27 March 2016

Itaconix plc

Preliminary Results for the 12 month period to 31 December 2016

2016 Business Highlights

Strategic refocus:

During 2016 Itaconix plc (formerly Revolymer plc) (“Itaconix” or the “Company”) undertook a major reorganization to focus on its Specialty Chemicals business primarily in the high value market areas of Homecare, Personal Care and Industrial. Itaconix and its subsidiaries (the “Group”) aim to be a leader in functional polymers that improve the safety, performance and sustainability of its customer’s products.

Structural developments:

Key steps in this strategic transformation included the following:

• Acquisition of Itaconix Corporation – on 20 June 2016 the Group announced that it had unconditionally agreed to acquire Itaconix Corporation based in New Hampshire, USA, for an initial consideration of $7m (at the time approximately £4.9m) comprising $3m in cash and $4m in new shares, plus further deferred performance related consideration of up to $6m payable in new shares
• Refinancing - Itaconix raised £5.8m (before expenses) in two tranches in June and July 2016 through the placing of 15,680,222 new shares at 37 pence per share
• Divestment of Nicotine Gum Business – on 31 October 2016 the Group completed the divestment of its nicotine gum business to the Danish company Alkalon A/S (“Alkalon”), for a 15% equity holding in the combined new business, which may increase to 20% if additional specific contracts in Canada are secured within nine months of completion
• Corporate rebranding – after the period end, on 1 March 2017 it was announced that the Company had changed its name to Itaconix plc, marking the refocus of the business on specialty chemicals and away from nicotine gum
• Plant expansion – a $1m investment has been made to upgrade the Group’s polyitaconate manufacturing facility in New Hampshire, quadrupling the previous capacity. After successful commissioning, the facility came on line in March 2017.

Business model:

Following these developments, 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. 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 license only model including greater customer intimacy, more control over execution timelines and greater margin potential.

Itaconix is 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.

Commercial Progress:

Itaconix continues to launch new products, gain commercial traction, generate revenue starts and conclude partnership deals:

• Launch of RevCare NE 100S – This new bio-based, high performance hair styling ingredient was launched at the Global In-Cosmetics show in April 2016
  
• The first commercial sale of Itaconix® CHT™ was made in September 2016 for use in a private label automatic dish wash formula, with further sales awaited
  
• Croda – On 23 January 2017, Itaconix announced that it had signed an exclusive global supply and joint marketing agreement with Croda Inc. (“Croda”) in respect of its polymer-based odour removal additive Itaconix® ZINADOR™ 22L (“ZINADOR”). Itaconix will produce ZINADOR for Croda and Croda will market and sell ZINADOR in household, municipal, animal and industrial applications. This was followed in March 2017 by the first major purchase order from Croda for ZINADOR
  
• AkzoNobel - On 27 January 2017, Itaconix announced that it had signed a joint development agreement with AkzoNobel Chemicals International B.V. (“AkzoNobel”) to advance commercial collaborations in certain applications for the itaconic acid polymer technology platform.

Management and Board:

The management team has been augmented during the year with the addition of John Shaw and Dr Yvon Durant from the management of Itaconix Corporation, and the appointment of Dr Louise Crascall as Chief Commercial Officer with responsibility for the Personal Care business area.

The Board of Directors has also undergone change, with the appointment in September 2016 of chemicals industry veteran Dr Jim Barber as the nominee director of the former shareholders of Itaconix Corporation and the retirement of Jack Keenan and Robert Frost at the 2016 year end.

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