REG - HeiQ PLC - Results for 18-month period ended 30 June 2024
31/10/2024 07:00
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RNS Number : 3126K HeiQ PLC 31 October 2024
31 October 2024
HeiQ Plc
("HeiQ" or "the Company")
Results for 18-month period ended 30 June 2024
HeiQ Plc (LSE: HEIQ), a leading company in materials innovation and hygiene
technologies, announces its audited financial results for the 18 months ending
30 June 2024.
Financial Overview:
· Revenue of US$62.3 million (12 months to 31 December 2022:
US$47.2 million)
· Gross profit margin of 36.6% (12 months to 31 December 2022:
28.5%)
· Adjusted LBITDA of US$9.9 million (12 months to 31 December 2022:
US$12.2 million)
· Operating loss of US$19.0 million (12 months to 31 December 2022:
loss of US$29.2 million)
· Loss after taxation of US$21.3 million (12 months to 31 December
2022: loss of US$29.8 million)
· Cash at 30 June 2024 of US$5.0 million with net debt (including
lease liabilities) of US$13.4 million
Operational Overview:
· Julien Born appointed as CEO of HeiQ AeoniQ Holdings to lead
global expansion
· Robert van de Kerhof appointed as new Chair of HeiQ plc
· Successful fundraising of £2.4 million through placing,
convertible loan note and retail offer
· Acquisition of Portugal factory site for HeiQ AeoniQ's first
commercial production plant
· HeiQ Synbio signed a significant distributor agreement with
Ecolab Inc
Post Period:
· Initiated a major restructuring project aimed at reducing costs
by an additional 20% by the end of 2025.
· The Board announced on 22 October 2024 its intention to de-List
the Company from the London Stock Exchange, effective November 19, 2024. This
step has been taken to streamline operations and allocate resources more
effectively. The Board has deemed the cost burden of maintaining a public
listing outweighs the benefits, particularly as HeiQ's venture businesses
progress and require substantial capital for growth. This move will enable
more targeted private fundraising and allow for focused investment in
high-growth areas.
Annual Report:
The Company's Annual Report and Accounts for the 18 month period ended 30 June
2024 will shortly be available to view on HeiQ's
website, www.heiq.com/investors (http://www.heiq.com/investors) . A copy of
the Annual Report will also be submitted to the Financial Conduct Authority in
the United Kingdom via the National Storage Mechanism ("NSM"), available for
inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . Copies will be
posted to shareholders in the coming days.
Carlo Centonze, co-founder and CEO, HeiQ plc, said:
"The decision to de-list from the London Stock Exchange is a strategic step
aimed at optimizing our resources during these challenging times. Operating as
a private company will allow us to channel our efforts and capital more
directly into scaling our innovative ventures, particularly HeiQ AeoniQ, which
requires significant investment for its commercial production phase. We are
deeply grateful to our shareholders, team, and partners for their support
to-date. It has not been an easy period in our company journey, however we
remain steadfast in our mission create sustainable, long-term growth as we
enter our new chapter."
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 / Molly Gretton / Tom Carnegie HeiQ@s (mailto:HeiQ@secnewgate.co.uk) ecnewgate (mailto:HeiQ@secnewgate.co.uk)
.co.uk (mailto:HeiQ@secnewgate.co.uk)
About HeiQ
Founded in 2005, HeiQ is a Swiss-based international company that is a global
leader in biotech ingredients and specialty chemicals for diverse applications
such as textiles, flooring, building materials, glass, plastics, probiotic
cleaning, cosmetics, and more. Working with more than 1000 partners in over 60
countries, our goal is to infuse ordinary products with extraordinary
qualities, offering our co-creation partners sustainable and disruptive
solutions across industries.
Our business model focuses on the commercialization of existing and as well as
the incubation of new technologies, driving shareholder value through sales
growth, entry into lucrative markets, and disruptive innovation. This model
consists of three distinct technology ventures, being HeiQ AeoniQ, HeiQ
Xpectra, and HeiQ GrapheneX, and three growth-orientated business units being
HeiQ Textiles & Flooring, HeiQ Life Sciences, and HeiQ Antimicrobials.
We have a robust track record of innovation, with over 200 technologies
developed in partnership with 300 major brands, including Hanes, Burberry,
HUGO BOSS, Lycra, Zara, Itochu, Bosch Siemens, Ecolab, Woellner, Americhem,
Lixil, and many more. Our global team comprises about 200 professionals from
30 nationalities across five continents. We're committed to shaping a future
where everyday products drive positive change, one innovation at a time.
To learn more about HeiQ and our innovative solutions, visit www.heiq.com.
Chair's Statement
Re-position for growth
Over the reporting period, HeiQ has been challenged with, on one side the
continued suppressed market conditions for our Textile & Flooring, and
Antimicrobial businesses, while on the other side, the LifeSciences business
and the three new ventures continue to deliver against our expectations.
Considering the limited visibility of when the suppressed markets will
recover, and the short term need to invest in the growth ventures, the Board
has made two important decisions.
First, it initiated a major restructuring project which will reduce costs by
an additional 20% by the end of 2025. This project includes the merger of the
Textile & Flooring and Antimicrobials into one business unit "Advanced
Materials", headcount reduction, and the optimization of our geographical
presence.
The impact of the project is essential for the future value creation of HeiQ
for its investors as it allows the Company to focus on materializing on the
significant growth potential of the LifeSciences business (HeiQ Synbio), as
well as investing in the three venture businesses HeiQ AeoniQ, HeiQ Graphenex,
and HeiQ Xpectra despite suppressed markets for today's main commercial
businesses.
Second, the Board has decided to cancel the listing of HeiQ PLC at the London
Stock Exchange effective November 19, 2024 for two main reasons: The cost
burden associated with maintaining the Company's listing is disproportionate
to the benefits and secondly, each of our venture businesses is making great
progress and will require capital over the next year to take the next, value
creating steps. In particular HeiQ AeoniQ will require significant investments
for the first commercial plant in Portugal in the near future. The Directors
believe that de-listing and operating as a private company benefits
fundraising at appropriate valuations for the ventures and enables their
growth and value creation for the Company's shareholders accordingly.
Outlook
For the merged business unit Advanced Materials, we expect markets to remain
weak until at least the second half of 2025 and thus, we are consolidating the
business capabilities into three main hubs (USA, Portugal, Thailand) in the
course of 2025. The LifeSciences business unit is expected to grow
significantly as industrial pro-/postbiotic solutions gain market acceptance
in various applications.
For each of our three venture units, 2025 will be a critical year in terms of
proof of concept (HeiQ GrapheneX), market launch of first applications (HeiQ
Xpectra) and financing of the first commercial plant (HeiQ AeoniQ).
Therefore, it is vital that the venture teams can focus on delivering these
milestones and that the corporate structure enables them to do so.
On behalf of the full Board, I sincerely thank the HeiQ management team and
all employees for their dedication, resilience and commitment over the past 18
months. It has not been an easy period, but your hard work and passion have
been instrumental in advancing our mission.
I also truly thank all our long- and shorter-term investors for their support
as a public company and hope that we can count on most of them also throughout
our next chapter as a private company again.
Robert van de Kerkhof
Chair
Chief Executive Officer's review
Advancing innovation in curtailed markets
The beating heart of our innovation engine is to solve real world problems
brought to us by our customers, with science. Over the past 18 months we were
able to advance the technology readiness level of all our three disruptive
venture platforms. With HeiQ AeoniQ, the climate positive cellulosic filament
fibers from our Austrian pilot plant, we went to market with the capsule
collection by Hugo Boss "The Change" and demonstrated the potential to replace
70 million tons of oil-based synthetic fibers. With HeiQ GrapheneX we secured
a joint development agreement with a fortune 500 player in handheld mobile
devices for our novel double energy density anode free lithium metal battery.
With HeiQ Xpectra we secured a fortune 500 company to co-develop a transparent
heat-reflective coating for simple, rapid and cost-effective building
insulation. At the same time we signed a multi-year exclusive strategic
partnership with a further fortune 500 company, Ecolab, for the distribution
of our HeiQ Synbio probiotic cleaner line for hospitals and industrial
customers (BU LifeSciences). A publication in the Lancet and more recently in
the Antimicrobial Resistance & Infection Control confirmed that HeiQ
Synbio indeed is a unique solution to reduce antibiotic resistant genes in
pathogens causing hospital acquired infections.
Our traditional business in textile, flooring and antimicrobials did its very
best to cross-finance the advancement of our disruptive venture technology
platforms; replacing oil-based and microplastic polluting synthetic fibers;
enabling double energy density batteries; insulating rapidly and
cost-efficiently the 50% poor building cohorts of Europe and blunting the
damocletian sword of antimicrobial resistant genes in hospitals. It did so in
adverse market conditions, with our loyal customer base operating at a reduced
50% to 70% capacity over the past two years.
There were plenty of headwinds in the reporting period. We held the line and
advanced our venture innovations, yet at high cost.
Trading Update
Markets remained a challenge throughout the period for our industry and our
business. At the start of 2023, we took steps to reduce our cost base and
reorganize the business. We have not seen the challenges abate in 2024 and
thus have taken further restructuring actions to be in a better position going
forward to manage the challenging macro-economic environment, to continue
building value in our core innovations and to preserve our ability to deliver
when the market demand turns.
Our credit facilities continue to be uncommitted in nature, which casts a
material uncertainty on the going concern assessment until appropriate
longer-term funding is in place, as disclosed in the Notes to the financial
statements.
While the financial statements continue to be prepared on a going concern
basis, the Board is of the view that, pending implementation of the
restructuring, the Group has adequate resources. The main cash burn is related
to investments in the ventures which could be reduced or stopped in case
needed. HeiQ is in discussions to raise additional equity for those ventures
and adapting the speed of investment accordingly.
Restructuring and divesting
In an effort to drive additional savings while maintaining key capabilities we
are merging two business units (Textile & Flooring and Antimicrobials) to
form a new business unit Advanced Materials. Advanced Materials and
LifeScience each have their dedicated CEO, management team, and P&L
responsibility: Advance Materials, under the leadership of Mr. Mike Abbott,
headquartered in the US and LifeSciences, led by Dr. Robin Temmerman,
headquartered in Belgium
Besides continuing the streamlining and relocating of various support
functions out of Switzerland to lower-cost locations, we have created clear
goals and responsibilities for all our business and service organizations to
optimize operations and to focus resource allocation rigorously. We are
increasingly grouping our operations around our four hubs, USA, Belgium,
Portugal and Thailand to serve our customer base.
In Innovation, we keep focusing on technologies which are closest to cash-flow
generation or are already being financed by brand partners or through grants.
In Differentiation we are leveraging our brand customers to promote HeiQ to a
broader (consumer) audience thereby reducing our costs. We have further
streamlined our internal service organization, particularly in finance by
implementing a centralized accounting function to strengthen our financial
reporting processes.
Further restructuring currently being implemented, will aim to reduce our cost
base by an additional 20%. The announced de-listing contributes significantly
to the overhead cost reduction. However, refinancing will be necessary to push
forward with the scaling of our disruptive venture innovations. HeiQ AeoniQ
needs a large fundraise to build its first production plant and has engaged an
Investment Bank to support us in the task. The Board has judged that
fundraising is best achieved by raising capital in the private markets and
thus decided to cancel the listing of HeiQ plc as of November 19, 2024.
Advanced Materials (Merger between Textiles & Flooring &
Antimicrobials)
We have taken decisive steps to strengthen our position as the market leader
for branded, nominated textile innovation. Our top-selling products have been
further integrated backwards to improve margins. We have right sized our
presence in China and are building out our south Asia hub from Thailand. We
have moved the semi-specialty part of our production from Switzerland to the
US and our Innovation and Differentiation services to Portugal. We have worked
hard to reduce our net working capital and improve the market availability in
our main regions Asia, Europe and the Americas and we are integrating our
distributors better to have more retail and service power. We are considering
a divestment of one of our operational assets should we receive attractive
offers from the market.
LifeSciences
Following our break-through publication in the Lancet with the University
Hospital Charité Berlin study sponsored by the Melinda & Bill Gates
foundation and the German state, we secured the US based fortune 500 market
leader in Hygiene, Ecolab. Following changing regulations in the EU, we
secured a potent exclusive channel partner. Our task now is to invest and
scale for growth to disrupt the market with the market leader.
Venture Innovation
HeiQ AeoniQ successes to date include the launch to market with Hugo Boss the
world's first plastic minimized sneaker. With Robert van de Kerkhoff, former
CCO of man-made cellulosic fiber market leader Lenzing (Austria), we secured a
Chairman for HeiQ AeoniQ with deep fiber expertise. With Julien Born, former
CEO of The Lycra company, we have a CEO for HeiQ AeoniQ who brings the
expertise to finance and build our first two production plants. The asset
heavy and CAPEX intensive scale-up is a new challenge for HeiQ, one that we
must master to capture the technology value creation. At the end of 2023 we
purchased an industrial production site in Maia, Portugal to be the
cornerstone of the HeiQ AeoniQ scale-up and growth.
HeiQ GrapheneX has secured a joint development agreement with a fortune 500
player in handheld mobile devices for our novel double energy density anode
free lithium metal battery. For the next phase, we have reached out to
possible partners in Korea and Japan to access established battery clusters
for the further acceleration of our development. A first prototype is planned
to be ready by the end of 2024.
HeiQ Xpectra secured an extension of the joint development agreement with a
fortune 500 partner for the further development of electromagnetic signature
management for stealth functionality. A further fortune 500 partner was
secured for the co-development of a transparent heat reflective coating for
simple, rapid and cost-effective building insulation with a joint
commercialization launch planned for Q1 2025.
Outlook
Looking ahead, our vision remains firm: striving to improve the lives of
billions by bringing sustainable material technology solutions to market that
can make an impact. To achieve this and to weather current challenging market
conditions and financial uncertainties, we have taken and will take further
actions as and when needed to control our costs and sharpen our strategy. This
includes prioritizing innovations close to positive cash flow generation, to
put appropriate emphasis on operational excellence as well as to drive to
market our high potential venture innovation initiatives with their superior
performance and sustainability profiles.
We expect the above-mentioned additional restructuring measures to flow
through to our bottom line in H2 2025 with corresponding stabilization of our
financial performance. However, we remain alert to take additional corrective
action or seek additional fundraising should markets deteriorate further.
As always, 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 market and the Group. As a significant shareholder
and a founder of HeiQ, my commitment to grow HeiQ and materialize its
technological potential remains unchanged.
Carlo Centonze
CEO
Financial Review
Difficult market conditions for our main commercial business remained
through-out the 18-months reporting period ending June 30, 2024. Revenues
suffered from continuing reduced market demand and the anticipated recovery
did not yet occur. Since the second half of 2022 we have seen revenues
remaining at a low level of roughly US$20 million per each six-month period as
a reflection of continuing low market demand mainly in the textile industry.
On an annualized basis revenues decreased by 12.3% in the reporting period
compared to 2022.
Following the recording of a significant allowance on inventory in 2022, the
overall gross margin has recovered to 36.6% in the reporting period (2022:
28.5%).
In order to adapt to the decrease in revenues, the Board has implemented
various cost reduction measures throughout the period. On an annualized basis,
these measures have contributed to reduce selling and general administration
expenses (SG&A) by 5.8% compared to 2022, whereas not all implemented
measures have fully materialized by the end of the reporting period yet.
The improved margin and reduced SG&A expenses are the key drivers for the
significantly improved adjusted EBITDA in the reporting period compared to the
prior period (annualized: reduction of adjusted EBITDA loss by 45.6%).
The proceeds (gross amount US$2.75 million) from the out-of-court settlement
of the ICP case are a key driver of Other Income in the reporting period.
Financial performance
Period ended Year ended
June 30, 2024 December 31, 2022
Financial performance US$'000 US$'000
Revenue 62,318 47,202
Gross profit 22,833 13,457
Gross profit margin 36.6% 28.5%
Selling and general administrative expenses (43,769) (30,969)
Impairment losses (323) (12,381)
Net other income/(expenses) 2,277 648
Operating loss (18,982) (29,245)
Operating margin (30.5%) (62.0%)
Loss after taxation (21,338) (29,814)
Adjusted EBITDA (9,935) (12,174)
EBITDA margin (adjusted) (15.9%) (25.8%)
Adjusted EBITDA
Reported adjusted EBITDA loss was US$9.9 million for the period compared to a
EBITDA loss of US$12.2 million in 2022.
EBITDA is a way of measuring cash generation. HeiQ therefore adjusts EBITDA
for share options and rights granted to Directors and employees and
significant non-cash items being impairments of goodwill and intangible
assets.
Period ended Year ended
June 30, 2024 December 31, 2022
US$'000 US$'000
Operating loss (18,982) (29,245)
Depreciation 3,888 2,220
Amortization 3,238 1,435
Impairment losses and write-offs 1,742 13,278
Share options and rights granted to Directors and employees 179 138
Adjusted EBITDA (9,935) (12,174)
Reporting as per new Business Unit structure
Following the merger of the two former Business Units Textiles & Flooring
and Antimicrobials into Advanced Materials, HeiQ reports three segments: the
two commercial Business Units as well as "Other activities". Other activities
include the Venture Units as well as not allocated items including Innovation
Service function. In 2022 SG&A expenses have been allocated to Business
Units only to a limited extent with focus on commercial activities. For 2023
and going forward, the Group had allocated costs more extensively to the
Business Units.
Advanced Materials LifeSciences Other activities Total
US$'000 Period 23/24 Year Period 23/24 Year Period 23/24 Year Period 23/24 Year
2022 2022 2022 2022
Revenue 50,697 38,366 6,988 6,164 4,633 2,672 62,318 47,202
Operating profits (loss) (4,391) (14,347) (1,385) (5,537) (13,206) (9,361) (18,982) (29,245)
Financial result (1,441) (590)
Loss before taxation (20,423) (29,835)
Taxation (915) 21
Loss after taxation (21,338) (29,814)
Depreciation and amortization
Property, plant and equipment 1,200 362 453 335 662 585 2,315 1,282
Right-of use assets 383 165 218 145 972 628 1,573 938
Intangible Assets 1,512 773 837 550 889 112 3,238 1,435
Impairment loss
Property, plant and equipment - - - 730 - - - 730
Intangible Assets 323 8,247 - 2,402 - 1,002 323 11,651
On an annualized basis, both Business units show a decrease in revenues. While
for Advanced Materials this is driven by the general market conditions, for
LifeSciences this is rather driven by the discontinued face mask business and
related revenues that were still significant in 2022.
Revenues allocated to other activities encompass mainly Innovation Services
provided to 3rd party customers and from the Venture Units.
Statement of Financial Position
Total assets were US$62.6 million as of June 30, 2024 (December 31, 2022:
US$71.1 million) with equity amounting to US$25.4 million and liabilities of
US$37.1 million as of June 30, 2024 (December 31, 2022: US$40.3 million equity
and US$30.8 million of liabilities). This corresponds to an equity ratio of
41% (2022: 57%).
Non-current assets increased from US$38.7 million (December 31, 2022) to
US$40.1 million as of June 30, 2024, mainly driven by acquisition of two
industrial sites in Portugal in 2024.
Current assets decreased by 30.8% to US$22.5 million as of June 30, 2024
(US$32.4m as of December 31, 2022) driven by a reduction of inventories. The
cash balance decreased by US$3.5 million and was US$5.0 million as of June 30,
2024 (December 31, 2022: US$8.5 million).
The increase in total liabilities was mainly driven by short- and long-term
borrowings, reflecting the increased use of credit facilities. Total
liabilities increased by US$6.3 million (20.5%) from US$30.8 million as of
December 31, 2022 to US$37.1 million as of June 30, 2024. Net debts (including
lease liabilities) amount to US$13.4 million as of June 30, 2024 (December 31,
2022: US$3.7 million).
In March 2024 the Company completed a fund raise of GBP 2.436 million through
the issuance of 28 million new ordinary shares. At the same time, the general
meeting approved a capital reorganization in course of which each existing
ordinary share was subdivided into one new ordinary share of 5 pence and one
deferred share of 25 pence. Following the fund raise, the Company has
168'537'907 ordinary shares of 5 pence each in issue.
Cash Flow Statement
Net cash generated from operating activities in the 18-months period continued
to be negative and amounted to US$-3.7 million (2022: US$-2.5 million). On an
annualized basis, this represents a decrease of -1.3% versus revenues being
down by -12.3% compared to the prior period.
Cash used in investing activities amounts to US$8.4 million in the reporting
period (2022: US$8.8 million) and is largely driven by the acquisition of two
industrial sites in Portugal in relation to HeiQ AeoniQ for a total
consideration of €5.0 million including taxes.
Net cash from financing activities amounted to US$8.7 million (2022: US$5.9
million net cash used). This includes US$3.0 million net proceeds from the
fund raise in March 2024 as well as an increase in borrowings.
The Group reports a cash balance of US$5.0 million as of June 30, 2024
(December 31, 2022: US$8.5 million).
Going Concern Assessment
To manage its cash balance, the Group has access to credit facilities totaling
CHF8.06 million (approximately US$9.3 million as of September 30, 2024). 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 one month. One credit facility is being
reduced monthly by CHF0.02 million (approximately US$0.02 million) and the
other facility is being reduced quarterly by CHF0.2 million (approximately
US$0.23 million) until December 31, 2024 and CHF0.25 million (approximately
US$0.29 million) per quarter thereafter.
The facilities are not committed, but the Board has not received any
indication from financing partners that facilities are at risk of being
terminated and mentioned repayment schedules have been agreed only recently.
As of September 30, 2024, the Group has drawn fixed advances of CHF7.06
million and EUR0.4 million of the facilities with maturity date within the
month of October 2024.
The Group's directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future and operate within its credit facilities for a period of 12 months from
date of approval of these financial statements. Nevertheless, the Board
acknowledges the uncommitted status of the facilities which could be
terminated without notice during the forecast period requiring the refinancing
of debts as per above maturity dates, indicates that a material uncertainty
exists that may cast significant doubt on the Group's ability to continue as a
going concern. Additionally, should intended financing events for the venture
units not materialize within the expected timeframe, the Group might need to
delay or discontinue the scaling of respective ventures in order to continue
as a going concern. Further disclosures on the going concern assessment are
made in Note 3b to the financial statements.
Xaver Hangartner
Chief Financial Officer
Consolidated statement of profit and loss and other comprehensive income
For the 18-month period ended June 30, 2024
Period ended Year ended
June 30, December 31,
2024 2022
Note US$'000 US$'000
Revenue 7 62,318 47,202
Cost of sales 9 (39,485) (33,745)
Gross profit 22,833 13,457
Other income 10 4,642 4,832
Selling and general administrative expenses 11 (43,769) (30,969)
Impairment loss on intangible assets 18 (323) (11,651)
Impairment loss on property, plant & equipment 19 - (730)
Other expenses 13 (2,365) (4,184)
Operating loss (18,982) (29,245)
Finance income 14 202 683
Finance costs 15 (1,643) (1,273)
Loss before taxation (20,423) (29,835)
Income tax 16 (915) 21
Loss after taxation (21,338) (29,814)
Other comprehensive income:
Exchange differences on translation of foreign operations 466 (1,914)
Items that may be reclassified to profit or loss in subsequent periods 466 (1,914)
Actuarial gains/(losses) from defined benefit pension plans 29 (178) 1,380
Income tax relating to items that will not be reclassified subsequently to 29 42 (276)
profit or loss
Items that will not be reclassified to profit or loss in subsequent periods (136) 1,104
Other comprehensive loss for the year 330 (810)
Total comprehensive loss for the year (21,008) (30,624)
Loss attributable to:
Equity holders of HeiQ (20,839) (29,251)
Non-controlling interests (499) (563)
(21,338) (29,814)
Total Comprehensive loss attributable to:
Equity holders of the Company (20,509) (30,061)
Non-controlling interests (499) (563)
(21,008) (30,624)
Loss per share:
Basic (cents)* 17 (13.18) (21.92)
*The effect of share options is anti-dilutive and therefore not disclosed.
Consolidated statement of financial position
As at June 30, 2024
As at As at
June 30, December 31,
2024 2022
Note US$'000 US$'000
ASSETS
Intangible assets 18 18,671 20,442
Property, plant and equipment 19 13,312 9,802
Right-of-use assets 20 7,732 7,819
Deferred tax assets 32 305 538
Other non-current assets 21 79 137
Non-current assets 40,099 38,738
Inventories 22 8,256 13,168
Trade receivables 23 6,255 6,487
Other receivables and prepayments 24 2,925 4,262
Cash and cash equivalents 5,027 8,488
Current assets 22,463 32,405
Total assets 62,562 71,143
EQUITY AND LIABILITIES
Issued share capital and share premium 26 209,294 205,874
Other reserves 28 (127,738) (128,017)
Retained deficit 28 (57,987) (39,466)
Equity attributable to HeiQ shareholders 23,569 38,391
Non-controlling interests 1,859 1,948
Total equity 25,428 40,339
Lease liabilities 30 6,284 6,558
Long-term borrowings 31 1,829 1,445
Deferred tax liability 32 1,273 1,253
Other non-current liabilities 33 5,741 4,714
Total non-current liabilities 15,127 13,970
Trade and other payables 34 5,961 5,322
Accrued liabilities 35 3,066 4,978
Income tax liability 16 189 314
Deferred revenue 36 1,912 1,285
Short-term borrowings 31 9,380 2,893
Lease liabilities 30 997 1,264
Other current liabilities 38 502 778
Total current liabilities 22,007 16,834
Total liabilities 37,134 30,804
Total equity and liabilities 62,562 71,143
The Notes form an integral part of these Consolidated Financial Statements.
The Consolidated Financial Statements were approved and authorized for issue
by the Board of Directors on October 30, 2024 and signed on its behalf by:
Xaver Hangartner,
Chief Financial Officer
Consolidated statement of changes in equity
For the 18-month period ended June 30, 2024
Issued share capital and share premium Other reserves Retained deficit Equity attributable to HeiQ shareholders Non-controlling interests Total equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at January 1, 2022 195,714 (127,195) (11,525) 56,994 2,541 59,535
Loss after taxation - - (29,251) (29,251) (563) (29,814)
Other comprehensive (loss)/income - (810) - (810) - (810)
Total comprehensive (loss)/income for the year - (810) (29,251) (30,061) (563) (30,624)
Issuance of shares 26 10,160 - - 10,160 - 10,160
Share-based payment income 27 - (12) - (12) - (12)
Dividends paid to minority shareholders 28 - - - - (243) (243)
Capital contributions from minority shareholders 28 - - - - 764 764
Changes in non-controlling interests 6b - - (2,445) (2,445) (616) (3,061)
Transfer of shares to non-controlling interest 6a - - 3,755 3,755 65 3,820
Transactions with owners 10,160 (12) 1,310 11,458 (30) 11,428
Balance at December 31, 2022 205,874 (128,017) (39,466) 38,391 1,948 40,339
Loss after taxation - - (20,839) (20,839) (499) (21,338)
Other comprehensive (loss)/income - 330 - 330 - 330
Total comprehensive (loss)/income for the year - 330 (20,839) (20,509) (499) (21,008)
Issuance of shares 26 3,420 - - 3,420 - 3,420
Share-based payment income 27 - (51) - (51) - (51)
Elimination of non-controlling interest at disposal of subsidiary 6c - - - - 73 73
Dividends paid to minority shareholders 28 - - - - (267) (267)
Deconsolidation of subsidiary 6f - - 929 929 488 1,417
Transfer of shares to non-controlling interest 6a - - 1,389 1,389 116 1,505
Transactions with owners 3,420 (51) 2,318 5,687 410 6,097
Balance at June 30, 2024 209,294 (127,738) (57,987) 23,569 1,859 25,428
Consolidated statement of cash flows
For the 18-month period ended June 30, 2024
Period ended Year ended
June 30, December 31,
2024 2022
Note US$'000 US$'000
Cash flows from operating activities
Loss before taxation (20,423) (29,835)
Cash flow from operations reconciliation:
Depreciation and amortization 9,11 7,126 3,655
Impairment expense 323 12,380
Net loss on disposal of assets 43 181 (5)
Write-off of intangible assets 13 1,419 897
Gain from disposal of subsidiary (460) -
Fair value gain on derivative liability 38 (367) (371)
Finance costs 896 273
Finance income (45) (2)
Pension expense (305) 247
Non-cash equity compensation 12 178 138
Gain from lease modification 20 (33) (68)
Other costs paid in shares 26 - 235
Currency translation 175 (61)
Working capital adjustments:
Decrease in inventories 43 4,920 602
Decrease/(Increase) in trade and other receivables 43 2,463 7,783
(Decrease)/Increase in trade and other payables 43 1,257 2,543
Cash generated (used in)/from operations (2,695) (1,589)
Taxes paid 16 (1,023) (870)
Net cash generated (used in)/from operating activities (3,718) (2,459)
Cash flows from investing activities
Consideration for acquisition of businesses 43 (801) (1,587)
Cash assumed in asset acquisition 26 13 65
Disposal of a subsidiary, net of cash disposed of 6c (51) -
Purchase of property, plant and equipment 19 (7,031) (3,418)
Proceeds from the disposal of property, plant and equipment 870 53
Development and acquisition of intangible assets 18 (1,427) (3,865)
Interest received 45 2
Net cash used in investing activities (8,382) (8,750)
Cash flows from financing activities
Interest paid on borrowings (586) (110)
Repayment of leases 20,43 (1,996) (992)
Interest paid on leases 20 (311) (163)
Proceeds from equity issuance, net 26 3,050 -
Proceeds from disposals of minority interests 5b 1,505 4,792
Proceeds from borrowings 43 10,278 3,465
Repayment of borrowings 43 (2,978) (904)
Dividends paid to minority shareholders 28 (267) (243)
Net cash from/(used in) financing activities 8,695 5,845
Net decrease in cash and cash equivalents (3,405) (5,364)
Cash and cash equivalents - beginning of the period/year 8,488 14,560
Effects of exchange rate changes on the balance of cash held in foreign (56) (708)
currencies
Cash and cash equivalents - end of the period/year 5,027 8,488
Notes to the Consolidated Financial Statements for the 18-month period ended June 30, 2024
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.
The principal activities of the Company and its subsidiaries (the Group) and
the nature of the Group's operations are set out in Note 6.
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. Foreign operations
are included in accordance with the policies set out in Note 3.
The Group extended its accounting reference date from December 31 to June 30,
to enable the incoming auditor to properly onboard and complete the audit in a
reasonable timeframe.
2. Changes in accounting policies and adoption of new and revised standards
Change in accounting policy
Inventory valuation
The Group changed its inventory valuation method from first-in-first-out basis
to weighted-average basis. The Group has assessed the impact on the valuation:
there was no material impact from the change in policy. See Note 3s for a
description of the accounting policy.
New standards, interpretations and amendments effective for the current period
Adopted
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);
• Deferred Tax Related to Assets and Liabilities arising
from a Single Transaction (Amendments to IAS 12);
• International Tax Reform-Pillar Two Model
Rules-Amendments to the IFRS for SMEs Standard;
• Initial Application of IFRS 17 and IFRS 9-Comparative
Information;
• Non-current Liabilities with Covenants (Amendments to
IAS 1);
• Supplier Finance Arrangements (Amendments to IAS 7 and
IFRS 7); and
• Lease Liability in a Sale and Leaseback Amendments to
IFRS 16.
New standards, interpretations and amendments not yet effective for the current period
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early. The most significant of
these are as follows:
Effective for annual periods beginning on or after January 1, 2025:
• Lack of Exchangeability (Amendments to IAS 21);
• IFRS 18 Presentation and Disclosure in Financial
Statements; and
• IFRS 19 Subsidiaries without Public Accountability:
Disclosures.
Management anticipates that these new standards, interpretations and
amendments will be adopted in the financial statements as and when they are
applicable and adoption of these new standards, interpretations and
amendments, will be reviewed for their impact on the financial statements
prior to their initial application.
The Directors do not expect these new accounting standards and amendments will
have a material impact on the Group's financial statements.
3. Accounting policies
a. Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with UK
adopted international financial reporting standards.
The Consolidated Financial Statements have been prepared under the historical
cost convention except for certain financial and equity instruments that have
been measured at fair value. Historical cost is generally based on the fair
value of the consideration given in exchange for goods and services.
The preparation of Financial Statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgment in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgment and complexity, or
areas where assumptions and estimates are significant to the Consolidated
Financial Statements are disclosed in Note 4.
b. Going Concern
The Consolidated 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.
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Strategic
Report. The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the Financial Review and in
Note 31 to the financial statements. In addition, Notes 41 and 42 to the
financial statements include the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives; details of
its financial instruments; and its exposures to credit risk and liquidity
risk.
To manage its cash balance, the Group has access to credit facilities totaling
CHF8.06 million (approximately US$9.3 million as of September 30, 2024). 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 one month. One credit facility is being
reduced monthly by CHF0.02 million (approximately US$0.02 million) and the
other facility is being reduced quarterly by CHF0.2 million (approximately
US$0.23 million) until December 31, 2024 and CHF0.25 million (approximately
US$0.29 million) per quarter thereafter.
The facilities are not committed, but the Board has not received any
indication from financing partners that facilities are at risk of being
terminated and mentioned repayment schedules have been agreed only recently.
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 of September 30, 2024, the Group has drawn fixed advances of CHF7.06
million and EUR0.4 million of the facilities with maturity date within the
month of October 2024.
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. In the course of 2024, the Group agreed with the
financing partners to make scheduled repayments of the credit facilities.
Nevertheless, the Board acknowledges the uncommitted status of the facilities
which could be terminated during the forecast period requiring the refinancing
of debts as per maturity dates disclosed in the Financial Review, indicates
that a material uncertainty exists that may cast significant doubt on the
Group'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 at the going concern basis.
c. Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the
Company and its subsidiaries listed in Note 6 "Subsidiaries" to the
Consolidated Financial Statements.
A subsidiary is defined as an entity over which the Company has control. The
Company controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases.
d. Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of assets
transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interest issued by the Group in exchange
for control of the acquiree. Acquisition-related costs are recognized in
profit or loss as incurred.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree, and
the fair value of the acquirer's previously held equity interest in the
acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed.
If the initial accounting for a business combination is incomplete by the end
of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see
above), or additional assets or liabilities are recognized, to reflect new
information obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the amounts recognized as
of that date.
e. Foreign currency transactions and translation
Each entity of the Group determines its own functional currency. The
functional currency of the Group companies is the currency of their local
economic environment. On a single entity level, transactions in foreign
currencies are translated into the functional currency at the rate of exchange
on the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are translated at the exchange rate ruling at the reporting
date. The resulting gain or loss is reflected in the "consolidated statement
of profit and loss and other comprehensive income" within operating income or
operating expense, if the balance sheet account is of operating nature - e.g.
trade and other receivables/payables and within either "Finance income" or
"Finance costs", if the balance sheet account is of non-operating nature -
e.g. cash and cash equivalents, loans receivable, loans payable.
Single entities with functional currencies other than US$ are translated into
US$ as part of the consolidation where assets and liabilities are translated
at closing rate for the year-ended, and profit and loss items are translated
at an average rate for the year. Equity transactions are translated at a
historic rate. The residual value flows into the currency translation reserve.
The results and financial position of all Group entities that have a
functional currency different from the presentation currency are translated
into US$, the presentation currency, as follows:
• assets and liabilities are translated at the closing
rate at the date of the "Statement of Financial Position";
• income and expenses are translated at average exchange
rates (unless this average is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions); and
• all resulting exchange differences are recognized in
other comprehensive income.
The Group recognizes in "other comprehensive income" the exchange differences
arising from the translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which settlement is
neither planned nor likely to occur in the foreseeable future.
f. Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses, if any. The cost of an item of property, plant and
equipment initially recognized includes its purchase price and any cost that
is directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by the
Group.
Property, plant and equipment are generally depreciated on a straight-line
basis over their estimated useful lives:
Machinery and equipment 5 - 15 years
Motor vehicles
4 - 5 years
Computers and related software 3 - 5 years
Furniture and fixtures 5 -
10 years
Buildings
10 - 20 years
Freehold land is not depreciated.
The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any changes
in estimate accounted for on a prospective basis.
Property, plant and equipment held under leases are depreciated over the
shorter of the lease term and estimated useful life.
g. Intangible assets
All intangible assets, except goodwill, are stated at cost less accumulated
amortization and any accumulated impairment losses.
Goodwill
Goodwill represents the amount by which the fair value of the cost of a
business combination exceeds the fair value of the net assets acquired.
Goodwill is not amortized and is stated at cost less any accumulated
impairment losses.
The recoverable amount of goodwill is tested for impairment annually or when
events or changes in circumstance indicate that it might be impaired.
Impairment charges are deducted from the carrying value and recognized
immediately in the income statement. For the purpose of impairment testing,
goodwill is allocated to each of the Group's cash generating units expected to
benefit from the synergies of the combination. If the recoverable amount of
the cash generating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognized for goodwill is not reversed in a subsequent
period.
Intangible assets acquired in a business combination
Net assets acquired as part of a business combination includes an assessment
of the fair value of separately identifiable acquisition-related intangible
assets, in addition to other assets, liabilities and contingent liabilities
purchased.
Subsequent to initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated amortization and accumulated
impairment losses, on the same basis as intangible assets that are acquired
separately.
Acquisition-related intangible assets are amortized on a straight-line basis
over their useful lives which are individually assessed.
The estimated useful lives are as follows:
Brand names
10 years
Customer relations
5 years
Technologies
10 years
Other intangible assets
5 - 10 years
Internally developed assets
Internally generated assets represent expenditure incurred on research and
development projects. Recognition follows the following principles:
Research expenditure is recognized as an expense when it is incurred.
Development projects are capitalized as long-term assets to the extent that
such expenditure is expected to generate future economic benefits.
Capitalized development expenditure is measured at cost less accumulated
amortization and impairment losses, if any. Certain internal salary costs are
included where the above criteria are met. These internal costs are
capitalized when they are incurred in respect of products developed for sale
or assets developed to be used.
In the event that it is no longer probable that the expected future economic
benefits will be recovered, the development expenditure is written down to its
recoverable amount. Development expenditure initially recognized as an expense
is not recognized as assets in subsequent periods.
Capitalized development expenditure in relation to projects that are still in
development phase are capitalized as asset under construction until they are
ready for sale or use. These assets are tested annually for impairment.
Internally developed assets are amortized on a straight-line method over a
period of five to ten years when the asset is ready for sale or use.
The estimated useful life is 5-10 years.
Other intangible assets
Other intangible assets include purchased rights, licenses, patent costs,
concessions, website designs and domains and trademarks. They are measured
initially at purchase cost and are amortized on a straight-line basis over
their estimated useful lives. The estimated useful life is 5-10 years.
Derecognition intangible assets
An intangible asset is derecognized on disposal, or when no future economic
benefits are expected from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as the difference between the
net disposal proceeds and the carrying amount of the asset, are recognized in
profit or loss when the asset is derecognized.
h. Impairment of financial assets
The expected credit loss model defined in IFRS 9 "Financial Instruments"
requires the Group to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in credit
risk since initial recognition of the financial assets. The credit event does
not have to occur before credit losses are recognized. IFRS 9 "Financial
Instruments" allows for a simplified approach for measuring the loss allowance
at an amount equal to lifetime expected credit losses for trade receivables
and contract assets.
The Group has three types of financial assets subject to the expected credit
loss model: trade receivables, contract assets, other receivables.
For trade receivables and contract assets, the company uses a simplified
provision matrix to calculate expected credit loss: The expected loss rates
are based on the Group's historical credit losses. The historical loss rates
are then adjusted for current and forward-looking information on macroeconomic
factors affecting the Group's customers.
For other receivables, the company makes use of the low credit risk exemption.
Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased
significantly since initial recognition, the Group compares the risk of a
default occurring on the financial instrument at the reporting date with the
risk of a default occurring on the financial instrument at the date of initial
recognition. In making this assessment, the Group considers both quantitative
and qualitative information that is reasonable and supportable, including
historical experience and forward-looking information that is available
without undue cost or effort. Forward looking information considered includes
the future prospects of the industries in which the Group's debtors operate,
obtained from economic expert reports, financial analysts, governmental
bodies, relevant think-tanks and other similar organizations, as well as
consideration of various external sources of actual and forecast economic
information that relate to the Group's core operations.
In particular, the following information is taken into account when assessing
whether credit risk has increased significantly since initial recognition:
• Significant deterioration in external market indicators
of credit risk for a particular financial instrument, e.g. a significant
increase in the credit spread, the credit default swap prices for the debtor,
or the length of time or the extent to which the fair value of a financial
asset has been less than its amortized cost;
• existing or forecast adverse changes in business,
financial or economic conditions that are expected to cause a significant
decrease in the debtor's ability to meet its debt obligations;
• an actual or expected significant deterioration in the
operating results of the debtor;
• significant increases in credit risk on other financial
instruments of the same debtor;
• an actual or expected significant adverse change in the
regulatory, economic, or technological environment of the debtor that results
in a significant decrease in the debtor's ability to meet its debt
obligations.
Irrespective of the outcome of the above assessment, the Group presumes that
the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 180 days past due, unless
the Group has reasonable and supportable information that demonstrates
otherwise.
Despite the foregoing, the Group assumes that the credit risk on a financial
instrument has not increased significantly since initial recognition if the
financial instrument is determined to have low credit risk at the reporting
date. A financial instrument is determined to have low credit risk if:
• the financial instrument has a low risk of default;
• the debtor has a strong capacity to meet its contractual
cash flow obligations in the near term;
• adverse changes in economic and business conditions in
the longer term may, but will not necessarily, reduce the ability of the
borrower to fulfil its contractual cash flow obligations.
The Group regularly monitors the effectiveness of the criteria used to
identify whether there has been a significant increase in credit risk and
revises them as appropriate to ensure that the criteria are capable of
identifying significant increase in credit risk before the amount becomes past
due.
Definition of default
The Group considers the following as constituting an event of default for
internal credit risk management purposes as historical experience indicates
that financial assets that meet either of the following criteria are generally
not recoverable:
• When there is a breach of financial covenants by the
debtor;
• Information developed internally or obtained from
external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collateral held
by the Group).
Irrespective of the above analysis, the Group considers that default has
occurred when a financial asset is more than 360 days past due unless the
Group has reasonable and supportable information to demonstrate that a more
lagging default criterion is more appropriate.
Write-off policy
The Group writes off a financial asset when there is information indicating
that the debtor is in severe financial difficulty and there is no realistic
prospect of recovery, e.g. when the debtor has been placed under liquidation
or has entered into bankruptcy proceedings, or in the case of trade
receivables, when the amounts are over two years past due unless the Group has
reasonable support to assume recoverability, whichever occurs sooner.
Financial assets written off may still be subject to enforcement activities
under the Group's recovery procedures, taking into account legal advice where
appropriate. Any recoveries made are recognized in profit or loss.
i. Impairment of non-financial assets
At each reporting date, the Directors assess whether indications exist that an
asset may be impaired. If indications do exist, or when annual impairment
testing for an asset is required, the Directors estimate the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's
or cash-generating unit's fair value less costs to sell and its value-in-use,
and is determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or groups
of assets. Where the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount, the Directors consider the asset impaired and
write the subject asset down to its recoverable amount. In assessing
value-in-use, the Directors discount the estimated future cash flows to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In
determining fair value less costs to sell, the Directors consider recent
market transactions, if available. If no such transactions can be identified,
the Directors utilize an appropriate valuation model.
When applicable, the Group recognizes impairment losses of continuing
operations in the "statement of profit and loss and other comprehensive
income" in those expense categories consistent with the function of the
impaired asset.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognized for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognized immediately in profit or loss to
the extent that it eliminates the impairment loss which has been recognized
for the asset in prior years. Any increase in excess of this amount is treated
as a revaluation increase.
j. Leases
Lessee position:
The Group accounts for a contract, or a portion of a contract, as a lease when
it conveys the right to use an asset for a period of time in exchange for
consideration. Leases are those contracts that satisfy the following criteria:
• there is an identified asset;
• the Group obtains substantially all the economic
benefits from use of the asset; and
• the Group has the right to direct use of the asset.
In determining whether the Group obtains substantially all the economic
benefits that arise from use of the asset, the Group considers only the
economic benefits that arise from use of the asset, not those incidental to
legal ownership or other potential benefits.
In determining whether the Group has the right to direct use of the asset, the
Directors consider whether the Group directs how and for what purpose the
asset is used throughout the period of use. If there are no significant
decisions to be made because they are pre-determined due to the nature of the
asset, the Directors consider whether the Group was involved in the design of
the asset in a way that predetermines how and for what purpose the asset will
be used throughout the period of use. If the contract or portion of a contract
does not satisfy these criteria, the Group applies other applicable IFRSs
rather than IFRS 16 "Leases".
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
Group's incremental borrowing rate on commencement of the lease is used, which
the Directors have assessed to be between 1.75% and 5%, depending on the
nature of the asset and location.
Right-of-use assets
A right-of-use asset is recognized at the commencement date of a lease. The
right-of-use asset is measured at cost, which comprises the initial amount of
the lease liability, adjusted for, as applicable, any lease payments made at
or before the commencement date net of any lease incentives received, any
initial direct costs incurred, and an estimate of costs expected to be
incurred for dismantling and removing the underlying asset, and restoring the
site or asset.
Right-of-use assets are depreciated on a straight-line basis over the
unexpired period of the lease or the estimated useful life of the asset,
whichever is the shorter. Right-of-use assets are subject to impairment or
adjusted for any re-measurement of lease liabilities.
The Group has elected not to recognize a right-of-use asset and corresponding
lease liability for short-term leases with terms of 12 months or less and
leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
k. Taxation
The income tax expense represents the sum of the tax currently payable and
deferred tax.
Current and deferred tax are recognized in profit or loss, except when they
relate to items that are recognized in other comprehensive income or directly
in equity, in which case the current and deferred tax are also recognized in
other comprehensive income or directly in equity respectively. Where current
tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business
combination.
Income taxation
Current income tax assets and liabilities are measured at the amount to be
recovered from, or paid to, the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively
enacted at the reporting date in the jurisdictions where the Group operates
and generates taxable income.
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Consolidated Financial Statements. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantially
enacted by the reporting date and expected to apply when the related deferred
tax is realized or the deferred liability is settled.
Deferred tax assets are recognized to the extent that it is probable that the
future taxable profit will be available against which the temporary
differences can be utilized.
l. Revenue from contracts with customers
The Group's revenue represents the fair value of the consideration received or
receivable for the rendering of services, licenses and similar fees as well as
for the sale of functional products in different forms (mainly ingredients,
materials and consumer goods), net of value added tax and other similar
sales-based taxes, rebates and discounts after eliminating intercompany sales.
Revenue from contracts with customers is recognized once the performance
obligation has been fulfilled. If the Group fulfills its performance
obligations to the customer, revenues recognized are capitalized as contract
assets until the Group invoices the customers.
In contrast, if customers pay in advance for the services, a contract
liability is recognized and is released at point of revenue recognition.
The Group has the following major revenue streams:
Sale of goods
The Group sells functional ingredients, materials or consumer goods. Revenue
from the sale of goods to customers is generally recognized at a point in
time, once control over the goods is passed to customers.
Research and development services
HeiQ provides research and development services to customers in exchange for a
fee. Revenue is generally recognized at the point in time of completion of the
project, for example, with delivery of proof-of-concept to the customer.
Consulting services for research and development projects
HeiQ provides consulting services for customers regarding research and
development projects including grant acquisition services, industry cluster
services and management services. The revenue for these services is recognized
over time based on completion of the project. Any amounts invoiced for stages
not completed, are recognized as deferred revenue.
Exclusivity fees
HeiQ grants exclusivity to customers for certain products in certain regions.
The contracts restrict HeiQ from selling specific products to competitors for
a limited time. The customers pay a fee for exclusivity which increases the
price of the goods supplied by HeiQ. In cases where the obligation to grant
exclusivity can be valued separately from other obligations in the contract,
the exclusivity portion is accounted for over time according to the
contractual definition of the exclusivity period.
m. Share-based payments
All of the Group's share-based awards are equity settled. Equity-settled
share-based payments to employees are measured at the fair value of the equity
instruments at the grant date. Equity-settled share-based payments to
non-employees are measured at the fair value of services received, or if this
cannot be measured, at the fair value of the equity instruments granted at the
date that the Group obtains the goods or counterparty renders the service. The
fair value of such shares issued has been estimated by reference to the cash
consideration received for shares issued or material third party transactions
at or close to the dates for such non-cash issues.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Directors' estimate of equity instruments that will eventually vest,
with a corresponding increase in equity. Where the conditions are non-vesting,
the expense and equity reserve arising from share-based payment transactions
is recognized in full immediately on grant.
At the end of each reporting period, the Directors revise their estimate of
the number of equity instruments expected to vest. The impact of the revision
of the original estimates, if any, is recognized in profit or loss such that
the cumulative expense reflects the revised estimate, with a corresponding
adjustment to other reserves.
n. Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided. A liability is
recognized for the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or constructive
obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Long-term benefits
Defined benefit plans
The Group operates defined benefit pension plans, which require a contribution
to be made to a separately administered fund. The cost of providing benefits
under the defined benefit plan is determined using the projected unit credit
method with actuarial valuations being carried out at the end of each annual
reporting period.
Re-measurements, comprising of actuarial gains and losses, the effect of the
asset ceiling, excluding amounts included in net interest on the net defined
benefit liability and the return on plan assets (excluding amounts included in
net interest on the net defined benefit liability), are recognized immediately
in the statement of financial position with a corresponding debit or credit to
other reserve through "Other Comprehensive Income" in the period in which they
occur. Re-measurements are not reclassified to profit or loss in subsequent
periods.
Past-service costs are recognized in profit or loss on the earlier of:
• the date of the plan amendment or curtailment; and
• the date that the Group recognizes related restructuring
costs, or termination benefits, if earlier.
Net interest is calculated by applying the discount rate to the net defined
benefit liability or asset. The Group recognizes the following changes in the
net defined benefit obligation under "cost of sales", "administration
expenses" and "selling and distribution expenses" in the consolidated
statement of profit or loss (by function):
• service costs comprising current service costs,
past-service costs, gains and losses on curtailments and non-routine
settlements; and
• net interest expense or income.
Defined contribution plans
The income statement expense for the defined contribution pension plans
operated represents the contributions payable for the year.
o. Financial instruments
Financial assets and financial liabilities are recognized in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Transaction costs that are directly attributable to the acquisition or issue
of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognized immediately in profit or
loss.
p. Finance income and expenses
Finance expenses comprise interest payable, lease expenses recognized in
profit or loss using the effective interest method, unwinding of the discount
on provisions, and net foreign exchange losses that are recognized in the
income statement.
Finance income comprises interest receivable on cash deposits and net foreign
exchange gains.
Interest income and interest payable is recognized in profit or loss as it
accrues, using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
q. Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows,
cash and cash equivalents include cash on hand, deposits held at call with
financial institutions, other short-term highly liquid investments with
original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of
changes in value, and bank overdrafts.
r. Trade and other receivables
Trade receivables are recognized initially at transaction price and
subsequently measured at amortized cost using the effective interest method,
less provision for impairment.
s. Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is
based on the weighted-average principle and includes expenditure incurred in
acquiring the inventories and other costs in bringing them to their existing
location and condition.
t. Provisions
A provision is recognized when the Group has a present obligation, legal or
constructive, as a result of a past event and it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate can be made. Provisions are reviewed at
each reporting date and adjusted to reflect the current best estimate. If it
is no longer probable that an outflow of economic resources will be required
to settle the obligation, the provision is reversed. Where the effect of the
time value of money is material, provisions are discounted using a current
pre-tax rate that reflects, where appropriate, the risks specific to the
liability. When discounting is used, the increase in the provision due to the
passage of time is recognized as an interest expense.
u. Contingent liabilities
Contingent liabilities are possible obligations whose existence depends on the
outcome of uncertain future events or present obligations where the outflow of
resources is uncertain or cannot be measured reliably. Contingent liabilities
are not recognized in the Consolidated Financial Statements but are disclosed
unless they are remote.
4. Critical accounting judgements and key sources of estimation uncertainty
In applying the Group's accounting policies, which are described in Note 3,
the directors are required to make judgements (other than those involving
estimations) that have a significant impact on the amounts recognized and to
make estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Critical accounting judgements
The following are the critical judgements, apart from those involving
estimations (which are presented separately below), that the directors have
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognized in financial statements.
Allowance for inventory obsolescence
The Group applied judgement in calculating the allowance for obsolete
inventory. For slow-moving items, the Group compared quantities on hand with
budgeted sales quantities. The sales projections are inherently uncertain due
to the nature of the business and fluctuating market conditions. The inventory
allowance calculated as at June 30, 2024 is US$4,992,000 (December 31, 2022:
US$5,396,000) as presented in Note 22.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the reporting period that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
Goodwill impairment testing
Following the assessment of the recoverable amount of goodwill, the directors
consider the recoverable amount of goodwill allocated to CGU "ChemTex"(book
value: US$3.3 million) and "RAS" (remaining goodwill book value: US$3.7
million) to be most sensitive to the achievement of forecasts in 2024/2025
comprising forecasts of revenue, staff costs and operating expenses based on
current and anticipated market conditions. Whilst the Group can manage most of
the CGUs' costs, the revenue projections are inherently uncertain due to the
nature of the business and fluctuating market conditions. The market for both
ChemTex and RAS CGU has been stable in 2024 compared to 2023. However, it is
possible that underperformance to estimated revenues as considered in the
impairment test may occur in 2024/2025.
The sensitivity analysis for a reasonably possible change in assumptions in
respect of the recoverable amount of the CGU "ChemTex" and "RAS" goodwill is
presented in Note 18.
5. Business combinations
Business combinations in the 18-month period ended June 30, 2024
a. 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. The regulatory registrations of Tarn-Pure
are critical to HeiQ to ensure regulatory compliance of its antimicrobial
products long term. 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. A further US$244,000 of deferred consideration is payable in
cash in monthly instalments from February 2023 to February 2025.
The final purchase price allocation was finalised with minor changes to the
preliminary figures published in the interims. The following table summarizes
the consideration paid, the fair value of assets acquired, liabilities
assumed, and goodwill arising on acquisition at the acquisition date.
Purchase price allocation US$'000
Consideration:
Cash paid to shareholders 621
Shares issued to shareholders 372
Deferred consideration 244
Total Consideration 1,237
Fair value of net assets acquired:
Cash and cash equivalents 12
Trade and other receivables 12
Trade and other payables (2)
Borrowings (42)
Intangible assets identified on acquisition:
Customer Relationship 150
Regulatory asset 507
Deferred tax liability on intangible assets (164)
Total net assets 473
Goodwill 764
Total 1,237
Goodwill of US$764,000 was recognized and is attributable to anticipated
future profit from expansion opportunities and synergies of the business. The
goodwill arising from the acquisition has been allocated to the existing RAS
CGU (see definition in Note 18). Fair value adjustments have been recognized
for acquisition-related intangible assets which are in alignment with
accounting policies of the Group. Transaction costs relating to the
acquisition of US$23 have been charged to the Statement of profit and loss and
other comprehensive Income in the period relating to the acquisition of Tarn
Pure and a further US$50 was incurred in 2022.
Business combinations in the year 2022
There were no business combinations in the year 2022.
6. Subsidiaries
The consolidated financial statements include the financial statements of HeiQ
Plc and the subsidiaries listed in the table below.
Company Country of registration or incorporation Registered office Principal activity Percentage of ordinary shares held
HeiQ Materials AG Switzerland Rütistrasse 12, 8952 Schlieren Zurich Development, production and sale of chemicals 100%
HeiQ ChemTex Inc. United States 2725 Armentrout Dr, Concord, NC 28025 Development, production and sale of chemicals 100%
HeiQ Pty Ltd Australia Level 20/181 William Street, Melbourne, VIC 3000 Research and development 100%
HeiQ GrapheneX AG Switzerland Rütistrasse 12, 8952 Schlieren Zurich Research and development 100%
HeiQ Company Limited Taiwan No. 14 & 16, Ln. 50, Wufu 1st Rd. Luzhu District, Taoyuan City 33850 Distribution 100%
HX Company Limited Taiwan No. 14 & 16, Ln. 50, Wufu 1st Rd. Luzhu District, Taoyuan City 33850 Trading and production 66.7%
HeiQ Iberia Unipessoal Lda Portugal Rua Engº Frederico Ulrich, nº 2650, 4470-605 Maia Sales agency and internal services company 100%
Chrisal NV Belgium Priester Daensstraat 9, 3920 Lommel, Belgium Biotechnology 71%
HeiQ RAS AG Germany Rudolf Vogt Straße 8-10, 93053 Regensburg Materials innovation 100%
HeiQ Regulatory GmbH Germany Rudolf Vogt Straße 8-10, 93053 Regensburg Materials innovation 100%
HeiQ (China) Material Tech LTD China Room 2501, Xuhui Commercial Mansion, No. 168 Yude Road, Shanghai Distribution 100%
Life Material Technologies Limited Hong Kong Alexandra House, 6th Floor, 16-20 Chater Road, Central Materials technology 100%
Life Natural Limited Hong Kong Alexandra House, 6th Floor, 16-20 Chater Road, Central Inactive 100%
LMT Holding Limited Thailand 222 Lumpini Building 2, 247 Rajdamri Road Holding 96.45%
Lumpini, Phatumwan, Bangkok 10330
Life Material Technologies Limited Thailand 222 Lumpini Building 2, 247 Rajdamri Road Trading 99.995%
Lumpini, Phatumwan, Bangkok 10330
HeiQ AeoniQ GmbH Austria Industriestrasse 35, 3130 Herzogenburg Materials Innovation 96%
Chem-Tex Laboratories Inc. United States 2725 Armentrout Dr, Concord, NC 28025 Chemical production site 100%
Beijing HeiQ Material Tech Co., Ltd. China Room 17B9870, Floor 17, 101 Nei, -4 to 33, Building 13, Wangjing Dongyuan Inactive/Distribution 100%
Siqu, Chaoyang District, Beijing
HeiQ AeoniQ Holding AG Switzerland Parkstrasse 1, 5234 Villigen Holding 95.95%
Tarn-Pure Holdings Ltd United Kingdom Castle Court, 6 Cathedral Road, Cardiff, CF11 9LJ Holding 100%
Tarn Pure (IP) Limited United Kingdom Castle Court, 6 Cathedral Road, Cardiff, CF11 9LJ Holder of intellectual property 100%
Tarn-Pure AG Ltd. United Kingdom Castle Court, 6 Cathedral Road, Cardiff, CF11 9LJ Trading 100%
Tarn-Pure Ireland Limited Ireland C/O Duggan & Power, Odeon House 7, Eyre Square, Co. Galway Trading 100%
HeiQ AeoniQ Portugal Portugal Rua Engº Frederico Ulrich, nº 2650, 4470-605 Maia Materials Innovation 100%
Changes to subsidiaries during the period other than acquisitions
a. Transfer of shares in HeiQ AeoniQ GmbH to non-controlling interests
On February 11, 2022, HeiQ Materials AG reached an agreement with Hugo Boss AG
to dispose of 2.5% of its shareholding in HeiQ AeoniQ GmbH and issued a call
option. Under the call option, the Company granted Hugo Boss AG the
contractual right to acquire from the Company a further 5% shareholding in
HeiQ AeoniQ GmbH for a call option exercise price of €10,000,000
(approximately US$10,657,000). The option agreement was changed in December
2023. Hugo Boss AG now has the right to acquire a shareholding of up to 12.5%
(in addition to the 2.5% already owned) for the exercise price of
€10,000,000 (approximately US$10,688,000). The shares and call option were
issued for US$4,791,000, the call option was recognized as a derivative
liability, see Note 38.
In July 2023, HeiQ Materials AG reached an agreement with MAS to dispose of
1.5% of its shareholding in HeiQ AeoniQ GmbH reducing the Group's ownership to
96%.
b. Acquisition of non-controlling interest in Chrisal N.V.
On December 14, 2022, HeiQ increased its interest in HeiQ Chrisal N.V. from
51% to 71% after some sellers exercised their put options. HeiQ paid €2.9
million (approximately US$3.0 million) for the additional 20% shareholding to
the vendors through the issue of 3,348,164 new ordinary shares in the Company.
The 20% share was valued at US$0.6 million. The transaction resulted in a
US$0.6 million reduction of non-controlling interests and a US$2.4 million
charge to retained earnings.
c. Disposal of Life Material Latam, Ltda, Brazil
In July 2023, the Group sold 31% of its share in Life Materials Latam Ltda,
Brazil for a consideration of US$nil. The Group's stake was reduced to 20%
and, as a result, the company is no longer consolidated.
d. Foundation of HeiQ AeoniQ Holding AG
The Group founded HeiQ AeoniQ Holding AG Switzerland. As at June 30, 2024, the
Group holds 95.95% ownership.
e. Foundation of HeiQ AeoniQ Portugal
The Group founded HeiQ AeoniQ Holding Portugal. As at June 30, 2024, the Group
holds 100% ownership.
f. Deconsolidation of HeiQ Medica S.L.
In October 2023, the Group lost its control over, HeiQ Medica S.L.
Consequently, the Group derecognized the subsidiary's assets and liabilities
as well as the carrying amount of non-controlling interests in the subsidiary.
The deconsolidation of the subsidiary's assets and liabilities resulted in a
net income of US$479,000 which was recognized under other income, see Note 10.
7. Revenue
The Group derives its revenue from contracts with customers for the transfer
of goods and services over time and at a point in time in the following major
organization units. The disclosure of revenue by organizational units is
consistent with the revenue information that is disclosed for each reportable
segment under IFRS 8 Operating Segments (see note 8).
Disaggregation of revenue
Period ended Year ended
June 30, December 31,
2024 2022
Revenue by organizational unit US$'000 US$'000
Advanced Materials 50,697 38,366
LifeSciences 6,988 6,164
Other activities 4,633 2,872
Total revenue 62,318 47,202
Period ended Year ended
June 30, December 31,
2024 2022
Revenue by timing of revenue US$'000 US$'000
Goods transferred at a point in time 56,860 45,002
Services transferred at a point in time 1,914 160
Services transferred over time 3,544 2,040
Total revenue 62,318 47,202
Unsatisfied performance obligations
The transaction prices allocated to unsatisfied and partially unsatisfied
obligations at reporting date are as set out below:
As at As at
June 30, December 31,
2024 2022
Unsatisfied performance obligations US$'000 US$'000
Exclusivity services 1,200 2,100
Research and development services 5,087 3,750
Total unsatisfied performance obligations 6,287 5,850
Management expects that 25 per cent of the transaction price allocated to the
unsatisfied contracts at the reporting date will be recognized as revenue
during the next reporting period 2024/2025 (US$1.6 million). Another 24% is
expected to be recognized in the 2025/2026 period (US$1.5 million). The
remaining 51 per cent, US$3.3 million, are expected to be recognized in later
periods.
Disclosure related to contracts with customers
Contract assets and contract liabilities are disclosed under Note 25 and Note
37, respectively. Impairment losses recognized on any receivables or contract
assets arising from the Group's contracts with customers are disclosed under
Note 23 and Note 25, respectively.
8. Operating Segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors of the Company.
For management purposes and following the decision by the Board of Directors
to merge two units, the Group is organized into the following reportable
segments:
Segment Activity
Advanced Materials Provide innovative ingredients to make textiles & flooring more
functional, durable and sustainable and functionalize different hard surfaces
in everyday products and our surroundings
LifeSciences Offer biotech solutions to replace harmful substances in domestic, commercial
and industrial usage, for a more balanced microbiome and environment
Other activities All other activities of the Group including Innovation Services, Business
Development, and other non-allocated functions.
In 2023 new overhead allocation rules were introduced and as a result more
overhead costs were allocated to segments. 2022 segment revenue and profits
are restated below using the new rules to allow for like for like comparison.
Segment revenues and profits
The following is an analysis of the Group's revenue and results by reportable
segment:
Advanced Materials LifeSciences Other activities Total
US$'000 Period 23/24 Year Period 23/24 Year Period 23/24 Year Period 23/24 Year
2022 2022 2022 2022
Revenue 50,697 38,366 6,988 6,164 4,633 2,672 62,318 47,202
Operating profits (loss) (4,391) (14,347) (1,385) (5,537) (13,206) (9,361) (18,982) (29,245)
Financial result (1,441) (590)
Loss before taxation (20,423) (29,835)
Taxation (915) 21
Loss after taxation (21,338) (29,814)
Depreciation and amortization
Property, plant and equipment 1,200 362 453 335 662 585 2,315 1,282
Right-of use assets 383 165 218 145 972 628 1,573 938
Intangible Assets 1,512 773 837 550 889 112 3,238 1,435
Impairment loss
Property, plant and equipment - - - 730 - - - 730
Intangible Assets 323 8,247 - 2,402 - 1,002 323 11,651
The segment revenue reported above represents revenue generated from external
customers. There were no intersegment sales in the period ended June 30, 2024
(year ended December 31, 2022: nil).
The accounting policies of the reportable segments are the same as the Group's
accounting policies described in Note 3. Segment profit represents the profit
earned by each segment without allocation of the central SG&A costs
including expenses for infrastructure, R&D and laboratories, directors'
salaries, finance income, nonoperating gains and losses in respect of
financial instruments and finance costs, and income tax expense. This is the
measure reported to the Group's decision-making body for the purpose of
resource allocation and assessment of segment performance.
Geographic information
Period ended Year ended
June 30, December 31,
2024 2022
Revenue by region US$'000 US$'000
North & South America 26,726 20,425
Asia 18,911 13,376
Europe 16,228 13,109
Others 453 293
Total revenue 62,318 47,202
Period ended Year ended
June 30, December 31,
2024 2022
Non-current assets by region US$'000 US$'000
Europe 30,379 22,290
Asia 2,226 8,102
North & South America 7,318 7,734
Others 176 612
Total non-current assets 40,099 38,738
Information about major customers
During the period ended June 30, 2024, no customers individually totaled more
than 10% of total revenues (year ended December 31, 2022: none).
9. Cost of sales
Period ended Year ended
June 30, December 31,
2024 2022
Cost of sales US$'000 US$'000
Material expenses 30,086 20,942
Personnel expenses 4,682 2,830
Depreciation of property, plant and equipment 892 652
Inventory allowance increase (reduction) (427) 4,912
Other costs of sales 4,252 4,409
Total cost of sales 39,485 33,745
Other costs of goods sold include freight and custom costs, warehousing and
allowances on inventory.
10. Other income
Period ended Year ended
June 30, December 31,
2024 2022
Other income US$'000 US$'000
Gain on disposal of property plant and equipment 23 21
Gain on earnout consideration payable (Note 5g) 138 -
Foreign exchange gains 121 3,539
Fair value gain on derivative liabilities (Note 38) 367 371
Income from out-of-court settlement 2,750 -
Other income 1,243 901
Total other income 4,642 4,832
In November 2023, the Group reached a settlement of the litigation with ICP,
which includes dismissal of claims and counterclaims by both parties with
prejudice. ICP has agreed to pay HeiQ Plc a total of USD $2.75 million. The
settlement refers to a complaint filed by the Group in October 2022 for
breaching its Exclusive Agreement terms.
Foreign exchange gains previously reported under other income have been
reclassified to finance income (Note 14) during the 2024 reporting period to
more fairly present the nature of such items.
11. Selling and general administration expenses
Period ended Year ended
June 30, December 31,
Selling and general administration expenses 2024 2022
US$'000 US$'000
Personnel expenses 19,324 14,977
Depreciation of property, plant and equipment 1,423 630
Amortization of intangible assets 3,238 1,435
Depreciation of right-of-use assets 1,573 938
Net credit losses on financial assets and contract assets 1,025 85
Other 17,186 12,904
Total selling and general administration expense 43,769 30,969
Other selling and general administration expenses include costs for
infrastructure, professional services and marketing as well as R&D and
laboratory related costs, information technology & data expenses, sales
representative & distribution expenses.
Auditor's remuneration
The total remuneration of the Group's auditors, being RPGCC for the audit of
the 18-month period ended June 30, 2024, and Deloitte LLP for the audit of the
year ended December 31, 2022, for services provided to the Group, and included
in other selling and general administration expenses, is analyzed below:
Period ended Year ended
June 30, December 31,
2024 2022
Auditor's remuneration US$'000 US$'000
Audit of Group performed by Group Auditor 443 1,180*
Audit of subsidiaries performed by local auditors 77 122
Total fees for audit services 520 1,302
Audit related assurance services - -
Other assurance services - -
Total auditor remuneration - -
*: includes US$180,000 related to the 2021 audit (Crowe UK LLP) which was
agreed on after the issuance of the annual report.
12. Personnel expenses
Period ended Year ended
June 30, December 31,
2024 2022
Personnel expenses US$'000 US$'000
Wages & salaries 21,273 15,274
Social security & other payroll taxes 2,249 1,685
Pension costs 306 710
Share-based payments 178 138
Total personnel expenses 24,006 17,807
Reported as cost of sales (Note 9) 4,682 2,830
Reported as selling and general administration expense (Note 11) 19,324 14,977
Total personnel expenses 24,006 17,807
The average monthly number of employees was as follows: 194 218
13. Other expenses
Period ended Year ended
June 30, December 31,
2024 2022
Other expenses US$'000 US$'000
Foreign exchange losses 343 3,050
Loss on disposal of property, plant and equipment 204 16
Transaction costs relating to mergers and acquisitions 23 50
Write off intangible assets (Note 18) 1,419 897
Other 376 171
Total other expenses 2,365 4,184
The write-off mainly relates to patents acquired in view of the commercial
partnership with ICP. As the partnership ended, the asset's economic benefits
were deemed to no longer have any value.
Foreign exchange losses previously reported under other expenses have been
reclassified to finance costs (Note 15) during the 2023 reporting period to
more fairly present the nature of such items.
14. Finance income
Period ended Year ended
June 30, December 31,
2024 2022
Finance income US$'000 US$'000
Interest income 18 5
Gains on foreign currency transactions 157 678
Other 27 -
Total finance income 202 683
15. Finance costs
Period ended Year ended
June 30, December 31,
2024 2022
Finance costs US$'000 US$'000
Amortization of deferred finance costs - acquisition costs 3 -
Lease finance expense 311 163
Interest on borrowings 586 110
Bank fees 364 98
Loss on foreign currency transactions 379 902
Total finance costs 1,643 1,273
16. Income tax
The Group's average expected tax rate was 20.2% in the 18-month period ended
June 30, 2024 (Year ended December 31, 2022: 21.1%). During the period ended
June 30, 2024, there were no significant changes to local tax rates in the tax
jurisdictions in which the Group operates.
For the period ending June 30, 2024, the Group had a tax expense of US$915
(year ending December 31, 2022: tax credit of US$21,000). The effective tax
rate was 4.7% (2022: 0.1%). The effective tax rate was primarily impacted by
unrecognized tax losses.
The differences between the statutory income tax rate and the effective tax
rates are summarized as follows:
Period ended Year ended
June 30, 2024 December 31, 2022
US$'000 Tax rate % US$'000 Tax rate %
Expected tax at average tax rate (3,905) 20.2% (6,304) 21.1%
Increase/(decrease) in tax resulting from:
Tax credits 21 (0.1%) (340) 1.1%
Unrecognized tax losses 4,385 (22.7%) 3,796 (12.7%)
Non-deductible expenditure 52 (0.3%) 2,586 (8.7%)
Temporary differences 328 (1.7%) 165 (0.6%)
Other - net 34 (0.1%) 76 (0.1%)
Total income tax expense (income) 915 (4.7%) (21) 0.1%
The components of the provision for taxation on income included in the
"Statement of profit or loss and other comprehensive income" are summarized
below:
Period ended Year ended
June 30, December 31,
2024 2022
Current income tax expense US$'000 US$'000
Swiss corporate income taxes (27) 58
United States state and federal taxes 455 393
Taiwan corporate income taxes 229 118
Belgium corporate income taxes 37 (123)
Germany corporate income taxes (24) 51
United Kingdom corporate income taxes 89 -
Others 1 63
Total current income tax expense 760 560
Deferred income tax expense
Switzerland 518 90
United States (38) (606)
China 6 117
Austria 3 20
Belgium (198) (136)
Germany (91) (68)
Others (45) 2
Total deferred income tax expense (income) 155 (581)
Total income tax expense (income) 915 (21)
In addition to the amount charged to profit or loss, the following amounts
relating to deferred tax have been recognized in other comprehensive income:
Period ended Year ended
June 30, December 31,
2024 2022
Items that will not be reclassified subsequently to profit or loss US$'000 US$'000
Remeasurement of net defined benefit liability 42 (276)
Total income tax recognized in other comprehensive income 42 (276)
Period ended Year ended
June 30, December 31,
2024 2022
Net tax (assets)/liabilities US$'000 US$'000
Opening balance - (prepaid taxes) (343) 51
Assumed on business combinations - -
Assumed on asset acquisition - (32)
Income tax expense for the year 760 560
Taxes paid (1,023) (870)
Foreign currency differences - (52)
Net tax (asset)/liability (606) (343)
As at As at
June 30, December 31,
2024 2022
Net tax (assets) liabilities US$'000 US$'000
Prepaid income taxes (795) (657)
Income tax liabilities 189 314
Net tax (asset)/liability (606) (343)
Since the Group operates internationally, it is subject to income taxes in
many different tax jurisdictions. The Group calculates its average expected
tax rate as a weighted average of the tax rates in the tax jurisdictions in
which the Group operates. This rate changes from year to year due to changes
in the mix of the Group's taxable income and changes in local tax rates.
17. Earnings per share
The calculation of the basic earnings per share is based on the following
data:
Period ended Year ended
June 30, December 31,
2024 2022
Earnings US$'000 US$'000
Loss attributable to the ordinary equity holders of the parent entity (20,839) (29,251)
Period ended Year ended
June 30, December 31,
Number of shares 2024 2022
Weighted average number of ordinary shares for the purposes of basic earnings
per share
158,135,830 133,426,953
Basic earnings per share is calculated by dividing the profit/loss after tax
attributable to the equity holders of the Company by the weighted average
number of shares in issue during the year. The effect of share options is
anti-dilutive and therefore not disclosed.
18. Intangible assets
Goodwill Internally developed assets Brand names and customer relations Acquired technologies Other intangible assets Total
Cost US$'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
Business combinations 764 - 150 - 507 1,421
Additions arising from internal development - 1,277 - - - 1,277
Other acquisitions - - - - 150 150
Disposals / write-offs - (1,169) - - (1,806) (2,975)
Deconsolidation of subsidiary (123) - - - - (123)
Currency translation differences 70 141 14 7 106 338
As at June 30, 2024 21,298 5,843 4,507 3,022 2,191 36,861
Amortization and accumulated impairment losses
As at January 1, 2022 2,305 474 602 234 518 4,133
Amortization for the year - 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 year - 1,136 1,057 500 545 3,238
Disposals / write-offs - (958) - - (599) (1,557)
Deconsolidation of subsidiary (123) - - - - (123)
Impairment loss - 323 - - - 323
Currency translation differences 19 30 (46) (30) 5 (22)
As at June 30, 2024 12,027 2,086 2,309 993 775 18,190
Net book value
As at December 31, 2022 8,456 4,039 3,045 2,492 2,410 20,442
As at June 30, 2024 9,271 3,757 2,198 2,029 1,416 18,671
Other intangible assets include acquired rights, licenses, patent costs,
concessions, website designs and domains and trademarks.
Goodwill
Goodwill acquired in a business combination was allocated, at acquisition, to
the following cash generating units (CGUs):
CGU Description of activities
ChemTex This CGU is based on the 2017 acquisition of ChemTex Inc. The CGU's main
activities are carpet polymer, industrial polymer, textile finishes, R&D,
laboratory work, production and sales. The CGU contributes to the Group's
Advanced Materials segment.
Chrisal The CGU is based on the 2021 acquisition of Chrisal, a biotechnology company
and a leader in innovative ingredients and consumer products that incorporate
the benefits of probiotics and synbiotics. The CGU contributes to the Group's
LifeSciences segment.
RAS The CGU is based on the 2021 acquisition of RAS AG. RAS AG develops and
manufactures antimicrobial, hygiene-enhancing additives and durable
antimicrobial coating systems which are sold under the trademark agpure®, and
transparent electrically conductive and infrared reflective coatings sold
under the Xpectra technology (formerly known under the ECOS® trademark).
Furthermore, the CGU includes the regulatory registrations acquired in the
Tarn Pure acquisition. Which support the regulatory compliance of HeiQ's
antimicrobial products. The CGU contributes to the Group's Advanced Materials
segment.
Life The CGU is based on the 2021 acquisition of Life Group. LIFE develops and
distributes bio-based antimicrobial additives and treatments used by
manufacturers of plastics, coatings, textiles, ceramics and paper, that
inhibit or manage bacteria, fungi, algae, and other micro-organisms that come
in contact with treated materials. The CGU contributes to the Group's Advanced
Materials segment.
MasFabEs The CGU is based on the 2020 acquisition of MasFabEs. The MasFabEs CGU
manufactures medical masks and devices. The CGU contributes to the Group's
LifeSciences segment.
The following table summarizes goodwill allocation and accumulated impairment
for each CGUs:
Balance acquired Accumulated impairment Currency revaluation Net book value
Goodwill US$'000 US$'000 US$'000 US$'000
ChemTex 3,393 - 3,393
Chrisal* 6,163 (3,677) (291) 2,195
RAS (incl. Tarn Pure in 2023/2024)* 7,998 (4,007) (308) 3,683
Life 5,202 (5,202) - -
MasFabEs** 123 (123) - -
Total goodwill 22,879 (13,009) (599) 9,271
*The balances of Chrisal and RAS are revalued from local currency to US$ at
each reporting date.
**Goodwilll allocated to the MasFabEs CGU was derecognized following the
deconsolidation of HeiQ Medica S.L.
Goodwill impairment test
The Group tests goodwill annually for impairment or more frequently if there
are indications that these assets might be impaired. For the 18-month period
ended June 30, 2024, the Group tested goodwill for ChemTex, Chrisal and RAS
CGU. The recoverable amount of each CGU is determined based on a value in use
calculation which uses cash flow projections based on financial budgets
approved by the directors. The projections are based on a seven-year period
and an individual pre-tax discount rate ranging between 8.3% to 9.8% per cent
per annum for each CGUs as presented further below in more detail (2022: 12 to
14 per cent per annum). The discount rate is based on pre-tax weighted average
cost of capital for an average company in the chemical industry adjusted for
relative size and risks of each CGU. The directors expect income from all CGUs
over the next seven years. The perpetuity growth rate used is based on
consumer price index relevant for each CGU.
The assumptions used by management in forecasting revenues for the relevant
periods are as follows:
For the financial period 2024/2025, forecast has been determined by adjusting
the forecast for the year as approved by the Board ("Budget") for any variance
of actual performance (to date June 2024) against it. For later periods,
revenue growth was estimated based on projected (2025-2030) compound annual
growth rate of the respective business. Operating profits are forecast based
on historical experience of operating margins, adjusted for the impact of
known or expected changes in pricing and regional inflation expectations.
A summary of the key assumptions used in the value-in-use calculation is set
below:
Assumption ChemTex Chrisal RAS
Discount factor 9.3% 9.8% 8.3%
Perpetual growth rate 2.09% 1.96% 1.96%
Compound annual growth rate for the next five years 5.2% 36.8% 15.8%
As of end of June 2024, the Group conducted its annual goodwill impairment
test review and identified that the aggregated recoverable amount of each
Chrisal CGU, RAS CGU and Life CGU (based on the value in use approach and the
inputs displayed in the table above) exceeded its carrying amount. As a
result, no impairment was considered necessary as a result of these test in
this financial period ended June 30, 2024 (2022: total impairment loss
recognized of US$10,576,000).
As a result of the impairment losses described above, the following book
values remain for each CGU:
As at As at
June 30, December 31,
2024 2022
Goodwill book value US$'000 US$'000
ChemTex 3,393 3,393
Chrisal* 2,195 2,189
RAS (incl. Tarn Pure in 2023/2024)* 3,683 2,874
Life - -
Total goodwill book value 9,271 8,456
*The balances of Chrisal and RAS are revalued from local currency to US$ at
each reporting date.
Sensitivity analysis
The Group has conducted an analysis of the sensitivity of the impairment test
to reasonably possible changes in the key assumptions used to determine the
recoverable amount for each CGU to which goodwill is allocated. In the
process, the recoverable amount for ChemTex CGU and RAS CGU was identified as
key estimate.
For ChemTex CGU, the sensitivity analysis showed that an impairment loss would
be possible if the compound annual growth rate (7.2%) over the next seven
years would be lower than 3.2%. A reasonably possible underperformance against
the forecast sales growth rate (7.2%) for ChemTex CGU by 5 percent points,
i.e. applying a compound annual growth rate of 2.2% for the next seven years,
would result in a partial impairment of US$1,980,000.
For RAS CGU, the sensitivity analysis showed that an impairment loss would be
possible if the compound annual growth rate over the next seven years would be
lower than 15.8%. RAS' CAGR suggests that a 10 percent point underperformance
against forecast sales growth rates (15.8%), i.e. assuming a compound annual
growth rate of 5.8% for the next seven years - would result in a partial
impairment of US$2,922,000 of RAS CGU.
2022 goodwill impairment test
In the reporting year ended December 31, 2022, a US$10,576,000 impairment loss
was recognized relating to Chrisal CGU (US$2,402,000), RAS CGU (US$2,972,000)
and Life CGU (US$5,202,000).
Internally developed assets under construction
The Group tests internally developed assets under construction on a yearly
basis. The Directors consider whether estimated future economic benefits
outweigh the costs capitalized by reviewing whether each project:
· is still in development phase;
· can be used or sold in the future; and
· can be completed given the technical, financial and other
resources available.
The Group has processes in place for continually reviewing development
expenditure to ensure that projects under development are still viable. In the
reporting period ended June 30, 2024, assets amounting to US$211,000 were
written off relating to projects that were no longer to meet the
capitalization criteria. Furthermore, an impairment of US$323,000 was posted
in relation to an innovation project in the Advanced Materials segment due to
doubts around the technical and commercial feasibility of the product.
Internally developed assets and other intangibles with finite lives
The Group tests internally developed assets and other intangibles with finite
lives for impairment only if there are indications that these assets might be
impaired. The Group has processes in place for continually reviewing
development expenditure to ensure that projects under development are still
viable. In the reporting period ended June 30, 2024, assets worth US$1.2m. The
write-offs mainly related to patents acquired in view of the commercial
partnership with ICP. With the end of the partnership, the asset's economic
benefits were deemed to no longer have any value.
19. Property, plant and equipment
Machinery and equipment Motor vehicles Computers and software Furniture and fixtures Land and buildings Total
Cost US$'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 2,735 5,280
Disposals (69) (12) - - - (81)
Reclassifications (407) 59 - 348 - -
Currency translation differences (233) (1) (21) (23) (90) (368)
As at December 31, 2022 8,851 608 1,090 849 4,168 15,566
Additions 1,319 113 32 62 5,505 7,031
Disposals (1,748) (59) (748) (207) - (2,762)
Deconsolidation of subsidiary (1,265) (30) (11) (33) - (1,339)
Reclassifications (37) - - 37 - -
Currency translation differences 76 1 27 10 (68) 46
As at June 30, 2024 7,196 633 390 718 9,605 18,542
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 year 1,421 114 148 152 480 2,315
Eliminated on disposal (736) (35) (743) (198) - (1,712)
Deconsolidation of subsidiary (1,210) (8) (5) (8) - (1,231)
Reclassifications 7 - (6) (1) - -
Currency translation differences 67 1 22 7 (3) 94
As at June 30, 2024 3,449 487 244 340 710 5,230
Net book value
As at December 31, 2022 4,951 193 262 461 3,935 9,802
As at June 30, 2024 3,747 146 146 378 8,895 13,312
Impairment losses recognized in the year
During the year ended December 31, 2022, as a result of the significant
decline in demand for of certain types of hygiene masks, the Group carried out
a review of the recoverable amount of machinery. The Group recognized an
impairment loss of US$730,000 for machinery that was intended to be used to
manufacture hygiene masks for which demand declined significantly. The asset
was used in the LifeSciences reportable segment. In the period ended June 30,
2024, the machinery was derecognized following deconsolidation of the
subsidiary HeiQ Medica SL.
20. Right-of-use assets
Land and buildings Motor vehicles Machinery and equipment Total
Cost US$'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 860 140 913 1,913
Disposals due to expiry of lease (475) (40) (32) (547)
Modification to lease terms*** (1,228) (110) - (1,338)
Currency translation differences (58) 19 (29) (68)
As at June 30, 2024 6,051 691 3,088 9,830
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 year 1,096 232 245 1,573
Disposals due to expiry of lease (301) (25) (33) (359)
Modification to lease terms*** (990) (41) - (1,031)
Currency translation differences (134) (1) (1) (136)
As at June 30, 2024 1,390 372 336 2,098
Net book value
As at December 31, 2022 5,233 475 2,111 7,819
As at June 30, 2024 4,661 319 2,752 7,732
*With the acquisition of ChemTex Laboratories' property, plant and equipment
(Note 26), 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. The resulting US$68,000 net gain was recognized as operating
income.
***The Group terminated certain lease agreements prior to their expiry
resulting in the disposal of the right-of-use assets and related liabilities.
Furthermore, a building lease has been restructured resulting in amended
contract terms. The result of these changes resulted in a total US$33,000 net
gain which was recognized as operating income.
Amounts recognized in profit and loss
Period ended Year ended
June 30, December 31,
2024 2022
US$'000 US$'000
Depreciation expense on right-of-use assets 1,573 938
Interest expense on lease liabilities 311 163
Expense relating to short-term leases 374 225
Expense relating to leases of low value assets 51 40
Gain from early disposal and modification of leases 33 68
Amounts recognized in cash flow statement
Period ended Year ended
June 30, December 31,
2024 2022
US$'000 US$'000
Total fixed lease payments 1996 992
Gain from early disposal and modification of leases (33) (68)
Interest paid on leases 311 163
21. Other non-current assets
As at As at
June 30, December 31
2024 2022
Other non-current assets US$'000 US$'000
Deposits 72 80
Other prepayments 7 57
Other non-current assets 79 137
22. Inventories
As at As at
June 30, December 31
2024 2022
Inventories US$'000 US$'000
Gross inventories 12,616 18,564
Allowance for inventories (4,360) (5,396)
Net realizable value 8,256 13,168
The cost of inventories recognized as an expense during the period ended June
30, 2024 in respect of continuing operations was US$39,485,000 (Year ended
December 31, 2022: US$33,745,000).
The cost of inventories recognized during the period includes a reduction of
the inventory allowance of US$417,000 (Year ended December 31, 2022: net loss
of US$4,912,000).
23. Trade receivables
As at As at
June 30, December 31,
2024 2022
Trade receivables US$'000 US$'000
Not past due 2,791 2,788
<30 days 2,011 520
31-60 days 671 781
61-90 days 234 215
91-120 days 46 180
>120 days 1,782 2,407
Total trade receivables 7,535 6,891
Provision for expected credit losses (1,280) (404)
Total trade receivables (net) 6,255 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, 2024, the Group has recognized an expected credit loss of
US$1,280,000 (December 31, 2022: US$404,000). The following table details the
risk profile of receivables based on the Group's provision matrix.
Lifetime Expected credit losses on trade receivables
Trade receivables - days past due
Not past due 1-60 61-120 >120 days Total
Expected credit loss US$'000 US$'000 US$'000 US$'000 US$'000
Expected credit loss rate 1% 1% 68% 17%
1% 1%
Estimated total gross carrying amount at default 2,791 2,682 280 1,782 7,535
Lifetime ECL as at June 30, 2024 40 18 2 1,220 1,280
Trade receivables - days past due
Not past due 1-60 61-120 >120 days Total
Expected credit loss US$'000 US$'000 US$'000 US$'000 US$'000
Expected credit loss rate 0% 0% 0% 17% 6%
Estimated total gross carrying amount at default 2,788 1,301 395 2,407 6,891
Lifetime ECL as at December 31, 2022 - - - 404 404
The following table shows the movement in lifetime ECL that has been
recognized for trade receivables in
accordance with the simplified approach set out in IFRS 9.
Individually assessed Collectively assessed Total
Expected credit losses US$'000 US$'000 US$'000
Balance as at January 1, 2022 278 46 324
Net remeasurement of loss allowance 172 (6) 166
Amounts written off (81) - (81)
Foreign exchange gains and losses (4) (1) (5)
Balance as at December 31, 2022 365 39 404
Net remeasurement of loss allowance 878 85 963
Amounts written off (97) - (97)
Foreign exchange gains and losses 12 (2) 10
Balance as at June 30, 2024 1,158 122 1,280
The following tables explain how significant changes in the gross carrying
amount of the trade receivables contributed to changes in the loss allowance:
Increase (decrease) in lifetime expected credit losses Period ended Year ended
June 30, December 31,
2024 2022
US$'000 US$'000
Origination of new trade receivables net of those settled, as well as increase 878 172
in days past
due up to 120 days
Write-off of receivables older than 120 days (97) (81)
24. Other receivables and prepayments
As at As at
June 30, December 31,
2024 2022
Other receivables and prepayments US$'000 US$'000
Contract assets 83 115
Receivables from tax authorities 1,804 1,864
Prepayments 769 1,023
Other receivables 269 1,260
Total other receivables and prepayments 2,925 4,262
25. 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 As at
June 30, December 31, January 1,
2024 2022 2022
Contract assets US$'000 US$'000 US$'000
Research and development services 83 65 80
Take-or-pay services - - 170
Exclusivity services - 50 -
Total contract assets 83 115 250
Current assets 83 115 250
Non-current assets - - -
Total contract assets - 115 250
Revenues related to research and development services were recognized at the
point of delivering proof of concept and completing testing services.
Performance obligations related to exclusivity services were deemed fulfilled
by the Group upon completion of the contractual term. Payment for the above
services is not due from the customer yet and therefore a contract asset is
recognized.
The directors of the Company always measure the loss allowance on amounts due
from customers at an amount equal to lifetime ECL, taking into account the
historical default experience, the nature of the customer and where relevant,
the sector in which they operate. There has been no change in the estimation
techniques or significant assumptions made during the current reporting period
in assessing the loss allowance for the amounts due from customers under
construction contracts.
Lifetime Expected credit losses on contract assets
The following table details the risk profile of amounts due from customers
based on the Group's provision matrix. Based on the historic default
experience, no expected credit loss has been recognized:
As at As at
June 30, December 31,
2024 2022
Expected credit loss US$'000 US$'000
Expected credit loss rate 0% 0%
Estimated total gross carrying amount at default 83 115
Lifetime ECL - -
Net carrying amount 83 115
26. Issued share capital and share premium
Movements in the Company's share capital and share premium account were as
follows:
Note Number of shares Share capital Share premium Totals
No. US$'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 ChemTex Labs 2,176,884 795 1,177 1,972
Issue of shares 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
Issue of shares from fundraise (b) 28,000,000 1,752 1,296 3,048
Balance as at June 30, 2024 168,537,907 57,013 152,281 209,294
All shares in issue were allotted, called up and fully paid. The Group
subdivided each existing ordinary share of 30p into one new ordinary share of
5 pence and one deferred share of 25 pence.
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:
a) 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$1,237,000. The purchase consideration was payable partly
by the issue of 455,435 new ordinary shares for (US$372,000). See Note 4 for
details.
b) In March 2024, the Group issued 28,000,000 new ordinary shares
at £0.087 per share raising in aggregate £2.44 million (approximately
US$3.0m).
27. Share-based payments
Equity-settled Share Option Scheme
The Company has adopted the HeiQ Plc Option Scheme.
Under the Option Scheme, awards may be made only to employees and executive
directors. The Board will administer the Option Scheme with all decisions
relating to awards made to executive directors taken by the Remuneration
Committee.
Awards under the equity-settled option plan will be market value options, but
participants resident in jurisdictions where local securities laws or other
regulations are considered problematic may be awarded cash-based equivalents.
Any awards made are not pensionable.
All awards made will be subject to one or more performance conditions at the
discretion of the Board. Ordinary Shares received on exercise of any options
awarded under the Option Scheme may be required to be held for a period of
time before they can be disposed of (other than disposals to satisfy any tax
payable on exercise).
The total number of Ordinary Shares which can be issued under the Option
Scheme (together with any other employees' share scheme operated by the
Company) may not exceed 10 per cent. of the Company's ordinary share capital
from time to time.
An option-holder has no voting or dividend rights in the Company before the
exercise of a Share option.
There are four option grants with the same vesting requirements. The key
performance indicators attaching to these awards relate to targets for sales
growth (65 per cent. of the award) and operating margin (35 per cent. of the
award) over a period of three years. A fifth option grant introduced new
vesting requirements which are subject to share price growth.
Options are exercisable at a price equal to the average quoted market price of
the Company's shares on the date of grant. The vesting period is three years.
If the options remain unexercised after a period of ten years from the date of
grant the options expire. Options are forfeited if the employee leaves the
Group before the options vest.
Details of the share options outstanding during the year are as follows:
Period ended June 30, 2024 Year ended December 31, 2022
Number of options Weighted average exercise price (£) Number of options Weighted average exercise price (£)
Outstanding at beginning of period/year 11,525,911 1.05 8,707,658 1.14
Granted during the period/year 10,300,000 0.09 3,349,125 0.83
Forfeited during the period/year (2,364,362) 1.06 (530,872) 1.12
Lapsed during the period/year (3,783,496) 1.23
Vested during the period/year (1,046,504) 1.23 - -
Exercised during the period/year - - - -
Expired during the period/year - - - -
Outstanding at the end of the period 14,631,549 0.31 11,525,911 1.05
Exercisable at the end of the period 1,046,504 1.23 - -
The options outstanding at June 30, 2024 had a weighted average exercise price
of £0.31 and a weighted average remaining contractual life of 1.9 years.
Since the options are subject to market-based performance conditions, the
Monte Carlo model was used in calculating the fair value. The estimated fair
value of the 10,300,000 options granted in April 2024 is £221,120
(approximately US$280,000).
In 2022, options were granted on June 15 and September 26. The aggregate of
the estimated fair values of the options granted on those dates is £1,117,000
(approximately US$1,304,000). In 2021, options were granted on October 19. The
Black-Scholes model was used in calculating the fair value of these option
grants. The aggregate of the estimated fair values of the options granted on
that date was £930,000 (approximately US$1,275,000).
The inputs into the valuation models are as follows:
Period ended Year ended
June 30, December 31,
2024 2022
Model used Monte Carlo Black Scholes
Weighted average share price (£) 0.0860 0.817
Weighted average exercise price (£) 0.0898 0.834
Expected volatility 65.0% 69.3%/70.3%*
Expected life 2.7 years 2.6 /2.3 years*
Risk-free rate 4.32% 1.90%/4.38%*
Expected dividend yields 0% 0%
Share price hurdle £0.3250 n/a
*In the reporting year ended 2022, there were two grants with different inputs
used in the Black Scholes model.
Expected volatility was determined by calculating the historical volatility of
the Group's share price as well as a set of comparable listed companies. The
expected life used in the model is equal to the vesting period.
Due to the expectation that performance targets will not be met, the number of
options expected to vest from the second, third and fourth option grant
dropped to nil (2022: 2,279,236). This resulted in a net income of US$51,000
arising from options-related share-based payment transactions for the 18-month
period ended June 30, 2024 (income for the year ended December 31, 2022:
US$12,000).
Other share-based payments
Remuneration of US$764,000 described in Note 26 in relation to the acquisition
of Life Materials Technologies Limited is linked to a service period of five
years. An expense of US$229,000 was recognized in the 18-month period ended
June 30, 2024 (year ended December 31, 2022: US$150,000). The remainder of
approximately US$306,000 is expected to be expensed over the period from July
1, 2024, to June 30, 2026.
28. Other reserves and retained deficit
Other reserves comprise the share-based payment reserve, the merger reserve,
the currency translation reserve and the other reserve.
The retained deficit comprises all other net gains and losses and transactions
with owners not recognized elsewhere.
Movements in the other reserves were as follows:
Share- based payment reserve Merger reserve Currency translation reserve Other reserve Total Other reserves
Note US$'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 27 (12) - - - (12)
Transactions with owners (12) - - - (12)
Balance at December 31, 2022 462 (126,912) (1,527) (40) (128,017)
Other comprehensive (loss)/income - - 466 (136) 330
Total comprehensive (loss)/income for the year - - 466 (136) 330
Share-based payment charges/(reversal) 27 (51) - - - (51)
Transactions with owners (51) - - - (51)
Balance at June 30, 2024 411 (126,912) (1,061) (176) (127,738)
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 27.
The merger reserve was created in accordance with IFRS3 'Business
Combinations'. The merger reserve arises due to the elimination of the
Company's investment in HeiQ Materials AG. Since the shareholders of HeiQ
Materials AG became the majority shareholders of the enlarged Group, the
acquisition is accounted for as though there is a continuation of the legal
subsidiary's financial statements. In reverse acquisition accounting, the
business combination's costs are deemed to have been incurred by the legal
subsidiary.
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.
The other reserve comprises the cumulative re-measurement of defined benefit
obligations and plan assets to fair value, and which are recognized as a
component of other comprehensive income. Such actuarial gains and losses from
defined benefit pension plans are not reclassified to profit or loss in
subsequent periods.
Dividend paid by subsidiary
In October 2023, HeiQ Chrisal N.V. declared and paid a dividend of US$42,000
of which 29% or US$12,000 was paid to minority shareholders. In January 2024,
HeiQ Chrisal declared and paid a dividend of US$704,000 of which 29% or
US$204,000 was paid to minority shareholders. In June 2024, HeiQ Chrisal
declared and paid a dividend of US$174,000 of which 29% or US$50,500 was paid
to minority shareholders.
Capital contributions from minority shareholders
In the year ended December 31, 2022, the Group received a capital contribution
from a minority shareholder of US$764,000 which arose from a waived loan (see
Note 31 for details).
29. Pensions and other post-employment benefit plans
The Group operates a defined benefit pension plan in Switzerland, which
requires contributions to be made to a separately administered fund. The cost
of providing benefits under the defined benefit plan is determined using the
projected unit credit method.
Correspondingly the value of the defined benefit obligation at valuation date
is equal to the present value of the accrued pro-rated service considering
expected salary at eligibility date and the future pension increase.
Pension plan description
The pension scheme is with AXA pension fund. The pension plans grant
disability and death benefits which are defined as a percentage of the salary
insured. Although the Swiss plan operates like a defined contribution plan
under local regulations, it is accounted for as a defined benefit pension plan
under IAS19 'Employee Benefits' because of the need to accrue a minimum level
of interest on the mandatory part of the pension accounts. Upon reaching
retirement age, the savings capital will be converted with a fixed conversion
rate into an old-age pension. In the event that an employee leaves employment
prior to reaching a pensionable age, the cumulative balance of the savings
account is withdrawn from the pension plan and invested into the pension plan
of the employee's new employer.
Regulatory framework
Pension plan legal structure
HeiQ Materials AG is affiliated to a collective foundation. The collective
foundation operates one defined benefit pension plan for HeiQ Materials AG.
Under Swiss law, all employees are required to be a member of the pension
plan. There are minimum benefits requested by law (for old-age, disability,
death and termination). The pension plans cover more than legally requested.
Each affiliated company has a pension plan committee. The committee is
represented by 50% of employer representatives and the remaining 50% are
employee representatives.
Responsibilities of the board of trustees (and/or the employer on the board of trustees)
The highest corporate body of the collective foundation is the board of
trustees. The board of trustees is elected out of the affiliated companies and
is also represented by 50% of employee and employer representatives (on the
level of the collective foundation). This board handles the general management
of the pension scheme, ensures compliance with the statutory requirements,
defines the strategic objectives and policies of the pension scheme and
identifies the resources for their implementation. This board decides also on
the asset allocation and is responsible to the authorities for the correct
administration of the collective foundation.
Special situation
The pension scheme has no minimum funding requirement (when the pension fund
is in a surplus position), although the pension scheme has a minimum
contribution requirement as specified below. Under local requirements, where a
pension fund is operated in a surplus position, limited restrictions apply in
terms of the trustee's ability to apply benefits to the members of the locally
determined "free reserves". In instances where the pension fund enters into an
underfunded status the active members, along with the employer, are required
to make additional contributions until such time the pension fund is in a
fully funded position.
Funding arrangements that affect future contributions
Swiss law provides for minimum pension obligations on retirement. Swiss law
also prescribes minimum annual funding requirements. An employer may provide
or contribute a higher amount than as specified under Swiss law - such amounts
are specified under the terms and conditions of each of the Swiss employee's
individual terms and conditions of employment.
In addition, employers are able to make one off contributions or prepayments
to these funds. Although these contributions cannot be withdrawn, they are
available to the Company to offset its future employer cash contributions to
the plan. Although a surplus can exist in the fund, Swiss law requires minimum
annual funding requirements to continue.
For the active members of the pension plan, annual contributions are required
by both the employer and employee. The employer contributions must be at least
equal to the employee contributions, but may be higher, separately mentioned
in the constitution of the pension plan.
Minimum annual contribution obligations are determined with reference to an
employee's age and current salary, however as indicated above these can be
increased under the employee's terms and conditions of employment.
In the event of the winding up of HeiQ Materials AG, or the pension fund, HeiQ
Materials AG has no right to any refund of any surplus in the pension fund.
Any surplus balance is allocated to the members (active and pensioners).
General risk
The Group faces the risk that its equity ratio can be affected by a poor
performance of the assets of the pension fund or a change of assumptions.
Therefore, sensitivities of the main assumptions have been calculated and
disclosed (see below).
The following tables summarize the components of net benefit expense
recognized in the statement of profit and loss and the funded status and
amounts recognized in the statement of financial position for the plan:
In February 2023, nine employees were made redundant which resulted in a
curtailment gain US$148,000. The valuation was based on the participants data
as of year-end 2022 and the valuation assumptions as of end of February 2023.
In October 2023, the Board of Trustees of the AXA pension fund decided that a
new enveloping conversion rate of 5.20% will apply to retirements from January
1, 2025 for men and women aged 65. For retirements up to the end of 2024, the
split conversion rates of 6.80% for mandatory savings capital and 5.00% for
men aged 65 and 4.88% for women aged 64 for supplementary savings capital will
continue to apply. The decision was accounted for as a plan amendment at the
time the decision was made. The valuation was based on the participants data
as at December 31, 2023 and the valuation assumptions as at October 31, 2023.
The impact was recognized as a plan amendment and a gain of US$341,000.
Net benefit obligations
The components of the net defined benefits obligations included in non-current
liabilities are as follows:
As at As at
June 30, December 31,
Net benefit obligations 2024 2022
US$'000 US$'000
Fair value of plan assets 7,245 9,616
Defined benefit obligations (8,094) (10,568)
Funded status (net liability) (849) (952)
Duration (years) 15.8 13.8
Expected benefits payable in following year (351) (389)
Period ended Year ended
June 30, December 31,
2024 2022
Development of obligations and assets US$'000 US$'000
Present value of funded obligations, beginning of period/year (10,568) (13,003)
Employer service cost (571) (571)
Employee contributions (452) (352)
Past service cost 341 -
Curtailments/Settlements 148 -
Interest cost (302) (45)
Benefits paid/(refunded) 4,309 522
Actuarial (loss)/gain on benefit obligation (636) 2,562
Currency (loss)/gain (363) 319
Present value of funded obligations, end of period/year (8,094) (10,568)
Defined benefit obligation participants (6,746) (10,568)
Defined benefit obligation pensioners (1,348) -
Present value of funded obligations, end of period/year (8,094) (10,568)
Fair value of plan assets, beginning of period/year 9,616 10,858
Expected return on plan assets 273 37
Employer's contributions 448 352
Employees' contributions 452 352
Benefits (paid)/refunded (4,309) (522)
Admin expense (28) (21)
Actuarial (loss)/gain on plan assets 458 (1,182)
Currency gain/(loss) 335 (258)
Fair value of plan assets, end of period/year 7,245 9,616
Period ended Year ended
June 30, December 31,
Movements in net liability recognized in statement of financial position: 2024 2022
US$'000 US$'000
Net liability, beginning of year (952) (2,146)
Employer service cost (571) (571)
Interest cost (302) (45)
Expected return on plan assets 273 37
Admin expense (28) (21)
Past service cost recognized in period/year 341 -
Curtailment, settlement, plan amendment gain (loss) 148 -
Employer's contributions (following year expected contributions) 448 352
Prepaid (accrued) pension cost: (311) 247
- operating income (expense) 339 (240)
- finance expense (28) (7)
Total gains recognized within other comprehensive income (178) 1,380
Currency loss (28) 62
Net liability, end of period/year (849) (952)
Expected employer's cash contributions for following period/year 264 360
Period ended Year ended
June 30, December 31,
Amounts recognized in profit and loss 2024 2022
US$'000 US$'000
Employer service cost (571) (571)
Past service cost recognized in period/year 341 -
Interest cost (302) (45)
Expected return on plan assets 273 37
Admin expense (28) (21)
Curtailment, settlement, plan amendment gain (loss) 150 -
Components of defined benefit costs recognized in profit or loss (137) (600)
Period ended Year ended
June 30, December 31,
2024 2022
Amounts recognized in other comprehensive income US$'000 US$'000
Actuarial gains/(losses) arising from plan experience 212 193
Actuarial (losses)/gains arising from demographic assumptions - (23)
Actuarial gains arising from financial assumptions (848) 2,392
Re-measurement of defined benefit obligations (636) 2,562
Re-measurement of assets 458 (1,182)
Deferred tax asset derecognized / (recognized) 42 (276)
Total recognized in OCI (136) 1,104
The assets of the scheme are invested on a collective basis with other
employers. The allocation of the pooled assets between asset categories is
as follows.
As at As at
June 30, December 31,
Asset allocation 2024 2022
Cash 1.2% 2.8%
Bonds 30.2% 29.1%
Equities 34.4% 33.2%
Property (incl. mortgages) 28.8% 31.3%
Other 5.4% 3.6%
Total 100.0% 100.0%
Principal actuarial assumptions (beginning of period/year):
The principal assumptions used in determining pension and post-employment
benefit obligations for the plan are shown below:
As at As at
June 30, December 31,
The principal assumptions 2024 2022
Discount rate 1.50% 2.25%
Interest credit rate 2.00% 2.25%
Average future salary increases 1.50% 2.50%
Future pension increases 0.00% 0.00%
Mortality tables used BVG 2020 GT BVG 2020 GT
Average retirement age 65/65 65/65
The forecasted contributions of the Group for the 2024/2025 financial year
amount to US$351,000.
Sensitivities
A quantitative sensitivity analysis for significant assumptions is as follows:
As at As at
June 30, December 31,
Impact on defined benefit obligation 2024 2022
Discount rate + 0.25% (308) (323)
Discount rate - 0.25% 329 343
Salary increase + 0.25% 44 44
Salary increase - 0.25% (43) (43)
Pension increase + 0.25% 165 167
Pension decrease - 0.25% (not lower than 0%) - -
A negative value corresponds to a reduction of the defined benefit obligation,
a positive value to an increase of the defined benefit obligation.
The sensitivity analyses above have been determined based on a method that
extrapolates the impact on the defined benefit obligation as a result of
reasonable changes in key assumptions occurring at the end of the reporting
period. The sensitivity analyses are based on a change in a significant
assumption, keeping all other assumptions constant. The sensitivity analyses
may not be representative of an actual change in the defined benefit
obligation as it is unlikely that changes in assumptions would occur in
isolation from one another.
Other pension plans
Life Materials Technologies Limited, Thailand, also has a pension scheme which
gives rise to defined benefit obligations under IAS 19 net defined liability
as at June 30, 2024 is US$134,000 (December 31, 2022: US$134,000).
30. Lease liabilities
Future minimum lease payments associated with leases were as follows:
As at As at
June 30, December 31,
2024 2022
Lease liabilities US$'000 US$'000
Not later than one year 1,151 1,301
Later than one year and not later than five years 3,398 3,813
Later than five years 3,271 3,387
Total minimum lease payments 7,820 8,501
Less: Future finance charges (539) (679)
Present value of minimum lease payments 7,281 7,822
Current liability 997 1,264
Non-current liability 6,284 6,558
7,281 7,822
31. Borrowings
The Group's borrowings are held at amortized cost. They consist of the
following:
As at As at
June 30, December 31,
2024 2022
Borrowings US$'000 US$'000
Unsecured bank loans 9,973 3,573
Secured bank loans 793 628
Loans from related parties 443 -
Loans from non-controlling interest - 137
Total borrowings 11,209 4,338
The following table provides a reconciliation of the Group's future maturities
of its total borrowings for each year presented:
As at As at
June 30, December 31,
2024 2022
US$'000 US$'000
Not later than one year 9,380 2,893
Later than one year but less than five years 884 1,029
After more than five years 945 416
Total borrowings 11,209 4,338
The other principal features of the Group's borrowings are as follows:
Unsecured bank loans
As at December 31, 2022
As at June 30, 2024
Description Currency Repayment date Principal Interest rate Principal US$'000 Interest rate
US$'000
Credit facility CHF August 2024 550 7.10% - -
Credit facility CHF September 2024 1,100 5.45% - -
Credit facility CHF July 2024 5,829 4.44% 2,574 2.20%
Credit facility CHF July 2024 550 4.40% - -
Credit facility EUR July 2024 415 6.82% - -
Various bank loans(1)) EUR 1-10 years 1,504 3,04% 999 2.21%
Bank loan GBP May 2026 25 2.50% - -
Outstanding at the end of the year 9,973 3,573
1) Several loans repayable over nine years. The loans are
repayable over a period of up to nine years. These loans have fixed interest
rates between 1.19% and 4.50% and the weighted average fixed interest rate on
the outstanding balances is 3,04%.
Secured bank loans
The Group took out a bank loan in October 2020 which incurs interest at a
fixed rate of 3.25%. The loan was secured by property owned by a company which
is controlled by a minority shareholder of HeiQ Medica. As at December 31,
2022, US$628,000 was outstanding on the loan. The loan was derecognized
following deconsolidation of the subsidiary, see Note 6f.
In March 2024, a new bank loan was taken out in the amount of EUR750.000 at an
interest rate of 7%. The loan is secured by property owned by the Group. As of
June 30, 2024, EUR740,000 is outstanding (US$793,000).
Related party loans
In December 2023, Cortegrande AG, a company controlled by Carlo Centonze,
granted a loan to HeiQ Group in the amount of EUR 1,350,000 (approximately
US$1,494,000). The loan was increased to EUR 1,475,000 in January 2024. In
March 2024, most of the outstanding loan was repaid in shares as part of the
settlement of the convertible loan note issued by the Company. The remaining
loan amounts to EUR 400,000 (approximately US$443,000), incurs interest at
4.5% and is repayable in June 2025.
Loans from non-controlling interests
A loan disclosed in the 2022 annual report in the amount of BRL 715,683
(US$137,000) which was payable to a minority shareholder of Life Materials
Latam Ltda, Brazil is no longer consolidated following the deconsolidation of
the subsidiary.
32. Deferred tax
The following are the major deferred tax liabilities and assets recognized by
the Group and movements thereon during the current and prior reporting period.
Pension fund obligations Tax losses Share-based payments Temporary differences Total
Deferred tax US$'000 US$'000 US$'000 US$'000 US$'000
Balance at January 1, 2022 429 178 85 (1,686) (994)
Charge/(credit) to profit or loss 49 (150) 1 681 581
Credit 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/(credit) to profit or loss (457) - (87) 389 (155)
Charge to other comprehensive income 42 - - - 42
Arising from business combinations - - - (164) (164)
Foreign currency differences 20 - (4) 8 24
Balance as at June 30, 2024 (205) - - (763) (968)
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:
Year ended Year ended
June 30, December 31,
2024 2022
US$'000 US$'000
Deferred tax
Deferred tax assets 305 538
Deferred tax liabilities (1,273) (1,253)
Net deferred tax assets (liabilities) (968) (715)
Deferred tax assets related to pension fund obligations and share-based
payments were derecognized due to the current operational results and the
uncertainty about future profits in the Swiss tax jurisdiction. Deferred tax
liabilities related to capital allowances and depreciation increased following
the recognition of intangible assets acquired in the Tarn Pure acquisition.
Tax losses were not recognized as deferred tax assets. During the period ended
June 30, 2024, such tax losses amounted to US$4.4million (year ended December
31, 2022: US$3.2million). They arose from aggregated losses of US$20.8million
(2022: US$17.5million).
The Group has applied the exception under the IAS 12 amendment with respect to
International Tax Reform - Pillar Two Model Rules to not recognize or disclose
any information about deferred tax assets and liabilities related to top-up
income taxes.
The group applies the exception recognizing and disclosing information about
deferred tax assets and liabilities related to OECD pillar two
income taxes, as provided in the amendments to IAS 12 issued in May 2023.
33. Other non-current liabilities
As at As at
June 30, December 31,
2024 2022
US$'000 US$'000
Defined benefit obligation IAS 19 Switzerland (Note 29) 849 952
Defined benefit obligation IAS 19 Thailand (Note 29) 134 134
Contract liabilities 4,758 3,614
Deferred grant income - 14
Total other non-current liabilities 5,741 4,714
34. Trade and other payables
As at As at
June 30, December 31,
2024 2022
US$'000 US$'000
Trade payables 3,706 3,321
Payables to tax authorities 315 375
Other payables 1,940 1,626
Total trade and other payables 5,961 5,322
Trade payables principally comprise amounts outstanding for trade purchases
and ongoing costs. Other payables relate to employee-related expenses,
utilities and other overhead costs. Typically, no interest is charged on the
trade payables. The Group has financial risk management policies in place to
ensure that all payables are paid within the pre-agreed credit terms.
The directors consider that the carrying amount of trade payables approximates
to their fair value.
35. Accrued liabilities
As at As at
June 30, December 31,
2024 2022
US$'000 US$'000
Costs of goods sold 837 875
Personnel expenses 1,202 1,737
Other operating expenses 1,027 2,366
Total accrued liabilities 3,066 4,978
36. Deferred revenue
As at As at
June 30, December 31,
2024 2022
US$'000 US$'000
Contract liabilities 1,700 1,176
Prepayments for unshipped goods 120 94
Deferred grant income 92 15
Total deferred revenue 1,912 1,285
37. Contract liabilities
As at As at As at
June 30, December 31, January 1,
2024 2022 2022
US$'000 US$'000 US$'000
Exclusivity agreements 2,107 1,832 -
Research and development services 4,351 2,958 1,000
Total contract liabilities 6,458 4,790 1,000
Current liabilities (Note 36) 1,700 1,176 1,000
Non-current liabilities (Note 33) 4,758 3,614 -
Total contract liabilities 6,458 4,790 1,000
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.
The Group received a total of US$3.9 million prepayments for research and
development services related to distribution agreements. The Group is expected
to fulfill its performance obligations over the next five years. In 2022, the
Group entered into an agreement to grant exclusivity to a customer worth US$2
million and research and development services worth a further US$2 million.
The customer has prepaid, and revenue recognition is spread over four
reporting periods starting in July 2022 and ending June 2026.
The following table shows how much of the revenue recognized in the current
reporting period relates to brought forward contract liabilities.
Period ended Year ended
June 30, December 31,
2024 2022
US$'000 US$'000
Exclusivity agreements 785 -
Research and development services 905 -
Total revenue recognized from contract liabilities 1,690 -
38. Other current liabilities
As at As at
June 30, December 31,
2024 2022
US$'000 US$'000
Deferred consideration in relation to acquisitions 169 92
Call option derivative liability 333 686
Other current liabilities 502 778
Deferred consideration
The deferred consideration relating to business combinations is summarized
below:
ChemTex RAS AG Life Tarn Pure Total
US$'000 US$'000 US$'000 US$'000 US$'000
As at January 1, 2022 279 3,152 2,652 - 6,083
Foreign exchange revaluation - (277) - - (277)
Consideration settled in cash (187) - (1,400) - (1,587)
Consideration settled in shares - (2,875) (1,252) - (4,127)
As at December 31, 2022 92 - - - 92
Additions from acquisition as per Note 5a - - - 244 244
Consideration settled in cash - - - (180) (180)
Amortization of fair value discount - - - 3 3
Foreign exchange revaluation - - - 10 10
As at June 30, 2024 92 - - 77 169
Additional deferred consideration relates to the acquisition of Tarn Pure. The
fair value of the deferred consideration has been discounted using an imputed
interest rate of 2.20% to take into account the time value of money.
Call option derivative liability
As described in Note 6a, HeiQ AeoniQ GmbH's minority shareholder Hugo Boss AG
had the contractual right to acquire a further 5% shareholding in HeiQ AeoniQ
GmbH for a call option exercise price of €10,000,000 (approximately
US$10,657,000) for which a liability was recognized. The option was set to
expire on December 31, 2023 but was renewed until December 31, 2024 which
resulted in the revaluation of the liability as well as a gain disclosed under
other income, see Note 10.
The Group valued the option at initial recognition at US$1,097,000 based. As
at June 30, 2024, the liability was revalued to US$333,000 using the
Black-Scholes model. The gain from Hugo Boss not exercising the option was
US£367,000 for the period ended June 30, 2024 (year ended December 31, 2022:
US$371,000).
The inputs into the Black-Scholes model are as follows:
Weighted average share price (€) 2,285.71
Weighted average exercise price (€) 2,500.00
Expected volatility 22.5%
Expected life 0.5 year
Risk-free rate 1.0%
Expected dividend yield 0%
39. Contingent assets and liabilities
A minority shareholder of one of the Group's subsidiaries has made a claim in
court regarding the interpretation of certain put-option rights on shares of
the same subsidiary. The Company considers these option rights as lapsed as
per the Shareholder Agreement. At present, it is not possible to determine the
outcome of these matters. Hence, no provision has been made in the financial
statements for their ultimate resolution.
The Group entered into a manufacture, supply and exclusive distribution
agreement with Ecolab Inc. The Group received a €1.8m upfront payment from
Ecolab Inc. which compensates the Group's efforts in the preparation and
upkeep of the contract. The full amount is refundable contingent on the Group
breaching certain commitments. As at June 30, 2024, the Group has assessed the
probability of a refund as unlikely and therefore has not recognized a
liability.
40. Provisions
As at As at
June 30, December 31,
Provisions 2024 2022
US$'000 US$'000
Legal/Compliance provision - 339
Total provisions - 339
Current liability - 339
Non-current liability - -
Total provisions - 339
Provisions Legal/Compliance provision Total
US$'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 year - -
Utilization of provision (339) (339)
Exchange difference - -
Balance as at June 30, 2024 - -
The liability relating to United States Environmental Protection Agency
("EPA") in connection with alleged violations of the Federal Insecticide,
Fungicide and Rodenticide Act ("FIFRA") pertaining to mislabeling was settled
in May 2023. The amount settled was equal to the provision accounted for as of
December 31, 2022.
41. Fair value and financial instruments
a) Fair value
The fair value of an asset or liability is the price tat would be received to
sell that asset or paid to transfer that liability in an orderly transaction
occurring in the principal market (or most advantageous market in the absence
of a principal market) for such asset or liability. In estimating fair
value, the Directors utilize valuation techniques that are consistent with the
market approach, the income approach and/or the cost approach. Such
valuation techniques are consistently applied. Inputs to valuation techniques
include the assumptions that market participants would use in pricing an asset
or liability. IFRS 13 "Fair Value Measurement" establishes a fair value
hierarchy for valuation inputs that gives the highest priority to quoted
prices in active markets for identical assets or liabilities and the lowest
priority to unobservable inputs. The fair value hierarchy is defined as
follows:
Level 1: Inputs are unadjusted, quoted prices in active markets for identical
assets at the measurement date.
Level 2: Inputs (other than quoted prices included in Level 1) can include the
following:
· observable prices in active markets for similar assets;
· prices for identical assets in markets that are not active;
· directly observable market inputs for substantially the full term
of the asset; and
· market inputs that are not directly observable but are derived
from or corroborated by observable market data.
Level 3: Unobservable inputs which reflect the Directors' best estimates of
what market participants would use in pricing the asset at the measurement
date.
We have not identified any financial instruments measured at fair value for
the period ended June 30, 2024 and the year ended December 31, 2022.
There were no transfers between fair value levels during the period ended June
30, 2024 (year ended December 31, 2022: US$nil).
b) Financial instruments
For trade receivables, the Group applies the simplified approach permitted by
IFRS 9 "Financial Instruments", which requires expected lifetime losses to be
recognized from initial recognition of the receivables.
Financial liabilities are initially measured at fair value and subsequently
measured at amortized cost.
The Group is not a financial institution. The Group does not apply hedge
accounting and its customers are considered creditworthy and in general pay
consistently within agreed payments terms. In the period ended June 30, 2024,
few customers have shown delays in payment which are closely monitored.
A classification of the Group's financial instruments is included in the table
below. These financial instruments are held at amortized cost which is
estimated to be equal to fair value.
As at As at
June 30, December 31,
2024 2022
Financial instruments US$'000 US$'000
Cash and cash equivalents 5,027 8,488
Trade receivables 6,255 6,487
Accrued income and other receivables 2,156 3,239
Trade and other payables (5,961) (5,322)
Accrued liabilities (3,066) (4,978)
Deferred consideration (169) (92)
Call option derivative liability (333) (686)
Borrowings held at amortized cost (11,209) (4,338)
Lease liabilities held at present value of lease payments (7,281) (7,823)
Total financial instruments (14,581) (5,025)
42. Financial risk management
For the purposes of capital management, capital includes issued capital and
all other equity reserves attributable to the equity holders of the Company,
as well as debt. The primary objective of the Directors' capital management is
to ensure that the Group maintains a strong credit rating and healthy capital
ratios in order to support its business and maximize shareholder value.
To maintain or adjust the capital structure, the Directors may adjust the
dividend payment to shareholders, return capital to shareholders or issue new
shares. No changes were made in the objectives, policies or processes during
the year.
The Directors manage the Group's capital structure and adjust it in light of
changes in economic conditions and the requirements of the financial
covenants. The Group includes in its net debt, interest-bearing loans, lease
liabilities and borrowings, trade and other payables, less cash and short-term
deposits.
The Group's principal financial liabilities comprise of borrowings and trade
and other payables, which it uses primarily to finance and financially
guarantee its operations.
The Group's principal financial assets include cash and cash equivalents and
trade and other receivables derived from its operations.
a. Market risk
Market risk is the risk that changes in market prices, such as foreign
exchange rates and interest rates will affect the Group's income or the value
of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable
parameters, while optimizing the returns.
b. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. As the Group's borrowings are either on fixed interest terms or
interest-free, the Group is not subject to significant interest rate risk.
c. Credit risk
Credit risk is the risk that a customer or counterparty to a financial
instrument will not meet its obligations under a contract and arises primarily
from the Group's cash in banks and trade receivables.
The Company considers the credit risk in relation to its cash holdings low
because the counterparties are banks with high credit ratings.
Trade receivables are due from customers and collectability is dependent on
the financial condition of each individual company as well as the general
economic conditions of the industry. The Directors review the financial
condition of customers prior to extending credit and generally do not require
collateral in support of the Group's trade receivables. The majority of trade
receivables are current or overdue for less than 30 days and the Directors
believe these receivables are collectible. Amounts overdue longer than 120
days relate to a limited number of customers with a long trading history.
Collection of these receivables is expected in the course of the next
reporting period. For doubtful accounts, the Group calculates an expected
credit loss provision which is disclosed in Note 23.
As at June 30, 2024, the Group had one customer that individually accounted
for more than 10% of total receivables, totaling 14% of total trade
receivables (December 31, 2022: one customers that individually accounted for
more than 10% of total receivables, totaling 29%).
In order to minimize credit risk, the Group has adopted a policy of only
dealing with creditworthy counterparties and obtaining sufficient collateral,
where appropriate, as a means of mitigating the risk of financial loss from
defaults. The credit rating information is supplied by independent rating
agencies where available and, if not available, the Group uses other publicly
available financial information and its own trading records to rate its major
customers. The Group's exposure and the credit ratings of its counterparties
are continuously monitored, and the aggregate value of transactions concluded
is spread amongst approved counterparties.
Credit approvals and other monitoring procedures are also in place to ensure
that follow-up action is taken to recover overdue debts. Furthermore, the
Group reviews the recoverable amount of each trade debt and debt investment on
an individual basis at the end of the reporting period to ensure that adequate
loss allowance is made for irrecoverable amounts. In this regard, the
directors of the Company consider that the Group's credit risk is
significantly reduced. Trade receivables consist of a large number of
customers, spread across diverse industries and geographical areas. Ongoing
credit evaluation is performed on the financial condition of accounts
receivable and, where appropriate, credit guarantee insurance cover is
purchased.
d. Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of
an exposure will fluctuate due to changes in foreign exchange rates. The
Group's exposure to the risk of changes in foreign exchange rates relates
primarily to its financing activities (when financial liabilities and cash are
denominated other than in a company's functional currency).
Most of the Group's transactions are carried out in US Dollars ($). Foreign
currency risk is monitored closely on an ongoing basis to ensure that the net
exposure is at an acceptable level.
The Group maintains a natural hedge whenever possible, by matching the cash
inflows (revenue stream) and cash outflows used for purposes such as capital
and operational expenditure in the respective currencies. The Group's net
exposure to foreign exchange risk was as follows:
Functional currency
AUD EUR GBP US$ Others Total
As at June 30, 2024 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial assets denominated in $ - 153 3 1,386 (4) 1,538
Financial liabilities denominated in $ - (163) - 407 - 244
Net foreign currency exposure - (10) 3 1,793 (4) 1,782
Functional
currency
AUD EUR GBP US$ Others Total
As at December 31, 2022 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial assets denominated in $ 19 92 206 6,771 3 7,091
Financial liabilities denominated in $ - - - - - -
Net foreign currency exposure 19 92 206 6,771 3 7,091
Foreign currency sensitivity analysis:
The following tables demonstrate the sensitivity to a reasonably possible
change in foreign currency exchange rates, with all other variables held
constant.
The impact on the Group's profit before tax is due to changes in the fair
value of monetary assets and liabilities. The Group's exposure to foreign
currency changes for all other currencies is not material.
A 10 per cent. movement in each of the Australian dollar (AUD), euro (EUR),
British pound (GBP) and US dollar ($) would increase/(decrease) net assets by
the amounts shown below. This analysis assumes that all other variables, in
particular interest rates, remain constant.
AUD EUR GBP US$ Others
As at June 30, 2024 US$'000 US$'000 US$'000 US$'000 US$'000
Effect on net assets:
Strengthened by 10% - (1) - 179 178
Weakened by 10% - 1- - (179) (178)
AUD EUR GBP US$ Others
As at December 31, 2022 US$'000 US$'000 US$'000 US$'000 US$'000
Effect on net assets:
Strengthened by 10% 2 9 21 677 -
Weakened by 10% (2) (9) (21) (677) -
e. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they are due. The Directors manage this risk by:
· maintaining adequate cash reserves through the use of the Group's
cash from operations and bank borrowings as well as overdraft facilities; and
· continuously monitoring projected and actual cash flows to ensure
the Group maintains an appropriate amount of liquidity.
Overview of financing facilities
The following tables detail the Group's remaining contractual maturity for
financial liabilities with agreed repayment periods. The tables have been
drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Group can be required to
pay. The table includes both interest and principal cash flows.
Less than 2 to 5 > 5 Total
1 year years years
As at June 30, 2024 US$'000 US$'000 US$'000 US$'000
Trade and other payables 5,961 - - 5,961
Borrowings held at amortized cost 9,380 884 945 11,209
Leases (gross cash flows) 1,151 3,398 3,271 7,820
Other liabilities 3,255 - - 3,255
Financing facilities 19,747 4,282 4,216 28,245
Less than 2 to 5 > 5 Total
1 year years years
As at December 31, 2022 US$'000 US$'000 US$'000 US$'000
Trade and other payables 5,322 - - 5,322
Borrowings held at amortized cost 2,893 1,029 416 4,338
Leases (gross cash flows) 1,302 3,813 3,387 8,502
Other liabilities 5,290 - - 5,290
Financing facilities 14,807 4,842 3,803 23,452
Unsecured bank overdraft facility
As at As at
June 30, December 31,
2024 2022
Unsecured bank overdraft facility US$'000 US$'000
Amount used 8,935 2,790
Amount unused 414 6,861
Total 9,349 9,651
The bank overdraft facilities are reviewed at least annually.
f. Capital risk management
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximizing the return to shareholders
through the optimization of the debt and equity balance. The Group's overall
strategy remains unchanged from 2022.
The capital structure of the Group consists of equity and liabilities of the
Group. The Group intends to keep debt low to minimize the interest rate
impact.
The Group is not subject to any externally imposed capital requirements.
The Directors review the capital structure on a semi-annual basis based on the
equity ratio and total borrowings. The equity ratio at June 30, 2024 is as
follows:
As at As at
June 30, December 31,
2024 2022
Equity ratio US$'000 US$'000
Equity 25,428 40,339
Total equity and liabilities 62,562 71,143
Equity ratio 41% 57%
43. 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 5g.
Additions to buildings and land during the year ended December 31, 2022
amounting to US$1,862,000 million were financed by share issue.
Gains and losses on disposal of assets
Note
As at As at
June 30, December 31,
2024 2022
Gains and losses on disposal of assets US$'000 US$'000
Gain on disposal of property, plant and equipment 10 (23) (21)
of property, plant and equipment
Loss on disposal of property, plant and equipment 13 204 16
Net loss (gain) on disposal of assets 181 (5)
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from
financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities are those for which cash flows were, or
future cash flows will be, classified in the Group's consolidated cash flow
statement as cash flows from financing activities.
Leases Borrowings Total
Liabilities arising from financing activities US$'000 US$'000 US$'000
Balance at January 1, 2022 8,114 2,762 10,876
Cash flows (992) 2,561 1,569
New lease agreements 2,181 - 2,181
Revaluation of lease agreements (574) - (574)
Disposal due to acquisitions (490) - (490)
Loans waived by creditors - (764) (764)
Exchange differences (416) (221) (637)
Balance at December 31, 2022 7,823 4,338 12,161
Cash flows (1,996) 7,300 5,304
New lease agreements 1,601 - 1,601
Revaluation of lease agreements (213) - (213)
Derecognized following deconsolidation of subsidiary - (304) (304)
Exchange differences 66 (125) (59)
Balance at June 30, 2024 7,281 11,209 18,490
Working capital reconciliation:
The Company defines working capital as trade receivables, other receivables
and prepayments less trade and other payables, accrued liabilities, deferred
revenue and non-current liabilities excluding pension liabilities.
Period ended June 30, 2024 Opening balances Assumed on acquisition of assets Deconsolidation of subsidiary Change in balance Closing balances
US$'000 US$'000 US$'000 US$'000 US$'000
Inventories 13,168 13 (5) (4,920) 8,256
Trade receivables 6,487 2 (18) (216) 6,255
Other receivables and prepayments 4,262 10 900 (2,247) 2,925
Trade and other receivables and prepayments 10,749 12 882 (2,463) 9,180
Trade and other payables 5,322 2 (315) 952 5,961
Accrued liabilities 4,978 - - (1,912) 3,066
Deferred revenue incl. non-current contract liabilities 4,913 - (460) 2,217 6,670
Trade and other payables, accrued liabilities and deferred revenue 15,213 2 (775) 1,257 15,697
Year ended December 31, 2022 Opening balances Assumed on acquisition of assets Change in balance Closing balances
US$'000 US$'000 US$'000 US$'000
Inventories 13,770 - (602) 13,168
Trade receivables 14,656 - (8,169) 6,487
Other receivables and prepayments 3,876 - 386 4,262
Trade and other receivables and prepayments 18,532 - (7,783) 10,749
Trade and other payables 8,271 - (2,949) 5,322
Accrued liabilities 3,386 9 1,583 4,978
Deferred revenue incl. non-current contract liabilities 1,004 - 3,909 4,913
Trade and other payables, accrued liabilities and deferred revenue 12,661 9 2,543 15,213
Consideration for acquisition of businesses
Period ended June 30, 2024 US$'000
Consideration payment for acquisition of Tarn Pure 801
Cash assumed on acquisition of Tarn Pure (12)
Net consideration payment for acquisitions of businesses and assets 789
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
44. Related party transactions
HeiQ Materials AG supplied materials and services totaling US$40,000 to ECSA,
a company controlled by a director of HeiQ Materials AG, in the period ended
June 30, 2024 (year ended December 31, 2022: US$46,000). The transactions were
made on terms equivalent to those in arm's length transactions.
Loans due to related parties
As at As at
June 30, December 31,
2024 2022
Loans due to related parties US$'000 US$'000
Cortegrande AG, €400,000 (Note 31) 443 -
Loans due to related parties 443 -
The associates have provided the Group with short-term loans at rates
comparable to the average commercial rate of interest.
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the
Group, is set out below in aggregate for each of the categories specified in
IAS 24 Related Party Disclosures.
Year ended Year ended
June 30, December 31,
2024 2022
Remuneration of key management personnel US$'000 US$'000
Short-term employee benefits 1,042 738
Post-employment benefits 42 35
Cash remuneration of key management personnel 1,084 773
Share-based payment expense (income) 46 (58)
Total remuneration of key management personnel 1,130 715
The cash remuneration for the period ended June 30, 2024 is equivalent to the
total compensation of CHF 578,034 and GBP 332,500 (year ended December 31,
2022: CHF 477,626 and GBP 220,000) which are presented in the annual report on
Director's remuneration.
45. Material subsequent events
The Comany announced on October 22, 2024 that it decided to cancel the listing
of its ordinary shares on the Official List of the Financial Conduct Authority
("FCA") and to cancel the admission to trading of the Shares on the Main
Market for listed securities of the London Stock Exchange ("LSE")
("Delisting").
Following the Group's decision and communication to de-list from the London
Stock Exchange on October 22, 2024, the Group's share price dropped
temporarily to 1 pence and has been fluctuating below 6 pence thereafter.
46. Ultimate controlling party
As at June 30, 2024, the Company did not have any single identifiable
controlling party.
Company Statement of Financial Position (registered company number:09040064)
As at June 30, 2024
As at As at
June 30, December 31,
2024 2022
Note £'000 £'000
Investments 4 10,184 42,758
Amounts due from subsidiaries 5 9,998 9,000
Non-current assets 20,182 51,758
Trade and other receivables 7 2,375 798
Cash and bank balances 6 8 306
Current assets 2,383 1,104
TOTAL ASSETS 22,565 52,862
Borrowings 8 (351) -
Trade and other payables 9 (582) (204)
Current liabilities (933) (204)
TOTAL LIABILITIES (933) 52,862
NET ASSETS 21,632 52,658
Ordinary Share capital 10 8,428 42,025
Deferred share capital 10 35,134 -
Share premium account 10 115,879 114,663
Share-based payment reserve 11 301 340
Accumulated losses (138,110) (104,370)
Total EQUITY 21,632 52,658
The Company has taken advantage of Section 408 of the Companies Act 2006 and
has not included a Profit and Loss account in these separate financial
statements. The loss attributable to members of the Company for the period
ended June 30, 2024 is £33,740,000 (December 31, 2022: loss of £76,099,000)
The notes form an integral part of these Financial Statements. The Financial
Statements were authorized for issue by the board of Directors on October 30,
2024 and were signed on its behalf by.
Xaver Hangartner
Director
Company Statement of Changes in Equity
For the 18-month period ended June 30, 2024
Ordinary Share capital Deferred Share capital Share premium account Share-based payment Accumulated Total
reserve losses
£'000 £'000 £'000 £'000 £'000 £'000
Balance at January 1, 2022 39,175 - 109,460 346 (28,271) 120,710
Loss for the year - - - - (76,099) (76,099)
Issue of shares 2,850 - 5,203 - - 8,053
Share-based payment charges - - - (6) - (6)
Transactions with owners 2,850 - 5,203 (6) - 8,047
Balance at December 31, 2022 42,025 - 114,663 340 (104,370) 52,658
Loss for the period - - - - (33,740) (33,740)
Issue of shares 1,537 - 1,216 - - 2,753
Capital reorganization (35,134) 35,134 - - - -
Share-based payment charges - - - (39) - (39)
Transactions with owners (33,597) 35,134 1,216 (39) - 2,714
Balance at June 30, 2024 8,428 35,134 115,879 301 (138,110) 21,632
Company statement of Cash Flows
For the 18-month period ended June 30, 2024
Period ended Year ended
June 30, December 31,
2024 2022
Note £'000 £'000
Cash flows from operating activities
Loss before taxation (33,740) (76,099)
Cash flow from operations reconciliation:
Net finance income (573) (377)
Impairment provision 4 33,849 67,180
Working capital adjustments:
(Increase) / decrease in trade and other receivables (1,577) 8,580
Increase / (decrease) in trade and other payables 379 (95)
Net cash used in operating activities (1,662) (811)
Cash flows from investing activities
Interest received 592 377
Amounts advanced to subsidiaries 5 (1,996) -
Consideration payment for acquisitions of businesses 10 (317) (463)
Net cash used in investing activities (1,721) (86)
Cash flows from financing activities
Proceeds from equity issuance 10 2,753 -
Proceeds from borrowings 8 1,281 -
Repayment of borrowings 8 (930) -
Interest paid on borrowings (19) -
Net cash generated from / (used in) financing activities 3,085 (86)
Net decrease in cash and cash equivalents (298) (897)
Cash and cash equivalents - beginning of the period/year 306 1,203
Cash and cash equivalents - end of the period/year 8 306
Notes to the Company Financial Statements for the period ended June 30, 2024
1. General information
The Company was incorporated on May 14, 2014 as Auctus Growth Limited, in
England and Wales under the Companies Act 2006 with company number 09040064.
The Company was re-registered as a public company on July 24, 2014. On
December 4, 2020, following a reverse takeover of Swiss based HeiQ Materials
AG, the Company's name was changed to HeiQ Plc. The Company's registered
office is 5th Floor, 15 Whitehall, London, SW1A 2DD.
The Company's enlarged share capital is admitted to the standard segment of
the Official List and trading on the London Stock Exchange's ("LSE") Main
Market under the ticker 'HEIQ'. The ISIN of the Ordinary Shares is
GB00BN2CJ299 and the SEDOL Code is BN2CJ29. On October 22, 2024 the Company
announced that it has requested that (i) the FCA cancel the listing of the
Shares on the Official List of the FCA, and that (ii) the LSE cancels the
admission to trading of the Shares on the Main Market for listed securities of
the LSE. It is anticipated that the delisting will become effective from 08:00
a.m. (London time) on November 19, 2024.
The principal activity of the Company is that of a holding company for the
Group, as well as performing all administrative, corporate finance, strategic
and governance functions of the Group.
The Company's financial statements are prepared in Pounds Sterling, which is
the presentational currency for the financial statements and all values are
rounded to the nearest thousand Pounds Sterling except where otherwise
indicated.
2. Summary of significant accounting policies
a. Basis of preparation
These Financial Statements have been prepared in accordance with UK adopted
international accounting standards applying the FRS101 Reduced Disclosure
Framework.
These financial statements are prepared under the historical cost convention.
Historical cost is generally based on the fair value of the consideration
given in exchange of assets. The principal accounting policies are set out
below.
The Company also produces consolidated accounts which include the results of
the Company.
The financial statements have been prepared on a going concern basis which
contemplates the continuity of normal business activities and the realization
of assets and the settlement of liabilities in the ordinary course of
business. The Directors have assessed both the Company's and the Group's
ability to continue in operational existence for the foreseeable future. The
Company has prepared forecasts and projections which reflect the expected
trading performance of the Company and the Group on the basis of best
estimates of management using current knowledge and expectations of trading
performance. As at June 30, 2024, the Company had £8,000 (December 31, 2022:
£306,000) in cash. The company's ongoing cash needs are satisfied by
collecting open receivables from subsidiaries. As described in Note 3b to the
consolidated financial statements, there is material uncertainty at the Group
level that casts significant doubt upon the company's ability to continue as a
going concern and that, therefore, the company may be unable to realize its
assets and discharge its liabilities in the normal course of business.
Nevertheless, after making enquiries and considering the uncertainties
described above, the Directors consider there are reasonable grounds to
believe that the Company will be able to pay its debts as and when they become
due and payable, as well as to fund the Company's future operating expenses.
The going concern basis preparation is therefore considered to be appropriate
in preparing these financial statements.
b. Investments
Fixed asset investments are carried at cost less, where appropriate, any
provision for impairment.
c. Loans to subsidiaries
Loans to subsidiaries are measured at the present value of the future cash
payments discounted at a market rate of interest for a similar debt instrument
unless such amounts are repayable on demand. The present value of loans that
are repayable on demand is equal to the undiscounted cash amount payable,
reflecting the Company's right to demand immediate repayment.
d. Foreign currencies
The company's equity is raised in Pound Sterling (£) which is the functional
and presentational currency of the Company, and all values are rounded to the
nearest thousand pounds except where otherwise indicated. Transactions in
foreign currencies are recorded using the rate of exchange ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are translated using the contracted rate or the rate of exchange
ruling at the balance sheet date and the gains or losses on translation are
included in the profit and loss account.
e. Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances, deposits with
financial institutions and short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
f. Trade and other receivables
Trade and other receivables are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest method,
less provision for impairment.
g. Income taxes
The charge for taxation is based on the profit/ loss for the year and takes
into account taxation deferred because of timing differences between the
treatment of certain items for taxation and accounting purposes.
Deferred tax is provided on timing differences which arise from the inclusion
of income and expenses in tax assessments in periods different from those in
which they are recognized in the financial statements. The following timing
differences are not provided for: differences between accumulated depreciation
and tax allowances for the cost of a fixed asset if and when all conditions
for retaining the tax allowances have been met; and differences relating to
investments in subsidiaries, to the extent that it is not probable that they
will reverse in the foreseeable future and the reporting entity is able to
control the reversal of the timing difference. Deferred tax is not
recognized on permanent differences arising because certain types of income or
expense are non-taxable or are disallowable for tax or because certain tax
charges or allowances are greater or smaller than the corresponding income or
expense.
h. Share-based payment arrangements
Equity-settled share-based payments to employees are measured at the fair
value of the equity instruments at the grant date. Equity-settled share-based
payments to non-employees are measured at the fair value of services received,
or if this cannot be measured, at the fair value of the equity instruments
granted at the date that the Company obtains the goods or counterparty renders
the service. Details regarding the determination of the fair value of
equity-settled share-based transactions are set out in Note 27 to the
consolidated financial statements.
The fair vale determined at the grant date of the equity-settled share-based
payments is recognized on a straight-line basis over the vesting period, based
on the Company's estimate of equity instruments that will eventually vest,
with a corresponding increase in equity.
The Company grants equity-settled share-based payment award to employees of
subsidiaries. The Company classifies the transaction as equity-settled in its
separate financial statements. The Company recognizes a capital contribution
from the subsidiary as a credit to the share-based payment reserve and a
corresponding increase in its investment in the subsidiary. At the end of each
reporting period, the Company revises its estimate of the number of equity
instruments expected to vest.
i. Trade and other payables
Trade and other payables are initially recognized at fair value and thereafter
stated at amortized cost using the effective interest method unless the effect
of discounting would be immaterial, in which case they are stated at cost.
j. Share capital
Proceeds from issuance of ordinary shares are classified as equity.
Incremental costs directly attributable to the issuance of new ordinary shares
or options are shown in equity as a deduction from the proceeds.
k. Financial instruments
Financial instruments are recognized in the statements of financial position
when the Company has become a party to the contractual provisions of the
instruments.
Financial instruments are classified as liabilities or equity in accordance
with the substance of the contractual arrangement. Interest, dividends, gains
and losses relating to a financial instrument classified as a liability are
reported as an expense or income. Distributions to holders of financial
instruments classified as equity are charged directly to equity.
Financial instruments are offset when the Company has a legally enforceable
right to offset and intends to settle either on a net basis or to realize the
asset and settle the liability simultaneously.
A financial instrument is recognized initially at its fair value plus, in the
case of a financial instrument not at fair value through profit or loss,
transaction costs that are directly attributable to the acquisition or issue
of the financial instrument.
Financial instruments recognized in the statements of financial position are
disclosed in the individual policy statement associated with each item.
(i) Financial liabilities
Financial liabilities are recognized when, and only when, the Company becomes
a party to the contractual provisions of the financial instrument.
All financial liabilities are recognized initially at fair value plus directly
attributable transaction costs and subsequently measured at amortized cost
using the effective interest method other than those categorized as fair value
through profit or loss.
Fair value through profit or loss category comprises financial liabilities
that are either held for trading or are designated to eliminate or
significantly reduce a measurement or recognition inconsistency that would
otherwise arise. Derivatives are also classified as held for trading unless
they are designated as hedges. There were no financial liabilities classified
under this category.
A financial liability is derecognized when the obligation under the liability
is discharged, cancelled or expires. When an existing financial liability is
replaced by another from the same party on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognized in the profit or loss.
(ii) Equity instruments
Ordinary shares are classified as equity. Dividends on ordinary shares are
recognized as liabilities when approved for appropriation.
(iii) Other financial instruments
Other financial instruments not meeting the definition of Basic Financial
Instruments are recognized initially at fair value. Subsequent to initial
recognition other financial instruments are measured at fair value with
changes recognized in profit or loss except investments in equity instruments
that are not publicly traded and whose fair value cannot otherwise be measured
reliably shall be measured at cost less impairment.
3. Critical accounting judgments and key sources of estimation uncertainty
In the application of the Company's accounting policies, which are described
in Note 2, management is required to make judgments, estimates and assumptions
about the carrying values of assets and liabilities that are not readily
apparent from other sources. The estimates and underlying assumptions are
based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
Critical accounting judgements
There were no critical accounting judgements impacting the Company's
standalone financial statements 2023/2024 and 2022. Critical accounting
judgments affecting the Group are discussed in Note 4 to the consolidated
financial statements.
Key sources of estimate uncertainty
Impairment of amounts due from subsidiaries
As described in Note 2 to the financial statements, fixed asset investments
are stated at the lower of cost less provision for impairment. The present
value of loans to subsidiaries that are repayable on demand is equal to the
undiscounted cash amount payable, reflecting the Company's right to demand
immediate repayment.
At each reporting date fixed asset investments and loans made to subsidiaries
are reviewed to determine whether there is any indication that those assets
have suffered an impairment loss. If there is an indication of possible
impairment, the recoverable amount of any affected asset is estimated and
compared with its carrying amount. If the estimated recoverable amount is
lower, the carrying amount is reduced to its estimated recoverable amount, and
an impairment loss is recognized immediately in profit or loss.
The Directors have carried out an impairment test on the value of the loans
due from subsidiaries and have concluded that an impairment provision of
£9,998,000 (2022: £ 9,000,000) is necessary to reflect the uncertainty
around financing of the Group and Company as mentioned in Note 3b to the
consolidated financial statements and Note 2a to the Company Financial
Statements, respectively.
Impairment of fixed asset investments
The Directors have also carried out an impairment test on the value of the
Company's fixed asset investments and considered whether there are any
indicators of impairment from external and internal sources of information,
including the fact that the market capitalization of the Company has fallen
below the net carrying value of such investments which would indicate that the
carrying value may have been impaired and have concluded that an impairment
provision of £126.8m (2022: £94.0m) is required to write down these amounts
to their estimated recoverable amount.
4. Investments
Period ended Year ended
June 30, December 31,
2024 2022
Investments in subsidiary undertakings £'000 £'000
Balance brought forward 42,758 101,484
Additions 277 8,454
Impairment provision charge (32,851) (67,180)
Balance at the end of the period/year 10,184 42,758
Details of the Company's principal subsidiaries as at June 30, 2024 are set
out in Note 6 to the consolidated financial statements. The Company's
investments in subsidiaries are carried at cost less impairment.
The Directors have concluded that the significant devaluation of the Group
represents an indicator of impairment as at June 30, 2024. Therefore, the
Directors performed an impairment test of the Group and valued the Company's
investment in its subsidiaries at £20,182,000 based on market capitalization
(December 31, 2022: £51,758,000 based on company valuation). The carrying
value of its investments in subsidiaries was £137,036,000 (December 31, 2022:
£136,759,000) before impairment provision charges. The amounts due from
subsidiaries as at June 30, 2024 was £ 9,000,000 (December 31, 2022:
£9,000,000).
The Company has therefore increased its impairment provision to £127,850,000
(December 31, 2022: £94,001,000) against the carrying value of the Company's
investments in subsidiaries to reduce such value to £10,184,000 (December 31,
2022: £42,758,000).
Sensitivity
The calculation of the market capitalization of £20,182,000 is based on the
Company's share price of 12 pence as at June 30, 2024. Due to the volatility
of the share price, a decrease of 90% in the share price to 1.1 pence is
reasonably possible. A decrease in the share price of 90%, would result in a
market capitalization of £2 million and an additional impairment loss of
approximately £10.2 million.
5. Amounts due from subsidiaries
Period ended Year ended
June 30, December 31,
2024 2022
Investments in subsidiary undertakings £'000 £'000
Balance brought forward 9,000 18,000
Additions 1,996 -
Impairment provision charge (998) (9,000)
Balance at the end of the period/year 9,998 9,000
The amounts (£9,000,000 and £1,996,000) due from subsidiaries are unsecured
and are repayable on demand. They yield interest at 2.5% and 4.5%,
respectively. Given the uncertainty described in the going concern review of
the Group in Note 3b to the consolidated financial statements, the
recoverability of the loan was reassessed. Due to the persistently increased
risk of default following the Group's recent performance, it was concluded
that an expected credit loss of £9,998,000 is appropriate for the financial
period ended June 30, 2024 (year ended December 31, 2022: £9,000,000).
Sensitivity
The expected credit loss of £9,998,000 reflects 50% of the balance due. Had
the Directors' assessment been that the whole £19,996,000 are not
collectible, there would have been an additional expected credit loss of
£9,998,000.
6. Cash and cash equivalents
As at As at
June 30, December 31,
2024 2022
Cash and cash equivalents £'000 £'000
Bank balances 8 306
Total cash and cash equivalents 8 306
7. Trade and other receivables
As at As at
June 30, December 31,
2024 2022
Trade and other receivables £'000 £'000
Receivables from subsidiaries 2,309 772
Prepayments 26 14
Vat receivable 40 12
Total trade and other receivables 2,375 798
8. Borrowings
Period ended Year ended
June 30, December 31,
2024 2022
Borrowings £'000 £'000
Balance brought forward - -
Additions 1,281
Repayments (930) -
Balance at the end of the period/year 351 -
In December 2023, Cortegrande AG, a company controlled by Carlo Centonze,
granted a loan to the Company in the amount of EUR 1,350,000. The loan was
increased to EUR 1,475,000 (approximately £$1,281,000) in January 2024. In
March 2024, most of the outstanding loan was repaid in shares as part of the
settlement of the convertible loan note issued by the Company. The remaining
loan amounts to EUR 350,000 (approximately £351,000), incurs interest at 4.5%
and is repayable in June 2.
9. Trade and other payables
As at As at
June 30, December 31,
2024 2022
Trade and other payables £'000 £'000
Trade payables 90 1
Other payables 46 -
Income tax liability 70 -
Accruals 376 203
Total trade and other payables 582 204
The directors consider that the carrying amounts of amounts falling due within
one year approximate to their fair values.
10. Share capital and share options
Share capital
Details of the Company's allotted, called-up and fully paid share capital are
set out in Note 26 to the Consolidated Financial Statements. The Ordinary
shares of the Company carry one vote per share and an equal right to any
dividends declared.
Movements in the Company's share capital were as follows:
Number of shares Ordinary Share capital Deferred share capital Share premium Totals
No. £'000 £'000 £'000 £'000
Balance as of January 1, 2022 130,583,536 39,175 - 109,460 148,635
Issue of shares to vendors of Life Materials 347,552 104 - 347 451
Issue of shares as deferred consideration 3,461,615 1,039 - 2,233 3,272
Issue of shares Advisory Board 164,721 50 - 146 196
Issue of shares Chem-Tex Labs 2,176,884 653 - 967 1,620
Issue of shares Chrisal 3,348,164 1004 - 1510 2,514
Balance as at December 31, 2022 140,082,472 42,025 - 114,663 156,688
Issue of shares to vendors of Tarn Pure (a) 455,435 137 - 180 317
Capital reorganization (b) - (35,134) 35,134 - -
Issue of shares for fundraise (c) 28,000,000 1,400 - 1,036 2,436
Balance as at June 30, 2024 168,537,907 8,428 35,134 115,879 159,441
a) 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$1,237,000. The purchase consideration was payable partly
by the issue of 455,435 new ordinary shares for (US£317,000). See Note 4 to
the Consolidated Financial Statements for details.
b) In March 2024, the Company subdivided all existing 140,537,907
ordinary shares of 30p into new ordinary shares of 5 pence and deferred shares
of 25 pence. The par value of all ordinary shares is £0.05 as at June 30,
2024 (December 31, 2022: £0.30). All shares in issue were allotted, called up
and fully paid. The Ordinary shares of the Company carry one vote per share
and an equal right to any dividends declared. The 140,537,907 Deferred Shares
do not carry voting rights and only receive a return on a capital event
relating to the Company after every ordinary share has had the sum of
£1,000,000 returned on them. It is a condition of issue of the Deferred
Shares that the Company will not issue any share certificates or credit CREST
accounts in respect of them. The Deferred Shares are not admitted to trading
on the Main Market or any other exchange.
c) In March 2024, the Group issued 28,000,000 new ordinary
shares at £0.087 per share raising in aggregate £2,436,000 which is net of
£78,000 transaction costs incurred in the fundraise.
Share premium
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.
11. Share-based payments
Details of the Company's share option scheme and options issued during the
year are contained in Note 27 to the Consolidated Financial Statements.
12. Segment information
Operating segments are identified on the basis of internal reports about
components of the Company that are regularly reviewed by the Board. Until its
acquisition of HeiQ Materials AG on December 7, 2020, the Company was an
investing company and did not trade. On the completion of the acquisition of
HeiQ Materials AG and its subsidiaries, the Company became the holding company
of the Group.
The Company has one segment, namely that of a parent company to its
subsidiaries. Accordingly, no segmental analysis has been provided in these
financial statements.
13. Employees
The average monthly number of employees including directors was as follows:
As at As at
June 30, December 31,
2024 2022
Number of employees No. No.
Directors 5 5
Total employees 5 5
14. Related party transactions
The only key management personnel of the Company are the Directors. Details of
their remuneration are contained in Note 44 to the consolidated financial
statements.
Cortegrande AG, a company controlled by Carlo Centonze, granted a loan to the
Company, see Note 8 for details.
Details of amounts due between the Company and its subsidiaries are shown in
Notes 5 above.
15. Subsequent events
As discussed in Note 5, the valuation of investments is dependent on the
Group's market capitalization. Following the Group's decision and
communication to de-list from the London Stock Exchange on October 22, 2024,
the share price dropped temporarily to 1 pence and has been fluctuating below
6 pence thereafter. Had the share price on June 30, 2024 been below 6 pence
instead of 12 pence, there would have been an additional impairment loss of
approximately £10.2 million on the investment.
Disclosures in relation to events subsequent to June 30, 2024 are shown in
Note 45 to the consolidated financial statements.
16. Ultimate controlling party
As at June 30, 2024, no one entity owns greater than 50% of the issued share
capital. Therefore, the Company does not have an ultimate controlling party.
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