REG - HeiQ PLC - Interim Results
30/10/2023 07:15
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RNS Number : 6246R HeiQ PLC 30 October 2023
30 October 2023
HeiQ Plc
("HeiQ" or "the Company")
Half year results for the period ended 30 June 2023
HeiQ Plc (LSE:HEIQ), a leading company in materials innovation and hygiene
technologies, announces its interim results for the period ending 30 June 2023
("H1 2023").
These results are published concurrently with the Company's final results for
the full year ended 31 December 2022 ("FY 22").
Restoration of Trading:
As detailed in the FY 22 results, upon uploading the Annual Report 2022 to the
National Storage Mechanism, expected to be completed today, the Company will
make an immediate request to the FCA for the Company's Ordinary Shares to be
restored to trading on the Main Market of the London Stock Exchange as soon as
practicable thereafter. A further announcement will be made confirming the
exact time and date of resumption of trading.
Financial Overview:
· Revenue reduced by 26% to US$20.5 million (H1 2022 restated*:
US$27.6 million)
· Gross profit margin of 40.9% (H1 2022 restated*: 41.5% in H1
2022)
· Adjusted EBITDA of US-$3.6 million (H1 2022 restated*: US$0.7
million)
· Operating loss of US-$6.0 million (H1 2022 restated*: US-$1.6
million)
· Loss after taxation of US$-6.5 million (H1 2022 restated*: profit
of US-$1.9 million)
· Cash balance as at 30 June 2023 of US$7.3 million
* Details on restatements of prior year financial information are disclosed in
Note 2 of the Consolidated Financial Statements.
Operational Overview:
Trading conditions for the markets of our commercialized product range
continued to be challenging during H1 2023 and, as highlighted in detail in
our Full Year results for the 12 months to 31 December 2022, the Company took
decisive steps to reduce its cost base and reorganize the business to maintain
its innovation and differentiation capabilities during the period under
review. With costs reduced and operations adapted in light of the challenging
headwinds our entire industry is facing, the Company expects H2 2023 trading
to stabilize.
Post Period:
The Company is closely monitoring the market and is ready to take further cost
reduction action, should it need to. We continue to add value to our high
potential key innovation initiatives through focused investment, to position
ourselves for when the macro-economic difficulties abate.
While the Board considers the Company has adequate resources, it is in
discussions with financial institutions to replace the currently uncommitted
credit facilities by committed, long-term facilities.
Equity analyst and shareholder presentations:
Following the resumption of trading in its ordinary shares the Company will
announce registration details for two live presentations. These presentations
will cover today's results and will be held separately for both equity
analysts and investors.
For further information, please contact:
HeiQ Plc +41 56 250 68 50
Carlo Centonze (CEO)
Cavendish Securities Plc (Broker) +44 (0) 207 397 8900
Stephen Keys / Callum Davidson
SEC Newgate (Media Enquiries) +44 (0) 20 3757 6882
Elisabeth Cowell / Tom Carnegie / Molly Gretton HeiQ@s (mailto:HeiQ@secnewgate.co.uk) ecnewgate (mailto:HeiQ@secnewgate.co.uk)
.co.uk (mailto:HeiQ@secnewgate.co.uk)
About HeiQ
HeiQ is a Swiss-based international company that innovates pioneering and
differentiating materials in partnership with established global brands. We
bridge the academic and commercial worlds to conceive performance-enhancing
materials and technologies, working with aligned brands to research,
manufacture and bring products to market, aiming for lab to consumer in
months. Our goal is to improve the lives of billions by innovating the
materials that go into everyday products, making them more hygienic,
comfortable, protective, and sustainable.
Our strong IP portfolio positions us as an innovation leader for niche,
premium and high-margin products in the textile chemicals, man-made fibers,
paints and coatings, antimicrobial plastics, probiotics and household cleaner
markets. We have also expanded into healthcare facilities, probiotic cleaning,
and hygiene coatings markets to help make hospitals and healthcare
environments more hygienic.
We have developed over 200 technologies in partnership with 300 major brands.
With a substantial research and development pipeline, including key technology
development projects HeiQ AeoniQ, HeiQ ECOS, HeiQ GrapheneX, and HeiQ Synbio,
HeiQ aims to deliver shareholder value through sales growth and entry into new
lucrative markets through disruptive innovation and M&A.
We have built a strong reputation for ESG & sustainable innovation, having
won multiple awards including the Swiss Technology Award twice and the Swiss
Environmental Award. Under experienced leadership, we are committed to driving
our profit in close connection with people and the planet. For more
information, please visit www.heiq.com (http://www.heiq.com) .
Chairwoman's Statement
Due to the delay in the publication of the audited annual accounts 2022, these
interim financial statements 2023 are published at the same time as the annual
accounts 2022.
While further details on trading and HeiQ's performance in H1 2023 can be
found in the CEO Statement in the annual report 2022, I provide a short
synopsis here for our investors.
Trading conditions for the markets of our commercialized product range
continued to be challenging during H1 2023 and, as highlighted in detail in
our Full Year results for the 12 months to December 31, 2022, we took focused
steps to reduce our cost base and reorganize the business during the period
under review.
We believe that the actions taken since the start of the year mean we will be
better positioned to manage the challenging macro-economic environment, while
continuing to build value in our core innovations to preserve our ability to
deliver when the market demand turns.
Financial Review
Results Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
US$'000 US$'000 US$'000
(restated*)
Revenue 20,500 27,558 47,202
Cost of sales (12,110) (16,127) (33,745)
Gross profit 8,390 11,431 13,457
Other income 946 2,748 4,832
Selling and general administrative expenses (14,263) (14,016) (30,969)
Impairment loss on intangible assets - - (11,651)
Impairment loss on property, plant & equipment - - (730)
Other expenses (1,075) (1,735) (4,184)
Operating loss (6,002) (1,572) (29,245)
Depreciation of property, plant and equipment 710 644 1,282
Amortization of intangible assets 1,069 666 1,435
Depreciation of right-of-use assets 479 497 938
Impairment losses and write-offs - - 13,278
Share options and rights granted to Directors and employees 132 486 138
Adjusted EBITDA (3,612) 721 (12,174)
EBITDA Margin (adjusted) (17.6%) 2.6% (25.8%)
*The results have been restated in the comparative period as described in Note
2 to the consolidated financial statements.
Revenues
Total revenues in H1 2023 decreased by 26% to US$20.5 million (H1 2022: US$
27.6 million) driven by weak demand across the markets in which we operate.
Gross margin
Gross margin slightly decreased from 41.5% in H1 2022 to 40.9% in H1 2023,
driven primarily by overcapacity in the markets which resulted in price
pressure.
Selling & general administration costs "SG&A"
SG&A costs grew by 1.7% to US$14.3 million in H1 2023 compared to the
previous year (H1 2022: US$14.0 million). The Company implemented various cost
reduction measures during the period and expects to see the full benefit of
the measures materialize in H2 2023. Cost saving measures have included a
reduction of FTE's as well as re-location of functions/FTE's to locations with
lower employer costs per FTE.
Liquidity as of 30 June 2023 & Going Concern Assessment
As of June 30, 2023, the Company reports a cash balance of US$7.3 million
(December 31, 2022: US$8.5 million). To manage its cash balance, the Group has
access to credit facilities totalling CHF9.0 million (approximately US$9.8
million as of September 30, 2023). The credit facilities are in place with two
different banks and both contracts have materially the same conditions. The
facilities are not limited in time, can be terminated by either party at any
time and allow overdrafts and fixed cash advances with a duration of up to
twelve months.
As of September 30, 2023, the Group has drawn CHF6.3 million of the facilities
(CHF2.4 million as of December 31, 2022) (see Note 2 for details including
maturity dates). The facilities are not committed, but the Board has not
received any indication from financing partners that facilities are at risk of
being terminated. Furthermore, the Board is in discussions with financial
institutions to replace the currently uncommitted credit facilities by
committed, long-term facilities, but the outcome of these discussions remains
uncertain.
The Group's directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future and operate within its credit facilities for the period 12 months from
date of signature. Nevertheless, the Board acknowledges the uncommitted status
of the facilities which could be terminated requiring the refinancing of
debts, and which casts material uncertainty on the going concern assessment
until appropriate longer-term funding is in place. Further disclosures on the
going concern assessment are made in the notes to the financial statements.
Principal risks and uncertainties
The Group has an established, structured approach to identifying and assessing
the impact of financial and operational risks on its business. The principal
risks and uncertainties for the remainder of the financial year are not
expected to change materially from those included on pages 38 to 42 of the
Annual Report and Accounts 2022. The risks identified relate to the following
areas: Delivery on growth strategy; Increase in competition; Geographical
risks; IP protection and first mover advantage; Regulatory risks; Reputational
risks and failure to build brand equity; Innovation pipeline; Supply chain
disruptions; Personnel/Workforce; Interruption of IT system operations;
Liquidity risk; currency risks; Product liability. Further information in
relation to the Group's financial position and going concern is included in
note 2.
Outlook
With our costs reduced and operations adapted in light of the challenging
headwinds our entire industry is facing, we expect H2 2023 trading to
stabilize. We are closely monitoring the market and are ready to take further
cost reducing action, should we need to. We continue to add value to our high
potential key innovation initiatives through focused investment, to position
ourselves for when the macro-economic difficulties abate.
I would like to end my statement by thanking our investors, team, advisors and
customers for their support during what has been a very challenging period for
the company.
Esther Dale-Kolb
Chairwoman
October 26, 2023
Condensed consolidated statement of profit and loss and other comprehensive income
For the six months ended June 30, 2023
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Note US$'000 US$'000 US$'000
(restated*)
Revenue 5 20,500 27,558 47,202
Cost of sales 7 (12,110) (16,127) (33,745)
Gross profit 8,390 11,431 13,457
Other income 8 946 2,748 4,832
Selling and general administrative expenses 9 (14,263) (14,016) (30,969)
Impairment loss on intangible assets 16 - - (11,651)
Impairment loss on property, plant & equipment 17 - - (730)
Other expenses 11 (1,075) (1,735) (4,184)
Operating loss (6,002) (1,572) (29,245)
Finance income 12 5 442 683
Finance costs 13 (384) (524) (1,273)
Loss before taxation (6,381) (1,654) (29,835)
Income tax 14 (146) (254) 21
Loss after taxation (6,527) (1,908) (29,814)
Other comprehensive income:
Exchange differences on translation of foreign operations 429 (1,090) (1,914)
Items that may be reclassified to profit or loss in subsequent periods 429 (1,090) (1,914)
Actuarial gains/(losses) from defined benefit pension plans - - 1,380
Income tax relating to items that will not be reclassified subsequently to - - (276)
profit or loss
Items that will not be reclassified to profit or loss in subsequent periods - - 1,104
Other comprehensive income (loss) for the year 429 (1,090) (810)
Total comprehensive loss for the year (6,098) (2,998) (30,624)
Loss attributable to:
Equity holders of HeiQ (6,436) (1,705) (29,251)
Non-controlling interests (91) (203) (563)
(6,527) (1,908) (29,814)
Total Comprehensive loss attributable to:
Equity holders of the Company (6,007) (2,795) (30,061)
Non-controlling interests (91) (203) (563)
(6,098) (2,998) (30,624)
Loss per share:
Basic (cents) ** (4.58) (1.29) (21.92)
*The consolidated statement of profit and loss and other comprehensive income
has been restated in the comparative period as described in Note 2.
**The effect of share options is anti-dilutive and therefore not disclosed.
Condensed consolidated statement of financial position
As at June 30, 2023
As at As at As at
June 30, June 30, December 31,
2023 2022 2022
Note US$'000 US$'000 US$'000
(restated*)
ASSETS
Intangible assets 16 21,672 32,766 20,442
Property, plant and equipment 17 8,944 6,823 9,802
Right-of-use assets 18 8,355 8,163 7,819
Deferred tax assets 28 579 1,510 538
Other non-current assets 19 182 153 137
Non-current assets 39,732 49,415 38,738
Inventories 20 14,406 16,184 13,168
Trade receivables 21 8,256 18,118 6,487
Other receivables and prepayments 22 4,231 2,022 4,262
Cash and cash equivalents 7,274 9,488 8,488
Current assets 34,167 45,812 32,405
Total assets 73,899 95,227 71,143
EQUITY AND LIABILITIES
Issued share capital and share premium 24 206,246 200,606 205,874
Other reserves 26 (127,456) (127,862) (128,017)
Retained deficit (45,902) (10,775) (39,466)
Equity attributable to HeiQ shareholders 32,888 61,969 38,391
Non-controlling interests 1,857 2,087 1,948
Total equity 34,745 64,056 40,339
Lease liabilities 7,089 7,148 6,558
Long-term borrowings 27 1,866 1,561 1,445
Deferred tax liability 28 1,337 2,144 1,253
Other non-current liabilities 29 5,772 7,593 4,714
Total non-current liabilities 16,064 18,446 13,970
Trade and other payables 30 8,653 6,959 5,322
Accrued liabilities 31 3,692 2,178 4,978
Income tax liability 14 243 111 314
Deferred revenue 32 1,365 672 1,285
Short-term borrowings 27 7,471 1,583 2,893
Lease liabilities 1,121 1,130 1,264
Other current liabilities 34 545 92 778
Total current liabilities 23,090 12,725 16,834
Total liabilities 39,154 31,171 30,804
Total equity and liabilities 73,899 95,227 71,143
*The comparative period of the consolidated statement financial position has
been added this year because it was restated as described in Note 2.
The Notes form an integral part of these Condensed Consolidated Financial
Statements. The Financial Statements were approved and authorized for issue by
the Board of Directors on October 26, 2023 and signed on its behalf by:
Xaver Hangartner
Chief Financial Officer
Condensed consolidated statement of changes in equity
For the six months ended June 30, 2023
Issued share capital and share premium Other reserves Retained deficit Equity attributable to HeiQ shareholders Non-controlling interests Total equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at January 1, 2022 195,714 (127,195) (11,525) 56,994 2,541 59,535
Loss after taxation - - (29,251) (29,251) (563) (29,814)
Other comprehensive (loss)/income - (810) - (810) - (810)
Total comprehensive (loss)/income for the year - (810) (29,251) (30,061) (563) (30,624)
Issuance of shares 24 10,160 - - 10,160 - 10,160
Share-based payment charges 26 - (12) - (12) - (12)
Dividends paid to minority shareholders 26 - - - - (243) (243)
Capital contributions from minority shareholders - - - - 764 764
Adjustments arising from change in non-controlling interests - - (2,445) (2,445) (616) (3,061)
Transfer on disposal of non-controlling interest - - 3,755 3,755 65 3,820
Transactions with owners 10,160 (12) 1,310 11,458 (30) 11,428
Balance at December 31, 2022 205,874 (128,017) (39,466) 38,391 1,948 40,339
Loss after taxation - - (6,436) (6,436) (91) (6,527)
Other comprehensive (loss)/income - 429 - 429 - 429
Total comprehensive (loss)/income for the year - 429 (6,436) (6,007) (91) (6,098)
Issuance of shares 24 372 - - 372 - 372
Share-based payment charges 26 - 132 - 132 - 132
Transactions with owners 372 132 - 504 - 504
Balance at June 30, 2023 206,246 (127,456) (45,902) 32,888 1,857 34,745
Condensed consolidated statement of cash flows
For the six months ended June 30, 2023
Six months to Six months to Year ended
June 30, 2023 June 30, 2022 December 31, 2022
Note US$'000 US$'000 US$'000
(Restated*)
Cash flows from operating activities
Loss before taxation (6,381) (1,654) (29,835)
Cash flow from operations reconciliation:
Depreciation and amortization 16-18 2,258 1,807 3,655
Impairment expense 11 - - 12,380
Net loss on disposal of assets 17 3 (5)
Write-off of intangible assets 11 14 - 897
Fair value gain on derivative liability 8 (248) - (371)
Finance costs 217 124 273
Finance income (5) (1) (2)
Pension expense 43 117 247
Non-cash equity compensation 25 132 486 138
Gain from lease modification (9) (68) (68)
Other costs paid in shares 24 - - 235
Currency translation (594) (684) (61)
Working capital adjustments:
(Increase)/decrease in inventories 37 (1,238) (2,414) 602
Decrease/(Increase) in trade and other receivables 37 (1,617) (1,608) 7,783
(Decrease)/Increase in trade and other payables 37 3,118 2,448 2,543
Cash used in operations (4,293) (1,444) (1,589)
Taxes paid 14 (506) (529) (870)
Net cash used in operating activities (4,799) (1,973) (2,459)
Cash flows from investing activities
Consideration for acquisition of businesses 37 - (1,587) (1,587)
Cash assumed in asset acquisition 37 2 - 65
Purchase of property, plant and equipment 17 (584) (1,060) (3,418)
Proceeds from the disposal of property, plant and equipment 815 37 53
Development and acquisition of intangible assets 16 (665) (1,946) (3,865)
Interest received 5 1 2
Net cash used in investing activities (427) (4,555) (8,750)
Cash flows from financing activities
Interest paid on borrowings (122) (42) (110)
Repayment of leases (614) (452) (992)
Interest paid on leases (95) (82) (163)
Proceeds from disposals of minority interests - 2,459 4,792
Proceeds from borrowings 27 4,998 823 3,465
Repayment of borrowings 27 (265) (197) (904)
Dividends paid to minority shareholders 26 - (243) (243)
Net cash from financing activities 3,902 2,266 5,845
Net decrease in cash and cash equivalents (1,324) (4,262) (5,364)
Cash and cash equivalents - beginning of the year 8,488 14,560 14,560
Effects of exchange rate changes on the balance of cash held in foreign 110 (810) (708)
currencies
Cash and cash equivalents - end of the year 7,274 9,488 8,488
* The consolidated statement of cash flows has been restated for the
comparative period as described in Note 2.
Notes to the Condensed Consolidated Financial Statements for the six months ended June 30, 2023
1. General information
HeiQ Plc (the Company) is a company limited by shares incorporated and
registered in the United Kingdom. Its ultimate controlling party is HeiQ Plc.
The address of the Company's registered office is 5th Floor, 15 Whitehall,
London, SW1A 2DD.
These financial statements are presented in United States Dollars (US$) which
is the presentation currency of the Group, and all values are rounded to the
nearest thousand dollars except where otherwise indicated.
2. Basis of preparation and measurement
Basis of preparation
The unaudited condensed consolidated interim financial statements have been
prepared in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and International Accounting Standard 34 "Interim
Financial Reporting" (IAS 34). Other than as noted below, the accounting
policies applied by the Group in the preparation of these interim financial
statements are the same as those set out in the Company's audited financial
statements for the year ended December 31, 2022. These financial statements
have been prepared under the historical cost convention except for certain
financial and equity instruments that have been measured at fair value.
These condensed financial statements do not include all of the information
required for a complete set of IFRS financial statements. However, selected
explanatory notes are included to explain events and transactions that are
significant to an understanding of the changes in the Company's financial
position and performance since the audited financial statements for the year
ended December 31, 2022.
Statutory accounts for the year ended December 31, 2022 have been filed with
the Registrar of Companies in October 2023 and the auditor's report was
unqualified, did not contain any statement under Section 498(2) or 498(3) of
the Companies Act 2006, and contained a matter (material uncertainty in
regards to the going concern assumption) to which the auditors drew attention
without qualifying their report.
The condensed interim financial statements are unaudited and have not been
reviewed by the auditors and were approved by the Board of Directors on
October 26, 2023.
Going concern
The unaudited condensed consolidated interim financial statements have been
prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realization of the assets and the settlement of
liabilities in the normal course of business.
To manage its cash balance, the Group has access to credit facilities
totalling CHF9.0 million (approximately US$9.8 million as of September 30,
2023). The credit facilities are in place with two different banks but with
materially the same conditions. The facilities are not limited in time, can be
terminated by either party at any time and allow overdrafts and fixed cash
advances with a duration of up to twelve months. In case one or the other
party terminates the agreement, fixed cash advances become due upon their
defined maturity date. The facilities do not contain financial covenants, but
they do require the delivery of certain financial and operational information
within a defined timeframe after the balance sheet date. As the publication of
audited accounts for the year 2022 was delayed, the Company was not able to
submit these accounts within the contractually defined timeframe but has
received extensions to do so from both banks until October 31, 2023.
As of September 30, 2023, the Group has drawn CHF6.3 million of the facilities
(CHF2.4 million as December 31, 2022) as follows:
Term / Maturity date CHF
November 27, 2023 4.5 million
June 17, 2024 0.8 million
September 30, 2024 1.0 million
The Group's forecasts and projections for the next 12 months reflect the very
challenging trading environment and show that the Group should be able to
operate within the level of its current facility for at least 12 months from
the date of signature of these financial statements if the facility drawdowns
remain available. While the facilities are not committed, the Board has not
received any indication from financing partners that the facilities are at
risk of being terminated. Furthermore, the Board is in discussions with
financial institutions to replace the currently uncommitted credit facilities
by committed, long-term facilities, but the outcome of these discussions
remains uncertain.
Nevertheless, the Board acknowledges the uncommitted status of the facilities
which could be terminated without notice during the forecast period requiring
the refinancing of debts as per above maturity date indicates that a material
uncertainty exists that may cast significant doubt on the Group's and Parent
Company's ability to continue as a going concern, and therefore the Group may
not be able to realize its assets and discharge its liabilities in the normal
course of business.
After considering the forecasts, sensitivities, and mitigating actions
available to management and having regard to the risks and uncertainties to
which the Group is exposed (including the material uncertainty referred to
above), the Group's directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future and operate within its credit facilities for the period 12 months from
date of signature. Accordingly, the financial statements continue to be
prepared on a going concern basis.
Basis of consolidation
The Condensed Consolidated Financial Statements comprise the financial
statements of the Company and its subsidiaries. Business combinations are
accounted for under the acquisition method.
Restatement of prior period errors
As explained in Note 2 of the 2022 statutory accounts, several errors were
corrected which affected the years ended December 31 2022 and December 31
2021. These corrections led to the following restatements of the June 30, 2022
accounts:
Overstatement of lease assets and liabilities: Similarly to the correction as
per December 31, 2021, mainly balance sheet accounts were affected by the
restatement. Right-of-use assets and lease liabilities were derecognized, and
some payables were reclassified to loans.
PPA Chrisal: Accounting for 51% of intangible assets acquired instead of 100%:
The correction of the error led to an increase in intangible assets as
disclosed in the restated 2021 accounts, however, with the higher base amount
amortization for the six months ended June 30, 2022 is also higher for the
period which is reflected in an overall smaller adjustment to the balance
sheet.
Correcting revenue recognition of take-or-pay contracts: The correction of the
revenue recognition in years prior to 2022, led to smaller balances of trade
receivable and accrued liabilities being carried forward to the June 2022
accounts.
Goodwill impairment Chrisal CGU and RAS CGU: The intangible asset balance
brought forward to June 2022 has been reduced by the goodwill impairment
posted in the 2021 accounts.
Correcting revenue recognition of R&D services: Revenues amounting to $2
million for R&D services were incorrectly recognized in the 2022 interim
statements. During the audit of 2022 financial statements, it was found that
the Group's performance obligations relating to a research and development
project had not been fulfilled and that revenue recognition in relation to
milestones was not appropriate. A further US$3.3 million of deferred revenue
has been reclassified to long-term as a consequence of this change in
accounting policy.
The effect of the restatements on the six months ended June 30, 2022 is shown
in the following tables:
Consolidated statement of financial position
June 30, 2022
US$'000 As presented Restatement Revenue recognition Restatement Goodwill impairment Restatement Leasing Restatement PPA Chrisal Restatement R&D revenues As Restated
Assets
Intangible assets 33,448 - (2,310) - 1,628 - 32,766
Right-of-use assets 9,114 - - (951) - - 8,163
Deferred tax assets 874 - - - - - 1,510
Trade receivables 21,512 (3,394) - - - - 18,118
Other receivables and prepayments 5,143 (3,121) - - - - 2,022
Total Assets 102,739 (5,879) (2,310) (951) 1,628 - 95,227
Capital and reserves
Retained deficit (2,249) (3,957) (2,310) 3 (262) (2,000) 10,775 (10,775)
Non-controlling interests 601 - - 3 1,483 - 2,087
Total Equity 71,096 (3,957) (2,310) 6 1,221 (2,000) 64,056
Liabilities
Leases (non-current) 7,977 - - (829) - - 7,148
Long-term borrowings 668 - - 893 - - 1,561
Deferred tax liability 1,737 - - - 407 - 2,144
Other non-current liabilities 2,293 - - - - 5,300 7,593
Trade and other payables 7,928 - - (969) - - 6,959
Accrued liabilities 4,100 (1,922) - - - - 2,178
Deferred revenue 3,972 - - - - (3,300) 672
Short-term borrowings 1,503 - - 80 - - 1,583
Leases (current) 1,262 - - (132) - - 1,130
Total Liabilities 31,643 (1,922) - (957) 407 - 31,171
Consolidated statement of comprehensive income
June 30, 2022
US$'000 As presented Restatement Revenue recognition Restatement Goodwill impairment Restatement Leasing Restatement PPA Chrisal Restatement R&D revenues As Restated
Net result for the period
Revenue 30,280 (722) - - - (2,000) (27,558)
Selling and general administration expense (13,878) - - (7) (131) - (14,016)
Finance costs (537) - - 13 - - (524)
Income tax (287) - - - 33 - (254)
Income (loss) after taxation 906 (722) - 6 (98) (2,000) (1,654))
Income (loss) after taxation attributable to HeiQ Stockholders 1,112 (722) - 3 (98) (2,000) (1,705)
Income after taxation attributable to non-controlling interest (206) - - 3 - - (203)
Income (loss) after taxation 906 (722) - 6 (98) (2,000) (1,908)
Earnings per share
June 30, 2022
US$'000 As presented Restatement Revenue recognition Restatement Goodwill impairment Restatement Leasing Restatement PPA Chrisal Restatement R&D revenues As Restated
Basic earnings (loss) per share 0.84 (0.55) - - (0.07) (1.51) (1.29)
New standards, interpretations and amendments not yet effective for the current period
The following new standards and amendments were effective for the first time
in these financial statements but did not have a material effect on the Group:
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2);
• Classification of Liabilities as Current or Non-current
(Amendments to IAS 1);
• Definition of Accounting Estimates (Amendments to IAS 8); and
• Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
3. Significant accounting policies
The Company has applied the same accounting policies and methods of
computation in its interim consolidated financial statements as in its 2022
financial statements.
New and amended standards and Interpretations issued by the IASB that will
apply for the first time in the next annual financial statements are not
expected to impact the Group as they are either not relevant to the Group's
activities or require accounting which is consistent with the Group's current
accounting policies.
Use of estimates and judgements
There have been no material revisions to the nature and amounts of estimates
of amounts reported in prior periods.
4. Significant events and transactions
Acquisition of Tarn Pure
On January 12, 2023, HeiQ Plc, completed the acquisition of the entire issued
share capital of Tarn-Pure Holdings Ltd ("Tarn-Pure"). Tarn-Pure is a UK-based
intellectual property company holding critical EU and UK regulatory
registrations to sell elemental copper and elemental silver for use in
disinfecting hygiene applications. To acquire Tarn-Pure, HeiQ paid the vendors
£530,000 (approximately US$621,000) in cash with an additional £317,000
(approximately US$372,000) satisfied through the issuance of 455,435 new
ordinary shares of 30p each in the Company (the "Consideration Shares"),
issued at a price of 69.6p per share resulting in a total consideration of
£847,000 (approximately US$993,000). The purchase price allocation has not
been finalized yet and is subject to possible changes in valuation of the
assets acquired. it will be completed in the 2023 annual report.
The following table provides an overview of the preliminary purchase price
allocation. It summarizes the consideration paid, the fair value of assets
acquired, liabilities assumed, and goodwill arising on acquisition at the
acquisition date.
Preliminary purchase price allocation US$'000
Consideration:
Cash paid to shareholders 621
Shares issued to shareholders 372
Total Consideration 993
Fair value of net assets acquired:
Inventory 13
Cash 2
Trade and other receivables 23
Borrowings (42)
Intangible assets identified on acquisition:
Customer Relationship 123
Regulatory asset 682
Deferred tax liability on intangible assets (201)
Total net assets 599
Goodwill 394
Total 993
5. Revenue
The Group's focus on materials innovation which includes scientific research,
manufacturing and consumer ingredient branding. The primary source of revenue
is the production and sale of functional ingredients, materials and finished
goods. Other sources of revenue include research and development, take-or-pay
and exclusivity services.
The following table reconciles HeiQ Group's revenue for the periods presented:
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Revenue by type of product US$'000 US$'000 US$'000
Revenue recognized at point in time
Functional ingredients 15,747 21,156 36,175
Functional materials 546 434 2,000
Functional consumer goods 2,702 5,042 6,827
Services 980 160 160
Revenue recognized over time
Services 525 766 2,040
Total revenue 20,500 27,558 47,202
Unsatisfied performance obligations
The transaction prices allocated to unsatisfied and partially unsatisfied
obligations at June 30, 2023 are as set out below:
As at As at
June 30, December 31,
2023 2022
Unsatisfied performance obligations US$'000 US$'000
Exclusivity services 1,800 2,100
Research and development services 3,500 3,750
Total unsatisfied performance obligations 5,300 5,850
Management expects that 10 per cent of the transaction price allocated to the
unsatisfied contracts as of June 2023 will be recognized as revenue during the
2023 reporting period (US$0.5 million). The remaining 90 per cent, US$4.8
million will be recognized in the 2024 (US$1.1 million), 2025 (US$3.1 million)
and 2026 financial year (US$0.6 million).
Disclosure related to contracts with customers
Contract assets and contract liabilities are disclosed under Note 23 and Note
33, respectively. Impairment losses recognized on any receivables or contract
assets arising from the Group's contracts with customers are disclosed under
Note 21 and Note 23, respectively.
6. Operating Segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors of the Company.
For management purposes, the Group is organised into business units and the
following reportable segments:
Segment Activity
Textiles & Flooring Provide innovative ingredients to make textiles & flooring more
functional, durable and sustainable.
Life Sciences Offer biotech solutions to replace harmful substances in domestic, commercial
and industrial usage, for a more balanced microbiome and environment
Antimicrobials Functionalize different hard surfaces in everyday products and our
surroundings
Other activities All other activities of the Group including Innovation Services, Business
Development, and other non-allocated functions.
In 2023 new overhead allocation rules were introduced and as a result more
overhead costs were allocated to segments. 2022 segment revenue and profits
are restated below using the new rules to allow for like for like comparison.
Segment revenues and profits
The following is an analysis of the Group's revenue and results by reportable
segment:
Six months to June 30, 2023 Textiles & Flooring Life Sciences Antimicrobials Other activities Total
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 15,531 2,479 1,164 1,326 20,500
Operating profit (loss) 1,117 (693) (1,710) (4,716) (6,002)
Finance result (379)
Loss before taxation (6,381)
Taxation (146)
Loss after taxation (6,527)
Depreciation and amortization
Property, plant and equipment 298 171 15 227 710
Right-of use assets 90 74 22 292 479
Intangible assets 144 (144) 277 401 247 1,069
Impairment loss
Property, plant and equipment - - - - -
Intangible assets - - - - -
Six months to June 30, 2022 Textiles & Flooring Life Sciences Antimicrobials Other activities Total
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 19,538 3,891 3,028 1,102 27,558
Operating profit (loss) 2,682 (537) (468) (3,249) (1,572)
Finance result (82)
Loss before taxation (1,654)
Taxation (254)
Loss after taxation (1,908)
Depreciation and amortization
Property, plant and equipment 208 173 17 246 644
Right-of use assets 75 72 24 325 497
Intangible assets 36 274 349 7 666
Impairment loss
Property, plant and equipment - - - - -
Intangible assets - - - - -
Year ended December 31, 2022 Textiles & Flooring Life Sciences Antimicrobials Other activities
US$'000 US$'000 US$'000 US$'000 Total
(restated)
(restated)
(restated)
(restated)
US$'000
Revenue 34,184 6,164 4,182 2,672 47,202
Operating profits loss (4,231) (5,537) (10,116) (9,359) (29,245)
Finance result (590)
Loss before taxation (29,835)
Taxation 21
Loss after taxation (29,814)
Depreciation and amortization
Property, plant and equipment 334 335 28 585 1,282
Right-of use assets 123 145 42 628 938
Intangible assets (107) 550 699 293 1,435
Impairment loss
Property, plant and equipment - 730 - - 730
Intangible assets - 2,402 8,247 1,002 11,651
Segment revenue reported above represents revenue generated from external
customers. There were no intersegment sales in the six months ended June 30,
2023 (2022: nil).
Geographic information
Six months to June 30, 2023 Six months to June 30, 2022 Year ended December 31, 2022
Revenue by region US$'000 US$'000 US$'000
North & South America 9,694 11,098 20,425
Asia 4,798 8,955 13,376
Europe 5,848 7,327 13,109
Others 160 178 293
Total revenue 20,500 27,558 47,202
As at As at December 31,
June 30, 2023 2022
Non-current assets by region US$'000 US$'000
Europe 28,956 22,290
Asia 2,701 8,102
North & South America 7,557 7,734
Others 518 612
Total non-current assets 39,732 38,738
Information about major customers
During the six months ended June 30, 2023, no customers individually totalled
more than 10% of total revenues (2022: none).
7. Cost of sales
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Cost of sales US$'000 US$'000 US$'000
Material expenses 10,351 12,114 20,942
Personnel expenses 1,563 1,477 2,830
Depreciation of property, plant and equipment 352 342 652
Other costs of sales (156) 2,194 9,321
Total cost of sales 12,110 16,127 33,745
Other costs of goods sold include freight and custom costs, warehousing and
allowances on inventory.
8. Other income
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Other income US$'000 US$'000 US$'000
Gain on disposal of property plant and equipment 12 9 21
Foreign exchange gains 517 2,334 3,539
Fair value gain on derivative liabilities 248 - 371
Other income 169 405 901
Total other income 946 2,748 4,832
9. Selling and general administration expenses
Selling and general administration expenses Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
US$'000 US$'000 US$'000
(restated*)
Personnel expenses 6,849 7,808 14,977
Depreciation of property, plant and equipment 358 302 630
Amortization 1,069 666 1,435
Depreciation of right-of-use assets 479 497 938
Net credit losses on financial assets and contract assets - - 85
Other 5,508 4,743 12,904
Total selling and general administration expenses 14,263 14,016 30,969
Other selling and general administration expenses include costs for
infrastructure, professional services and marketing as well as R&D and
laboratory related costs, information technology & data expenses, sales
representative & distribution expenses.
10. Personnel expenses
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Personnel expenses US$'000 US$'000 US$'000
Wages & salaries 7,224 7,930 15,274
Social security & other payroll taxes 802 624 1,685
Pension costs 254 244 710
Share-based payments 132 486 138
Total personnel expenses 8,412 9,285 17,807
Reported as cost of sales (Note 7) 1,563 1,477 2,830
Reported as selling and general administration expense (Note 9) 6,849 7,808 14,977
Total personnel expenses 8,412 9,285 17,807
11. Other expenses
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Other expenses US$'000 US$'000 US$'000
Foreign exchange losses 928 1,621 3,050
Loss on disposal of property, plant and equipment 30 12 16
Transaction costs relating to mergers and acquisitions 23 - 50
Write off intangible assets 14 - 897
Other 80 102 171
Total other expenses 1,075 1,735 4,184
12. Finance income
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Finance income US$'000 US$'000 US$'000
Interest income 3 1 5
Gains on foreign currency transactions - 440 678
Other 2 1 -
Total finance income 5 442 683
13. Finance costs
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Finance costs US$'000 US$'000 US$'000
(restated*)
Lease finance expense 95 81 163
Interest on borrowings 122 43 110
Bank fees 167 34 98
Loss on foreign currency transactions - 366 902
Total finance costs 384 524 1,273
14. Income tax
The components of the provision for taxation on income included in the
"Statement of profit or loss and other comprehensive income" are summarized
below:
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022 2022
Current income tax expense US$'000 US$'000 US$'000
Swiss corporate income taxes 21 30 58
United States state and federal taxes 101 383 393
Taiwan corporate income taxes 81 78 118
Belgium corporate income taxes 83 76 (123)
Germany corporate income taxes - (17) 51
Others 11 79 63
Total current income tax expense 297 629 560
Deferred income tax expense
(restated*)
Switzerland (22) (69) 90
United States (4) (71) (606)
China (2) (128) 117
Austria (2) (4) 20
Belgium (68) (71) (136)
Others (53) (32) (66)
Total deferred income tax expense (income) (151) (375) (581)
Total income tax expense (income) (146) (254) (21)
As at June 30, As at December 31,
2023 2022
Net tax (assets)/liabilities US$'000 US$'000
Opening balance - (prepaid taxes) (343) 51
Assumed on asset acquisition - (32)
Income tax expense for the year 297 560
Taxes paid (506) (870)
Foreign currency differences (3) (52)
Net tax (asset)/liability (555) (343)
As at
As at
June 30, December 31,
2023 2022
Net tax (assets) liabilities US$'000 US$'000
Prepaid income taxes (798) (657)
Income tax liabilities 243 314
Net tax (asset)/liability (555) (343)
15. Earnings per share
The calculation of the basic earnings per share is based on the following
data:
Six months to Six months to Year ended
June 30, June 30, December 31,
2023 2022* 2022
Earnings US$'000 US$'000 US$'000
Loss attributable to the ordinary equity holders of the parent entity (6,436) (1,705) (29,251)
*Earnings have been restated in the comparative period as described in note 2.
The effect of share options is anti-dilutive and therefore not disclosed.
As at As at As at
June 30, June 30, December 31,
2023 2022 2022
Number of shares US$'000 US$'000 US$'000
Weighted average number of ordinary shares for the purposes of basic earnings 140,507,712 131,781,726 133,426,953
per share
Basic earnings per share is calculated by dividing the profit/loss after tax
attributable to the equity holders of the Company by the weighted average
number of shares in issue during the year. The effect of share options is
anti-dilutive and therefore not disclosed.
16. Intangible assets
Goodwill Internally developed assets Brand names and customer relations Acquired technologies Other intangible assets Total
Cost US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at January 1, 2022 21,382 3,509 4,503 3,180 2,332 34,906
Additions arising from internal development - 2,165 - - - 2,165
Other acquisitions - - - - 1,700 1,700
Disposals / write-offs - (85) - - (812) (897)
Currency translation differences (795) 5 (160) (165) 14 (1,101)
As at December 31, 2022 20,587 5,594 4,343 3,015 3,234 36,773
Additions arising from internal development - 583 - - - 583
Business combinations 394 - 123 - 682 1,199
Other acquisitions - - - - 82 82
Disposals / write-offs - (14) - - - (14)
Currency translation differences 294 162 61 57 73 647
As at June 30, 2023 21,275 6,325 4,527 3,072 4,071 39,270
Amortization and accumulated impairment losses
As at January 1, 2022 2,305 474 602 234 518 4,133
Amortization for the period - 198 695 334 208 1,435
Impairment loss 10,576 880 73 - 122 11,651
Currency translation differences (750) 3 (72) (45) (24) (888)
As at December 31, 2022 12,131 1,555 1,298 523 824 16,331
Amortization for the period - 331 360 167 211 1,069
Currency translation differences 158 48 (5) (3) - 198
As at June 30, 2023 12,289 1,934 1,653 687 1,035 17,598
Net book value
As at December 31, 2022 8,456 4,039 3,045 2,492 2,410 20,442
As at June 30, 2023 8,986 4,391 2,874 2,385 3,036 21,672
17. Property, plant and equipment
Machinery and equipment Motor vehicles Computers and software Furniture and fixtures Land and buildings Total
Cost US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at January 1, 2022 7,288 536 914 474 1,523 10,735
Additions 2,272 26 197 50 2,736 5,280
Disposals (69) (12) - - - (81)
Reclassifications (407) 59 - 348 - -
Currency translation differences (233) (1) (21) (23) (91) (369)
As at December 31, 2022 8,851 608 1,090 849 4,168 15,565
Additions 504 32 2 42 4 584
Disposals (807) (45) (3) - - (855)
Reclassifications (32) - - 32 - -
Currency translation differences 118 2 29 17 41 207
As at June 30, 2023 8,634 597 1,118 940 4,213 15,502
Depreciation and accumulated impairment losses
As at January 1, 2022 2,723 330 619 86 112 3,870
Charge for the year 763 90 218 83 128 1,282
Eliminated on disposal (27) (5) - - - (32)
Impairment loss 730 - - - - 730
Reclassifications (222) - - 222 - -
Currency translation differences (67) - (9) (3) (7) (86)
As at December 31, 2022 3,900 415 828 388 233 5,764
Charge for the period 437 42 59 55 117 710
Eliminated on disposal - (21) (1) - - (22)
Currency translation differences 68 1 24 7 7 106
As at June 30, 2023 4,405 437 910 450 356 6,558
Net book value
As at December 31, 2022 4,951 193 262 461 3,935 9,802
As at June 30, 2023 4,229 160 208 490 3,856 8,944
18. Right-of-use assets
Land and buildings Motor vehicles Machinery and equipment Total
Cost US$'000 US$'000 US$'000 US$'000
As at January 1, 2022 8,913 611 341 9,865
Additions 86 174 1,921 2,181
Disposals due to expiry of lease - (36) - (36)
Disposals due to business combination* (467) - - (467)
Modification to lease terms** (1,199) - - (1,199)
Currency translation differences (381) (67) (26) (474)
As at December 31, 2022 6,952 682 2,236 9,870
Additions 98 93 791 982
Disposals due to expiry of lease (220) - - (220)
Modification to lease terms** (253) (54) - (307)
Currency translation differences 160 18 30 208
As at June 30, 2023 6,737 739 3,057 10,533
Depreciation
As at January 1, 2022 1,716 109 66 1,891
Depreciation for the year 730 140 68 938
Disposals due to expiry of lease - (36) - (36)
Modification to lease terms** (693) - - (693)
Currency translation differences (34) (6) (9) (49)
As at December 31, 2022 1,719 207 125 2,051
Depreciation for the period 357 76 46 479
Disposals due to expiry of lease (118) - (32) (150)
Modification to lease terms** (173) (16) - (189)
Currency translation differences (21) 5 3 (13)
As at June 30, 2023 1,764 272 142 2,178
Net book value
As at December 31, 2022 5,233 475 2,111 7,819
As at June 30, 2023 4,973 467 2,915 8,355
*With the acquisition of ChemTex Laboratories' property, plant and equipment,
the Group no longer has a lease liability with a third party.
**The Group agreed to shorten the agreed lease terms of two existing leases
from 2032 to 2027. These modifications have resulted in a reduction in the
total amounts payable under the leases and a reduction to both of the
right-of-use assets and lease liabilities with effect from the date of
modification.
19. Other non-current assets
As at As at
June 30, 2023 December 31, 2022
Other non-current assets US$'000 US$'000
Deposits 96 80
Other prepayments 86 57
Other non-current assets 182 137
20. Inventories
As at As at
June 30, 2023 December 31, 2022
Inventories US$'000 US$'000
Functional ingredients 11,044 7,420
Functional materials 1,188 4,000
Functional consumer goods 2,174 1,748
Total inventories 14,406 13,168
The cost of inventories recognized as an expense in the six months ended June
30, 2023 in respect of continuing operations was US$12,110,000 (December 31,
2022: US$33,597,000).
21. Trade receivables
As at As at
June 30, 2023 December 31, 2022
Trade receivables US$'000 US$'000
Not past due 5,027 2,788
< 30 days 1,256 520
31-60 days 402 781
61-90 days 667 215
91-120 days 94 180
>120 days 1,223 2,407
Total trade receivables 8,669 6,891
Provision for expected credit losses (413) (404)
Total trade receivables (net) 8,256 6,487
The average credit period on sales of goods varies by region from 30 - 120
days. No interest is charged on outstanding trade receivables. The Group
always measures the loss allowance for trade receivables at an amount equal to
lifetime ECL. The expected credit losses on trade receivables are estimated
using a provision matrix by reference to past default experience of the debtor
and an analysis of the debtor's current financial position, adjusted for
factors that are specific to the debtors, general economic conditions of the
industry in which the debtors operate and an assessment of both the current as
well as the forecast.
As at June 30, 2023, the Group has recognized an expected credit loss of
US$413,000 (2021: US$404,000).
22. Other receivables and prepayments
As at As at
June 30, 2023 December 31, 2022
Total other receivables and prepayments US$'000 US$'000
Contract assets 108 115
Receivables from tax authorities 2,271 1,864
Prepayments 969 1,023
Other receivables 883 1,260
Total other receivables and prepayments 4,231 4,262
23. Contract assets
Amounts relating to contract assets are balances due from customers under
construction contracts that arise when the Group receives payments from
customers in line with a series of performance-related milestones. The Group
recognizes a contract asset for any work performed. Any amount previously
recognized as a contract asset is reclassified to trade receivables at the
point at which it is invoiced to the customer.
As at As at
June 30, 2023 December 31, 2022
Contract assets US$'000 US$'000
Research and development services 108 65
Exclusivity services - 50
Total contract assets 108 115
Current assets 108 115
Non-current assets - -
Total contract assets 108 115
Revenues related to research and development services were recognized at the
point of delivering proof of concept and completing testing services.
Performance obligations related to exclusivity services were deemed fulfilled
by the Group upon completion of the contractual term. Payment for the above
services is not due from the customer yet and therefore a contract asset is
recognized.
The directors of the Company always measure the loss allowance on amounts due
from customers at an amount equal to lifetime ECL, taking into account the
historical default experience, the nature of the customer and where relevant,
the sector in which they operate. There has been no change in the estimation
techniques or significant assumptions made during the current reporting period
in assessing the loss allowance for the amounts due from customers under
construction contracts.
Lifetime Expected credit losses on contract assets
The following table details the risk profile of amounts due from customers
based on the Group's provision matrix. Based on the historic default
experience, the following expected credit loss has been recognized:
As at As at
June 30, 2023 December 31, 2022
Expected credit loss US$'000 US$'000
Expected credit loss rate 0% 0%
Estimated total gross carrying amount at default 108 115
Lifetime ECL - -
Net carrying amount 108 115
24. Issued share capital and share premium
Movements in the Company's share capital and share premium account were as
follows:
Number of shares Share capital Share premium Totals
No. US$'000 US$'000 US$'000
Balance as of January 1, 2022 130,583,536 51,523 144,191 195,714
Issue of shares to vendors of Life Materials 347,552 141 471 612
Issue of shares as deferred consideration 3,461,615 1,359 2,921 4,280
Issue of shares to Advisory Board and others 164,721 60 175 235
Issue of shares to vendors of ChemTex Labs 2,176,884 795 1,177 1,972
Issue of shares to vendors of Chrisal 3,348,164 1,223 1,838 3,061
Balance as at December 31, 2022 140,082,472 55,101 150,773 205,874
Issue of shares Tarn Pure (a) 455,435 160 212 372
Balance as at June 30, 2023 140,537,907 55,261 150,985 206,246
The par value of all shares is £0.30. All shares in issue were allotted,
called up and fully paid.
The share premium account represents the amount received on the issue of
ordinary shares by the Company in excess of their nominal value and is
non-distributable.
The Company issued new ordinary shares for the following:
On January 12, 2023, HeiQ plc completed the acquisition of 100% of the issued
share capital and voting rights of Tarn Pure for a total consideration of
US$993,000. The purchase consideration was payable partly in cash (US$621,000)
and partly by the issue of 455,435 new ordinary shares for (US$372,000). See
Note 4 for details.
25. Share-based payments
Equity-settled Share Option Scheme
Following employee departures, the number of options expected to vest dropped
to 2,279,236 as per June 30, 2023 (December 31, 2022: 2,497,281). The expense
arising from these share-based payment transactions was US$132,000 for the six
months ended June 30, 2023 which compares against an income of US$12,000 for
the year ended December 31, 2022 following a drop in market expectations
during the second half of 2022. In the six months ended June 30, 2022, the
Group incurred an expense of US$415,000.
Other share-based payments
Remuneration of US$764,000 in relation to the acquisition of Life Materials
Technologies Limited is linked to a service period of five years. An expense
of US$75,000 was recognized in the six months ended June 30, 2023 (six months
ended June 30, 2023: US$71,000; year ended December 31, 2022: US$150,000). The
remainder of approximately US$469,000 is expected to be expensed over the
period from July 1, 2023, to June 30, 2026.
26. Other reserves
Other reserves comprise the share-based payment reserve, the merger reserve,
the currency translation reserve and the other reserve.
The retained deficit comprises all other net gains and losses and transactions
with owners not recognized elsewhere.
Movements in the other reserves were as follows:
Share- based payment reserve Merger reserve Currency translation reserve Other reserve Total Other reserves
Note US$'000 US$'000 US$'000 US$'000 US$'000
Balance at January 1, 2022 474 (126,912) 387 (1,144) (127,195)
Other comprehensive (loss)/income - - (1,914) 1,104 (810)
Total comprehensive (loss)/income for the year - - (1,914) 1,104 (810)
Share-based payment charges 25 (12) - - - (12)
Transactions with owners (12) - - - (12)
Balance at December 31, 2022 462 (126,912) (1,527) (40) (128,017)
Other comprehensive (loss)/income - - 429 - 429
Total comprehensive (loss)/income for the period - - 429 - 429
Share-based payment charges 132 - - - 132
Transactions with owners 132 - - - 132
Balance at June 30, 2023 594 (126,912) (1,098) (40) (127,456)
The share-based payment reserve arises from the requirement to fair value the
issue of share options at grant date. Further details of share options are
included at Note 25.
The currency translation reserve represents cumulative foreign exchange
differences arising from the translation of the financial statements of
foreign subsidiaries and is not distributable by way of dividends.
Dividend paid by subsidiary
In June 2022, HeiQ Chrisal N.V. declared and paid a dividend of €470,000
(approximately US$496,000) of which 49% or US$243,000 was paid to minority
shareholders.
Capital contributions from minority shareholders
The Group received in 2022 a capital contribution from a minority shareholder
of US$764,000 which arose from a waived loan.
27. Borrowings
The Group's borrowings are held at amortized cost. They consist of the
following:
As at As at
June 30, 2022
December 31, 2022
Borrowings US$'000 US$'000
Unsecured bank loans 8,533 3,573
Secured bank loans 213 628
Loans from non-controlling interest 591 137
Total borrowings 9,337 4,338
The other principal features of the Group's borrowings are as follows:
Unsecured bank loans
A credit facility amounting to CHF 2,400,000 (US$2,574,000) was taken out in
December 2022 which incurs interest at a fixed rate of 2.2%. It was repaid on
February 28, 2023 and the loan was replaced with a new credit facility worth
CHF 4,500,000 (US$ 4,964,000).
Several loans amounting to US$1.6 million were assumed through the acquisition
of Chrisal. They finance the acquisition of property, plant and equipment as
well as the prepayment of provisional taxes. A further €277,000 was taken
out in February 2023 which is repayable over ten years. As at June 30, 2023, a
total of €1,271,000 (US$1,387,000) is outstanding (December 2022: €938,000
(US$999,000)). The loans are repayable over a period of up to ten 10 years.
These loans all have fixed interest rates between 0.78 and 3.95% and the
weighted average fixed interest rate on the outstanding balances is 2.85%.
Loans from non-controlling interests
A loan is payable to a minority shareholder of Life-Materials Latam Ltda,
Brazil. Interest is fixed at 0.5%. There is no specific repayment date, but
the loan is payable once the entity is able to repay it. The balance was BRL
1,020,000 (approximately US$210,000) as at June 30, 2023 (December 31, 2022 is
BRL 715,683 (US$137,000).
Secured bank loans
A bank loan taken out in October 2020 which incurs interest at a fixed rate of
3.25% and which is secured on property owned by a company which is controlled
by a minority shareholder of HeiQ Medica. It is repayable in equal monthly
instalments of €8,000 (US$9,500) over eight years up to September 2028. As
at June 30, 2023, €542,500 (US$592.000) is outstanding (December 31, 2022:
US$629,000).
The following table provides a reconciliation of the Group's future maturities
of its total borrowings for each year presented:
As at As at
June 30, 2023
December 31, 2022
Maturity of borrowings US$'000 US$'000
Not later than one year 7,471 2,893
Later than one year but less than five years 721 1,029
After more than five years 1,145 416
Total borrowings 9,337 4,338
28. Deferred tax
The following are the major deferred tax liabilities and assets recognized by
the Group and movements thereon during the current and prior reporting period.
Pension fund obligations Tax losses Share-based payments Capital allowances, depreciation and other temporary differences Total
Deferred tax US$'000 US$'000 US$'000 US$'000 US$'000
Balance at January 1, 2022 429 178 85 (1,686) (994)
Charge to profit or loss 49 (150) 1 681 581
Charge to other comprehensive income (276) - - - (276)
Foreign currency differences (12) (28) 5 9 (26)
Balance as at December 31, 2022 190 - 91 (996) (715)
Charge to profit or loss 9 - 25 117 151
Business combinations - - - (201) (201)
Foreign currency differences 6 - 1 - 7
Balance as at June 30, 2023 205 - 117 (1,080) (758)
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis. The following is the analysis of the deferred tax balances (after
offset) for financial reporting purposes:
As at As at
June 30, 2023
December 31, 2022
Deferred tax US$'000 US$'000
Deferred tax assets 579 538
Deferred tax liabilities (1,337) (1,253)
Net deferred tax assets (liabilities) (758) (715)
Deferred tax liabilities related to capital allowances and depreciation
decreased following the amortization of intangible assets acquired in the
business combinations in 2021.
29. Other non-current liabilities
Other non-current liabilities As at As at
December 31, 2022
June 30, 2023
US$'000
US$'000
Defined benefit obligation IAS 19 Switzerland 1,023 952
Defined benefit obligation IAS 19 Thailand 130 134
Contract liabilities 4,233 3,614
Deferred grant income 386 14
Total other non-current liabilities 5,772 4,714
30. Trade and other payables
As at As at
June 30, 2023 December 31, 2022
Trade and other payables US$'000 US$'000
Trade payables 6,086 3,321
Payables to tax authorities 326 375
Other payables 2,241 1,626
Total trade and other payables 8,653 5,322
Trade payables principally comprise amounts outstanding for trade purchases
and ongoing costs. Other payables relate to employee-related expenses,
utilities and other overhead costs. Typically, no interest is charged on the
trade payables. The Group has financial risk management policies in place to
ensure that all payables are paid within the pre-agreed credit terms.
The directors consider that the carrying amount of trade payables approximates
to their fair value.
31. Accrued liabilities
As at As at
June 30, 2023 December 31, 2022
Accrued liabilities US$'000 US$'000
Costs of goods sold 909 875
Personnel expenses 1,415 1,737
Other operating expenses 1,368 2,366
Total accrued liabilities 3,692 4,978
32. Deferred revenue
As at As at
June 30, 2023 December 31, 2022
Deferred revenue US$'000 US$'000
Contract liabilities 1,230 1,176
Prepayments for unshipped goods 80 94
Deferred grant income 55 15
Total deferred revenue 1,365 1,285
33. Contract liabilities
As at As at
June 30, 2023 December 31, 2022
Contract liabilities US$'000 US$'000
Exclusivity agreements 1,585 1,832
Research and development services 3,878 2,958
Total contract liabilities 5,463 4,790
Current liabilities (Note 32) 1,230 1,176
Non-current liabilities (Note 29) 4,233 3,614
Total contract liabilities 5,463 4,790
Revenue relating to both exclusivity and research and development services is
recognized over time although the customer pays up-front in full for these
services. A contract liability is recognized for revenue relating to the
services at the time of the initial sales transaction and is released over the
service period.
34. Other current liabilities
As at As at
June 30, 2023 December 31, 2022
Current liabilities US$'000 US$'000
Deferred consideration in relation to acquisitions 92 92
Call option liability 453 686
Other current liabilities 545 778
35. Contingent assets and liabilities
On October 10, 2022 the Group announced that it has filed a complaint in the
United States District Court for the Western District Of North Carolina,
Charlotte Division, against ICP Industrial Inc, for breaching its Exclusive
Agreement terms. Because of the claimed contract breach, the Group has not
recognized any income or assets from the contract. Within the same legal
proceeding, ICP Industrial Inc, has filed a counter claim against the Group.
Although the Group is confident in its legal position, the outcome of the
legal proceedings as well as the court-mandated mediation remains uncertain.
Therefore, while a future economic benefit is expected, it can not be reliably
quantified at this point in time and could bear the risk of prejudice given
the ongoing legal proceedings.
36. Provisions
Provisions As at As at
June 30, 2023 December 31, 2022
US$'000 US$'000
Current liabilities - 339
Non-current liabilities - -
Total provisions - 339
Legal/Compliance provision Total
Current liabilities US$'000 US$'000
Balance at January 1, 2022 - -
Additional provision in the year 339 339
Utilization of provision - -
Exchange difference - -
Balance as at December 31, 2022 339 339
Additional provision in the period - -
Utilization of provision (339) (339)
Exchange difference - -
Balance as at June 30, 2023 - -
The Group was contacted by the United States Environmental Protection Agency
("EPA") in connection with violations of the Federal Insecticide, Fungicide
and Rodenticide Act ("FIFRA") pertaining to mislabelling. As at December 31,
2022, the Company has assessed the claim and made a provision for US$339,000
which was paid in May 2023.
This provision is reported in Note 31 as Accrued liabilities - Other operating
expenses.
37. Notes to the statements of cash flows
Non-cash transactions
Certain shares were issued during the year for a non-cash consideration as
described in Note 24.
During the year ended December 31, 2022, additions to buildings and land
amounting to US$1,862,000 million were financed by issuing shares.
Working capital reconciliation:
The Company defines working capital as trade receivables, other receivables
and prepayments less trade and other payables, accrued liabilities and
deferred revenue.
Six months ended June 30, 2023 Opening balances Assumed on acquisition of subsidiaries Change in balance Closing balances
US$'000 US$'000 US$'000 US$'000
Inventories 13,168 13 1,225 14,406
Trade receivables 6,487 11 1,758 8,256
Other receivables and prepayments 4,262 12 (43) 4,231
Trade and other receivables and prepayments 10,749 23 1,715 12,487
Trade and other payables 5,322 - 3,331 8,653
Accrued liabilities 4,978 - (1,286) 3,692
Deferred revenue incl. non-current contract liabilities 4,913 - 1,072 5,985
Trade and other payables, accrued liabilities and deferred revenue 15,213 - 3,117 18,330
Six months ended June 30, 2022 Opening balances Assumed on acquisition of subsidiaries Change in balance Closing balances
US$'000 US$'000 US$'000 US$'000
Inventories 13,770 - 2,414 16,184
Trade receivables 14,656 - 3,462 18,118
Other receivables and prepayments 3,876 - (1,854) 2,022
Trade and other receivables and prepayments 18,532 - 1,608 20,140
Trade and other payables 8,271 - (1,312) 6,959
Accrued liabilities 3,386 - (1,208) 2,178
Deferred revenue incl. non-current contract liabilities 1004 - 4,968 5,972
Trade and other payables, accrued liabilities and deferred revenue 12,661 - 2,448 15,109
Year ended December 31, 2022 Opening balances Assumed on acquisition of assets Change in balance Closing balances
US$'000 US$'000 US$'000 US$'000
Inventories 13,770 - (602) 13,168
Trade receivables 14,656 - (8,169) 6,487
Other receivables and prepayments 3,876 - 386 4,262
Trade and other receivables and prepayments 18,532 - (7,783) 10,749
Trade and other payables 8,271 - (2,949) 5,322
Accrued liabilities 3,386 9 1,583 4,978
Deferred revenue incl. non-current contract liabilities 1,004 - 3,909 4,913
Trade and other payables, accrued liabilities and deferred revenue 12,661 9 2,543 15,213
Consideration for acquisition of businesses (Note 4)
Six months ended June 30, 2023 US$'000
Consideration payment for acquisition of Tarn Pure 621
Cash assumed on acquisition of Tarn Pure (2)
Net consideration payment for acquisitions of businesses and assets 619
Year ended December 31, 2022 US$'000
Consideration payment for acquisition of Life Materials Technologies Ltd 1,400
Consideration payment for acquisition of ChemTex assets 187
Net consideration payment for acquisitions of businesses and assets 1,587
38. Related party transactions
The Group have not identified any significant transactions with related
parties. There are no loans outstanding with related parties.
39. Material subsequent events
As communicated on July 06, 2023, HeiQ Plc sold a 1.5% minority interest in
HeiQ AeoniQ GmbH to MAS Holdings for US$1.5 million. It was also agreed that a
further 1% shareholding will be sold to MAS Holdings for US$1 million subject
to the achievement of a mutually agreed milestone.
40. Ultimate controlling party
As at June 30, 2023, the Company did not have any single identifiable
controlling party.
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