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HeiQ Plc announced its audited financial results for the 18 months ended June 30, 2024, reporting revenue of US$62.3 million, an Adjusted LBITDA of US$9.9 million, and a loss after taxation of US$21.3 million. During this period, Julien Born was appointed CEO of HeiQ AeoniQ Holdings and Robert van de Kerhof became the new Chair of HeiQ plc, while the company completed a £2.4 million fundraising and acquired a Portugal factory site. The Board further announced on October 22, 2024, its intention to de-list the Company from the London Stock Exchange, effective November 19, 2024, and initiated a restructuring project to reduce costs by an additional 20% by the end of 2025.
| Date | 31 Oct 2024 |
| Time | 07:00:06 |
| Category | Results |
| ID | 3126K |
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. 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. 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 Carlo Centonze (CEO) |
+41 56 250 68 50 |
|
Cavendish Securities plc (Broker) Stephen Keys / Callum Davidson |
+44 (0) 207 397 8900 |
|
SEC Newgate (Media Enquiries) Elisabeth Cowell / Molly Gretton / Tom Carnegie |
+44 (0) 20 3757 6882 |
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.
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
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
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$2.75 million) from the out-of-court settlement of the ICP case are a key driver of Other Income in the reporting period.
|
|
|
|
Period ended |
Year ended |
|
|
|
|
June 30, 2024 |
December 31, 2022 |
|
Financial performance |
|
|
US$'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%) |
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$'000 |
|
Operating loss |
|
|
(18,982) |
(29,245) |
|
Depreciation |
|
|
3,888 |
2,220 |
|
Amortization |
|
|
3,238 |
1,435 |
|
Impairment losses and write-offs |
|
|
1,742 |
13,278 |
|
Share options and rights granted to Directors and employees |
|
|
179 |
138 |
|
Adjusted EBITDA |
|
|
(9,935) |
(12,174) |
Following the merger of the two former Business Units Textiles & Flooring and Antimicrobials into Advanced Materials, HeiQ reports three segments: the two commercial Business Units as well as "Other activities". Other activities include the Venture Units as well as not allocated items including Innovation Service function. In 2022 SG&A expenses have been allocated to Business Units only to a limited extent with focus on commercial activities. For 2023 and going forward, the Group had allocated costs more extensively to the Business Units.
|
|
Advanced Materials |
LifeSciences |
Other activities |
Total |
|||||
|
US$'000 |
Period 23/24 |
Year 2022 |
Period 23/24 |
Year 2022 |
Period 23/24 |
Year 2022 |
Period 23/24 |
Year 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.
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$3.7 million).
In March 2024 the Company completed a fund raise of GBP 2.436 million through the issuance of 28 million new ordinary shares. At the same time, the general meeting approved a capital reorganization in course of which each existing ordinary share was subdivided into one new ordinary share of 5 pence and one deferred share of 25 pence. Following the fund raise, the Company has 168'537'907 ordinary shares of 5 pence each in issue.
Net cash generated from operating activities in the 18-months period continued to be negative and amounted to US$-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).
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$0.29 million) per quarter thereafter.
The facilities are not committed, but the Board has not received any indication from financing partners that facilities are at risk of being terminated and mentioned repayment schedules have been agreed only recently. As of September 30, 2024, the Group has drawn fixed advances of CHF7.06 million and EUR0.4 million of the facilities with maturity date within the month of October 2024.
The Group's directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and operate within its credit facilities for a period of 12 months from date of approval of these financial statements. Nevertheless, the Board acknowledges the uncommitted status of the facilities which could be terminated without notice during the forecast period requiring the refinancing of debts as per above maturity dates, indicates that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Additionally, should intended financing events for the venture units not materialize within the expected timeframe, the Group might need to delay or discontinue the scaling of respective ventures in order to continue as a going concern. Further disclosures on the going concern assessment are made in Note 3b to the financial statements.
Xaver Hangartner
Chief Financial Officer
For the 18-month period ended June 30, 2024
|
|
|
|
|
Period ended |
Year ended |
|
|
|
|
|
June 30, |
December 31, |
|
|
|
|
|
2024 |
2022
|
|
|
Note |
|
|
US$'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 profit or loss |
29 |
|
|
42 |
(276) |
|
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.
As at June 30, 2024
|
|
|
|
As at June 30, 2024 |
As at December 31, 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
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 |
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 currencies |
|
|
(56) |
(708) |
|
Cash and cash equivalents - end of the period/year |
|
|
5,027 |
8,488 |
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
All intangible assets, except goodwill, are stated at cost less accumulated amortization and any accumulated impairment losses.
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.
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 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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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:
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.
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.
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.
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.
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.
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.
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.
The income statement expense for the defined contribution pension plans operated represents the contributions payable for the year.
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.
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.
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.
Trade receivables are recognized initially at transaction price and subsequently measured at amortized cost using the effective interest method, less provision for impairment.
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.
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.
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.
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.
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.
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.
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.
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.
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.
There were no business combinations in the year 2022.
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% |
|
Life Material Technologies Limited |
Thailand |
222 Lumpini Building 2, 247 Rajdamri Road |
Trading |
99.995% |
|
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 Siqu, Chaoyang District, Beijing |
Inactive/Distribution |
100% |
|
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
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%.
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$2.4 million charge to retained earnings.
In July 2023, the Group sold 31% of its share in Life Materials Latam Ltda, Brazil for a consideration of US$nil. The Group's stake was reduced to 20% and, as a result, the company is no longer consolidated.
The Group founded HeiQ AeoniQ Holding AG Switzerland. As at June 30, 2024, the Group holds 95.95% ownership.
The Group founded HeiQ AeoniQ Holding Portugal. As at June 30, 2024, the Group holds 100% ownership.
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$479,000 which was recognized under other income, see Note 10.
The Group derives its revenue from contracts with customers for the transfer of goods and services over time and at a point in time in the following major organization units. The disclosure of revenue by organizational units is consistent with the revenue information that is disclosed for each reportable segment under IFRS 8 Operating Segments (see note 8).
|
|
|
Period ended |
Year ended |
|
|
|
June 30, |
December 31, |
|
|
|
2024 |
2022 |
|
Revenue by organizational unit |
|
US$'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$'000 |
|
Goods transferred at a point in time |
|
56,860 |
45,002 |
|
Services transferred at a point in time |
|
1,914 |
160 |
|
Services transferred over time |
|
3,544 |
2,040 |
|
Total revenue |
|
62,318 |
47,202 |
|
|
|
|
|
The transaction prices allocated to unsatisfied and partially unsatisfied obligations at reporting date are as set out below:
|
|
|
As at |
As at |
|
|
|
June 30, |
December 31, |
|
|
|
2024 |
2022 |
|
Unsatisfied performance obligations |
|
US$'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$3.3 million, are expected to be recognized in later periods.
Contract assets and contract liabilities are disclosed under Note 25 and Note 37, respectively. Impairment losses recognized on any receivables or contract assets arising from the Group's contracts with customers are disclosed under Note 23 and Note 25, respectively.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of the Company.
For management purposes and following the decision by the Board of Directors to merge two units, the Group is organized into the following reportable segments:
|
Segment |
Activity |
|
Advanced Materials |
Provide innovative ingredients to make textiles & flooring more functional, durable and sustainable and functionalize different hard surfaces in everyday products and our surroundings |
|
LifeSciences |
Offer biotech solutions to replace harmful substances in domestic, commercial and industrial usage, for a more balanced microbiome and environment |
|
Other activities |
All other activities of the Group including Innovation Services, Business Development, and other non-allocated functions. |
In 2023 new overhead allocation rules were introduced and as a result more overhead costs were allocated to segments. 2022 segment revenue and profits are restated below using the new rules to allow for like for like comparison.
The following is an analysis of the Group's revenue and results by reportable segment:
|
|
Advanced Materials |
LifeSciences |
Other activities |
Total |
|||||||
|
US$'000 |
Period 23/24 |
Year 2022 |
Period 23/24 |
Year 2022 |
Period 23/24 |
Year 2022 |
Period 23/24 |
Year 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.
|
|
|
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 |
During the period ended June 30, 2024, no customers individually totaled more than 10% of total revenues (year ended December 31, 2022: none).
|
|
|
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.
|
|
|
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 $2.75 million. The settlement refers to a complaint filed by the Group in October 2022 for breaching its Exclusive Agreement terms.
Foreign exchange gains previously reported under other income have been reclassified to finance income (Note 14) during the 2024 reporting period to more fairly present the nature of such items.
|
|
Period ended |
Year ended |
|
|
June 30, |
December 31, |
|
Selling and general administration expenses |
2024 US$'000 |
2022 US$'000 |
|
Personnel expenses |
19,324 |
14,977 |
|
Depreciation of property, plant and equipment |
1,423 |
630 |
|
Amortization of intangible assets |
3,238 |
1,435 |
|
Depreciation of right-of-use assets |
1,573 |
938 |
|
Net credit losses on financial assets and contract assets |
1,025 |
85 |
|
Other |
17,186 |
12,904 |
|
Total selling and general administration expense |
43,769 |
30,969 |
Other selling and general administration expenses include costs for infrastructure, professional services and marketing as well as R&D and laboratory related costs, information technology & data expenses, sales representative & distribution expenses.
The total remuneration of the Group's auditors, being RPGCC for the audit of the 18-month period ended June 30, 2024, and Deloitte LLP for the audit of the year ended December 31, 2022, for services provided to the Group, and included in other selling and general administration expenses, is analyzed below:
|
|
|
Period ended |
Year ended |
|
|
|
June 30, |
December 31, |
|
|
|
2024 |
2022 |
|
Auditor's remuneration |
|
US$'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$180,000 related to the 2021 audit (Crowe UK LLP) which was agreed on after the issuance of the annual report.
|
|
|
Period ended |
Year ended |
|
|
|
June 30, |
December 31, |
|
|
|
2024 |
2022 |
|
Personnel expenses |
|
US$'000 |
US$'000 |
|
Wages & salaries |
|
21,273 |
15,274 |
|
Social security & other payroll taxes |
|
2,249 |
1,685 |
|
Pension costs |
|
306 |
710 |
|
Share-based payments |
|
178 |
138 |
|
Total personnel expenses |
|
24,006 |
17,807 |
|
Reported as cost of sales (Note 9) |
|
4,682 |
2,830 |
|
Reported as selling and general administration expense (Note 11) |
|
19,324 |
14,977 |
|
Total personnel expenses |
|
24,006 |
17,807 |
|
The average monthly number of employees was as follows: |
|
|
194 |
218 |
|
|
Period ended |
Year ended |
|
|
June 30, |
December 31, |
|
|
2024 |
2022 |
|
Other expenses |
US$'000 |
US$'000 |
|
Foreign exchange losses |
343 |
3,050 |
|
Loss on disposal of property, plant and equipment |
204 |
16 |
|
Transaction costs relating to mergers and acquisitions |
23 |
50 |
|
Write off intangible assets (Note 18) |
1,419 |
897 |
|
Other |
376 |
171 |
|
Total other expenses |
2,365 |
4,184 |
The write-off mainly relates to patents acquired in view of the commercial partnership with ICP. As the partnership ended, the asset's economic benefits were deemed to no longer have any value.
Foreign exchange losses previously reported under other expenses have been reclassified to finance costs (Note 15) during the 2023 reporting period to more fairly present the nature of such items.
|
|
Period ended |
Year ended |
|
|
June 30, |
December 31, |
|
|
2024 |
2022 |
|
Finance income |
US$'000 |
US$'000 |
|
Interest income |
18 |
5 |
|
Gains on foreign currency transactions |
157 |
678 |
|
Other |
27 |
- |
|
Total finance income |
202 |
683 |
|
|
Period ended |
Year ended |
|
|
June 30, |
December 31, |
|
|
2024 |
2022 |
|
Finance costs |
US$'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 |
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$21,000). The effective tax rate was 4.7% (2022: 0.1%). The effective tax rate was primarily impacted by unrecognized tax losses.
The differences between the statutory income tax rate and the effective tax rates are summarized as follows:
|
|
Period ended June 30, 2024 |
|
Year ended December 31, 2022 |
||
|
|
US$'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$'000 |
|
Prepaid income taxes |
|
(795) |
(657) |
|
Income tax liabilities |
|
189 |
314 |
|
Net tax (asset)/liability |
|
(606) |
(343) |
Since the Group operates internationally, it is subject to income taxes in many different tax jurisdictions. The Group calculates its average expected tax rate as a weighted average of the tax rates in the tax jurisdictions in which the Group operates. This rate changes from year to year due to changes in the mix of the Group's taxable income and changes in local tax rates.
The calculation of the basic earnings per share is based on the following data:
|
|
|
Period ended |
Year ended |
|
|
|
June 30, |
December 31, |
|
|
|
2024 |
2022 |
|
Earnings |
|
US$'000 |
US$'000 |
|
Loss attributable to the ordinary equity holders of the parent entity |
|
(20,839) |
(29,251) |
|
|
|
Period ended |
Year ended |
|
|
|
June 30, |
December 31, |
|
Number of shares |
|
2024 |
2022 |
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
|
158,135,830 |
133,426,953 |
Basic earnings per share is calculated by dividing the profit/loss after tax attributable to the equity holders of the Company by the weighted average number of shares in issue during the year. The effect of share options is anti-dilutive and therefore not disclosed.
|
|
Goodwill |
Internally developed assets |
Brand names and customer relations |
Acquired technologies |
Other intangible assets |
Total |
|
Cost |
US$'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 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$'000 |
|
ChemTex |
3,393 |
|
- |
3,393 |
|
Chrisal* |
6,163 |
(3,677) |
(291) |
2,195 |
|
RAS (incl. Tarn Pure in 2023/2024)* |
|
(4,007) |
(308) |
3,683 |
|
Life |
5,202 |
(5,202) |
- |
- |
|
MasFabEs** |
123 |
(123) |
- |
- |
|
Total goodwill |
22,879 |
(13,009) |
(599) |
9,271 |
*The balances of Chrisal and RAS are revalued from local currency to US$ at each reporting date.
**Goodwilll allocated to the MasFabEs CGU was derecognized following the deconsolidation of HeiQ Medica S.L.
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$'000 |
|
ChemTex |
|
3,393 |
3,393 |
|
Chrisal* |
|
2,195 |
2,189 |
|
RAS (incl. Tarn Pure in 2023/2024)* |
|
|
2,874 |
|
Life |
|
- |
- |
|
Total goodwill book value |
|
9,271 |
8,456 |
*The balances of Chrisal and RAS are revalued from local currency to US$ at each reporting date.
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.
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).
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.
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$1.2m. The write-offs mainly related to patents acquired in view of the commercial partnership with ICP. With the end of the partnership, the asset's economic benefits were deemed to no longer have any value.
|
|
Machinery and equipment |
Motor vehicles |
Computers and software |
Furniture and fixtures |
Land and buildings |
Total |
|
Cost |
US$'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 |
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$730,000 for machinery that was intended to be used to manufacture hygiene masks for which demand declined significantly. The asset was used in the LifeSciences reportable segment. In the period ended June 30, 2024, the machinery was derecognized following deconsolidation of the subsidiary HeiQ Medica SL.
|
|
Land and buildings |
Motor vehicles |
Machinery and equipment |
Total |
|
Cost |
US$'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$33,000 net gain which was recognized as operating income.
|
|
|
Period ended June 30, 2024 |
Year ended December 31, 2022 |
|
|
|
US$'000 |
US$'000 |
|
Depreciation expense on right-of-use assets |
|
1,573 |
938 |
|
Interest expense on lease liabilities |
|
311 |
163 |
|
Expense relating to short-term leases |
|
374 |
225 |
|
Expense relating to leases of low value assets |
|
51 |
40 |
|
Gain from early disposal and modification of leases |
|
33 |
68 |
|
|
Period ended June 30, 2024 |
Year ended December 31, 2022 |
|
|
US$'000 |
US$'000 |
|
Total fixed lease payments |
1996 |
992 |
|
Gain from early disposal and modification of leases |
(33) |
(68) |
|
Interest paid on leases |
311 |
163 |
|
|
|
As at |
As at |
|
|
|
June 30, |
December 31 |
|
|
|
2024 |
2022 |
|
Other non-current assets |
|
US$'000 |
US$'000 |
|
Deposits |
|
72 |
80 |
|
Other prepayments |
|
7 |
57 |
|
Other non-current assets |
|
79 |
137 |
|
|
|
As at |
As at |
|
|
|
June 30, |
December 31 |
|
|
|
2024 |
2022 |
|
Inventories |
|
US$'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$4,912,000).
|
|
|
As at |
As at |
|
|
|
June 30, |
December 31, |
|
|
|
2024 |
2022 |
|
Trade receivables |
|
US$'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$404,000). The following table details the risk profile of receivables based on the Group's provision matrix.
|
|
Trade receivables - days past due |
||||
|
|
Not past due |
1-60 |
61-120 |
>120 days |
Total |
|
Expected credit loss |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Expected credit loss rate |
1% 1% |
1% |
1% |
68% |
17% |
|
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 June 30, 2024 US$'000 |
Year ended December 31, 2022 US$'000 |
|
Origination of new trade receivables net of those settled, as well as increase in days past due up to 120 days |
878 |
172 |
|
Write-off of receivables older than 120 days |
(97) |
(81) |
|
|
|
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 |
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 June 30, |
As at December 31, |
As at January 1, |
|
|
|
2024 |
2022 |
2022 |
|
Contract assets |
|
US$'000 |
US$'000 |
US$'000 |
|
Research and development services |
|
83 |
65 |
80 |
|
Take-or-pay services |
|
- |
- |
170 |
|
Exclusivity services |
|
- |
50 |
- |
|
Total contract assets |
|
83 |
115 |
250 |
|
Current assets |
|
83 |
115 |
250 |
|
Non-current assets |
|
- |
- |
- |
|
Total contract assets |
|
- |
115 |
250 |
Revenues related to research and development services were recognized at the point of delivering proof of concept and completing testing services. Performance obligations related to exclusivity services were deemed fulfilled by the Group upon completion of the contractual term. Payment for the above services is not due from the customer yet and therefore a contract asset is recognized.
The directors of the Company always measure the loss allowance on amounts due from customers at an amount equal to lifetime ECL, taking into account the historical default experience, the nature of the customer and where relevant, the sector in which they operate. There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance for the amounts due from customers under construction contracts.
The following table details the risk profile of amounts due from customers based on the Group's provision matrix. Based on the historic default experience, no expected credit loss has been recognized:
|
|
|
As at June 30, |
As at December 31, |
|
|
|
2024 |
2022 |
|
Expected credit loss |
|
US$'000 |
US$'000 |
|
Expected credit loss rate |
|
0% |
0% |
|
Estimated total gross carrying amount at default |
|
83 |
115 |
|
Lifetime ECL |
|
- |
- |
|
Net carrying amount |
|
83 |
115 |
Movements in the Company's share capital and share premium account were as follows:
|
|
Note |
Number of shares |
Share capital |
Share premium |
Totals |
|
|
|
No. |
US$'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).
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).
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$306,000 is expected to be expensed over the period from July 1, 2024, to June 30, 2026.
Other reserves comprise the share-based payment reserve, the merger reserve, the currency translation reserve and the other reserve.
The retained deficit comprises all other net gains and losses and transactions with owners not recognized elsewhere.
Movements in the other reserves were as follows:
|
|
|
Share- based payment reserve |
Merger reserve |
Currency translation reserve |
Other reserve |
Total Other reserves |
|
|
|
Note |
US$'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.
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).
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.
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.
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.
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.
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.
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).
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$341,000.
The components of the net defined benefits obligations included in non-current liabilities are as follows:
|
|
|
As at |
As at |
|
|
|
June 30, |
December 31, |
|
Net benefit obligations |
|
2024 |
2022 |
|
|
US$'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$'000 |
|
Present value of funded obligations, beginning of period/year |
|
(10,568) |
(13,003) |
|
Employer service cost |
|
(571) |
(571) |
|
Employee contributions |
|
(452) |
(352) |
|
Past service cost |
|
341 |
- |
|
Curtailments/Settlements |
|
148 |
- |
|
Interest cost |
|
(302) |
(45) |
|
Benefits paid/(refunded) |
|
4,309 |
522 |
|
Actuarial (loss)/gain on benefit obligation |
|
(636) |
2,562 |
|
Currency (loss)/gain |
|
(363) |
319 |
|
Present value of funded obligations, end of period/year |
|
(8,094) |
(10,568) |
|
|
|
|
|
|
Defined benefit obligation participants |
|
(6,746) |
(10,568) |
|
Defined benefit obligation pensioners |
|
(1,348) |
- |
|
Present value of funded obligations, end of period/year |
|
(8,094) |
(10,568) |
|
|
|
|
|
|
Fair value of plan assets, beginning of period/year |
|
9,616 |
10,858 |
|
Expected return on plan assets |
|
273 |
37 |
|
Employer's contributions |
|
448 |
352 |
|
Employees' contributions |
|
452 |
352 |
|
Benefits (paid)/refunded |
|
(4,309) |
(522) |
|
Admin expense |
|
(28) |
(21) |
|
Actuarial (loss)/gain on plan assets |
|
458 |
(1,182) |
|
Currency gain/(loss) |
|
335 |
(258) |
|
Fair value of plan assets, end of period/year |
|
7,245 |
9,616 |
|
|
|
|
|
|
|
Period ended |
Year ended |
|
|
|
June 30, |
December 31, |
|
|
Movements in net liability recognized in statement of financial position: |
2024 US$'000 |
2022 US$'000 |
|
|
Net liability, beginning of year |
(952) |
(2,146) |
|
|
Employer service cost |
(571) |
(571) |
|
|
Interest cost |
(302) |
(45) |
|
|
Expected return on plan assets |
273 |
37 |
|
|
Admin expense |
(28) |
(21) |
|
|
Past service cost recognized in period/year |
341 |
- |
|
|
Curtailment, settlement, plan amendment gain (loss) |
148 |
- |
|
|
Employer's contributions (following year expected contributions) |
448 |
352 |
|
|
Prepaid (accrued) pension cost: |
(311) |
247 |
|
|
- operating income (expense) |
339 |
(240) |
|
|
- finance expense |
(28) |
(7) |
|
|
Total gains recognized within other comprehensive income |
(178) |
1,380 |
|
|
Currency loss |
(28) |
62 |
|
|
Net liability, end of period/year |
(849) |
(952) |
|
|
|
|
|
|
|
Expected employer's cash contributions for following period/year |
264 |
360 |
|
|
|
|
|
|
|
|
Period ended |
Year ended |
|
|
|
June 30, |
December 31, |
|
|
Amounts recognized in profit and loss |
2024 US$'000 |
2022 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 June 30, |
As at 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% |
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.
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.
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$134,000).
Future minimum lease payments associated with leases were as follows:
|
|
|
As at June 30, 2024 |
As at December 31, 2022 |
|
Lease liabilities |
|
US$'000 |
US$'000 |
|
Not later than one year |
|
1,151 |
1,301 |
|
Later than one year and not later than five years |
|
3,398 |
3,813 |
|
Later than five years |
|
3,271 |
3,387 |
|
Total minimum lease payments |
|
7,820 |
8,501 |
|
Less: Future finance charges |
|
(539) |
(679) |
|
Present value of minimum lease payments |
|
7,281 |
7,822 |
|
|
|
|
|
|
Current liability |
|
997 |
1,264 |
|
Non-current liability |
|
6,284 |
6,558 |
|
|
|
7,281 |
7,822 |
The Group's borrowings are held at amortized cost. They consist of the following:
|
|
As at June 30, |
As at December 31, |
|
|
2024 |
2022 |
|
Borrowings |
US$'000 |
US$'000 |
|
Unsecured bank loans |
9,973 |
3,573 |
|
Secured bank loans |
793 |
628 |
|
Loans from related parties |
443 |
- |
|
Loans from non-controlling interest |
- |
137 |
|
Total borrowings |
11,209 |
4,338 |
The following table provides a reconciliation of the Group's future maturities of its total borrowings for each year presented:
|
|
|
As at June 30, |
As at December 31, |
|
|
|
2024 |
2022 |
|
|
|
US$'000 |
US$'000 |
|
Not later than one year |
|
9,380 |
2,893 |
|
Later than one year but less than five years |
|
884 |
1,029 |
|
After more than five years |
|
945 |
416 |
|
Total borrowings |
|
11,209 |
4,338 |
The other principal features of the Group's borrowings are as follows:
|
|
|
|
As at June 30, 2024 |
|
As at December 31, 2022 |
||
|
Description |
Currency |
Repayment date |
Principal US$'000 |
Interest rate |
|
Principal US$'000 |
Interest rate |
|
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 loans1) |
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%.
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).
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.
A loan disclosed in the 2022 annual report in the amount of BRL 715,683 (US$137,000) which was payable to a minority shareholder of Life Materials Latam Ltda, Brazil is no longer consolidated following the deconsolidation of the subsidiary.
The following are the major deferred tax liabilities and assets recognized by the Group and movements thereon during the current and prior reporting period.
|
|
Pension fund obligations |
Tax losses |
Share-based payments |
Temporary differences |
Total |
|
Deferred tax |
US$'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$17.5million).
The Group has applied the exception under the IAS 12 amendment with respect to International Tax Reform - Pillar Two Model Rules to not recognize or disclose any information about deferred tax assets and liabilities related to top-up income taxes.
The group applies the exception recognizing and disclosing information about deferred tax assets and liabilities related to OECD pillar two
income taxes, as provided in the amendments to IAS 12 issued in May 2023.
|
|
As at June 30, |
As at December 31, |
|
|
2024 |
2022 |
|
|
US$'000 |
US$'000 |
|
Defined benefit obligation IAS 19 Switzerland (Note 29) |
849 |
952 |
|
Defined benefit obligation IAS 19 Thailand (Note 29) |
134 |
134 |
|
Contract liabilities |
4,758 |
3,614 |
|
Deferred grant income |
- |
14 |
|
Total other non-current liabilities |
5,741 |
4,714 |
|
|
|
As at June 30, |
As at December 31, |
|
|
|
2024 |
2022 |
|
|
|
US$'000 |
US$'000 |
|
Trade payables |
|
3,706 |
3,321 |
|
Payables to tax authorities |
|
315 |
375 |
|
Other payables |
|
1,940 |
1,626 |
|
Total trade and other payables |
|
5,961 |
5,322 |
Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. Other payables relate to employee-related expenses, utilities and other overhead costs. Typically, no interest is charged on the trade payables. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
The directors consider that the carrying amount of trade payables approximates to their fair value.
|
|
|
As at June 30, |
As at December 31, |
|
|
|
2024 |
2022 |
|
|
|
US$'000 |
US$'000 |
|
Costs of goods sold |
|
837 |
875 |
|
Personnel expenses |
|
1,202 |
1,737 |
|
Other operating expenses |
|
1,027 |
2,366 |
|
Total accrued liabilities |
|
3,066 |
4,978 |
|
|
|
As at June 30, |
As at December 31, |
|
|
|
2024 |
2022 |
|
|
|
US$'000 |
US$'000 |
|
Contract liabilities |
|
1,700 |
1,176 |
|
Prepayments for unshipped goods |
|
120 |
94 |
|
Deferred grant income |
|
92 |
15 |
|
Total deferred revenue |
|
1,912 |
1,285 |
|
|
|
As at June 30, |
As at December 31, |
As at January 1, |
|
|
|
2024 |
2022 |
2022 |
|
|
|
US$'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$2 million. The customer has prepaid, and revenue recognition is spread over four reporting periods starting in July 2022 and ending June 2026.
The following table shows how much of the revenue recognized in the current reporting period relates to brought forward contract liabilities.
|
|
Period ended June 30, |
Year ended December 31, |
|
|
2024 |
2022 |
|
|
US$'000 |
US$'000 |
|
Exclusivity agreements |
785 |
- |
|
Research and development services |
905 |
- |
|
Total revenue recognized from contract liabilities |
1,690 |
- |
|
|
As at June 30, |
As at December 31, |
|
|
2024 |
2022 |
|
|
US$'000 |
US$'000 |
|
Deferred consideration in relation to acquisitions |
169 |
92 |
|
Call option derivative liability |
333 |
686 |
|
Other current liabilities |
502 |
778 |
The deferred consideration relating to business combinations is summarized below:
|
|
ChemTex |
RAS AG |
Life |
Tarn Pure |
Total |
|
|
US$'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.
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$371,000).
The inputs into the Black-Scholes model are as follows:
|
Weighted average share price (€) |
|
2,285.71 |
|
|
Weighted average exercise price (€) |
|
2,500.00 |
|
|
Expected volatility |
|
22.5% |
|
|
Expected life |
|
0.5 year |
|
|
Risk-free rate |
|
1.0% |
|
|
Expected dividend yield |
|
0% |
|
A minority shareholder of one of the Group's subsidiaries has made a claim in court regarding the interpretation of certain put-option rights on shares of the same subsidiary. The Company considers these option rights as lapsed as per the Shareholder Agreement. At present, it is not possible to determine the outcome of these matters. Hence, no provision has been made in the financial statements for their ultimate resolution.
The Group entered into a manufacture, supply and exclusive distribution agreement with Ecolab Inc. The Group received a €1.8m upfront payment from Ecolab Inc. which compensates the Group's efforts in the preparation and upkeep of the contract. The full amount is refundable contingent on the Group breaching certain commitments. As at June 30, 2024, the Group has assessed the probability of a refund as unlikely and therefore has not recognized a liability.
|
|
|
As at June 30, |
As at December 31, |
|
Provisions |
|
2024 |
2022 |
|
|
US$'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.
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).
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) |
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.
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.
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.
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.
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$'000 |
|
Effect on net assets: |
|
|
|
|
|
|
Strengthened by 10% |
2 |
9 |
21 |
677 |
- |
|
Weakened by 10% |
(2) |
(9) |
(21) |
(677) |
- |
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they are due. The Directors manage this risk by:
· maintaining adequate cash reserves through the use of the Group's cash from operations and bank borrowings as well as overdraft facilities; and
· continuously monitoring projected and actual cash flows to ensure the Group maintains an appropriate amount of liquidity.
The following tables detail the Group's remaining contractual maturity for financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.
|
|
Less than 1 year |
2 to 5 years |
> 5 years |
Total |
|
As at June 30, 2024 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Trade and other payables |
5,961 |
- |
- |
5,961 |
|
Borrowings held at amortized cost |
9,380 |
884 |
945 |
11,209 |
|
Leases (gross cash flows) |
1,151 |
3,398 |
3,271 |
7,820 |
|
Other liabilities |
3,255 |
- |
- |
3,255 |
|
Financing facilities |
19,747 |
4,282 |
4,216 |
28,245 |
|
|
Less than 1 year |
2 to 5 years |
> 5 years |
Total |
|
As at December 31, 2022 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Trade and other payables |
5,322 |
- |
- |
5,322 |
|
Borrowings held at amortized cost |
2,893 |
1,029 |
416 |
4,338 |
|
Leases (gross cash flows) |
1,302 |
3,813 |
3,387 |
8,502 |
|
Other liabilities |
5,290 |
- |
- |
5,290 |
|
Financing facilities |
14,807 |
4,842 |
3,803 |
23,452 |
|
|
|
As at June 30, 2024 |
As at December 31, 2022 |
|
Unsecured bank overdraft facility |
|
US$'000 |
US$'000 |
|
Amount used |
|
8,935 |
2,790 |
|
Amount unused |
|
414 |
6,861 |
|
Total |
|
9,349 |
9,651 |
The bank overdraft facilities are reviewed at least annually.
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group's overall strategy remains unchanged from 2022.
The capital structure of the Group consists of equity and liabilities of the Group. The Group intends to keep debt low to minimize the interest rate impact.
The Group is not subject to any externally imposed capital requirements.
The Directors review the capital structure on a semi-annual basis based on the equity ratio and total borrowings. The equity ratio at June 30, 2024 is as follows:
|
|
As at |
As at |
|
|
June 30, |
December 31, |
|
|
2024 |
2022 |
|
Equity ratio |
US$'000 |
US$'000 |
|
Equity |
25,428 |
40,339 |
|
Total equity and liabilities |
62,562 |
71,143 |
|
Equity ratio |
41% |
57% |
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$1,862,000 million were financed by share issue.
|
|
Note |
|
As at June 30, |
As at December 31, |
|
|
|
|
2024 |
2022 |
|
Gains and losses on disposal of assets |
|
|
US$'000 |
US$'000 |
|
Gain on disposal of property, plant and equipment of property, plant and equipment |
10 |
|
(23) |
(21) |
|
Loss on disposal of property, plant and equipment |
13 |
|
204 |
16 |
|
Net loss (gain) on disposal of assets |
|
|
181 |
(5) |
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated cash flow statement as cash flows from financing activities.
|
Liabilities arising from financing activities |
Leases US$'000 |
Borrowings US$'000 |
Total US$'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 |
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$'000 |
|
|
Inventories |
|
13,770 |
- |
(602) |
13,168 |
|
Trade receivables |
|
14,656 |
- |
(8,169) |
6,487 |
|
Other receivables and prepayments |
|
3,876 |
- |
386 |
4,262 |
|
Trade and other receivables and prepayments |
|
18,532 |
- |
(7,783) |
10,749 |
|
Trade and other payables |
|
8,271 |
- |
(2,949) |
5,322 |
|
Accrued liabilities |
|
3,386 |
9 |
1,583 |
4,978 |
|
Deferred revenue incl. non-current contract liabilities |
|
1,004 |
- |
3,909 |
4,913 |
|
Trade and other payables, accrued liabilities and deferred revenue |
|
12,661 |
9 |
2,543 |
15,213 |
|
Period ended June 30, 2024 |
|
US$'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 |
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$46,000). The transactions were made on terms equivalent to those in arm's length transactions.
|
|
As at June 30, 2024 |
As at December 31, 2022 |
|
Loans due to related parties |
US$'000 |
US$'000 |
|
Cortegrande AG, €400,000 (Note 31) |
443 |
- |
|
Loans due to related parties |
443 |
- |
The associates have provided the Group with short-term loans at rates comparable to the average commercial rate of interest.
The remuneration of the directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
|
|
|
Year ended |
Year ended |
|
|
|
June 30, |
December 31, |
|
|
|
2024 |
2022 |
|
Remuneration of key management personnel |
|
US$'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.
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.
As at June 30, 2024, the Company did not have any single identifiable controlling party.
As at June 30, 2024
|
|
|
|
As at June 30, 2024 |
As at December 31, 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
For the 18-month period ended June 30, 2024
|
|
Ordinary Share capital |
Deferred Share capital |
Share premium account |
Share-based payment reserve |
Accumulated losses |
Total |
|
|
£'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 |
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 |
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.
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.
Fixed asset investments are carried at cost less, where appropriate, any provision for impairment.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
|
|
|
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).
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.
|
|
|
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).
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.
|
|
|
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 |
|
|
|
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 |
|
|
|
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.
|
|
|
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.
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.
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.
Details of the Company's share option scheme and options issued during the year are contained in Note 27 to the Consolidated Financial Statements.
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.
The average monthly number of employees including directors was as follows:
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|
|
As at |
As at |
|
|
|
June 30, |
December 31, |
|
|
|
2024 |
2022 |
|
Number of employees |
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No. |
No. |
|
Directors |
|
5 |
5 |
|
Total employees |
|
5 |
5 |
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.
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.
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.