REG - HeiQ PLC - Unaudited Interim Results
28/03/2024 07:15
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RNS Number : 6715I HeiQ PLC 28 March 2024
28 March 2024
HeiQ Plc
("HeiQ" or "the Company")
Unaudited Interim Results
HeiQ Plc (LSE: HEIQ), a leading company in materials innovation and hygiene
technologies, announces its unaudited interim financial results for the 12
months ending 31 December 2023.
As announced on 14 March 2024, the Company has deemed it prudent to extend its
accounting reference date to 30 June 2024. The next set of audited financial
reports and accounts will therefore be for the period 1 January 2023 to 30
June 2024 and will be published by 31 October 2024, following the appointment
of a new auditor.
Financial Overview:
· Revenue reduced 11.6% to US$41.7 million (12 months to 31
December 2022: US$47.2 million)
· Gross profit margin increased 8.5% to 37% (12 months to 31
December 2022: 28.5%)
· Adjusted LBITDA decreased to US$5.2 million (12 months to 31
December 2022: US$12.2 million)
· Operating loss of US$11.6 million (12 months to 31 December 2022:
loss of US$29.2 million)
· Loss after taxation of US$14.0 million (12 months to 31 December
2022: loss of US$30.0 million)
· Cash at 31 December 2023 of US$9.7 million with net debt
(including lease liabilities) of US$10 million
Operational Overview:
Challenging market conditions persisted during the period, leading to
continued high inventories and weakened demand across the industry. HeiQ
responded with decisive measures:
· New organizational structure established to drive growth and
profitability of HeiQ's three venture initiatives (HeiQ AeoniQ, HeiQ GrapheneX
and HeiQ ECOS).
· Strengthened financial reporting processes through the
establishment of a central accounting function in Portugal.
· Advanced harmonizing the Enterprise Resource Planning (ERP)
system across the group.
· Comprehensive actions taken to address deficiencies outlined by
the former auditor.
Post Period:
· Julien Born appointed as CEO of HeiQ AeoniQ Holding to lead scale
up.
· Robert van de Kerkhof appointed as new Chair of HeiQ plc,
effective 1 April 2024.
· 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.
Investor Presentation:
Carlo Centonze, CEO, and Xaver Hangartner, CFO, will provide a live
presentation for investors via the Investor Meet Company platform at 11:00 am
GMT today. The presentation is open to all existing and potential
shareholders. Questions can be submitted at any time during the live
presentation. Investors can sign up to Investor Meet Company for free and
click "Add to Meet" HEIQ PLC via:
https://www.investormeetcompany.com/heiq-plc/register-investor
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investormeetcompany.com%2Fheiq-plc%2Fregister-investor&data=05%7C01%7Cmolly.gretton%40secnewgate.co.uk%7C2180a7e66e3c4c414a7508dbd6501118%7Cc060be4783c04d048b1741c760ed0f7d%7C0%7C0%7C638339411600681140%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=x9Bm7iZ8OkvLTsxniilYdw65AkUjDvsEy7u09hDHETk%3D&reserved=0)
Carlo Centonze, co-founder and CEO, HeiQ plc, said:
"As we look forward, we cautiously anticipate market conditions to improve in
the second half of 2024. Until this time, we will continue to remain vigilant,
focusing on operational efficiencies and adapting our cost base.
"With resilience, innovation, and collaboration at our core, we are confident
in our ability to overcome these obstacles and emerge stronger from these
testing times. I extend my gratitude to our investors, team members, advisors,
and customers for their unwavering support and dedication. Together, we will
chart a path forward towards sustainable growth and success in 2024 and
beyond."
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
HeiQ is a Swiss-based international company that innovates pioneering and
differentiating materials in partnership with established global brands. We
bridge the academic and commercial worlds to conceive performance-enhancing
materials and technologies, working with aligned brands to research,
manufacture and bring products to market, aiming for lab to consumer in
months. Our goal is to improve the lives of billions by innovating the
materials that go into everyday products, making them more hygienic,
comfortable, protective, and sustainable.
Our strong IP portfolio positions us as an innovation leader for niche,
premium and high-margin products in the textile chemicals, man-made fibers,
paints and coatings, antimicrobial plastics, probiotics and household cleaner
markets. We have also expanded into healthcare facilities, probiotic cleaning,
and hygiene coatings markets to help make hospitals and healthcare
environments more hygienic.
We have developed over 200 technologies in partnership with 300 major brands.
With a substantial research and development pipeline, including key technology
development projects HeiQ AeoniQ, HeiQ ECOS, HeiQ GrapheneX, and HeiQ Synbio,
HeiQ aims to deliver shareholder value through sales growth and entry into new
lucrative markets through disruptive innovation and M&A.
We have built a strong reputation for ESG & sustainable innovation, having
won multiple awards including the Swiss Technology Award twice and the Swiss
Environmental Award. Under experienced leadership, we are committed to driving
our profit in close connection with people and the planet. For more
information, please visit www.heiq.com.
Chairwoman's Statement
The market downturn which commenced in late 2022 continued to cause challenges
for HeiQ throughout 2023. Contrary to predictions by many in the industry,
market conditions failed to rebound during the period. Our revenues decreased
by 11.6% to US$42 million for the twelve months ending December 31, 2023,
primarily driven by historically high inventories, and weak industry demand.
In response, we implemented measures to adjust our cost base and
organizational structure, while maintaining HeiQ's innovation and
differentiation capabilities. Despite the extremely challenging market
conditions during the period for HeiQ's growth-oriented business units, we
made significant progress with our exciting and potentially game-changing
venture initiatives HeiQ AeoniQ, HeiQ GrapheneX and HeiQ ECOS.
In light of the challenges faced during the year, we are greatly appreciative
of the support shown by our shareholders in our recent fundraise to support
the Company's next phase of growth.
Strategy & Structure
Since listing on the London Stock Exchange on December 7, 2020, HeiQ has
evolved significantly. Initially known as an innovation company with a focus
on specialty chemicals for textile and flooring, HeiQ has since developed into
a company with leading technology platforms that drive sustainability in
strategic industries and applications.
This evolution means HeiQ, while still being recognized as a leader in textile
performance chemicals and antimicrobials, today focuses are on sustainable
technologies in textile fibres (HeiQ AeoniQ), probiotic healthcare cleaners
(HeiQ Synbio), anode free solid state lithium metal batteries (HeiQ GrapheneX)
and transparent conductive coatings (HeiQ ECOS). This evolution has been
achieved both through acquisitions and HeiQ's own innovation and business
development efforts.
HeiQ's organizational structure, consists of three distinct technology
ventures alongside three growth-orientated business segments.
This Venture & Growth structure enables the organization to stay focused
on growth and commercialization of existing as well as the incubation of new
technologies. With dedicated teams for each unit, we can deploy and adjust
resources and skills appropriate to the different maturity levels of the
units.
Governance
The evolution of HeiQ over the last four years has led to a significant
increase in administrative complexity, in turn, requiring our reporting
processes and governance to evolve and improve. The Company acknowledges and
is fully committed to implementing these improvements, and as such began
making significant investments in 2023 to address them.
In Q1 2023, we established a central accounting function within our global
shared service hub in Portugal to strengthen our financial reporting
processes. This has since expanded to include 5 full-time equivalents (FTEs).
We have also advanced the implementation of harmonizing our enterprise
resource planning (ERP) systems across our group. These initiatives aim to
improve the quality, efficiency, and governance of our financial reporting
processes. This investment in our organization has had a limited impact on
the 2022 financial reporting process, but we expect significant improvements
for the 2023/24 financial reporting cycle.
To address the deficiencies identified by Deloitte LLP in auditing the 2022
accounts we have undertaken a comprehensive set of actions:
• We engaged Ernst & Young (EY) to support the
improvement of governance, reporting and financial accounting processes.
• We are adding two additional employees to manage the
EY governance project implementation and to strengthen the internal controls
system on an ongoing basis.
• We defined a roadmap to address the most severe
deficiencies and those which will have the greatest positive impact on the
2023/24 financial reporting process.
• We have already implemented improvements for this
interim report as of December 31, 2023, as far as practicable.
As previously announced, the Company continues to seek a replacement auditor
following the resignation of Deloitte LLP. The Company will update the market
in due course.
The Company has extended its accounting reference date to June 30, to enable
an incoming auditor to properly onboard and complete the audit in a reasonable
timeframe. Therefore, this financial report represents unaudited interim
financial statements for the 12-month period ending December 31, 2023. The
Company's next set of audited financial reports and accounts will be for the
period January 1, 2023 to June 30, 2024 and will be published by October 31,
2024.
Changes to the Board of Directors
On January 1, 2024, Robert van de Kerkhof joined the Board of HeiQ plc as a
non-executive director and chair of the Environmental, Occupation, Health
& Safety and Sustainability Committee. With over 30 years' experience in
management and sustainability leadership, including serving as Chief
Commercial Officer, Chief Sustainability Officer and board member of the
listed company Lenzing AG (Austria), Robert is a great addition to the Board.
As previously announced, I will retire as Chair and non-executive director of
HeiQ plc on March 31, 2024. Joining the Company just before its listing in
2020, it has been an intense and very fulfilling time. Together with fellow
directors and a dedicated management team, we have navigated through a myriad
of challenges and opportunities, culminating in the development of a
compelling portfolio of high-potential platform technologies poised to
sustainably revolutionize growing industries.
As HeiQ enters the next stage of its growth with the commercial launch and
scaling of its venture technologies, I have concluded it is an appropriate
moment to hand-over the Chair position. This will allow me to spend more time
with my family while ensuring HeiQ has a new leader with exceptional
experience and industry knowledge.
Following the proposal by the Nomination Committee after a thorough selection
process, the Board of Directors has unanimously appointed Robert van de
Kerkhof as the new Chair of HeiQ plc, effective April 1, 2024.
I am convinced that HeiQ is in very capable hands with Robert as Chair, as he
is not only a technical expert, but also an exceptional leader with executive
management experience on listed company boards.
I thank the entire HeiQ team for the last four years and extend my best wishes
to all HeiQans, our investors as well as all our other stakeholders.
Esther Dale
Chair
March 28, 2024
Business Report & Outlook
I am pleased to provide an update on our company's performance for the twelve
months ending December 31, 2023 and an outlook for 2024.
2023 continued to present challenges for our industry and commercialized
businesses. Despite the strategic initiatives of relocation of capabilities,
cost containment and strategic focus undertaken to mitigate the impact of
market disruptions, our financial performance remained under pressure,
especially as we kept investing in our venture innovation platforms. Sales for
the year amounted to US$41.7 million, reflecting a -11.6% decrease compared to
the previous year. We continued to face margin pressure in a buyers-market
driven by current overcapacity and historically high inventories at brands.
Operating losses persisted in 2023, albeit with some improvement, amounting to
US$11.6 million for the twelve months ending December 31, 2023. The ongoing
macroeconomic uncertainties, coupled with the challenges in securing committed
credit facilities, contributed to the financial constraints faced by the
company.
Innovation remains the cornerstone of our company's strategy, driving
sustainable growth and differentiation in the market. We made significant
strides in advancing our key commercial and venture innovation platforms in
2023:
· HeiQ AeoniQ, the world's first climate positive cellulosic
filament fibre, launched to the market with Hugo Boss in 2023. Tennis star
Matteo Berrettini featured the first t-shirt during the Australian Open 2023,
and Hugo Boss prominently displayed a state-of-the-art fashion collection
called "The Change" at the Milano Fashion Show. The uniqueness of HeiQ AeoniQ
was awarded an ISPO award for product of the year. In Q1 2024 HeiQ purchased a
large industrial plot of 25,000m2 in Portugal to build its first 3,000-ton
HeiQ AeoniQ plant by 2026. Joining Hugo Boss, MAS Holdings, one of world's
leading garment makers, co-invested into HeiQ AeoniQ. HeiQ AeoniQ secured an
initial grant of EUR10 million from the Portuguese government and was given
the status as a project of national strategic importance. We were delighted to
appoint Julien Born, former CEO of The Lycra Company to lead HeiQ AeoniQ as
CEO and Robert van de Kerkhof, former CCO/CSO of Lenzing, to act as its Chair.
· HeiQ ECOS, our transparent conductive coating technology
platform, progressed well in application development with market leaders in
thin film insulation for rapid retrofitting and energy efficiency improvement
of buildings, climate control in advanced greenhouse foils, transparent car
window heating, signature management for defence applications, as well as
conductive layering for novel organic photovoltaics. We expect several of
these potential applications to become first market prototypes in 2024.
· HeiQ GrapheneX, our highly porous graphene membrane, has secured
its first external innovation funding from an electronics technology partner
and progressed to demonstrate the performance benefits of its novel graphene
membrane in building an anode-free solid-state lithium metal battery with
double energy density. Considerable new IP was gained and is being filed in
patent applications. In 2024 the first pilot commercialization plant will be
commissioned in Switzerland, bringing the technology from the lab to the work
floor.
· HeiQ Synbio, our biotech & life sciences platform, progressed
rapidly in 2023 with the completion of the study conducted by the Charité
University Hospital Berlin, sponsored by the German Government and the Bill
and Melinda Gates Foundation. It established that probiotic HeiQ Synbio
hospital cleaners perform equally well as Ecolab disinfectants but
additionally prevent the formation of pathogens' multi-resistance buildup.
Based on these stark results, the Robert Koch Institute recommended probiotic
cleaners to German hospitals. The European Commission added probiotic cleaners
to its new detergent regulation draft having previously awarded probiotic
cleaners the EU Ecolabel. We therefore expect strong growth for our HeiQ
Synbio platform in the years to come.
As we look ahead to 2024, we anticipate a continuation of the challenging
market conditions experienced in 2023 during the first half of the year. The
global economy remains uncertain, with ongoing geopolitical tensions and
supply chain disruptions affecting various industries. However, as of today,
we expect market conditions to start improving in H2 2024.
Considering the persisting challenges, focus for 2024 remains on:
· Lean Adaptation: Remaining agile and adaptive to changing market
dynamics and consumer behaviours.
· Operational Efficiency: Continued emphasis on cost optimization
measures to improve operational efficiency and preserve financial stability as
well as liquidity.
· Innovation and Differentiation: Prioritizing rapid innovation
initiatives that offer differentiation in the market and address evolving
customer needs.
· Market Expansion: Exploring opportunities for market expansion in
resilient sectors and geographies, while also strengthening existing
partnerships.
· Sustainability: Upholding our commitment to sustainability by
advancing our innovation initiatives that reduce environmental impact and
promote responsible business practices.
As we navigate through present-day challenges and uncertainties of the current
market landscape, we remain steadfast in our commitment to delivering
long-term value for our shareholders, customers, and stakeholders. With
resilience, innovation, and collaboration, we are confident in our ability to
raise again and overcome obstacles and emerge stronger from these testing
times.
I extend my gratitude to our investors, team members, advisors, and customers
for their unwavering support and dedication. Together, we will chart a path
forward towards sustainable growth and success in 2024 and beyond.
Carlo Centonze
CEO & Executive Director
March 28, 2024
Principal risks and uncertainties
The Group has an established, structured approach to identifying and assessing
the impact of financial and operational risks on its business. The principal
risks and uncertainties for the remainder of the financial year are not
expected to change materially from those included on pages 38 to 42 of the
Annual Report and Accounts 2022. The risks identified relate to the following
areas: Delivery on growth strategy; Increase in competition; Geographical
risks; IP protection and first mover advantage; Regulatory risks; Reputational
risks and failure to build brand equity; Innovation pipeline; Supply chain
disruptions; Personnel/Workforce; Interruption of IT system operations;
Liquidity risk; currency risks; Product liability. Further information in
relation to the Group's financial position and going concern is included in
note 2.
Carlo Centonze
CEO & Executive Director
March 28, 2024
Financial Review
As outlined in the Chairwoman's statement and the Business Report, 2023 was a
very challenging year for the Company. The continuously weak market conditions
for our main commercial businesses led to a decrease in revenues for the
12-month period by -11.6% to US$41.7 million (2022: US$47.2 million).
Gross profit of US$15.5 million (2022: US$13.5 million) represents a gross
margin on sales of 37.0% (2022: 28.5%). While this represents an overall
recovery of 8.5%, it was impacted by increased allowances on inventory to
reflect the continuing weak market demand. Excluding this impact, the gross
margin would be 41.2% for the period.
Total selling, general and administrative expenses (SG&A) were US$29.6
million for the 12months ending December 31, 2023, representing an overall
decrease of 4.5% versus the prior year period (2022: US$31.0 million).
Personnel expenses accounted for 44.9% of total SG&A costs in 2023 and
amount to US$13.3 million - down -11.3% (US$-1.7 million) compared to the same
period in 2022 (US$15.0 million). A significant portion of SG&A is related
to our venture initiatives and thus represents capability building development
costs. In 2023 SG&A expenses of about US$2.5 million relate to our venture
initiatives and thus represents capability building development costs.
Accounting aspects relying on significant judgment and estimations and
individual transactions that materially affected our interim financial
statements as of December 31, 2023, are as follows:
Allowance on inventory
In line with existing accounting policies of the Company, an inventory
allowance of US$1.8 million was recorded within cost of sales. The allowance
relates mainly to excess inventory positions. Based on the continuing weak
market conditions, for a limited number of inventory items the Board has
concluded that it is not certain that all inventory on hand can be sold within
the foreseeable future and therefore has determined this allowance to be
appropriate.
Impairment of intangible assets
The Company acquired in previous years certain intangible assets to secure its
intellectual property position in relation to certain long-term customer
contracts, including the exclusivity agreement with ICP Industrial Inc. As the
exclusive agreement with ICP has been terminated, the Directors have deemed it
appropriate to write-off the corresponding intangible assets, amounting in a
write-off of US$1.1 million in 2023.
Settlement of litigation
As announced in November 2023, the Group settled the litigation and the
termination of an exclusive agreement between its subsidiary HeiQ Materials AG
and ICP Industrial Inc. ("ICP"). The settlement of the litigation included
dismissal of claims and counterclaims by both parties with prejudice and ICP
agreed to pay HeiQ Plc a total of US$2.75 million, which was received in
December 2023. The settlement payment is accounted for as "Other income"
within the operating loss.
All the above contributed to a loss from operations for the 12 months ending
December 31, 2023 of US$11.6 million (2022: US$29.2 million).
Results For the six months ended For the year ended
December 31, December 31
2023 2022 2023 2022
US$'000 US$'000 US$'000 US$'000
Revenue 21,247 19,644 41,747 47,202
Cost of sales (14,177) (17,618) (26,287) (33,745)
Gross profit 7,070 2,026 15,460 13,457
Other income 3,284 2,084 4,230 4,832
Selling and general administrative expenses (15,319) (16,953) (29,582) (30,969)
Impairment reversal/(loss) on intangible assets 90 (11,651) 90 (11,651)
Impairment loss on property, plant & equipment (84) (730) (84) (730)
Other expenses (623) (2,449) (1,698) (4,184)
Operating loss (5,582) (27,673) (11,584) (29,245)
Depreciation of property, plant and equipment 742 638 1,453 1,282
Amortization of intangible assets 1,134 769 2,203 1,435
Depreciation of right-of-use assets 527 441 1,005 938
Impairment losses and write-offs 1,396 13,278 1,396 13,278
Share options and rights granted to 202 (348) 334 138
Directors and employees
Adjusted EBITDA (1,581) (12,895) (5,193) (12,174)
EBITDA Margin (adjusted) (7.4%) (65.6%) (12.4%) (25.8%)
Cashflow from operating activities
Liquidity and cashflow is a key focus for the Company in these challenging
circumstances. We have undertaken decisive steps to reduce the cash-use of
operating activities during the period. As a result, the Company managed to
return to a positive cashflow from operating activities in H2 2023:
US$'000 Jul - Dec Jan - Jun Jul - Dec Jan - Jun
2023
2023
2022
2022
Net cash from (used in) operating activities 1,505 (4,799) (486) (1,973)
Inventory & Trade receivables
Both inventory and trade receivables were significantly reduced during the
reporting period. As of December 31, 2023, inventory was valued at US$11.3
million which represents a reduction of -14.6% (2022: US$13.2 million). Trade
receivables of US$5.7 million represent a reduction of 12.5% (2022: US$6.5
million).
Post balance sheet date events
In February 2024 the Group completed the acquisition of two industrial
properties in Portugal for a total consideration of EUR5.0 million (including
taxes) which we believe represented a significant discount to market prices
for similar properties. To secure the price and to finance the acquisition,
the Company received bridge financing from Cortegrande AG, a company owned by
the Group CEO Carlo Centonze. In late March 2024, the Group secured a mortgage
of EUR0.75 million for the smaller lot acquired at a price (before taxes) of
EUR1.0 million while negotiations for the large lot (acquisition price before
tax EUR3.6 million) with the mortgage provider are ongoing. Further, in March
2024 the Company completed a capital raise issuing 28 million new shares for a
total consideration of £2.4 million (£0.087 per share).
Liquidity as of December 31, 2023 & Going Concern Assessment
As of December 31, 2023, the Company's cash balance was US$9.7 million
(December 31, 2022: US$8.5 million) and net debt position including lease
liabilities was US$-10.0 million as of December 31, 2023 (2022: US$-3.7
million). To manage its cash balance, the Group has access to credit
facilities totalling CHF8.8 million (approximately US$9.9 million as of March
28, 2023). The credit facilities are in place with two different banks and
both contracts have materially the same conditions. The facilities are not
limited in time, can be terminated by either party at any time and allow
overdrafts and fixed cash advances with a duration of up to twelve months.
As of March 28, 2023, the Group has drawn fixed cash advances amounting to
CHF7.8 million and EUR0.4 million (December 31, 2022: CHF2.4 million) - see
Note 2 for details including maturity dates. The facilities are not committed,
but the Board has not received any indication from financing partners that
facilities are at risk of being terminated. However, the credit facilities
will be reduced by CHF0.3 million to CHF8.5 million in total as of June 17,
2024.
The Group's directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future and operate within its credit facilities for the period of 12 months
from date of signature. Nevertheless, the Board acknowledges the uncommitted
status of the facilities which could be terminated requiring the refinancing
of debts, and which casts material uncertainty on the going concern assessment
until appropriate longer-term funding is in place. Further disclosures on the
going concern assessment are made in the notes to the financial statements.
Xaver Hangartner
CFO & Executive Director
March 28, 2024
Unaudited Condensed Consolidated Interim Financial Statements
Condensed consolidated statement of profit and loss and other comprehensive income
For the six months ended
December 31, For the year ended
December 31,
2023 2022 2023 2022
(Unaudited) (Unaudited) (Unaudited) (Audited)
Note US$'000 US$'000 US$'000 US$'000
Revenue 5 21,247 19,644 41,747 47,202
Cost of sales 7 (14,177) (17,618) (26,287) (33,745)
Gross profit 7,070 2,026 15,460 13,457
Other income 8 3,284 2,084 4,230 4,832
Selling and general administrative expenses 9 (15,319) (16,953) (29,582) (30,969)
Impairment reversal/(loss) on intangible assets 16 90 (11,651) 90 (11,651)
Impairment loss on property, plant & equipment 17 (84) (730) (84) (730)
Other expenses 11 (623) (2,449) (1,698) (4,184)
Operating loss (5,582) (27,673) (11,584) (29,245)
Finance income 12 69 241 74 683
Finance costs 13 (1,055) (749) (1,439) (1,273)
Loss before taxation (6,568) (28,181) (12,949) (29,835)
Income tax 14 (884) 275 (1,030) 21
Loss after taxation (7,452) (27,906) (13,979) (29,814)
Other comprehensive income:
Exchange differences on translation of foreign operations 546 (824) 975 (1,914)
Items that may be reclassified to profit or loss in subsequent periods 546 (824) 975 (1,914)
Actuarial gains/(losses) from defined benefit pension plans (218) 1,380 (218) 1,380
Income tax relating to items that will not be reclassified subsequently to 249 (276) 249 (276)
profit or loss
Items that will not be reclassified to profit or loss in subsequent periods 31 1,104 31 1,104
Other comprehensive income (loss) for the period 577 280 1,006 (810)
Total comprehensive loss for the period (6,875) (27,626) (12,973) (30,624)
Loss attributable to:
Equity holders of HeiQ (7,147) (27,546) (13,583) (29,251)
Non-controlling interests (305) (360) (396) (563)
(7,452) (27,906) (13,979) (29,814)
Total Comprehensive loss attributable to:
Equity holders of the Company (6,570) (27,266) (12,577) (30,061)
Non-controlling interests (305) (360) (396) (563)
(6,875) (27,626) (12,973) (30,624)
Loss per share:
Basic (cents) * 15 (5.09) (20.39) (9.67) (21.92)
*The effect of share options is anti-dilutive and therefore not disclosed.
Condensed consolidated statement of financial position
As at As at
December 31, December 31,
2023 2022
(Unaudited) (Audited)
Note US$'000 US$'000
ASSETS
Intangible assets 16 20,489 20,442
Property, plant and equipment 17 9,003 9,802
Right-of-use assets 18 8,132 7,819
Deferred tax assets 30 312 538
Other non-current assets 19 82 137
Non-current assets 38,018 38,738
Inventories 20 11,250 13,168
Trade receivables 21 5,673 6,487
Other receivables and prepayments 22 4,349 4,262
Cash and cash equivalents 9,694 8,488
Current assets 30,966 32,405
Total assets 68,984 71,143
EQUITY AND LIABILITIES
Issued share capital and share premium 24 206,246 205,874
Other reserves 26 (126,830) (128,017)
Retained deficit (51,661) (39,466)
Equity attributable to HeiQ shareholders 27,755 38,391
Non-controlling interests 1,728 1,948
Total equity 29,483 40,339
Lease liabilities 27 6,674 6,558
Long-term borrowings 29 1,501 1,445
Deferred tax liability 30 1,384 1,253
Other non-current liabilities 31 5,010 4,714
Total non-current liabilities 14,569 13,970
Trade and other payables 32 6,672 5,322
Accrued liabilities 33 4,483 4,978
Income tax liability 14 606 314
Deferred revenue 34 1,423 1,285
Short-term borrowings 29 10,409 2,893
Lease liabilities 27 1,131 1,264
Other current liabilities 36 208 778
Total current liabilities 24,932 16,834
Total liabilities 39,501 30,804
Total equity and liabilities 68,984 71,143
The Notes form an integral part of these Condensed Consolidated Interim
Financial Statements. The Financial Statements were approved and authorized
for issue by the Board of Directors on March 27, 2024 and signed on its behalf
by:
Xaver Hangartner
CFO & Executive Director
Condensed consolidated statement of changes in equity
Issued share capital and share premium Other reserves Retained deficit Equity attributable to HeiQ shareholders Non-controlling interests Total equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at January 1, 2022 (Audited) 195,714 (127,195) (11,525) 56,994 2,541 59,535
Loss after taxation - - (29,251) (29,251) (563) (29,814)
Other comprehensive (loss)/income - (810) - (810) - (810)
Total comprehensive (loss)/income for the period - (810) (29,251) (30,061) (563) (30,624)
Issuance of shares 24 10,160 - - 10,160 - 10,160
Share-based payment charges 25 - (12) - (12) - (12)
Dividends paid to minority shareholders 26 - - - - (243) (243)
Capital contributions from minority shareholders - - - - 764 764
Adjustments arising from change in non-controlling interests - - (2,445) (2,445) (616) (3,061)
Transfer on disposal of non-controlling interest - - 3,755 3,755 65 3,820
Transactions with owners 10,160 (12) 1,310 11,458 (30) 11,428
Balance at December 31, 2022 (Audited) 205,874 (128,017) (39,466) 38,391 1,948 40,339
Loss after taxation - - (13,583) (13,583) (396) (13,979)
Other comprehensive (loss)/income - 1,006 - 1,006 - 1,006
Total comprehensive (loss)/income for the period - 1,006 (13,583) (12,577) (396) (12,973)
Issuance of shares 24 372 - - 372 - 372
Share-based payment charges 25 - 181 - 181 - 181
Elimination of non-controlling interest at disposal of subsidiary 4b - - - - 73 73
Dividends paid to minority shareholders 26 - - - - (12) (12)
Transfer of shares to non-controlling interest 4c - - 1,388 1,388 115 1,503
Transactions with owners 372 181 1,388 1,941 176 2,117
Balance at December 31, 2023 (Unaudited) 206,246 (126,830) (51,661) 27,755 1,728 29,483
Condensed consolidated statement of cash flows
Six months ended December 31, Year ended
December 31,
2023 2022 2023 2022
(Unaudited) (Unaudited) (Unaudited) (Audited)
Note US$'000 US$'000 US$'000 US$'000
Cash flows from operating activities
Loss before taxation (6,568) (28,181) (12,949) (29,835)
Cash flow from operations reconciliation:
Depreciation and amortization 16-18 2,403 1,848 4,661 3,655
Impairment expense 16-17 (6) 12,380 (6) 12,380
Net loss/gain on disposal of assets 67 (8) 84 (5)
Write-off of intangible assets 11 1,388 897 1,402 897
Gain from disposal of subsidiary 4b (138) - (138)
Fair value gain on derivative liability 8 (453) (371) (701) (371)
Finance costs 300 149 517 273
Finance income (29) (1) (34) (2)
Pension expense (389) 130 (346) 247
Non-cash equity compensation 25 202 (348) 334 138
Gain from lease modification (6) - (15) (68)
Other costs paid in shares 24 - 235 - 235
Currency translation 916 623 322 (61)
Working capital adjustments:
Decrease in inventories 39 3,164 3,016 1,926 602
Decrease in trade and other receivables 39 2,350 9,391 733 7,783
(Decrease)/Increase in trade and other payables 39 (1,798) 95 1320 2,543
Cash from (used in) operations 1,403 (145) (2,890) (1,589)
Taxes paid 14 102 (341) (404) (870)
Net cash from (used in) operating activities 1,505 (486) (3,294) (2,459)
Cash flows from investing activities
Consideration for acquisition of businesses 39 (730) - (730) (1,587)
Cash assumed in asset acquisition 39 10 65 12 65
Disposal of a subsidiary, net of cash disposed of 4b (24) - (24) -
Purchase of property, plant and equipment 17 (829) (2,358) (1,413) (3,418)
Proceeds from the disposal of property, plant and equipment 29 16 844 53
Development and acquisition of intangible assets 16 (484) (1,919) (1,149) (3,865)
Interest received 29 1 34 2
Net cash used in investing activities (1,999) (4,195) (2,426) (8,750)
Cash flows from financing activities
Interest paid on borrowings (190) (68) (312) (110)
Repayment of leases (682) (540) (1,296) (992)
Interest paid on leases (110) (81) (205) (163)
Proceeds from disposals of minority interests 1,504 2,333 1,504 4,792
Proceeds from borrowings 27 2,964 2,642 7,962 3,465
Repayment of borrowings 27 (693) (707) (958) (904)
Dividends paid to minority shareholders 26 (12) - (12) (243)
Net cash from financing activities 2,781 3,579 6,683 5,845
Net decrease in cash and cash equivalents 2,287 (1,102) 963 (5,364)
Cash and cash equivalents - beginning of the period/year 7,274 9,488 8,488 14,560
Effects of exchange rate changes on the balance of cash held in foreign 133 102 243 (708)
currencies
Cash and cash equivalents - end of the period 9,694 8,488 9,694 8,488
Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended December 31, 2023
1. General information
HeiQ Plc (the Company) is a company limited by shares incorporated and
registered in the United Kingdom. The address of the Company's registered
office is 5th Floor, 15 Whitehall, London, SW1A 2DD.
These financial statements are presented in United States Dollars (US$) which
is the presentation currency of the Group, and all values are rounded to the
nearest thousand dollars except where otherwise indicated.
2. Basis of preparation and measurement
Basis of preparation
The 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. The Company's next set of audited financial reports and
accounts will be for the period January 1, 2023 to June 30, 2024 and will be
published by October 31, 2024.
The unaudited condensed consolidated interim financial statements have been
prepared in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and UK adopted International Accounting Standard
34 "Interim Financial Reporting" (IAS 34). Other than as noted below, the
accounting policies applied by the Group in the preparation of these interim
financial statements are the same as those set out in the Company's audited
financial statements for the year ended December 31, 2022. These financial
statements have been prepared under the historical cost convention except for
certain financial and equity instruments that have been measured at fair
value.
These condensed financial statements do not include all of the information
required for a complete set of IFRS financial statements. However, selected
explanatory notes are included to explain events and transactions that are
significant to an understanding of the changes in the Company's financial
position and performance since the audited financial statements for the year
ended December 31, 2022.
Statutory accounts for the year ended December 31, 2022 have been filed with
the Registrar of Companies in October 2023 and the auditor's report was
unqualified, did not contain any statement under Section 498(2) or 498(3) of
the Companies Act 2006, and contained a matter (material uncertainty in
regards to the going concern assumption) to which the auditors drew attention
without qualifying their report.
The condensed interim financial statements are unaudited and have not been
reviewed by the auditors and were approved by the Board of Directors on March
27, 2024.
Going concern
The unaudited condensed consolidated interim financial statements have been
prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realization of the assets and the settlement of
liabilities in the normal course of business.
To manage its cash balance, the Group has access to credit facilities
totalling CHF8.80 million (approximately US$9.9 million as of March 28, 2023).
The credit facilities are in place with two different banks but with
materially the same conditions. The facilities are not limited in time, can be
terminated by either party at any time and allow overdrafts and fixed cash
advances with a duration of up to twelve months. In case one or the other
party terminates the agreement, fixed cash advances become due upon their
defined maturity date. The facilities do not contain financial covenants, but
they do require the delivery of certain financial and operational information
within a defined timeframe after the balance sheet date.
As of March 28, 2024, the Group has drawn fixed advances amounting to CHF7.8
million and EUR0.4 million (CHF2.4 million as December 31, 2022) as follows:
Term / Maturity date CHF
April 26, 2024 5.5 million
April 15, 2024 0.5 million
June 17, 2024 0.8 million
September 30, 2024 1.0 million
Term / Maturity date EUR
April 02, 2024 0.4 million
The Group's forecasts and projections for the next 12 months reflect the very
challenging trading environment and show that the Group should be able to
operate within the level of its current facility for at least 12 months from
the date of signature of these financial statements if the facility drawdowns
remain available. While the facilities are not committed, the Board has not
received any indication from financing partners that the facilities are at
risk of being terminated. However, the credit facilities will be reduced by
CHF0.3 million to CHF8.5 million in total as of June 17, 2024.
The Board acknowledges the uncommitted status of the facilities which could be
terminated without notice during the forecast period requiring the refinancing
of debts as per above maturity date indicates that a material uncertainty
exists that may cast significant doubt on the Group's and Parent Company's
ability to continue as a going concern, and therefore the Group may not be
able to realize its assets and discharge its liabilities in the normal course
of business.
After considering the forecasts, sensitivities, and mitigating actions
available to management and having regard to the risks and uncertainties to
which the Group is exposed (including the material uncertainty referred to
above), the Group's directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future and operate within its credit facilities for the period 12 months from
date of signature. Accordingly, the financial statements continue to be
prepared on a going concern basis.
Basis of consolidation
The Condensed Consolidated Financial Statements comprise the financial
statements of the Company and its subsidiaries. Business combinations are
accounted for under the acquisition method.
New standards, interpretations and amendments not yet effective for the current period
The following new standards and amendments were effective for the first time
in these financial statements but did not have a material effect on the Group:
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2);
• Classification of Liabilities as Current or Non-current
(Amendments to IAS 1);
• Definition of Accounting Estimates (Amendments to IAS 8); and
• Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
3. Significant accounting policies
The Company has applied the same accounting policies and methods of
computation in its interim consolidated financial statements as in its 2022
financial statements.
New and amended standards and Interpretations issued by the IASB that will
apply for the first time in the next annual financial statements are not
expected to impact the Group as they are either not relevant to the Group's
activities or require accounting which is consistent with the Group's current
accounting policies.
Use of estimates and judgements
There have been no material revisions to the nature and amounts of estimates
of amounts reported in prior periods.
4. Significant events and transactions
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$244,000 of deferred consideration is payable in
cash in monthly instalments from February 2023 to February 2025. The purchase
price allocation has not been finalized yet and is subject to possible changes
in valuation of the assets acquired. it will be completed in the 2023/2024
annual report.
The following table provides an overview of the preliminary purchase price
allocation. It summarizes the consideration paid, the fair value of assets
acquired, liabilities assumed, and goodwill arising on acquisition at the
acquisition date.
Preliminary purchase price allocation US$'000
Consideration:
Cash paid to shareholders 621
Shares issued to shareholders 372
Deferred consideration 244
Total Consideration 1,237
Fair value of net assets acquired:
Inventory 13
Cash and cash equivalents 12
Trade and other receivables 12
Borrowings (42)
Intangible assets identified on acquisition:
Customer Relationship 123
Regulatory asset 682
Deferred tax liability on intangible assets (201)
Total net assets 599
Goodwill 638
Total 1,237
b. 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$nil. The Group's stake was reduced to 20%
and, as a result, the company is no longer consolidated.
c. Transfer of shares in HeiQ AeoniQ GmbH to non-controlling interests
In July 2023, HeiQ Materials AG reached an agreement with MAS to dispose of
1.5% of its shareholding in HeiQ AeoniQ GmbH.
d. Foundation of HeiQ AeoniQ Holding AG
The Group founded HeiQ AeoniQ Holding AG Switzerland, which resides at
Parkstrasse 1, 5234 Villigen. As at December 31, 2023, the Group holds 97%
ownership.
5. Revenue
The Group's focus on materials innovation which includes scientific research,
manufacturing and consumer ingredient branding. The primary source of revenue
is the production and sale of functional ingredients, materials and finished
goods. Other sources of revenue include research and development, take-or-pay
and exclusivity services.
The following table reconciles HeiQ Group's revenue for the periods presented:
For the six months ended For the year ended
December 31, December 31,
2023 2022 2023 2022
Revenue by type of product US$'000 US$'000 US$'000 US$'000
Revenue recognized at point in time
Functional ingredients 16,376 15,019 32,123 36,175
Functional materials 197 1,566 743 2,000
Functional consumer goods 2,680 1,785 5,382 6,827
Services 189 - 1,169 160
Revenue recognized over time
Services 1,805 1,274 2,330 2,040
Total revenue 21,247 19,644 41,747 47,202
Unsatisfied performance obligations
The transaction prices allocated to unsatisfied and partially unsatisfied
obligations at December 31, 2023 are as set out below:
As at As at
December 31, December 31,
2023 2022
Unsatisfied performance obligations US$'000 US$'000
Exclusivity services 1,500 2,100
Research and development services 3,360 3,750
Total unsatisfied performance obligations 4,860 5,850
Management expects that 25 per cent of the transaction price allocated to the
unsatisfied contracts as of 31 December 2023 will be recognized as revenue
during 2024 (US$1.2 million). The remaining 75 per cent, US$3.7 million, will
be recognized in 2025 (US$1.1 million) and 2026 financial year (US$2.6
million).
Disclosure related to contracts with customers
Contract assets and contract liabilities are disclosed under Note 23 and Note
35, respectively. Impairment losses recognized on any receivables or contract
assets arising from the Group's contracts with customers are disclosed under
Note 21 and Note 23, respectively.
6. Operating Segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors of the Company.
For management purposes, the Group is organised into business units and the
following reportable segments:
Segment Activity
Textiles & Flooring Provide innovative ingredients to make textiles & flooring more
functional, durable and sustainable.
Life Sciences Offer biotech solutions to replace harmful biocides in domestic, commercial,
healthcare and industrial usage, for a more balanced microbiome and
environment.
Antimicrobials Functionalize by enhancing hygiene of different hard surfaces in everyday
products and our surroundings.
Other activities All other activities of the Group including Innovation Services, Venture
Business Development, and other non-allocated functions.
In 2023 new overhead allocation rules were introduced and as a result more
overhead costs were allocated to segments. 2022 segment revenue and profits
are restated below using the new rules to allow for like for like comparison.
Segment revenues and profits
The following is an analysis of the Group's revenue and results by reportable
segment:
Six months ended December 31, 2023 Textiles & Flooring Life Sciences Antimicrobials Other activities Total
US$'000
US$'000
US$'000
US$'000
US$'000
Revenue 15,809 2,363 1,776 1,299 21,247
Operating loss (2,005) (1,019) 584 (3,142) (5,582)
Finance result (986)
Loss before taxation (6,568)
Taxation (884)
Loss after taxation (7,452)
Depreciation and amortization
Property, plant and equipment 282 190 23 247 742
Right-of use assets 76 75 20 356 527
Intangible assets 144 287 391 312 1,134
Impairment loss / (reversal)
Property, plant and equipment - 84 - - 84
Intangible assets - - - (90) (90)
Six months ended December 31, 2022 Textiles & Flooring Life Sciences Antimicrobials Other activities Total
US$'000
US$'000
US$'000
US$'000
US$'000
Revenue 14,646 2,273 1,154 1,571 19,644
Operating loss (6,913) (5,000) (9,648) (6,112) (27,673)
Finance result (508)
Loss before taxation (28,181)
Taxation 275
Loss after taxation (27,906)
Depreciation and amortization
Property, plant and equipment 126 162 11 339 638
Right-of use assets 48 73 18 302 441
Intangible assets 38 276 350 105 769
Impairment loss
Property, plant and equipment - 730 - - 730
Intangible assets - 2,402 8,247 1,002 11,651
Year ended December 31, 2023 Textiles & Flooring Life Sciences Antimicrobials Other activities Total
US$'000
US$'000
US$'000
US$'000
US$'000
Revenue 31,340 4,842 2,940 2,625 41,747
Operating loss (888) (1,712) (1,126) (7,858) (11,584)
Finance result (1,365)
Loss before taxation (12,949)
Taxation (1,030)
Loss after taxation (13,979)
Depreciation and amortization
Property, plant and equipment 580 361 38 474 1,453
Right-of use assets 166 149 42 648 1,005
Intangible assets 288 564 792 559 2,203
Impairment loss / (reversal)
Property, plant and equipment - 84 - - 84
Intangible assets - - - (90) (90)
Year ended December 31, 2022 Textiles & Flooring Life Sciences Antimicrobials Other activities Total
US$'000
US$'000
US$'000
US$'000
US$'000
Revenue 34,184 6,164 4,182 2,672 47,202
Operating loss (4,231) (5,537) (10,116) (9,361) (29,245)
Finance result (590)
Loss before taxation (29,835)
Taxation 21
Loss after taxation (29,814)
Depreciation and amortization
Property, plant and equipment 334 335 28 585 1,282
Right-of use assets 123 145 42 628 938
Intangible assets 74 550 699 112 1,435
Impairment loss
Property, plant and equipment - 730 - - 730
Intangible assets - 2,402 8,247 1,002 11,651
Segment revenue reported above represents revenue generated from external
customers. There were no intersegment sales in the six months ended December
31, 2023 (2022: nil).
Geographic information
For the six months ended For the year ended
December 31, December 31,
2023 2022 2023 2022
Revenue by region US$'000 US$'000 US$'000 US$'000
North & South America 9,010 9,327 18,704 20,425
Asia 6,914 4,421 11,712 13,376
Europe 5,243 5,782 11,091 13,109
Others 80 114 240 292
Total revenue 21,247 19,644 41,747 47,202
As at December 31, As at December 31,
2023 2022
Non-current assets by region US$'000 US$'000
Europe 27,767 22,290
Asia 2,370 8,102
North & South America 7,512 7,734
Others 369 612
Total non-current assets 38,018 38,738
Information about major customers
During the six months ended December 31, 2023, no customers individually
totalled more than 10% of total revenues (2022: none).
7. Cost of sales
For the six months ended December 31, For the year ended
December 31,
2023 2022 2023 2022
Cost of sales US$'000 US$'000 US$'000 US$'000
Material expenses 8,003 8,829 18,354 20,942
Personnel expenses 1,689 1,354 3,252 2,830
Depreciation of property, plant and equipment 291 310 643 652
Other costs of sales 4,194 7,125 4,038 9,321
Total cost of sales 14,177 17,618 26,287 33,745
Other costs of goods sold include freight and custom costs, warehousing and
allowances on inventory.
8. Other income
For the six months ended For the year ended
December 31, December 31,
2023 2022 2023 2022
Other income US$'000 US$'000 US$'000 US$'000
Gain on disposal of property plant and equipment 9 12 21 21
Gain on disposal of investments 138 - 138 -
Foreign exchange gains (517) 1,205 - 3,539
Fair value gain on derivative liabilities 453 371 701 371
Income from out-of-court settlement 2,750 - 2,750 -
Other income 451 496 620 901
Total other income 3,284 2,084 4,230 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 $2.75 million. The
settlement refers to a complaint filed by the Group in October 2022 for
breaching its Exclusive Agreement terms.
Foreign exchange gains previously reported under other income have been
reclassified to finance income (Note 12) during the 2023 reporting period so
as to more fairly present the nature of such items.
9. Selling and general administration expenses
Selling and general administration expenses For the six months ended
December 31, For the year ended
December 31,
2023 2022 2023 2022
US$'000 US$'000 US$'000 US$'000
Personnel expenses 6,442 7,169 13,291 14,977
Depreciation of property, plant and equipment 451 328 810 630
Amortization of intangible assets 1,134 769 2,203 1,435
Depreciation of right-of-use assets 527 441 1,005 938
Net credit losses on financial assets and contract assets 171 85 171 85
Other 6,594 8,161 12,102 12,904
Total selling and general administration expenses 15,319 16,953 29,582 30,969
Other selling and general administration expenses include costs for
infrastructure, professional services and marketing as well as R&D and
laboratory related costs, information technology & data expenses, sales
representative & distribution expenses.
10. Personnel expenses
For the six months ended For the year ended
December 31, December 31,
2023 2022 2023 2022
Personnel expenses US$'000 US$'000 US$'000 US$'000
Wages & salaries 7,323 7,344 14,547 15,274
Social security & other payroll taxes 766 1,061 1,568 1,685
Pension costs (160) 466 94 710
Share-based payments 202 (348) 334 138
Total personnel expenses 8,131 8,523 16,543 17,807
Reported as cost of sales (Note 7) 1,689 1,354 3,252 2,830
Reported as selling and general administration expense (Note 9) 6,442 7,169 13,291 14,977
Total personnel expenses 8,131 8,523 16,543 17,807
The pension costs for the six months ended December 31, 2023 were impacted by
a curtailment gain (US$141,000) and further income from a plan amendment
(US$341,000) as explained further in Note 28.
11. Other expenses
For the six months ended For the year ended
December 31, December 31,
2023 2022 2023 2022
Other expenses US$'000 US$'000 US$'000 US$'000
Foreign exchange losses (928) 1,429 - 3,050
Loss on disposal of property, plant and equipment 76 5 105 16
Transaction costs relating to mergers and acquisitions - 50 23 50
Write off intangible assets 1,388 897 1,402 897
Other 87 68 168 171
Total other expenses 623 2,449 1,698 4,184
The write off mainly relates to patents acquired in view of the commercial
partnership with ICP. As the partnership has been ended, the asset's economic
benefits were consumed.
Foreign exchange losses previously reported under other expenses have been
reclassified to finance costs (Note 13) during the 2023 reporting period so as
to more fairly present the nature of such items.
12. Finance income
For the six months ended For the year ended
December 31 December 31,
2023 2022 2023 2022
Finance income US$'000 US$'000 US$'000 US$'000
Interest income 11 4 14 5
Gains on foreign currency transactions 39 238 39 678
Other 19 (1) 21 -
Total finance income 69 241 74 683
13. Finance costs
For the six months ended For the year ended
December 31 December 31,
Finance costs 2023 2022 2023 2022
US$'000 US$'000 US$'000 US$'000
Lease finance expense 110 82 205 163
Interest on borrowings 190 68 312 110
Bank fees 104 65 271 98
Loss on foreign currency transactions 651 534 651 902
Total finance costs 1,055 749 1,439 1,273
14. Income tax
The components of the provision for taxation on income included in the
"Statement of profit or loss and other comprehensive income" are summarized
below:
For the six months ended For the year ended December 31
December 31
2023 2022 2023 2022
Current income tax expense US$'000 US$'000 US$'000 US$'000
Swiss corporate income taxes (70) 28 (49) 58
United States state and federal taxes 355 10 456 393
Taiwan corporate income taxes 73 40 154 118
Belgium corporate income taxes (53) (199) 30 (123)
Germany corporate income taxes (24) 68 (24) 51
Others 34 (16) 45 63
Total current income tax expense 315 (69) 612 560
Deferred income tax expense
Switzerland 698 159 676 90
United States (41) (535) (45) (606)
China 8 245 6 117
Austria 5 24 3 20
Belgium (63) (65) (131) (136)
Others (38) (34) (91) (66)
Total deferred income tax expense (income) 569 (206) 418 (581)
Total income tax expense (income) 884 (275) 1,030 (21)
As at December 31, As at December 31,
2023 2022
Net tax (assets)/liabilities US$'000 US$'000
Opening balance (prepaid taxes) (343) 51
Assumed on asset acquisition - (32)
Income tax expense for the year 612 560
Taxes paid (404) (870)
Foreign currency differences (5) (52)
Net tax (asset)/liability (140) (343)
As at December 31, As at December 31,
2023 2022
Net tax (assets) liabilities US$'000 US$'000
Prepaid income taxes (746) (657)
Income tax liabilities 606 314
Net tax (asset)/liability (140) (343)
15. Earnings per share
The calculation of basic earnings per share is based on the following data:
For the six months ended For the year ended
December 31, December 31,
2023 2022 2023 2022
Loss attributable to the ordinary equity holders of the parent entity (7,147) (27,546) (13,583) (29,251)
(US$'000)
Weighted average number of ordinary shares for the purposes of basic earnings 140,537,907 135,084,870 140,522,934 133,426,953
per share
Basic loss per share (cents) (5.09) (20.39) (9.67) (21.92)
The effect of share options is anti-dilutive and therefore not disclosed.
Basic earnings per share is calculated by dividing the profit/loss after tax
attributable to the equity holders of the Company by the weighted average
number of shares in issue during the year. The effect of share options is
anti-dilutive and therefore not disclosed.
16. Intangible assets
Goodwill Internally developed assets Brand names and customer relations Acquired technologies Other intangible assets Total
Cost US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at January 1, 2022 21,382 3,509 4,503 3,180 2,332 34,906
Additions arising from internal development - 2,165 - - - 2,165
Other acquisitions - - - - 1,700 1,700
Disposals / write-offs - (85) - - (812) (897)
Currency translation differences (795) 5 (160) (165) 14 (1,101)
As at December 31, 2022 20,587 5,594 4,343 3,015 3,234 36,773
Additions arising from internal development -
1,006 - - - 1,006
123
Business combinations 641 - 123 - 682 1,446
Other acquisitions - - - - 143 143
Disposals / write-offs - (228) - - (1,441) (1,669)
Reclassifications - 93 - - - 93
Currency translation differences 494 579 100 95 161 1,429
As at December 31, 2023 21,722 7,044 4,566 3,110 2,779 39,221
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 - 715 721 334 433 2,203
Disposals / write-offs - (25) - - (242) (267)
Reclassifications - 93 - . - 93
Impairment loss - (90) - - - (90)
Currency translation differences 263 190 (9) (6) 24 462
As at December 31, 2023 12,394 2,438 2,010 851 1,039 18,732
Net book value
As at December 31, 2022 8,456 4,039 3,045 2,492 2,410 20,442
As at December 31, 2023 9,328 4,606 2,556 2,259 1,740 20,489
17. Property, plant and equipment
Machinery and equipment Motor vehicles Computers and software Furniture and fixtures Land and buildings Total
Cost US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at January 1, 2022 7,288 536 914 474 1,523 10,735
Additions 2,272 26 197 50 2,736 5,280
Disposals (69) (12) - - - (81)
Reclassifications (407) 59 - 348 - -
Currency translation differences (233) (1) (21) (23) (91) (369)
As at December 31, 2022 8,851 608 1,090 849 4,168 15,566
Additions 1,167 113 32 60 41 1,413
Disposals (976) (57) (8) (15) - (1,056)
Reclassifications (37) - - 37 - -
Currency translation differences 374 9 97 49 68 597
As at December 31, 2023 9,379 673 1,211 980 4,277 16,520
Depreciation and accumulated impairment losses
As at January 1, 2022 2,723 330 619 86 112 3,870
Depreciation 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
Depreciation for the year 920 84 103 108 238 1,453
Eliminated on disposal (84) (33) (2) (8) - (127)
Impairment loss 34 21 6 23 - 84
Reclassifications 7 - (6) (1) - -
Currency translation differences 214 5 81 30 13 343
As at December 31, 2023 4,991 492 1,010 540 484 7,517
Net book value
As at December 31, 2022 4,951 193 262 461 3,935 9,802
As at December 31, 2023 4,388 181 201 440 3,793 9,003
18. Right-of-use assets
Land and buildings Motor vehicles Machinery and equipment Total
Cost US$'000 US$'000 US$'000 US$'000
As at January 1, 2022 8,913 611 341 9,865
Additions 86 174 1,921 2,181
Disposals due to expiry of lease - (36) - (36)
Disposals due to business combination* (467) - - (467)
Modification to lease terms** (1,199) - - (1,199)
Currency translation differences (381) (67) (26) (474)
As at December 31, 2022 6,952 682 2,236 9,870
Additions 99 140 858 1,096
Disposals due to expiry of lease (330) (28) (32) (390)
Modification to lease terms *** (253) (110) - (362)
Currency translation differences 311 33 201 545
As at December 31, 2023 6,780 717 3,262 10,759
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 703 157 145 1,005
Disposals due to expiry of lease (301) (25) (33) (359)
Modification to lease terms*** (173) (41) - (214)
Currency translation differences 125 11 7 144
As at December 31, 2023 2,073 309 245 2,627
Net book value
As at December 31, 2022 5,233 475 2,111 7,819
As at December 31, 2023 4,707 408 3,017 8,132
*With the acquisition of ChemTex Laboratories' property, plant and equipment,
the Group no longer has a lease liability with a third party.
**The Group agreed to shorten the agreed lease terms of two existing leases
from 2032 to 2027. These modifications have resulted in a reduction in the
total amounts payable under the leases and a reduction to both of the
right-of-use assets and lease liabilities with effect from the date of
modification.
***The Group terminated certain lease agreements prior to their expiry
resulting in the disposal of the right-of-use assets and related liabilities.
The disposal resulted in a US$15,000 net gain.
19. Other non-current assets
As at As at
December 31, 2023 December 31, 2022
Other non-current assets US$'000 US$'000
Deposits 75 80
Other prepayments 7 57
Other non-current assets 82 137
20. Inventories
As at As at
December 31, 2023 December 31, 2022
Inventories US$'000 US$'000
Functional ingredients & materials 9,154 11,420
Functional consumer goods 2,096 1,748
Total inventories 11,250 13,168
21. Trade receivables
As at As at
December 31, 2023 December 31, 2022
Trade receivables US$'000 US$'000
Not past due 3,154 2,788
< 30 days 1,269 520
31-60 days 344 781
61-90 days 549 215
91-120 days 69 180
>120 days 776 2,407
Total trade receivables 6,161 6,891
Provision for expected credit losses (488) (404)
Total trade receivables (net) 5,673 6,487
22. Other receivables and prepayments
As at As at
December 31, 2023 December 31, 2022
Total other receivables and prepayments US$'000 US$'000
Contract assets 34 115
Receivables from tax authorities 2,092 1,864
Prepayments 1,612 1,023
Other receivables 611 1,260
Total other receivables and prepayments 4,349 4,262
23. Contract assets
Amounts relating to contract assets are balances due from customers under
construction contracts that arise when the Group receives payments from
customers in line with a series of performance-related milestones. The Group
recognizes a contract asset for any work performed. Any amount previously
recognized as a contract asset is reclassified to trade receivables at the
point at which it is invoiced to the customer.
As at As at
December 31, 2023 December 31, 2022
Contract assets US$'000 US$'000
Research and development services 34 65
Exclusivity services - 50
Total contract assets 34 115
Current assets 34 115
Non-current assets - -
Total contract assets 34 115
Revenues related to research and development services were recognized at the
point of delivering proof of concept and completing testing services.
Performance obligations related to exclusivity services were deemed fulfilled
by the Group upon completion of the contractual term. Payment for the above
services is not due from the customer yet and therefore a contract asset is
recognized.
The directors of the Company always measure the loss allowance on amounts due
from customers at an amount equal to lifetime ECL, taking into account the
historical default experience, the nature of the customer and where relevant,
the sector in which they operate. There has been no change in the estimation
techniques or significant assumptions made during the current reporting period
in assessing the loss allowance for the amounts due from customers under
construction contracts.
Lifetime Expected credit losses on contract assets
The following table details the risk profile of amounts due from customers
based on the Group's provision matrix. Based on the historic default
experience, the following expected credit loss has been recognized:
As at As at
December 31, 2023 December 31, 2022
Expected credit loss US$'000 US$'000
Expected credit loss rate 0% 0%
Estimated total gross carrying amount at default 34 115
Lifetime ECL - -
Net carrying amount 34 115
24. Issued share capital and share premium
Movements in the Company's share capital and share premium account were as
follows:
Number of shares Share capital Share premium Totals
No. US$'000 US$'000 US$'000
Balance as of January 1, 2022 130,583,536 51,523 144,191 195,714
Issue of shares to vendors of Life Materials 347,552 141 471 612
Issue of shares as deferred consideration 3,461,615 1,359 2,921 4,280
Issue of shares to Advisory Board and others 164,721 60 175 235
Issue of shares to vendors of ChemTex Labs 2,176,884 795 1,177 1,972
Issue of shares to vendors of Chrisal 3,348,164 1,223 1,838 3,061
Balance as at December 31, 2022 140,082,472 55,101 150,773 205,874
Issue of shares Tarn Pure (a) 455,435 160 212 372
Balance as at December 31, 2023 140,537,907 55,261 150,985 206,246
The par value of all shares is £0.30. All shares in issue were allotted,
called up and fully paid.
The share premium account represents the amount received on the issue of
ordinary shares by the Company in excess of their nominal value and is
non-distributable.
The Company issued new ordinary shares for the following:
(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.
25. Share-based payments
Equity-settled Share Option Scheme
As of December 2023, 1,062,738 options vested with a strike price of £1.23.
Following the vesting and employee departures, the number of options expected
to vest dropped to 938,502 as per December 31, 2023 (June 30, 2023: 2,279,236;
December 31, 2022: 2,497,281). The expense arising from these share-based
payment transactions was US$49,000 for the six months ended December 31, 2023
and US$ 181,000 for the year ended December 31, 2023 which compares against an
income of US$12,000 for the year ended December 31, 2022 following a drop in
market expectations during the second half of 2022. In the six months ended
June 30, 2022, the Group incurred an expense of US$415,000.
Details of the share options outstanding and exercisable during the year are
as follows:
As at December 31, 2022
As at December 31, 2023
Number of options Weighted average exercise price (£) Number of options Weighted average exercise price (£)
Outstanding at beginning of year 11,525,911 1.05 8,707,658 1.14
Granted during the year 3,349,125 0.83
Forfeited during the year (2,289,440) 1.06 (530,872) 1.12
Lapsed during the year (3,842,184) 1.23 - -
Vesting during the year (1,062,738) 1.23 - -
Outstanding at the end of the year 4,331,549 0.84 11,525,911 1.05
As at December 31, 2022
As at December 31, 2023
Number of options Weighted average exercise price (£) Number of options Weighted average exercise price (£)
Exercisable at beginning of year - - - -
Vesting during the year 1,062,738 1.23 - -
Exercisable at the end of the year 1,062,738 1.23 - -
Other share-based payments
Remuneration of US$764,000 in relation to the acquisition of Life Materials
Technologies Limited is linked to a service period of five years. An expense
of US$78,000 was recognized in the six months ended December 31, 2023 (year
ended December 31, 2023: US$153,000; year ended December 31, 2022:
US$150,000). The remainder of US$382,000 is expected to be expensed over the
period from January 1, 2024, to June 30, 2026.
26. Other reserves
Other reserves comprise the share-based payment reserve, the merger reserve,
the currency translation reserve and the other reserve.
The retained deficit comprises all other net gains and losses and transactions
with owners not recognized elsewhere.
Movements in the other reserves were as follows:
Share- based payment reserve Merger reserve Currency translation reserve Other reserve Total Other reserves
Note US$'000 US$'000 US$'000 US$'000 US$'000
Balance at January 1, 2022 474 (126,912) 387 (1,144) (127,195)
Other comprehensive (loss)/income - - (1,914) 1,104 (810)
Total comprehensive (loss)/income for the year - - (1,914) 1,104 (810)
Share-based payment charges 25 (12) - - - (12)
Transactions with owners (12) - - - (12)
Balance at December 31, 2022 462 (126,912) (1,527) (40) (128,017)
Other comprehensive (loss)/income - - 975 31 1,006
Total comprehensive (loss)/income for the period - - 975 31 1,006
Share-based payment charges 25 181 - - - 181
Transactions with owners 181 - - - 181
Balance at December 31, 2023 643 (126,912) (552) (9) (126,830)
The share-based payment reserve arises from the requirement to fair value the
issue of share options at grant date. Further details of share options are
included at Note 25.
The currency translation reserve represents cumulative foreign exchange
differences arising from the translation of the financial statements of
foreign subsidiaries and is not distributable by way of dividends.
Dividend paid by subsidiary
In October 2023, HeiQ Chrisal N.V. declared and paid a dividend of US$42,000
of which 29% or US$12,000 was paid to minority shareholders.
27. Lease liabilities
Future minimum lease payments associated with leases were as follows:
As at As at
December 31, 2023
December 31, 2022
Lease payments US$'000 US$'000
Not later than one year 1,211 1,301
Later than one year and not later than five years 3,665 3,813
Later than five years 3,542 3,387
Total minimum lease payments 8,419 8,501
Less: Future finance charges (615) (679)
Present value of minimum lease payments 7,805 7,822
Later than one year and not later than five years 1,128 1,264
Later than five years 6,677 6,558
Total minimum lease payments 7,805 7,822
28. Pensions and other post-employment benefit plans
In February 2023, nine employees were made redundant which resulted in a
curtailment gain US$141,000. 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 1
January 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$341,000.
Net benefit obligations
The components of the net defined benefits obligations included in non-current
liabilities are as follows:
As at As at
December 31, December 31,
2023 2022
US$'000 US$'000
Fair value of plan assets 8,126 9,616
Defined benefit obligations (9,032) (10,568)
Funded status (net liability) (906) (952)
Duration (years) 14.6 13.8
Expected benefits payable in following year (352) (389)
Year ended Year ended
December 31, December 31,
2023 2022
Development of obligations and assets US$'000 US$'000
Present value of funded obligations, beginning of year (10,568) (13,003)
Employer service cost (417) (571)
Employee contributions (321) (352)
Past service gain 341 -
Curtailments/Settlements 141 -
Interest cost (236) (45)
Benefits paid/(refunded) 3,405 522
Actuarial (loss)/gain on benefit obligation (448) 2,562
Currency (loss)/gain (937) 319
Present value of funded obligations, end of year (9,032) (10,568)
Defined benefit obligation participants (7,757) (10,568)
Defined benefit obligation pensioners (1,274) -
Present value of funded obligations, end of year (9,032) (10,568)
Fair value of plan assets, beginning of year 9,616 10,858
Expected return on plan assets 215 37
Employer's contributions 320 352
Employees' contributions 321 352
Benefits (paid)/refunded (3,405) (522)
Admin expense (19) (21)
Actuarial (loss)/gain on plan assets 130 (1,182)
Currency gain/(loss) 850 (258)
Fair value of plan assets, end of year 8,126 9,616
Movements in net liability recognized in statement of financial position:
Year ended Year ended
December 31, December 31,
2023 2022
US$'000 US$'000
Net liability, beginning of year (952) (2,146)
Employer service cost (417) (571)
Interest cost (236) (45)
Expected return on plan assets 215 37
Admin expense (19) (21)
Past service cost recognized in year 341 -
Curtailment, settlement, plan amendment gain (loss) 148 -
Employer's contributions (following year expected contributions) 320 352
Prepaid (accrued) pension cost: (352) 247
- operating income (expense) 373 (240)
- finance expense (22) (7)
Total gains recognized within other comprehensive income (218) 1,380
Currency loss (87) 62
Net liability, end of year (906) (952)
Expected employer's cash contributions for following year 269 360
The assets of the scheme are invested on a collective basis with other
employers. The allocation of the pooled assets between asset categories is
as follows:
Asset allocation
As at As at
December 31, December 31,
2023 2022
US$'000 US$'000
Cash 3.1% 2.8%
Bonds 29.6% 29.1%
Equities 33.6% 33.2%
Property (incl. mortgages) 28.9% 31.3%
Other 4.8% 3.6%
Total 100.0% 100.0%
Amounts recognized in profit and loss
Year ended Year ended
December 31, December 31,
2023 2022
US$'000 US$'000
Employer service cost 417 (571)
Past service cost recognized in year 341 -
Interest cost (236) (45)
Expected return on plan assets 215 37
Admin expense (19) (21)
Curtailment, settlement, plan amendment gain (loss) 148 -
Components of defined benefit costs recognized in profit or loss 32 (600)
Amounts recognized in other comprehensive income
Year ended Year ended
December 31, December 31,
2023 2022
US$'000 US$'000
Actuarial gains/(losses) arising from plan experience 314 193
Actuarial (losses)/gains arising from demographic assumptions - (23)
Actuarial gains / (losses) arising from financial assumptions (762) 2,392
Re-measurement of defined benefit obligations (448) 2,562
Re-measurement of assets 230 (1,182)
Deferred tax asset recognized 44 (276)
Other - -
Total recognized in OCI (174) 1,104
Principal actuarial assumptions:
The principal assumptions used in determining pension and post-employment
benefit obligations for the plan are shown below:
As at As at
December 31, December 31,
2023 2022
US$'000 US$'000
Discount rate 1.50% 2.25%
Interest credit rate 2.00% 2.25%
Average future salary increases 2.00% 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 calendar year amount to
US$269,000.
Sensitivities
A quantitative sensitivity analysis for significant assumptions is as follows:
As at As at
December 31, December 31,
2023 2022
Impact on defined benefit obligation US$'000 US$'000
Discount rate + 0.25% (320) (346)
Discount rate - 0.25% 339 368
Salary increase + 0.25% 41 47
Salary increase - 0.25% (40) (46)
Pension increase + 0.25% 183 179
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. The pension expense in
profit and loss was US$10,000 (2022: US$1,000) which results in a US$144,000
net defined liability as at December 31, 2023 (2022: US$134,000).
29. Borrowings
The Group's borrowings are held at amortized cost. They consist of the
following:
As at As at
December 31, 2023
December 31, 2022
Borrowings US$'000 US$'000
Unsecured bank loans 10,112 3,573
Secured bank loans 304 628
Loans from related parties 1,494 -
Loans from non-controlling interest - 137
Total borrowings 11,910 4,338
The following table provides a reconciliation of the Group's future maturities
of its total borrowings for each year presented:
As at As at
December 31, 2023
December 31, 2022
Maturity of borrowings US$'000 US$'000
Not later than one year 10,409 2,893
Later than one year but less than five years 1,010 1,029
After more than five years 491 416
Total borrowings 11,910 4,338
The other principal features of the Group's borrowings are as follows:
Unsecured bank loans
As at December 31, 2022
As at December 31, 2023
Description Currency Repayment date Principal US$'000 Interest rate Principal US$'000 Interest rate
Credit facility CHF February 2024 6,461 4.67% 2,574 2.20%
Credit facility CHF June 2024 1,175 5.45% - -
Credit facility CHF September 2024 940 4.70% - -
Various bank loans(1)) EUR 1-10 years 1,504 2.93% 999 2.21%
Bank loan GBP April 2026 32 2.50% - -
Outstanding at the end of the year 10,112 3,573
1) Several loans repayable over ten years. The loans are repayable
over a period of up to ten 10 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 2.93%.
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 is secured by property owned by a company which
is controlled by a minority shareholder of HeiQ Medica. As at December 31,
2023, US$304,000 is outstanding (December 31, 2022: US$628,000).
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. As of March 28,
2024, the remaining loan amounts to EUR 400,000, incurs interest at 4.5% and
is repayable in June 2024.
Loans from non-controlling interests
A loan disclosed in the 2022 annual report in the amount of BRL 715,683
(US$137,000) which was payable to a minority shareholder of Life Materials
Latam Ltda, Brazil is no longer consolidated following the deconsolidation of
the subsidiary.
30. Deferred tax
The following are the major deferred tax liabilities and assets recognized by
the Group and movements thereon during the current and prior reporting period.
Pension fund obligations Tax losses Share-based payments Capital allowances, depreciation and other temporary differences Total
Deferred tax US$'000 US$'000 US$'000 US$'000 US$'000
Balance at January 1, 2022 429 178 85 (1,686) (994)
Charge to profit or loss 49 (150) 1 681 581
Charge to other comprehensive income (276) - - - (276)
Foreign currency differences (12) (28) 5 9 (26)
Balance as at December 31, 2022 190 - 91 (996) (715)
Charge to profit or loss (453) - (86) 121 (417)
Charge to other comprehensive income 249 - 249
Arising from business combinations - - - (201) (201)
Foreign currency differences 14 - (5) 4 13
Balance as at December 31, 2023 - - - (1,072) (1,072)
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 jurist. Deferred tax
liabilities related to capital allowances and depreciation increased following
the recognition of intangible assets acquired in the Tarn Pure acquisition.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis. The following is the analysis of the deferred tax balances (after
offset) for financial reporting purposes:
As at As at
December 31, 2023
December 31, 2022
Deferred tax US$'000 US$'000
Deferred tax assets 312 538
Deferred tax liabilities (1,384) (1,253)
Net deferred tax assets (liabilities) (1,072) (715)
31. Other non-current liabilities
Other non-current liabilities As at As at
December 31, 2022
December 31, 2023
US$'000
US$'000
Defined benefit obligation IAS 19 Switzerland 906 952
Defined benefit obligation IAS 19 Thailand 144 134
Contract liabilities 3,932 3,614
Deferred consideration Tarn Pure acquisition 19 -
Deferred grant income 9 14
Total other non-current liabilities 5,010 4,714
32. Trade and other payables
As at As at
December 31, 2023 December 31, 2022
Trade and other payables US$'000 US$'000
Trade payables 4,446 3,321
Payables to tax authorities 462 375
Other payables 1,764 1,626
Total trade and other payables 6,672 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.
33. Accrued liabilities
As at As at
December 31, 2023 December 31, 2022
Accrued liabilities US$'000 US$'000
Costs of goods sold 967 875
Personnel expenses 1,338 1,737
Other operating expenses 2,178 2,366
Total accrued liabilities 4,483 4,978
34. Deferred revenue
As at As at
December 31, 2023 December 31, 2022
Deferred revenue US$'000 US$'000
Contract liabilities 1,380 1,176
Prepayments for unshipped goods 22 94
Deferred grant income 21 15
Total deferred revenue 1,423 1,285
35. Contract liabilities
As at As at
December 31, 2023 December 31, 2022
Contract liabilities US$'000 US$'000
Exclusivity agreements 2,812 1,832
Research and development services 2,500 2,958
Total contract liabilities 5,312 4,790
Current liabilities (Note 34) 1,380 1,176
Non-current liabilities (Note 31) 3,932 3,614
Total contract liabilities 5,312 4,790
Revenue relating to both exclusivity and research and development services is
recognized over time although the customer pays up-front in full for these
services. A contract liability is recognized for revenue relating to the
services at the time of the initial sales transaction and is released over the
service period.
36. Other current liabilities
As at As at
December 31, 2023 December 31, 2022
Other current liabilities US$'000 US$'000
Deferred consideration in relation to acquisitions 208 92
Call option liability - 686
Other current liabilities 208 778
The deferred consideration in relation to business acquisition and related
financing expense are summarized below:
Deferred consideration in relation to acquisitions Chemtex RAS Life Tarn Pure Total
US$'000 US$'000 US$'000 US$'000 US$'000
As at December 31, 2021 279 3,152 2,652 - 6,083
Foreign exchange revaluation - (276) - - (276)
Consideration settled in cash (187) - (1,400) - (1,587)
Consideration settled in shares - (2,875) (1,252) - (4,127)
As at December 31, 2022 92 - - - 92
Additions from Tarn Pure acquisition as per Note 4a - - - 244 244
Consideration settled in cash - - - (110) (110)
Amortization of fair value discount - - - 1 1
As at December 31, 2022 92 - - 135 227
As at As at
December 31, 2023 December 31, 2022
Deferred consideration US$'000 US$'000
Current liabilities 208 92
Non-current liabilities 19 -
Total deferred consideration 227 92
37. Contingent assets and liabilities
A minority shareholder of one of the Group's subsidiaries has made a claim in
court regarding the interpretation of certain put-option rights on shares of
the same subsidiary. The Company considers these option rights as lapsed as
per the Shareholder Agreement. At present, it is not possible to determine the
outcome of these matters. Hence, no provision has been made in the financial
statements for their ultimate resolution.
38. Provisions
Provisions As at As at
December 31, 2023 December 31, 2022
US$'000 US$'000
Current liabilities - 339
Non-current liabilities - -
Total provisions - 339
Legal/Compliance provision Total
Provisions US$'000 US$'000
Balance at January 1, 2022 - -
Additional provision in the year 339 339
Utilization of provision - -
Exchange difference - -
Balance as at December 31, 2022 339 339
Additional provision in the period
Utilization of provision (339) (339)
Exchange difference
Balance as at December 31, 2023 - -
39. Notes to the statements of cash flows
Non-cash transactions
Certain shares were issued during the year for a non-cash consideration as
described in Note 24.
During the year ended December 31, 2022, additions to buildings and land
amounting to US$1,862,000 million were financed by issuing shares.
Working capital reconciliation
The Company defines working capital as trade receivables, other receivables
and prepayments less trade and other payables, accrued liabilities and
deferred revenue.
Year ended December 31, 2023 Opening balances Assumed on acquisition of assets Disposal of subsidiary Change in balance Closing balances
US$'000 US$'000 US$'000 US$'000
Inventories 13,168 13 (5) (1,926) 11,250
Trade receivables 6,487 2 - (816) 5,673
Other receivables and prepayments 4,262 10 (6) 83 4,349
Trade and other receivables and prepayments 10,749 12 (6) (733) 10,022
Trade and other payables 5,322 2 (16) 1,364 6,672
Accrued liabilities 4,978 - - (495) 4,483
Deferred revenue incl. non-current contract liabilities 4,913 - - 451 5,364
Trade and other payables, accrued liabilities and deferred revenue 15,213 2 (16) 1,320 16,519
Year ended December 31, 2022 Opening balances Assumed on acquisition of assets Change in balance Closing balances
US$'000 US$'000 US$'000 US$'000
Inventories 13,770 - (602) 13,168
Trade receivables 14,656 - (8,169) 6,487
Other receivables and prepayments 3,876 - 386 4,262
Trade and other receivables and prepayments 18,532 - (7,783) 10,749
Trade and other payables 8,271 - (2,949) 5,322
Accrued liabilities 3,386 9 1,583 4,978
Deferred revenue incl. non-current contract liabilities 1,004 - 3,909 4,913
Trade and other payables, accrued liabilities and deferred revenue 12,661 9 2,543 15,213
Consideration for acquisition of businesses (Note 4a)
Year ended December 31, 2023 US$'000
Consideration payment for acquisition of Tarn Pure 730
Cash assumed on acquisition of Tarn Pure (12)
Net consideration payment for acquisitions of businesses 718
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
40. Related party transactions
ECSA, a company controlled by a director of HeiQ Materials AG supplied
materials and services totalling US$36,000 to
HeiQ Materials AG, in the year ended December 31, 2023 (2022: US$88,000). The
transactions were made on terms equivalent to those in arm's length
transactions.
The directors have deferred payment of their board fees earned in the period
July - December 2023 and thus the Company has recorded a corresponding
liability against each of the directors.
Loans due to related parties
As at As at
December 31, 2023 December 31, 2022
Loans due to related parties US$'000 US$'000
Cortegrande AG, €1,350,000 1,494 -
Loans due to related parties 1,494 -
The associates have provided the Group with short-term loans at rates
comparable to the average commercial rate of interest.
41. Material subsequent events
Purchase of industrial site
In February 2024 the Group completed the acquisition of two industrial
properties in Portugal for a total consideration of EUR5.0 million (including
taxes). In March 2024, the Group was able to refinance the acquisition of the
smaller property with a mortgage amounting to EUR 750,000. The refinancing of
the larger property is still ongoing as of March 28, 2024.
Fundraise
In March 2024, the Group issued 28,000,000 new ordinary shares raising in
aggregate £2.44 million (gross). Following the issue and allotment of the New
Ordinary Shares the Company has 168,537,907 Ordinary Shares in issue. The
Company holds no Ordinary Shares in treasury, and therefore the total number
of voting rights in the Company is 168,537,907. All new shares have been
issued at £0.087 per share.
Directors have participated in the fundraise and acquired Convertible Loan
Note shares as follows:
Director name Number of ordinary shares acquired
Carlo Centonze (via Cortegrande AG) 8,808,793
Esther Dale 180,974
Xaver Hangartner 73,368
Furthermore, the Group subdivided each existing ordinary share of 30p into one
new ordinary share of 5 pence and one deferred share of 25 pence.
Appointment of new chair
In March 2024, Robert van de Kerkhof. who was appointed Director in November
2023, was nominated as the new Chairman replacing Esther Dale Kolb who
resigned from her role as Chair and Director as of March 31, 2024.
42. Ultimate controlling party
As at December 31, 2023, the Company did not have any single identifiable
controlling party.
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