Member Info for Elsol

Dear SI - see my note earlier - re: portfolio considerations and scarce plant capacity profit maximisation - I really don't think this is as bad as you first may believe. If you have sold some stock I would buy it back and given Johns Proactive Interview late today!

My view is we don't have all the jigsaw pieces of this decision as yet and the circumstances will be much clearer at the date of the end of year announcement (mid April) together with the important wider pipeline outlook perspectives we know are coming.

Like you all my heart sank a little this morning when hearing the news. However, after more thought I believe there is a very good and sensible business reason for ITX to turn away these weakly profitable or marginally loss making revenues due to future limited manufacturing capacity (ie. our critical profit limiting resource maybe coming as early as 2025). Plant capacity is our current scare resource in the next 12 to 18 months before we can commission a duplicate facility in Europe and transfer all that is needed and train new staff. Based on my knowledge of business economics you always profit maximise based on your product portfolio and the principal limited resource constraint. For us it's our physical plant capacity and to a certain degree plant operator workforce yet to be hired. So if I am right, this unusual decision is linked heavily to other portfolio contract constraints that means its perfect sense to turn away some 'skimmed milk' today for better tasting 'double cream' during later 2024 or early 2025. If we maintained status quo supply we may find ourselves turning away or significantly delaying a much better profit generation contract. From this decision there is alot going on behind the scenes in my opinion that never gets public viewing. If there are more mgt. sounds made about the European facility in the next few weeks, I believe I am correct and the SP will rebound accordingly. As for the quantum of the SP drop. Its currently non intuitive given the value of each major diversification channel incl. Superabsorbants, paints and leather which must each represent a minimum of say USD10m of risk adjusted value given commercial/ technical progress to date. My thinking these should represent approx 50% of the ITX enterprise value right now after deducting the free cash of say USD 6m (working capital / capex adjusted excess). So work out the numbers as they don't stack up at the moment. Once more news flows I think we will get the bigger picture context. Plant constraint could be the key missing decision perspective. (but as ever DYOR).

We should not maintain 'unhealthy profit' sticky customer relationships thats the point here. We have better fish to land in a large ocean now so a bit of spring cleaning of our portfolio may have been needed to optimize future opps/profit delivery and reduce loss making contracts!

Thanks for flag AJP! Yes some big transactions going through that we have not seen until fairly recently - that one again looks a buy so could be same purchaser.

Forgot to mention:

9. Slick new ITX web site in c. 8 weeks time so early May should be launched - will bring further client adoption/conversion benefits due to greater external impact - we are now here to stay as a major ECO functional ingredients business with some compelling new marketing strap lines like we are seeing recently being trademarked.

Thanks AJP08 - some interesting added info. in here for me:

1. Only $2m needed if they wanted to build a new plant - v. low capital intensity and minimal electric used in process

2. So many parallel new product avenues are here beyond detergents and hygiene - many significant - new ones for me were crop protection and industrial water treatment

3. IP moat - 16 families blocks competition and locks us in to brands

4. Retail channels (now ubiquitous ITX in most key channels)- very diverse with >170brands. Amazon - large mail order access channel

5. We have Reckitt as a client also which I did not know - another massive cleaning/hygiene global player

6. Big bonus focus onto much higher new vol markets for 24/25+

7. Now we have an artistic painting and shoe/ leather items to physically demonstrate and showcase to ITX clients - impressive.

8. John 's words - "very bright future & very exciting" so my take is that we are really on the cusp of major diversification opportunities

Well for every seller there is a buyer (somebody took GBP 10k in one slice today) so someone is picking these up on the cheap as we are heading into the early April announced results and 24/25F outlook disclosure which is likely to tip more fuel onto the SP in the context of the wider diversification ingress (leather/super abs etc). The only reason there is this final little taking profits undulation in the SP dynamics is that the share was very well oversold in 2023 with the big uplift coming recently only toward 'historical average'. However, with the c. £2.50 (5p old money) large financing more that a year ago now and much further excellent ITX business delivery 2023/early 2024, that professional benchmark price (2023) must now be looking a pretty damn solid reference point for investors one year on from that investment.

Good for you Ricky to skim a little after the rise but this does not takeaway the compelling 2024 investment opportunity from here on in

It's the near term revenue line growth expectations and how many new key supply accounts we are winning that are together the key value drivers for me rather than 2024 profitability per se. Great profits will flow naturally from continuing diversified sticky client access/channels. So the status of mkt traction across ITX expanding portfolio is what I will be interested in in the forthcoming results discussions. This will spark new investor interest/demand and potentially wider corporate activity.

To be honest, I think ITX will be merged/acquired with/by another speciality polymer/chem business well before we hit $100m revenues. There are too many globally diverse / big tier or regional mid-caps or smaller niche ECO focused players out there - all hungry for strong reliable market rev. growth, product/brand diversification and higher margin potential (chemistry functionality with added value possibilities). A business combination will generate significant synergies IMO. Not least customer access & leverage/overhead reduction/marketing power/noise and portfolio/R&D synergies (co-promotion of adjacent products). In any case, a key catalyst will be displacement of existing incumbent ingredients. This could happen sooner than one may think. Any takeout of the company will need to reimburse all the costs to date invested plus a handsome bid premium but the longer we stay alone the bigger the rewards for shareholders. Just hang on to your shares is my recommendation.

Sorry about the typo my friend but the message remains the same!

Wishing Thorndon all the very best and hope he is well. He has been an invaluable asset to the Board over many years hunting down ITX niche brand wins/early mkt penetrations that now leads us to the likes of Henkel, Unilever and I hope P&G in future too (unless anyone knows we are already in their formulations already!). Thanks buddy, we appreciate the time and great effort you have placed in ITX sleuthing to track down the best part of c.150+ global brands.

It was financial free green jam not red jam

The other thing in my mind right now is whether the ITX market guidance for 2024 and 2025+ stated by the company is a mid point projection or not. I suspect its just the run rate expansion for existing mainstream products plus continued formulation development revenues added together to be prudent. The reason I think this is that if you had 2 to 4 additional transformational new product channels the company would be unlikely to mould that upside into the core revenues. So all these major upsides are a bonus for 2024/25 if they come off and generate market traction and sales. I also think this is the reason last year we saw the large professional investor 10m USD round with no effective discount to minority share price at the time when normally you would see a 10 to 20% disc on share price for the new money.

Hi AJP, I didnt see that big trade! There is definitely someone hovering up some larger chunks of stock in the background that we did not see previously in the trading patterns. I took a look at the Canaccord Genuity (CG) web site and noticed they have Wealth division for high net worths etc and a few funds under management that focus on micro and nano capitalised stocks. I think the reason Finacap was ejected recently as dual nominated fin. advisor is that CG has greater capacity for establishing more of a wider investor presence for ITX. So, I think now the share is at a modest base camp (so to speak) essentially based purely on the existing launched products cashflows and we await for more news on the new transformative upside market opps. update early April? (3-4 of them) that may drive strongly the SP in April onwards. I think that's the reason someone is covertly adding bigger chunks of shares is my view with the view to another strong uplift beyond 250p (5p in old money) in the rest of 2024. Remember ITX has significant intangible asset value off balance sheet for these new market access R&D innovations (R&D projects in waiting to launch). Back in 2023 John said there was a rich $30m pipeline of potential customer/new development orders they are tracking with and that aligns with the doubling of the "formulation development" sales from memory at the time but I would have to look back at all the RNS's to confirm.

There is a significant amount of global lifescience/health/med tech R&D effort ongoing for Enhanced Drug Delivery/Inert implant based medical tech and woundcare tech. applications so its another place ITX can play in for sure in the future

Thx DB. not seen this video before, alot of good history. I did not know this was a stereoisomer based chemistry (chiral) for our key subject of matter patent. This is important for the functionality aspects and maps to other innovations for drug NCE development to improved efficacy and safety. (E.g. a few years back an anti sickness/vomiting drug was launched by GSK which had only one of the bio active isomers in its composition. Cheers

Hi think this is the non polymerised molecule not subject to itx patented tech. SODIUM POLYITACONATE. I think the latter is our ingredient but they are using the former also in some preservative use from what I understand with very aqueous formulation. The patent gurus can confirm tomorrow....

Certainly makes us much more attractive for near term or medium term M&A target for a large dirty hydrocarbon non green player at a high price premium as upside but longer we are solo the more premium we eventually get.

My god my wife uses it too I just asked her. Its good quality stuff apparently! No wonder John's wispy white hair looked so glossy and firm on his recent RNS videos