Carbios Presents Its 2022 Annual Results and the Progress of Its Industrial and Commercial Deployment

• Project to build, in France, the world’s first PET biorecycling plant: Progress in line with 2025 unit commissioning target ⁶
• Excellent results from the demonstration plant validating the industrial scale-up of Carbios technology
• Carbios licensing documentation ready for worldwide industrial and commercial deployment
• Long-term exclusive strategic partnership with Novozymes to ensure supply of enzymes at industrial scale for the Reference Unit and all future licensee plants
• Creation of fiber-to-fiber consortium with On, Patagonia, Puma, PVH Corp., and Salomon
• CE-PET research project successfully completed
• Participation in WhiteCycle project co-funded by Horizon Europe and coordinated by Michelin
• Publication of scientific articles in the prestigious Biophysical Journal and in Chemical Reviews
• Carbios hosts world’s first PET Biorecycling Summit
• Carbios publishes first Sustainability Report and outlines objectives for environmental, social and governance (ESG) initiatives
• Carbios joins Ellen MacArthur Foundation’s circular economy network
• €30 million European Investment Bank loan drawn down in 2022
• Group’s cash position of €101 million as of December 31, 2022

CLERMONT-FERRAND, France--(BUSINESS WIRE)--Regulatory News:

Carbios (Euronext Growth Paris: ALCRB), a pioneer in the development and industrialization of biological technologies for reinventing the life cycle of plastics and textiles, announces today its operating and financial results for the year 2022. The financial statements as of December 31, 2022, were approved by the Company’s Board of Directors at their meeting on April 5, 2023. The Company’s accounts have been audited by the Statutory Auditors and will be available today on the Company’s website.

"In 2022, Carbios continued to build on its momentum to grow and structure its partnerships. Most notably, Carbios signed an exclusive, long-term strategic agreement with Novozymes that guarantees the production and supply of Carbios' PET degradation enzymes on an industrial scale for our Reference Unit and future licensees of our technology. We also founded a fiber-to-fiber Consortium with On, Patagonia, PUMA, Salomon and PVH Corp. to collaborate on developing a more circular textile industry. We can also be proud of the outstanding results achieved in our demonstration unit, which proved the performance and robustness of our technology. At the same time, the design engineering studies for our Reference Unit have progressed in line with the objectives of being operational in 2025," commented Emmanuel LADENT, Chief Executive Officer of Carbios. "Looking ahead, we remain focused on executing our roadmap and are fully committed to working with our partners to begin construction this year of this Reference Unit, the world's first PET biorecycling plant. We are confident that we will grant the first licenses for this disruptive innovation combining economic performance and environmental efficiency by 2024. I would like to thank all Carbios' employees and all our stakeholders for their shared commitment to reducing plastic pollution and making Carbios a key player in the circular economy."

A webcast and conference call will take place today at 2:00pm CEST (Paris time)
Emmanuel Ladent – Chief Executive Officer / Pascal Bricout – Chief of Strategy and Financial Officer
Access to the webcast: https://edge.media-server.com/mmc/p/mg8626u7
France Dial-in: +33 (0)1 70 91 87 / UK Dial-in: +44 121 281 8004 / US Dial-in: +1 718 705 8796

FINANCIAL HIGHLIGHTS FOR 2022

The consolidated financial statements of the Company as of December 31, 2022, are presented in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union.

For 2022, these IFRS consolidated financial statements include the financial statements of Carbios, the parent company, and the financial statements of its fully integrated subsidiaries Carbiolice and Carbios 54¹ at December 31, 2022.

For 2021, these IFRS consolidated financial statements include the full-year financial statements of Carbios, as well as the equity-accounted securities of its subsidiary Carbiolice until June 3, 2021, and then the fully consolidated financial statements of the latter as of December 31, 2021, following Carbios’ acquisition of Carbiolice, and without Carbios 54 entity which was created on June 8, 2022. For comparison purposes, a proforma situation is presented below. It takes into account the takeover of Carbiolice on January 1, 2021 instead of June 3, 2021, and consequently presents Carbiolice as fully consolidated for the full-year 2021. The group formed by Carbios, Carbiolice and Carbios 54 is hereinafter referred to as the “Group”.

These IFRS financial statements for the Group have been prepared to provide high quality information in line with that of similar companies and based on international standards.

Statement of income

2022 figures include the full-year accounts of Carbios and Carbiolice, as well as the accounts of Carbios 54 for the period from June 8, 2022 to December 31, 2022, whereas the 2021 figures show the full-year accounts of Carbios, as well as the accounts of Carbiolice from June 4, 2021 to December 31, 2021, since Carbiolice was accounted for as an equity affiliate until June 3, 2021, and without Carbios 54 entity which was created on June 8, 2022.

However, to ease the comparison of 2022 and 2021 figures, the comments on activities around the income statement will be based, for 2021, on the proforma situation which fully takes Carbiolice into account for the year 2021, as if it was fully consolidated as of January 1, 2021.

• Income according IFRS 15 standards

For the financial years 2021 and 2022, income accounted under IFRS 15 are related to feasibility studies, tests, and research services, as well as deliveries of raw materials and samples of the Masterbatch by Carbiolice.

As of December 31, 2022, the Group’s income stood at €70 thousand, compared to €126 thousand for the year ended December 31, 2021.

• Operating expenses – Current portion

With regards to the presentation of its IFRS consolidated statements, the Group shows a statement of income by destination. Thus, current operating expenses are categorized and presented as: Net Research and Development expenses, Sales and Marketing expenses, as well as General and Administrative expenses.

Operating expenses stood at €26,101 thousand for 2022, compared to €18,300 thousand in the proforma 2021 situation.

To support the growth of its activities, the average number of employees within the Group increased from 80 in 2021 to 104 in 2022.

Net Research and Development expenses: The Group pursued its research and development efforts on all its proprietary pipeline of innovations and notably on its PET biorecycling technology. For the year 2022, the Group’s Net R&D expenses stood at €12,993 thousand, compared to €8,998 thousand for 2021.

For the year 2022:

• On R&D, the Group spent €19,057 thousand, in line with its industrialisation ambitions. The significant rise in R&D expenses is mainly due to the operations carried out within its industrial demonstration facility as well as to expenses incurred in connection with its Reference Unit project. The main changes are explained by the full-year operation of the demonstration facility, as well as the use of external services (in connection with the Reference Unit project) and the sustained efforts in R&D (particularly with the Company’s academic partners)
• On Subsidies and other income from operations, the Group recorded €4,776 thousand, partially offsetting its R&D expenses. This item includes notably a research tax credit of €2,538 thousand for Carbios and €655 thousand for Carbiolice in 2022 (as opposed to respectively €2,265 thousand and €721 thousand in 2021, these amounts having been received in 2022).
• Finally, the Group has capitalized €1,287 thousand development expenses related to the Company’s PET enzymatic recycling project in 2022. This activation started on October 1, 2021, in accordance with the capitalization criteria of the IAS 38 standard.

Sales and Marketing expenses: sales and marketing expenses stood at €4,373 thousand in 2022, compared to €2,300 thousand in 2021. This rise comes mainly from increased efforts to secure the commercial roll-out of Carbios technology, by developing partnerships and structuring the value chain (supply, market targets…). Thus, the increase stems both from external resources (fees) and internal resources, noticeable by the change in composition of the Executive Committee.

General and Administrative expenses: General and administrative expenses stood at €8,807 thousand in 2022, as opposed to €7,001 thousand in 2021. This increase is mainly due to personnel expenses, as a result of the significant increase in the number of employees in 2022 to further structure the Company’s functions, and to consulting services to a lesser extent.

• Other operating income and expenses, “adjusted” operating income and “adjusted” net income

In application of IFRS standards, the takeover of Carbiolice, dated June 4, 2021, has generated IFRS accounting restatements impacting the 2021 consolidated income statement on the aggregate of “Other operating income and expenses”.

As of December 31, 2021, by application of IFRS 3 standards, the sale of the shares accounted for by the equity method of associates (prior to the acquisition of all the shares of Carbiolice) generated a non-cash net bonus valued on the basis of the share previously held by Carbios in Carbiolice at fair value, which amounts to €21.2 million. As a result, these items had no impact in terms of cash flow for the Group.

To ease the reading and understanding of these financial statements, the Group presents an “adjusted” operating income, which corresponds to the operating income restated for items relating to the Carbiolice operations included in “Other operating income and expenses” and which reflects only the impact of revenue and “current” operating expenses. This adjusted operating result corresponds to a loss of €26.1 million as of December 31, 2022, as opposed to €18.1 million as of December 31, 2021 in the proforma situation. This increase is mainly related to the above-mentioned R&D and G&A expenses.

The Group also presents a net result “adjusted” of the IFRS impacts of the takeover of Carbiolice, which takes into account the financial result, the income tax, and the restatement/cancellation of the “share of profit (loss) of equity affiliates” (this amount being neutralized in the proforma accounts). This net “adjusted” result corresponds to a loss of €27.7 million as of December 31, 2022, as opposed to a loss of €16.3 million as of December 31, 2021 (the proforma loss amounted to €18.7 million euros).

Balance Sheet items

As of December 31, 2022, Cash and cash equivalents amounted to €101 million, as compared to €105 million for the year ended December 31, 2021.

The other key balance sheet items as of December 31, 2022 are:

• €20,6 million corresponding to the Goodwill calculated between the market value of Carbiolice and the net assets acquired;
• Intangible assets for a net book value of €22.5 million for the year ended December 31, 2022;
  Pursuing on its active policy of securing its Intellectual Property, Carbios continued to enrich its IP portfolio with the filing of 3 new patent families. The Group’s intellectual property portfolio at the end of 2022 included 53 patent families.
  As a result of the full integration of Carbiolice in 2021, €22.3 million were also recognized for the purchase price of Carbiolice, with a net amortization position of €19.7 million as of December 31, 2022, including:
  • €11.3 million net (€12.5 million gross) for the technology license (or “reacquired rights”). Under IFRS 3, the technology license between Carbios and Carbiolice is assimilated to a pre-existing relationship giving rise to the recognition of a “reacquired rights” asset that has been valued using the expected cash flow method; and
  • €8.3 million net (€9.8 million gross) market value of the acquired technology (Masterbatch) valued using the royalty and restoration cost method;
• Tangible assets for a net book value of €25 million, as compared to €16.5 million for the year ended December 31, 2021. This strong increase is mainly due to continued investment in the industrial demonstration facility (€17 million) and to the development of the Cataroux site for the regrouping of four of the Group’s business units, which took place in 2022 and was completed in 2023 with the arrival of Carbiolice teams;
• Rights-of-use asset for a net book value of €6.8 million corresponding to the market value of the tangible and intangible assets benefiting to the Group through its various lease contracts. In return, “lease debts” are recorded on the liabilities side of the balance sheet as financing for these assets; and
• Shareholder’s equity of €125.4 million, including the net proceeds of the €114 million capital increase successfully completed in May 2021³ with French and International investors, as compared to €146.7 million for the year ended December 31, 2021.

To date, Carbios holds 29.5 million shares of Carbiolice valued at €38.3 million in its financial statements and 10 thousand shares of Carbios 54 valued €10 000 in its financial statements since June 2022.

Cash flow statement

Benefiting from the net proceeds of the €114 million raised in 2021, as well as from the €30 million loan granted to Carbios by the European Investment Bank (EIB)⁴ which has been drawn down in the first half of 2022, the Group closed out with a net cash position of €101 million at year-end 2022, enabling it to pursue current developments beyond the next 12 months.

2022 AND 2023 YTD HIGHLIGHTS:

• Reference Unit project⁶

In February 2022⁵, Carbios announced a collaboration with Indorama Ventures for a project to build the world's first manufacturing plant using its PET biorecycling technology.

This Reference Unit is designed to process 50,000 tons of PET waste annually. It will also strengthen Carbios' business model which consists of licensing its technologies and know-how and the sale of enzymes to its licensees, who will build and run their own PET recycling production units.

The site chosen for the project is adjacent to the Indorama–Glanzstoff plant in Longlaville (France).

Engineering design studies are progressing in line with the calendar for the commissioning of the Unit. Working meetings are held with stakeholders – including local politicians, the prefecture, and DREAL and DDT… – to think through the next stages of the project.

As a reminder, the provisional calendar⁶ and key steps for the building of the Unit are:

• Industrial demonstration plant: From project to operations

In accordance with the Company's provisional calendar, all stages of the process, from pre-treatment of PET waste to monomer production, are now linked together. The demonstration plant is operated by technical team of 12 engineers and technicians.

The core elements of the process, the depolymerization kinetics and the yield from enzymatic recycling of PET plastic waste, are achieving identical results to those in the laboratory and pilot schemes. At these stages, the key challenges lie in optimizing productivity, yields and in the qualification of sources of raw materials. At the same time, the purification train is being made more reliable and fine-tuned in close collaboration with the design team for the Reference Unit and technology suppliers.

• Carbios licensing documentation ready for worldwide commercial deployment

In April 2023⁷, Carbios announced that its licensing documentation was now ready for the global commercialization of its PET biorecycling technology. The successful ongoing operations in its demonstration unit in Clermont-Ferrand and the advanced engineering study for its first commercial plant define the engineering basis and operational guidelines for units to be operated under license agreements. From technology promotion with the Technical Information Summary to project development with a specific Process Design Package and Process Book, future Carbios licensees will be handed all necessary process documentation to reliably engineer, procure, construct and operate their PET biorecycling plants under stringent HSE⁸ standards and with high product quality.

• Strategic partnership with Novozymes

In January 2023⁹, Carbios and Novozymes, the world leader in biological solutions, announced an exclusive long-term partnership. This major agreement guarantees the long-term production and supply of Carbios’ proprietary PET-degrading enzymes at an industrial scale for the world’s first biological PET-recycling plant due to be operational in 2025 in Longlaville (France), as well as Carbios’ future licensee customers.

Exclusive Global Partnership
Carbios and Novozymes have had a partnership since 2019 to develop enzyme-based solutions and address the sustainability challenge of plastic pollution. Building on the current Joint Development Agreement, Carbios and Novozymes will extend their collaboration to develop, optimize and produce enzymes that will subsequently be supplied by Novozymes to all licensees of Carbios’ technology. The new agreement grants both parties exclusivity in the field of the partnership.

• Fiber-to-Fiber consortium

In July 2022¹⁰, Carbios announced the signing of an agreement with On, Patagonia, PUMA and Salomon, to develop solutions that will enhance the recyclability and circularity of their products. An important aim of the two-year deal will be to speed up the introduction of Carbios' unique biorecycling technology, which represents a breakthrough for the textile industry. Carbios and the four companies will also research how products can be recycled, assess possible solutions for collecting worn polyester items, including sorting and dismantling technologies, and gather data on fiber-to-fiber recycling as well as circularity models. The common goal of the consortium members is to create real circularity in this industry by innovating to recycle fibers from one product into another and so reduce the problem of textile waste in a collaborative approach that helps create a more sustainable future.

In February 2023¹¹, Carbios announced that PVH Corp., whose global iconic brands include Calvin Klein and Tommy Hilfiger, has joined this fiber-to-fiber consortium.

• CE-PET research project¹²

In March 2022¹³, Carbios successfully completed the 3^rd and final technical stage of the CE-PET research project supported by the French State as part of the Investments for the Future Program, now integrated into France 2030, and operated by ADEME, (France's Environment and Energy Management Agency)¹⁴. The work done on this project by Carbios and academic partner INRAE¹⁵-TWB (Toulouse Biotechnology Institute) resulted in the successful manufacture at pilot scale of a white PET fiber that is 100% enzymatically recycled from colored textile waste. Thanks to the successful completion of this stage, which sought to develop Carbios' biorecycling process to recover textile waste, the Company will receive €827 thousand (€206,800 in subsidies and €620,400 in repayable advances).

In February 2023¹⁶, Carbios announced the validation of the final key stage of the CE-PET research project which enabled to demonstrate Carbios’ ability to enzymatically recycle complex waste to produce bottles and fibers and prove the robustness of its process.

For the validation of the whole project, Carbios will have received a total amount of €4,136,000 (€1,034,000 in grants and €3,102,000 in repayable advances) and its partner INRAE-TWB €3,416,000.

• Scientific publications

In July 2022¹⁷, Carbios and the Toulouse Biotechnology Institute (TBI) announced the publication of an article

CARBIOS
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