Itaconix widens loss after exiting nicotine gum business
Itaconix posted its preliminary results for the 12 months to 31 December on Monday - a year in which it changed its name from Revolymer, and undertook a “major reorganisation” to focus on its specialty chemicals business.
The AIM-traded firm reported £8.8m of short term deposits, cash and cash equivalents on hand at the year end, down from £10.5m.
Its financial reporting for the year was split into continuing operations - specialty chemicals including the US business of Itaconix Corporation acquired in June 2016 - and its discontinued nicotine gum operations.
Continuing operations revenue was £0.3m, up from nil a year earlier, primarily thanks to the Itaconix DSPTM product, resulting in a gross profit of £0.1m, also rising from nil.
Administrative expenses on continuing operations - including research and development expenditure - was £5.3m, up from £2.7m.
The increase of £2.6m was explained by the board by an increase in non cash charges relating mainly to the acquisition of Itaconix of £1.0m, £0.3m of costs not expected to be recurring, the cost of running the new US business including research and development of £0.6m, additional UK staff costs including research and development of £0.3m, additional other development costs of £0.1m, and additional advisory - including external finance and audit - costs of £0.1m.
As a result, the group’s operating loss before tax was £5.2m, widening from £2.6m, with the difference mainly accounted for by the increase in administrative expenses, half of which were non-cash or non-recurring.
Continuing operations’ total loss for the year widened to £5.1m from £0.7m, after research and development tax credits of £0.5m and a share of the loss of an associate of £0.5m.
“The group now has a portfolio of specialty products to supply to its customers in its key market segments of personal care, homecare and industrial,” said chief executive officer Kevin Matthews.
“All of these segments are global in nature, consistently delivering high growth rates and attractive margins.
“There are significant benefits to a product based business versus a licence only model including greater customer intimacy, more control over execution timelines and greater margin potential.”
Dr Matthews described Itaconix as an “innovator”, developing new products to meet customer needs.
“As well as having expertise in designing novel polymer products that can be protected with patents and know-how, the business has also developed application and formulation expertise that provides better insights into how polymers can be used to provide cost effective solutions for its customers.
“Itaconix is engaged in building a high margin, capital efficient business.
“Except for its relatively low cost polyitaconate manufacturing facility, the business uses third party contract manufacturers for a number of its products.”