cut-off) – as relating to accelerated recognition of revenue (which
has been assessed as a Key Audit Matter); and
o Management override of controls.
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.
P a g e | 34
INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
o Reading the minutes of meetings of those charged with governance for any known or
suspected instances of fraud.
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 by agreeing these to supporting
documentation.
o Assessing whether the judgements made in making accounting estimates are indicative
of potential bias.
o Performing analytical procedures to identify any unusual or unexpected relationships
o
which may indicate risks of misstatement due to fraud.
In response to the risk of fraud in revenue recognition, we have performed the
procedures set out in the key audit matter section of our report.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members who were all deemed to have appropriate competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
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.
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.
Owen Pettifor (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Gatwick, UK
17 April 2024
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
P a g e | 35
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Operating loss before exceptional items
Loss on modification of lease
Exceptional expense on revaluation of contingent consideration
Operating loss before tax from operations
Finance income
Loss before tax
Taxation charge
Loss after tax
Basic loss per share
Diluted loss per share
2023
$’000
7,866
(5,429)
2,437
-
(4,066)
(1,629)
(21)
-
(1,650)
2022
$’000
5,600
(4,113)
1,487
-
(3,804)
(2,317)
-
(138)
(2,455)
141
-
(1,509)
(2,455)
(27)
(1,536)
(0.12)
(0.12)
(8)
(2,463)
(0.50)
(0.50)
Notes
4
5
18
7
8
9
9
The accompanying notes 1 to 27 form an integral part of the financial statements.
P a g e | 36
CONSOLIDATED STATEMENT OF OTHER
COMPREHENSIVE INCOME
For the year ended 31 December 2023
Loss for the year
Items that will be reclassified subsequently to profit
or loss
Exchange gain in translation of foreign operations
Total comprehensive loss for the year
Attributable to:
Equity holders of parent
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2023
2022
Notes
$’000
$’000
(1,536)
(2,463)
530
93
(1,006)
(2,370)
(1,006)
(2,370)
The accompanying notes 1 to 27 form an integral part of the financial statements.
P a g e | 37
CONSOLIDATED AND COMPANY
BALANCE SHEETS
At 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Investment in subsidiary undertakings
Current assets
Inventories
Trade and other receivables
Investments
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
Lease liabilities
Current liabilities
Trade and other payables
Contingent consideration
Lease liabilities
Group
31 Dec
2023
31 Dec
2022
Company
31 Dec
2023
31 Dec
2022
Notes
$’000
$’000
$’000
$’000
11
12
20
15
10
13
14
15
16
21
23
20
17
18
20
24
337
2,236
1,273
-
3,870
-
301
343
-
-
644
1,096
1,421
6,183
2,567
11,267
1,119
164
-
597
1,880
-
-
-
1,273
1,824
3,097
-
123
6,183
2,201
8,507
-
-
-
-
1,513
1,513
-
30
-
79
109
15,137
2,524
11,604
1,622
8,665
58,012
(5)
31,343
872
429
(88,092)
11,224
5,959
47,942
(5)
31,343
643
(101)
(86,556)
(775)
1,957
1,957
119
119
1,677
-
279
1,956
1,866
1,134
180
3,180
8,665
58,012
(5)
3,582
872
(1,505)
(58,319)
11,302
5,959
47,942
(5)
3,582
643
(2,213)
(55,709)
199
-
-
302
-
-
302
-
-
289
1,134
-
1,423
Total liabilities
3,913
3,299
302
1,423
Total equity and liabilities
15,137
2,524
11,604
1,622
P a g e | 38
CONSOLIDATED AND COMPANY
BALANCE SHEETS
At 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and
has not presented its own profit and loss in these financial statements. The loss for the year for the Company
amounted to $2.6m (2022: loss of $969k). The financial statements of Itaconix plc, registered number 08024489,
were approved by the Board of Directors for issue on 17 April 2024.
John R. Shaw
Director
Peter Nieuwenhuizen
Director
The accompanying notes 1 to 27 form an integral part of the financial statements
P a g e | 39
CONSOLIDATED AND COMPANY
STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2023
Consolidated statement of changes in equity
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
At 1 January 2022
Loss for the year
Contingent consideration
Share issuance proceeds
Exchange differences on translation
of foreign operations
Plan termination (see note 22)
Share based payments
At 31 December 2022
Loss for the year
Share issuance proceeds
Share issuance expenses
Contingent consideration
Share consolidation
Exchange differences on translation
of foreign operations
Share based payments
Equity
share
capital
$’000
5,873
–
–
86
–
–
–
5,959
–
2,488
–
218
–
–
–
Equity share
premium
Own
shares
reserve
$’000
$’000
Share based
payment
reserve
$’000
Foreign
translation
reserve
$’000
Merger
reserve
$’000
31,343
–
–
–
10,386
–
–
–
–
–
–
–
(10,302)
559
31,343
–
–
–
–
–
–
–
31,343
643
–
–
–
–
–
–
229
872
Retained
deficit
Total
$’000
$’000
(94,395)
(2,463)
–
–
649
(2,463)
–
387
–
10,302
–
93
–
559
(86,556)
(775)
(1,536)
–
–
–
–
(1,536)
12,683
(1,014)
1,133
(26)
–
–
530
229
(88,092)
11,224
(194)
–
–
–
93
–
–
(101)
–
–
–
–
–
530
–
429
47,641
–
–
301
–
–
–
47,942
–
10,195
(1,014)
915
(26)
–
–
(5)
–
–
–
–
–
–
(5)
–
–
–
–
–
–
–
(5)
At 31 December 2023
8,665
58,012
Company statement of changes in equity
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
(1,225)
559
–
–
1,225
–
(5)
3,582
643
(2,213)
(55,709)
At 1 January 2022
Loss for the year
Contingent consideration
Share issuance proceeds
Exchange differences on translation
of foreign operations
Plan termination
Share based payments
At 31 December 2022
Loss for the year
Share issuance proceeds
Share issuance expenses
Contingent consideration
Share consolidation
Exchange differences on translation
of foreign operations
Share based payments
At 31 December 2023
5,873
–
–
86
–
–
–
5,959
–
2,488
–
218
–
–
–
47,641
–
–
301
–
–
–
47,942
–
10,195
(1,014)
915
(26)
–
–
(5)
–
–
–
–
–
–
3,582
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,665
58,012
(5)
3,582
The accompanying notes 1 to 27 form an integral part of the financial statements.
1,309
–
–
–
(2,165)
–
–
–
(55,965)
(969)
–
–
270
(969)
–
387
–
(48)
–
(48)
–
–
–
–
–
708
–
–
–
–
–
–
–
229
872
–
559
199
(2,610)
12,683
(1,014)
1,133
(26)
(2,610)
–
–
–
–
–
–
708
229
(1,505)
(58,319)
11,302
P a g e | 40
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY
STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2023
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.
P a g e | 41
CONSOLIDATED AND COMPANY
STATEMENTS OF CASH FLOWS
For the year ended 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Group
Company
2023
2022
2023
2022
Net cash outflow from operating activities
Interest received
Proceeds from sale of property, plant and equipment
Purchase of securities
Purchase of property, plant and equipment
Development of website
Cash loaned to subsidiary undertakings
Net cash outflow from investing activities
Cash received from issue of shares
Transactions costs paid on the issue of shares
Transactions costs paid on the share consolidation
Repayment of lease liability
Interest paid - leases
Net cash inflow from financing activities
Net inflow in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes
22
$’000
(1,923)
141
-
(7,456)
(226)
(29)
-
(7,570)
12,683
(1,014)
(26)
(252)
72
11,463
1,970
597
2,567
$’000
(219)
-
(59)
-
-
(59)
387
-
-
(138)
(57)
192
(86)
683
597
$’000
(398)
141
-
(7,456)
-
-
(1,808)
(9,123)
12,683
(1,014)
(26)
-
-
11,643
2,122
79
2,201
$’000
(663)
-
-
-
(89)
(89)
387
-
-
-
-
387
(365)
444
79
The accompanying notes 1 to 27 form an integral part of the financial statements
P a g e | 42
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
1.
General Information
Itaconix plc ("the Parent Company") is a public limited company incorporated in England and Wales. The
address of its registered office and principal place of business is set out on page 67. The principal accounting
policies adopted by the Group are set out in note 2. The nature of the Group’s operations and its principal
activities are set out in the Strategic Report. The principal activities of the Parent Company and its subsidiaries
are described in note 4. The financial statements have been presented in US Dollars and rounded to the
nearest thousand ($’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 and Parent company’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
1.2732 US Dollars to British Pounds Sterling as at 31 December 2023 and 1.2433 US Dollars to British Pounds
Sterling as the average rate prevailing during 2023.
Itaconix applied all standards and interpretations endorsed by the UK Endorsement Board (UKEB) that were
effective as of 1 January 2023. 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 2023, 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 for the year of $1.5m, had Net Operating Assets at the period end of $11.2m and a Net
Cash Outflow from Operating Activities of $1.9m. Primarily, the Group meets its day to day working capital
requirements through existing cash resources and had on hand cash, cash equivalents and investments at the
balance sheet date of $10.0m.
During the year, the Group successfully raised gross proceeds of $12.7m to enable the Group and Parent
Company to continue to execute its growth plans and for general working capital purposes.
The Directors have reviewed the Group’s cash flow forecasts covering a period of at least 12 months from the
date of approval of the financial statements, which foresee that the Group will be able to meet its liabilities as
they fall due. However, the success of the business is dependent on customers continuing to purchase our
products in order to increase revenue and profit growth and continuing to control the Group and Parent
Company’s cost base.
P a g e | 43
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Directors believe that, taken as a whole, the factors described above enable the Parent Company and
Group to be and continue as a going concern for the foreseeable future. The financial statements do not
include the adjustments that would be required if the Parent Company and the Group were unable to continue
as a going concern.
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.
P a g e | 44
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
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.
P a g e | 45
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
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.
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.
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
leasehold improvements
Computer, furniture and fixtures
4-7 years
10 years
3 years
P a g e | 46
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
Financial assets
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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. Investments comprise
funds placed on short-term and long-term deposits.
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 | 47
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
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
Inventory is valued using the specific identification method. Under this method, the cost of each individual
item in inventory is identified and recorded separately. Costs include direct materials, direct labour, and
applicable overhead costs. Inventory is stated at the lower of cost or net realisable value, with adjustments
made for any obsolete or slow moving items. The cost of goods sold is determined based on the specific cost
of each item sold during the reporting period.
Share based payments
The parent 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 graded 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 parent 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
award is recognised over the vesting year, with a credit recognised in equity on the subsidiary’s accounts. This
credit is treated as a capital contribution. 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 effecting as capital contribution from the parent
company and a credit to equity.
P a g e | 48
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
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, loss on lease modification, 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
Fair value of Group indebtedness (Parent 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, deemed to be both illiquid and not yet generating positive cash flows, or otherwise
highly unlikely to repay such indebtedness in the longer term (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 20).
Estimates
Share based payment cost
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, the expected term of the option, inputs which arise from judgements relating
to the probability of meeting non-market performance conditions and the continuing participation of
employees (See note 23).
Inventory reserve
The company maintains a reserve for inventory obsolescence and slow-moving inventory to reflect potential
decreases in the value of inventory. The reserve is determined based on an estimate by management
considering factors such as historical experience, market trends, and specific product considerations.
Adjustments to the reserve are recorded to cost of goods sold in the period which they are identified.
P a g e | 49
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
4.
Revenue
Revenue recognised in the Group income statement is analysed as follows:
Geographical information
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
North America
Europe
Revenues
Net assets
2023
$’000
6,898
968
7,866
2022
$’000
5,078
522
5,600
2023
$’000
1,504
9,720
11,224
2022
$’000
104
(879)
(775)
The revenue information is based on the location of the customer. Net assets of the Group (being total assets
less total liabilities) are attributable to geographical locations.
End Market information
Revenue for the Group are comprised of three primary end market segments, as identified below:
Cleaning
Hygiene
Beauty
Other
2023
$’000
7,207
351
254
54
7,866
2022
$’000
5,070
324
137
69
5,600
P a g e | 50
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
Segment information
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Group has two business segments. Performance Ingredients develops, produces and sells proprietary
specialty polymers that are used as functional ingredients to meet customers’ needs in cleaning, beauty and
hygiene products. Formulation Solutions provides technical services and ingredient supplies for formulated
products developed for customers based on Performance Ingredients. These segments make up the continuing
operations. Core Operations include development expense, general and administrative expense, professional
fees, and governance costs to progress and grow the Groups operations.
Performance
Ingredients
$’000
Formulation
Solutions
$’000
Core
Operations
$’000
2023
$’000
Revenue
Sale of goods
Results:
Depreciation and amortisation
Cost of sales
Gross profit
Administrative expense
Exceptional income
Taxation charge
Segment performance
Operating assets
Operating liabilities
Other disclosure:
Capital expenditure*
Revenue
Sale of goods
Results:
Depreciation and amortisation
Cost of sales
Gross profit
Administrative expense
Exceptional expense
Taxation charge
Segment performance
Operating assets
Operating liabilities
Other disclosure:
Capital expenditure*
5,958
1,908
-
7,866
(294)
(3,406)
2,258
-
-
-
2,258
4,381
(2,381)
-
(1,729)
179
-
-
-
179
284
(308)
-
-
-
(4,066)
120
(27)
(3,972)
2,992
(1,224)
(294)
(5,135)
2,437
(4,066)
120
(27)
(1,536)
7,657
(3,913)
48
-
178
226
Performance
Ingredients
$’000
Formulation
Solutions
$’000
Core
Operations
$’000
4,608
992
(286)
(2,914)
1,408
-
-
-
1,408
1,825
(1,244)
59
-
(913)
79
-
-
-
79
-
(1)
-
-
-
-
79
(3,804)
(138)
(8)
(3,950)
699
(920)
2022
$’000
5,600
(286)
(3,827)
1,487
(3,804)
(138)
(8)
(2,463)
2,524
(2,165)
-
59
P a g e | 51
*Capital expenditure consists of additions of property, plant and equipment.
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
Customer concentration information
The Group has revenue concentration in two customers of 63%.
5.
Operating loss before exceptional items
This is stated after charging:
Auditor’s remuneration:
Audit of the financial statements
Audit of the subsidiaries
Non-audit services
Total fees
Equity settled share based payment expense (SOCIE)
Depreciation of owned assets (note 12)
Amortisation of right-of-use assets (note 20)
Research and development expenditure
Foreign exchange differences
6.
Staff costs
Staff costs for the Group, including Directors, consist of:
Wages and salaries
Incentive compensation
Post-employment benefits
Equity settled share based payment expense
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2023
$’000
2022
$’000
10
151
-
161
229
194
202
145
36
2023
$’000
2,087
160
51
229
2,527
10
145
-
155
559
160
202
69
6
2022
$’000
1,639
334
45
559
2,577
Details of Directors’ fees are included in the Directors’ Remuneration Report on page 21 to 22.
Details of key management personnel fees are included in note 24.
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 one employee other than the Non-Executive Directors.
2023
No.
2
2
4
1
3
4
-
17
2022
No.
1
2
3
2
1
4
1
14
P a g e | 52
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
7.
Finance income
Interest receivable on bank deposits and term deposits
8.
Taxation
Corporation tax expense
Prior years’ corporation tax liability
Current year corporation tax liability
Corporation tax expense
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2023
$’000
141
2023
$’000
-
(27)
(27)
2022
$’000
-
2022
$’000
-
(8)
(8)
During the year ended 31 December 2023, the Group had a taxation expense of $27k (2022: $8k) of which
relates a provision of $27k for US taxation payable in respect of 2023 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
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
2023
$’000
(1,509)
(287)
-
-
-
260
(27)
2023
$’000
2,344
671
10,310
150
13,475
2022
$’000
(2,455)
(466)
26
-
-
432
(8)
2022
$’000
3,042
727
13,052
140
16,961
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.
P a g e | 53
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
Tax rate
The main rate of UK corporation tax was 19% from 1 April 2015.
The US federal tax rate is 21% as of 1 January 2018.
9.
Loss per share
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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
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
Basic and diluted loss per share (post consolidation comparison)
2023
$’000
(1,536)
12,863
(11.9)¢
(11.9)¢
2022
$’000
(2,463)
448,096
(0.5)¢
(27.5)¢
The loss for the period and the weighted average number of ordinary shares for calculating the diluted
earnings per share for the period to 31 December 2023 are identical to those used for the basic earnings per
share. This is because the outstanding share options (note 23) would have the effect of reducing the loss per
ordinary share and would therefore not be dilutive.
10. Investment in subsidiary undertakings
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 2022
Share based payment expense – capital contributed to subsidiary
Foreign translation adjustment
At 31 December 2022
Share based payment expense – capital contributed to subsidiary
Foreign translation adjustment
At 31 December 2023
Company
$000
1,074
559
(120)
1,513
229
82
1,824
P a g e | 54
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Name
Direct investments
Itaconix (U.K.) Limited (1)
Itaconix EBT Limited (1)
Indirect investments
Itaconix Corporation (2)
Principal activity
Place of
incorporation
and operation
Proportion of
ownership
interest
UK operating company
Trustee of Itaconix employee benefit trust
England
England
Trading US subsidiary of Itaconix (U.K.) Limited
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
11.
Intangible Assets
Group
Cost
Additions
Impairment
At 31 December 2023
Accumulated amortisation
Charge
At 31 December 2023
Carrying Amount
At 31 December 2023
At 31 December 2022
Website
Development
$’000
24
-
24
-
-
24
-
The Group capitalized website costs incurred in the current year related to the development, design, and
implementation of our online platform. These costs of $24k have been recognized as an intangible asset on the
balance sheet and will be subject to straight-line amortisation over the estimated useful life once placed in
service in 2024.
P a g e | 55
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
12.
Property, plant and equipment
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Computer and
office
equipment
$’000
Plant and
equipment
$’000
Leasehold
improvements
$’000
Group
Cost
At 1 January 2022
Additions
Impairment
Disposals
At 31 December 2022
Additions
Impairment
Disposals
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Charge
Eliminated on disposal
At 31 December 2022
Charge
Eliminated on disposal
At 31 December 2023
Carrying Amount
At 31 December 2023
At 31 December 2022
25
-
-
-
25
16
-
-
41
25
-
-
25
3
-
28
13
-
1,304
59
-
-
1,363
208
-
-
1,571
902
160
-
1,062
191
-
1,253
318
301
The parent company has no property, plant and equipment.
13.
Inventories
Group
Raw materials
Work in progress
Finished goods
Inventory reserve
The cost of good recognised in expense was $5,361k (2022: $4,113k).
96
-
-
-
96
6
-
-
102
96
-
-
96
-
-
96
6
-
2023
$’000
418
28
675
(25)
1,096
Total
$’000
1,425
59
-
-
1,484
230
-
-
1,714
1,023
160
-
1,183
194
-
1,377
337
301
2022
$’000
313
196
688
(78)
1,119
P a g e | 56
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
14.
Trade and other receivables
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Current assets
Group
Company
Trade receivables
Other receivables
2023
$’000
1,253
168
1,421
2022
$’000
127
37
164
2023
$’000
-
123
123
2022
$’000
-
30
30
Trade receivables are non-interest bearing and are generally on 30 day terms.
As at 31 December 2023, no provision (2022: no provision) has been made to trade receivables that were
considered to be impaired. The parent company and Group have no expected credit loss, as all receivables have
been or are expected to be received subsequent to year end.
In respect of the Company:
• 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.
• As at 31 December 2023 the balance of the fair value of debt from Group undertakings before an
impairment charge of $48,965k (2022: $48,486k).
•
•
The loss for the year includes a release of fair value impairment of Group indebtedness of $2,474k
resulting from a movement in provisions for this indebtedness (2022: $703k).
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 subsidiaries. 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, the analysis of the Group’s trade receivables that were past due but not impaired
is as follows:
Group
2023
2022
Neither
past due
nor
impaired
$’000
496
91
Total
$’000
1,253
127
<30
days
$’000
671
13
30–60
Days
$’000
12
-
60–90
days
$’000
50
12
90–120
days
$’000
3
11
>120
Days
$’000
21
-
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
2023
$’000
-
-
2022
$’000
-
-
2023
$’000
-
-
2022
$’000
-
-
P a g e | 57
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
15.
Investments
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Group
Company
2023
$’000
6,183
1,273
7,456
2022
$’000
-
-
-
2023
$’000
6,183
1,273
7,456
2022
$’000
-
-
-
Term deposits maturing within one year
Term deposits maturing within two years
16.
Cash and cash equivalents
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
2023
$’000
2,567
2022
$’000
597
2023
$’000
2,201
2022
$’000
79
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.
17.
Current liabilities
Current liabilities
Trade payables and other payables
Accruals
Contingent consideration
Lease liabilities (note 20)
Group
Company
2023
$’000
1,209
468
-
279
1,956
2022
$’000
1,002
864
1,134
180
3,180
2023
$’000
40
262
-
-
302
2022
$’000
83
206
1,134
-
1,423
The Directors consider that the carrying amount of trade payables, other payables and note payable
approximate to their fair value.
P a g e | 58
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
18.
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
2023
$’000
1,134
-
-
(1,134)
-
-
-
2022
$’000
1,116
138
(120)
-
1,134
1,134
-
2023
$’000
1,134
-
-
(1,134)
-
-
-
2022
$’000
1,116
138
(120)
-
1,134
1,134
-
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.
On 12 April 2021, 1,923,389 shares were issued in settlement of the contingent consideration for 2020 sales in
excess of the threshold.
On 8 February 2023, the Company and the Sellers entered into a settlement agreement to conclude this
arrangement in full and final settlement of the contingent consideration. The Company issued 18,094,582 shares
to the Sellers.
P a g e | 59
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
19.
Financial instruments
Financial risk management objectives and policies
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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.
Group
Company
Financial assets
Cash
Trade and other receivables
Intercompany receivable
Investments
Financial liabilities
Trade and other payables
Lease liabilities
Contingent consideration
Net Financial assets / (liabilities)
2023
$’000
2,567
1,421
-
7,456
(1,677)
(2,236)
-
7,531
2022
$’000
597
164
-
-
(1,866)
(299)
(1,134)
(2,538)
2023
$’000
2,201
123
-
7,456
(302)
-
-
9,478
2022
$’000
79
30
-
-
(289)
-
(1,134)
(1,314)
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 adequate cash
balances in Itaconix’s main operational currencies, notably UK Sterling, US Dollar, and Euros.
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 2023, there were no significant credit risk balances.
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.
P a g e | 60
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
Interest rate risk
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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. The receipts in EURO and GBP 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 (2022: nil). At
31 December 2023 the bank balances on hand of foreign currencies were:
Currency
GBP
EURO
2023
‘000
4,814
297
2022
‘000
82
-
The foreign currency balances are in aggregate higher than at the end of 2022, which is due to the fundraise
completed in February 2023. 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 2023:
Group
Trade and other payables
Lease liability
At 31 December 2022:
Group
Trade and other payables
Contingent consideration
Lease liability
On
demand
$000
-
-
Less than
3 months
$000
1,677
65
3 to 12
months
$000
-
214
1 to 5
years
$000
-
1,206
> 5 years
$000
-
1,841
-
1,742
214
1,206
1,841
On
demand
$000
-
-
-
Less than
3 months
$000
1,575
1,134
63
3 to 12
months
$000
291
-
189
-
2,772
480
1 to 5
years
$000
-
-
169
169
> 5 years
$000
-
-
6
6
Total
$000
1,677
3,326
5,003
Total
$000
1,866
1,134
427
3,427
P a g e | 61
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
Capital risk management
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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 2023 (2022: 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.
20.
Leases
The Group leases all its facilities from which it operates. The headquarters, production, and main offices are
located in Stratham, NH, USA. In December 2023, the Group renewed the facility lease extending the term
from September 2024 to August 2034 and expanding the facility from approximately 31,000 to 32,000 square
feet.
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 2022
Additions in year
Amortisation
Exchange differences
At 31 December 2022
Additions in year
Amortisation
Exchange differences
At 31 December 2023
Lease liability
At 1 January 2022
Interest expense
Lease payments
Exchange differences
At 31 December 2022
Additions in the year
Interest expense
Lease payments
Exchange differences
At 31 December 2023
Leased Building
$’000
545
-
(202)
-
343
2,095
(202)
-
2,236
Leased Building
$’000
494
57
(252)
-
299
2,117
72
(252)
-
2,236
P a g e | 62
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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 2023, the maturity of the lease (undiscounted) is as follows:
Up to 3
months
$’000
64
1
Between 3
months and
12 months
$’000
One to two
years
$’000
Two to five
years
$’000
210
4
300
5
900
1
Thereafter
$’000
1,841
-
Leased building
Leased equipment
21.
Share capital
At 1 January 2022 (443,462,757 shares in issue)
Issued as a result of an exercise of options
Nil
New share issued
21/04/22 – 6,666,668
At 31 December 2022 (450,129,425 shares in issue)
Issued as a result of an exercise of options
Nil
New share issued
08/02/23 – 18,094,582
08/02/23 – 67,519,000
27/02/23 – 138,563,048
21/08/23 – 45
Share consolidation 50:1
21/08/23 – 660,819,978
Group
$000
5,873
-
86
5,959
-
218
815
1,673
-
-
Company
$000
5,873
-
86
5,959
-
218
815
1,673
-
-
At 31 December 2023 (13,486,122 shares in issue)
8,665
8,665
Itaconix plc (previously Revolymer plc) was incorporated on 10 April 2012.
On 21 April 2022, the Company issued 6,666,668 ordinary shares with a nominal value of 1p per share for 4.5p
per share. The consideration was received in cash.
On 8 February 2023, the Company and the Contingent Consideration Payees entered into a settlement
agreement for the contingent consideration with the issuance of 18,094,582 new ordinary shares.
On 8 February 2023, the Company issued 67,519,000 ordinary shares with a nominal value of 1p per share for
5.1p per share. The consideration was received in cash.
On 27 February 2023, the Company issued 138,563,048 ordinary shares with a nominal value of 1p per share
for 5.1p per share. The consideration was received in cash.
On 21 August 2023, the Company consolidated the outstanding shares in a 50:1 consolidation.
P a g e | 63
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
22.
Notes to the statements of cash flow
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Loss before tax
Interest received
Depreciation of property, plant and equipment
Amortisation of right-of-use asset
Loss on lease modification
Impairment of Group indebtedness
Reversal of Group interest income
Revaluation of deferred consideration, net of foreign
exchange effect
Loss on foreign exchange
Share based payments charge
Taxation
Operating cash flows before movements in working
capital
Decrease in inventories
Decrease / (increase) in receivables
Increase / (decrease) in payables
Net cash outflow from continuing operating activities
23.
Share based payments
Group
Company
2023
$’000
(1,509)
(141)
194
202
21
-
-
-
530
229
(27)
(501)
23
(1,257)
(188)
(1,923)
2022
$’000
(2,455)
160
202
-
-
-
18
93
559
(8)
(1,431)
250
116
846
(219)
2023
$’000
(2,610)
(141)
-
-
-
2,473
(665)
-
398
229
-
(316)
-
(95)
13
(398)
2022
$’000
(969)
-
-
-
703
(614)
18
72
-
-
(791)
-
(12)
140
(663)
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 2023, 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) (“2019 US Employee Options”). On 28 June 2022, the Itaconix LTIP (“LTIP Management Options”) and the
EMI (“Employee Options”) scheme expired such that no further options could be issued. Accordingly, the fair
value of the LTIP Management Options and the Employee Options was estimated as at the date of grant using a
Black Scholes model. The model took into account the terms and conditions upon which the options were
granted using the following assumptions:
Number of
options
granted
Exercise price
Expected
volatility
Risk free
rate
Expected
dividend
yield
Expected
option life
2019 US Employee Options
2023
2022
2021
2020
30,000
311,777
42,000
98,000
£2.58
£2.51-£2.76
£3.77-£4.05
£1.36
90.50%
132.34%
134.05%
132.62%
3.54%
1.69%
0.97%
0.83%
0%
0%
0%
0%
3 years
3 years
3-4 years
3 years
LTIP Management Options
2022
21,215
£2.51-£2.76
132.34%
1.69%
0%
3 years
P a g e | 64
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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 2023. The charge for share based payments for the period to 31 December 2023 is
accordingly $229k (31 December 2022 $559k).
Upon the expiration of the Itaconix LTIP and EMI scheme, $10.3m of historically charged share based payments
expenses (for options previously issued but not exercised) were held in the share based payment reserve in
respect of the terminated scheme. They have been reclassified to retained losses in the previous period.
Summary of all options – vested and unvested
During the year the Company operated an employee share option plan for the benefit 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,
vested and unvested share options outstanding plans during the year:
Balance at beginning of year
Awarded during year
Lapsed during the year
Share option reduction on consolidation
2023
Number
of shares WAEP
£0.04
£0.05
£0.06
£0.04
21,749,765
1,500,000
(801,327)
(21,998,446)
2022
Number
of shares
5,3500,00
16,649,765
(250,000)
-
Unvested options at end of year
449,992
£2.53
21,749,765
WAEP
£0.04
£0.05
£0.02
£0.00
£0.04
24.
Related party transactions
Transactions with key management personnel
Remuneration of key management personnel
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’.
Salaries and other short-term employee benefits
Post-employment benefits
Equity settled share based payment expense
Contingent consideration of key management personnel
2023
$’000
867
27
143
1,037
2022
$’000
915
22
442
1,379
Certain key management personnel were partied to the contingent consideration agreement, as disclosed in
Note 18, and received shares of stock in February 2023 in final settlement to that agreement.
25.
Contingent assets
There were no contingent assets in 2023 (2022 - nil).
26.
Contingent liabilities
P a g e | 65
NOTES TO FINANCIAL STATEMENTS
For the year ended 31 December 2023
There were no contingent liabilities in 2023 (2022 - nil).
27.
Post Balance Sheet Event
There were no material post balance sheet events.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
P a g e | 66
APPENDIX TO THE ANNUAL REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Corporate Information
Advisors
Auditors
BDO LLP
2City Place
Beehive Ring Road
Crawley,
Gatwick RH6 0PA
Solicitors
Fieldfisher LLP
Riverbank House
2 Swan Lane
London EC4R 3TT
NOMAD/Broker
Canaccord Genuity Limited
88 Wood Street
London EC2V 7QR
Patent Agent
Grossman, Tucker, Perreault & Pfleger, LLP
55 South Commercial Street
Suite B14
Manchester, NH, 03101
USA
Registered Office
Fieldfisher LLP
Riverbank House
2 Swan Lane
London EC4R 3TT
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Bankers
HSBC plc
Vista
St David’s Park
Ewloe CH5 3UZ
US Operations
2 Marin Way
Unit 1
Stratham, NH, 03885
USA
P a g e | 67