TIDMHEIQ
RNS Number : 1856Z
HeiQ PLC
13 September 2022
September 13, 2022
HeiQ Plc
("HeiQ" or "the Company")
Interim Results for six months to June 30, 2022
Resilient trading and bringing life enhancing technology to
market
HeiQ Plc (LSE:HEIQ), an established global brand in materials
and textile innovation which operates in high-growth markets, is
pleased to announce its interim results for six months to June 30,
2022.
Financial highlights:
-- Revenue increase of 17% to US$ 30.3m (H1 2021: US$ 25.8m),
showing resilience and continued demand
-- Investment by HUGO BOSS (MDAX: BOSS) into HeiQ AeoniQ, the
world's first climate positive fiber to replace polyester (US$
135bn market). A total investment of US$ 10m, structured as
technology milestones & 2.5% equity into HeiQ's Austrian tech
subsidiary at an implied valuation of US$ 200m
-- Sales from HeiQ's ESG-focused "Resource Efficiency" products
increased by 83% compared to H1 2021 and has now become the second
largest functionality in the Group's portfolio
-- Gross margin uplift of 3% to 46.7% compared to previous half
year (H2 2021: 43.7%), reflecting stabilization of underlying
product margins as well as the favorable impact of the product
mix
-- Operating expenditure ("Opex") (respectively selling &
general administration costs) grew to US$ 3.3m or +31% over H1 2021
to US$ 13.9m, in line with the Company's investment budget and
growth strategy
-- Adjusted EBITDA of US$3.5m (1HY 2021: US$4.8m) achieved in
challenging market conditions during a phase of significant
investment in technology
Operational highlights:
-- Completed HeiQ AeoniQ pilot commercialization production
plant in time and on budget; Gained the LYCRA Company as exclusive
distributor
-- Made significant progress with blockbuster tech HeiQ
GrapheneX, demonstrated solid state battery prototype over 1300
cycles, filed a fourth patent & ordered the world's first pilot
commercialization plant
-- Publication of an independent study by Charité University
Hospital Berlin and the Robert Koch-Institute, proving symbiotic
cleaners - like the HeiQ Synbio cleaners - are far more effective
than disinfectants alone, a publication that is now driving
favourable change at regulators for probiotic cleaners in
healthcare
-- Gained Engie, a multibillion player in facility management,
as customer for HeiQ Synbio & Sanpure with the objective to
enter manifold channels at large scale swiftly
-- Launched HeiQ Mint - a durable botanical odour control for
textiles, capable to substitute textile antimicrobial technologies
globally.
Post period-end highlights:
-- Further strengthening of our cash position as significant
amounts of receivables have been collected after balance sheet
date
-- Additional EUR 2.2m paid in into equity of HeiQ AeoniQ LLC by
minority shareholder HUGO BOSS as contractual milestones have been
met
-- Strong H2 2022 performance expected and cautiously optimistic
to meet analyst expectations for the full year
-- Strong US Dollar continues to have a positive impact on the Company's cost structure
Carlo Centonze, co-founder and CEO, HeiQ plc, said:
"Despite the continuing challenging global market conditions and
a 3-month lockdown in our main market China in Q1 2022, we remain
cautiously optimistic and have plans in place to address those
challenges and continue making fast progress with commercialisation
of our disruptive innovative technologies.
HeiQ is very well-positioned to spearhead the decarbonization of
textile, the second most polluting industry in the world. HeiQ
AeoniQ, the world's first climate positive fiber, has made
significant steps towards full market launch in 1HY 2022, and we
remain confident that by the end of the year, first yarns can be
delivered to customers for capsule collections of truly climate
positive bio-degradable or circular apparel items. As such, HeiQ
AeoniQ remains one of our key focus areas for the months and years
ahead. Our ambition remains unchanged to build and operate one or
more full-scale Gigafactories at the beginning of 2025.
We are excited to continue delivering growth and bringing life
enhancing technology to market. The demand for our current and
future technology offering remains sound and we are executing our
long-term growth strategy and strengthening our innovation and
differentiation capabilities as planned. We are actively following
market environment changes and will remain agile to address them
swiftly. "
Analyst Briefing
Carlo Centonze, CEO, and Xaver Hangartner, CFO will host a
webinar for equity analysts at 09:30am BST today. Any equity
analysts wishing to register should contact SEC Newgate at
HeiQ@secnewgate.co.uk where further details will be provided.
This announcement contains inside information.
For further information, please contact:
HeiQ Plc
Carlo Centonze (CEO) +41 56 250 68 50
Cenkos Securities plc (Joint Broker)
Stephen Keys / Callum Davidson +44 (0) 207 397 8900
-------------------------
SEC Newgate (Media Enquiries) +44 (0) 20 3757 6882
Elisabeth Cowell / Axaule Shukanayeva / HeiQ@s ecnewgate .co.uk
Molly Gretton
-------------------------
About HeiQ
HeiQ is focused on improving the lives of billions of people
world-wide by innovating the materials people use every day. HeiQ
has strong IP which is at the forefront of global technology in the
$10 billion antimicrobial fabrics market, $24 billion textile
chemicals market, the $50 billion probiotics market and the $150
billion man-made fibers market. It has also moved into the medical
device, healthcare and hygiene coatings markets, to help make
hospitals and healthcare environments more hygienic. HeiQ aims to
deliver growth for its shareholders through a combination of
increased sales of its core products and by entering additional
lucrative markets through disruptive innovations and M&A.
HeiQ has created some of the most effective, durable and
high-performance technologies in the market today, which cool,
warm, dry, repel, purify, and destroy viruses. Since 2005, HeiQ has
developed over 200 technologies in partnership with 300 major
brands and it has a significant R&D pipeline containing over 50
projects. The Company has won multiple awards and gained a strong
reputation for the ESG & sustainable downstream effect of its
innovations. HeiQ is the only company to have won the Swiss
Technology award twice. It has also won the Swiss Environmental
award with an innovation that saves energy and water consumption
during the textile manufacturing process.
Led by an experienced leadership team, HeiQ researches new
solutions for partners, delivers scaled up manufacturing from its
sites across the world and helps partners market the product to end
consumers - aiming for lab to consumer in months.
Chairwoman's Statement
I am pleased to report that HeiQ continued to demonstrate
resilience during difficult market conditions and made solid
progress in delivering on its growth strategy during the six-month
period ending 30 June 2022 ("H1 2022").
HeiQ's revenues for H1 2022 grew by 17% year on year, and we
were pleased to have increased our overall gross margin compared to
the second half of the 2021 financial year (H2 2021). This was
achieved even though global economies have experienced new
significant turmoil in early 2022, just as things started to
normalize after two years of pandemic. On top of the energy crisis,
pressure on raw material prices continued, and inflation and energy
price rises significantly impacted the markets we operate in.
HeiQ's business from commercialized innovations demonstrated
robustness. While the strengthening of the US Dollar against the
Euro, Swiss Franc and Sterling negatively impacted our sales
(denominated in EUR) the positive effect on our costs outweighed
the topline impact.
As an IP innovator, the development of our innovation pipeline
is a significant growth driver for our business. In this regard, H1
2022 was very successful as we delivered substantial progress on
our four most promising innovation platforms, particularly HeiQ
AeoniQ and HeiQ Synbio.
HeiQ AeoniQ
HeiQ AeoniQ aims to replace oil-based textiles, namely Polyester
which accounts for over 60% of the textile market, with a climate
positive, circular filament yarn made of cellulosic. Having already
proved the concept of the HeiQ AeoniQ yarn in 2021, we achieved
several key commercialization milestones during the period by
installing a pilot production plant, securing investment from HUGO
BOSS, and signing up The LYCRA Company as exclusive
distributor.
In H2 2022, we will optimize the product and proprietary
production process for the pilot plant whilst also gearing up
towards delivery of the first large-scale production plant. This is
likely to be located in Portugal and is expected to come on-stream
in 2025. Unlike polyester or other textile yarns, HeiQ AeoniQ is
designed to have a positive carbon balance and as such we are also
progressing in getting the carbon credits certified.
HeiQ Synbio
HeiQ Synbio allows detergents to become much more effective than
disinfectants used today. It significantly reduces surface
pathogens and antimicrobial resistance which is particularly
important for detergents used in hospitals. In H1 2022, we achieved
significant milestones on the way to establish symbiotic detergents
as a new standard in hospital cleaning. An independent study by the
opinion leading Charité University Hospital Berlin, and the Robert
Koch-Institute proved symbiotic cleaners far more effective than
disinfectants alone. This positions the HeiQ Synbio platform well
given that we are seeing that upcoming European Union regulations
are expected to favor symbiotic cleaners. With this is mind, we
have entered negotiations with major players in the cleaning supply
chain with the objective to enter various channels at large scale
swiftly.
Financial Review
Revenues
Total revenues in H1 2022 increased by 17% to US$ 30.3m compared
to the prior year period (H1 2021: US$ 25.8m). Our "Hygiene"
functionality continues to be our largest, comprising 43% of total
revenues (US$ 12.9m in H1 2022), despite the 6% year on year
decline in this area mainly due to further reduced sales in masks
and lockdowns in China.
With US$10.2m in revenue in H1 2022, "Resource Efficiency" has
grown an impressive +83% compared to H1 2021 and has now become the
second largest functionality in the Group. Driven by revenues from
HeiQ AeoniQ and Innovation Services as well as existing process
chemicals, it now represents 34% of total revenues.
In line with our strategy to increase the share of revenue from
services, license, and royalties, H1 2022 saw revenues of this
nature increase from US$1.2m in H1 2021 to US$ 3.9m in H1 2022.
Gross margin
At 46.7%, gross margin for H1 2022 has improved since the
previous half year (H2 2021: 43.7%). The uplift of 3% reflects
stabilization of underlying product margins as well as the
favorable impact of the product mix (including higher share of
Services & Licensing/TechFee revenues). Compared to H1 2021,
the gross margin is still down 3.5% points (H1 2021: 50.2%) but we
remain optimistic that price increases delivered during the period
can narrow the gap in the coming months.
Opex
Our operating expenditure ("Opex") (respectively selling &
general administration costs) grew US$ 3.3m or 31% over H1 2021 to
US$13.9m. Opex located in acquired entities account for an increase
of US$ 1.9m. The remaining increase is driven by higher personnel
expense, investments in building up the HeiQ AeoniQ team as well as
in the organizational structure and systems in general.
Cash
Our cash position as of June 30 2022 is US$ 9.5m, down from US$
14.5m as at December 31, 2021. About 60% of this decrease is
related to investing and financing activities as well as exchange
rate effects on cash balances. Investments totaled US$ 4.6m
including US$1.6m installment payments for prior period
acquisitions. At the same time, we raised US$ 2.3m (net) through
financing activities (mainly the sale of a minority stake in HeiQ
AeoniQ LLC).
Cash generated from operations (before tax payments) was US$
-1.5m. This decrease was primarily due to investments in working
capital of US$ 4.2m. Compared to December 31, 2021, we increased
our inventories by US$ 2.4m after strong sales towards the end of
2021 and build-up of inventories for key items. With US$ +1.4m,
receivables also show a significant increase as of June 30 2022,
compared to December 31 2021. This is mainly driven by two
circumstances: At the end of H1 22, after achievement of
contractual agreed milestones, we invoiced HUGO BOSS US$ 3m, which
was collected in July 2022. Also, due to lockdowns, we faced delays
of payments into H2 2022 from certain Chinese distributors.
Results
Six months Six months
to to Year ended
December
June 30, June 30, 31,
2022 2021 2021
Comprehensive income US$'000 US$'000 US$'000
------------------------------------ ---------- ---------- ----------
Revenue 30,280 25,795 57,874
Cost of sales (16,127) (12,840) (30,898)
Gross profit 14,153 12,955 26,976
Other operating income 2,671 3,166 6,426
Selling and general administrative
expenses (13,878) (10,576) (24,465)
Other operating expenses (1,706) (2,238) (5,820)
------------------------------------ ---------- ---------- ------------
Operating profit 1,240 3,307 3,117
------------------------------------ ---------- ---------- ------------
Depreciation of property, plant and
equipment 644 591 1,255
Amortization of intangible assets 535 205 758
Depreciation of right-of-use assets 576 279 855
Share options and rights granted
to Directors and employees 486 387 498
Adjusted EBITDA 3,481 4,769 6,483
EBITDA Margin (adjusted) 11.5% 18.5% 11.2%
------------------------------------ ---------- ---------- ------------
Outlook
Despite the continued challenging global market conditions, we
remain cautiously optimistic that market expectations will be met
for the full year 2022.
The demand for our current and future technology offering
remains sound. We are executing our long-term growth strategy and
strengthening our innovation and differentiation capabilities as
planned. Our sales are traditionally stronger in the second half of
the year. We expect several projects to start adding sales in the
remaining months as well as securing additional revenues from
milestone achievements related to HeiQ AeoniQ. Now that lockdowns
in China have ceased, we expect sales in China to gain momentum in
H2 2022.
Having already executed price increases during the period to
combat inflationary pressures, we are confident that gross margins
will continue to recover.
If we look to the mid-term, HeiQ is very well positioned to
spearhead the decarbonization of the textile industry. The
development of HeiQ AeoniQ is progressing as planned and we remain
confident that by the end of the year, yarn can be delivered to
customers for first capsule collections of truly carbon negative
apparel items. As such, HeiQ AeoniQ remains one of our key focus
areas for the months and years ahead. Our ambition remains
unchanged to commission, a full-scale production site at the
beginning of 2025.
We are excited to continue delivering growth and bringing life
enhancing IP to market and thank our shareholders, customers, team
and advisers for their support.
Esther Dale-Kolb
Chairwoman
September 13, 2022
Condensed consolidated statement of comprehensive income
For the six months ended June 30, 2022
Six months Six months
to to Year ended
December
June 30, June 30, 31,
2022 2021 2021
Comprehensive income Note US$'000 US$'000 US$'000
------------------------------------ ---- ---------- ----------- ----------
Revenue 6 30,280 25,795 57,874
Cost of sales 7 (16,127) (12,840) (30,898)
------------------------------------ ---- ---------- ----------- ------------
Gross profit 14,153 12,955 26,976
------------------------------------ ---- ---------- ----------- ------------
Other operating income 6 2,671 3,166 6,426
Selling and general administrative
expenses 7 (13,878) (10,576) (24,465)
Other operating expenses 7 (1,706) (2,238) (5,820)
------------------------------------ ---- ---------- ----------- ------------
Operating profit 1,240 3,307 3,117
------------------------------------ ---- ---------- ----------- ------------
Other income 77 38 199
Other costs (29) (213) (361)
Finance income 442 520 534
Finance costs 17 (537) (282) (597)
Income before taxation 1,193 3,370 2,686
Taxation 8 (287) (522) (212)
------------------------------------ ---- ---------- ----------- ------------
Income after taxation 906 2,848 2,474
------------------------------------ ---- ---------- ----------- ------------
Earnings per share (cents) -
basic 9 0.84 2.46 2.07
Earnings per share (cents) -
diluted 9 0.81 2.38 2.01
------------------------------------ ---- ---------- ----------- ------------
Other comprehensive income
Exchange differences on translation
of foreign operations (1,970) (1 , 723) (1,662)
------------------------------------ ---- ---------- ----------- ------------
Items that may be reclassified
to profit or loss in subsequent
periods (1,970) (1,723) (1,662)
Actuarial gains / (losses) from
defined benefit pension plans - - 899
------------------------------------ ---- ---------- ----------- ------------
Items that will not be reclassified
to profit or loss in subsequent
periods - - 899
------------------------------------ ---- ---------- ----------- ------------
Total comprehensive income for
the period/year (1,064) 1,125 1,711
------------------------------------ ---- ---------- ----------- ------------
Income attributable to:
Equity holders of HeiQ 1,112 3,126 2,676
Non-controlling interests (206) (278) (202)
------------------------------------ ---- ---------- ----------- ------------
906 2,848 2,474
------------------------------------ ---- ---------- ----------- ------------
Comprehensive income / (loss)
attributable to:
Equity holders of the Company (858) 1,403 1,913
Non-controlling interests (206) (278) (202)
------------------------------------ ---- ---------- ----------- ------------
(1,064) 1,125 1,711
------------------------------------ ---- ---------- ----------- ------------
Condensed consolidated statement of financial position
As at June 30, 2022
As at As at
June 30, December
31,
2022 2021
Assets Note US$'000 US$'000
----------------------------------- ----- ---------- -----------
Intangible assets 10 33,448 32,212
Property, plant and equipment 11 6,823 6,865
Right-of-use assets 12 9,114 9,079
Deferred tax assets 8 874 701
Other non-current assets 153 333
----------------------------------- ----- ---------- -----------
Non-current assets 50,412 49,190
----------------------------------- ----- ---------- -----------
Inventories 16,184 13,770
Trade receivables 13 21,512 18,050
Other receivables and prepayments 5,143 6,275
Cash and cash equivalents 9,488 14,560
----------------------------------- ----- ---------- -----------
Current assets 52,327 52,655
----------------------------------- ----- ---------- -----------
Total assets 102,739 101,845
----------------------------------- ----- ---------- -----------
Equity and Liabilities
----------------------------------- ----- ---------- -----------
Share capital 14 53,023 51,523
Capital reserve 14 147,583 144,191
Other reserve (1,144) (1,144)
Share-based payment reserve 14 889 474
Merger reserve (126,912) (126,912)
Currency translation reserve (695) 1,275
Retained deficit (2,249) (5,823)
----------------------------------- ----- ---------- -----------
Equity attributable to owners
of the parent 70,495 63,584
Non-controlling interests 601 1,053
----------------------------------- ----- ---------- -----------
Total equity 71,096 64,637
----------------------------------- ----- ---------- -----------
Lease liabilities 12 7,977 8,176
Long-term borrowings 17 668 670
Deferred tax liability 8 1,737 1,894
Other non-current liabilities 16 2,293 2,619
----------------------------------- ----- ---------- -----------
Total non-current liabilities 12,675 13,359
----------------------------------- ----- ---------- -----------
Trade and other payables 7,928 9,359
Accrued liabilities 4,100 4,538
Income tax liability 8 111 51
Deferred revenue 3,972 1,774
Short-term borrowings 17 1,503 1,004
Lease liabilities 12 1,262 1,054
Other current liabilities 18 92 6,069
----------------------------------- ----- ---------- -----------
Total current liabilities 18,968 23,849
----------------------------------- ----- ---------- -----------
Total liabilities 31,643 37,208
----------------------------------- ----- ---------- -----------
Total liabilities and equity 102,739 101,845
----------------------------------- ----- ---------- -----------
The Notes form an integral part of these Condensed Consolidated
Financial Statements. The Financial Statements were approved and
authorized for issue by the Board of Directors on September 12,
2022 and signed on its behalf by:
Xaver Hangartner
Chief Financial Officer
September 12, 2022
Condensed consolidated statement of changes in shareholders'
equity
For the six months ended June 30, 2022
Share-
based Currency Non-
Share Capital Other payment Merger translation Retained controlling Total
capital reserve reserve reserve reserve reserve deficit interests equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------- ----- -------- -------- -------- -------- ---------- ----------- -------- ----------- -------
Balance at January 1,
2021 49,559 134,537 (2,043) 50 (126,912) 2,937 (8,499) (20) 49,609
Income after taxation - - - - - 2,676 (202) 2,474
Other comprehensive
(loss)/income - - 899 - - (1,662) - - (763)
Total comprehensive
(loss)/income for
the year - - 899 - - (1,662) 2,676 (202) 1,711
--------------------- -------- -------- -------- -------- ---------- ----------- -------- ----------- -------
Issuance of shares 1,964 9,654 - - - - - - 11,618
Share-based payment
charges - - - 424 - - - - 424
Amounts arising on
business
combinations - - - - - - - 1,275 1,275
--------------------- -------- -------- -------- -------- ---------- ----------- -------- ----------- -------
Transactions with
owners 1,964 9,654 - 424 - - - 1,275 13,317
--------------------- -------- -------- -------- -------- ---------- ----------- -------- ----------- -------
Balance at December
31, 2021 51,523 144,191 (1,144) 474 (126,912) 1,275 (5,823) 1,053 64,637
--------------------- -------- -------- -------- -------- ---------- ----------- -------- ----------- -------
Income after taxation - - - - - - 1,112 (206) 906
Other comprehensive
(loss)/income - - - - - (1,970) - - (1,970)
Total comprehensive
(loss)/income for the year - - - - - (1,970) 1,112 (206) (1,064)
----------------------------- ------- -------- -------- ---- ---------- -------- -------- ------ --------
Issuance of shares 14 1,500 3,392 - - - - - - 4,892
Share-based payment charges 14 - - - 415 - - - - 415
Dividends paid to minority
shareholders 15 - - - - - - - (243) (243)
Transfer on disposal of
non-controlling interest 4 - - - - - - 2,462 (3) 2,459
Transactions with owners 1,500 3,392 - 415 - - 2,462 (246) 7,523
Balance at June 30, 2022 53,023 147,583 (1,144) 889 (126,912) (695) (2,249) 601 71,096
----------------------------- ------- -------- -------- ---- ---------- -------- -------- ------ --------
Condensed consolidated statement of cash flows
For the six months ended June 30, 2022
Six months Six months
to to Year ended
December
June 30, June 30, 31,
2022 2021 2021
US$'000 US$'000 US$'000
------------------------------------------- ----------- ----------- -----------
Cash flows from operating activities
Income before taxation 1,193 3,370 2,686
Cash flow from operations reconciliation:
Depreciation and amortization 1,755 1,075 2,868
Impairment expense - - 144
Gain on disposal of property,
plant and equipment (9) - (54)
Loss on disposal of property,
plant and equipment 12 - 20
Gain on earnout consideration - - (80)
Finance costs 54 160 221
Finance income (1) (5) (18)
Pension expense 117 132 156
Non-cash equity compensation 486 387 498
Gain from lease modification (68) - -
Foreign exchange differences (860) (118) (877)
Working capital adjustments:
Decrease (Increase) in inventories (2,414) 2,369 2,028
Decrease (Increase) in trade and
other receivables (1,397) 455 (4,741)
Increase (decrease) in trade and
other payables
, accrued liabilities and deferred
revenue (342) (3,489) 3,092
------------------------------------------- ----------- ----------- -----------
Cash generated from operations (1,474) 4,336 5,943
------------------------------------------- ----------- ----------- -----------
Taxes paid (529) (1,442) (2,462)
------------------------------------------- ----------- ----------- -----------
Net cash generated from operating
activities (2,003) 2,894 3,481
------------------------------------------- ----------- ----------- -----------
Cash flows from investing activities
Consideration paid for acquisitions
of businesses (1,587) (8,444) (10,994)
Cash assumed on acquisitions of
businesses - 2,121 2,137
Purchase of property, plant and
equipment (1,060) (284) (994)
Proceeds from the disposal of
property, plant and equipment 37 66 138
Development and acquisition of
intangible assets (1,946) (1,329) (2,969)
Finance income 1 5 18
------------------------------------------- ----------- ----------- -----------
Net cash from / (used in) investing
activities (4,555) (7,865) (12,664)
------------------------------------------- ----------- ----------- -----------
Cash flows from financing activities
Finance costs (54) (160) (221)
Repayment of leases (521) (263) (790)
Proceeds from disposals of minority 2,459 - -
interests
Proceeds from borrowings 818 472 472
Repayment of borrowings (163) (113) (803)
Dividends paid to minority shareholders (243) - -
------------------------------------------- ----------- ----------- -----------
Net cash (used in) / from financing
activities 2,296 (64) (1,342)
------------------------------------------- ----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents (4,262) (5,035) (10,525)
Cash and cash equivalents - beginning
of the year 14,560 25,695 25,695
Effects of exchange rate changes
on the balance of cash held in
foreign currencies (810) (750) (610)
------------------------------------------- ----------- ----------- -----------
Cash and cash equivalents - end
of the period/year 9,488 19,910 14,560
------------------------------------------- ----------- ----------- -----------
Note: Non-cash transactions: Certain shares were issued during
the year for a non-cash consideration as described in Note 14.
Notes to the Consolidated Financial Statements for the six
months ended June 30, 2022
1. General information
HeiQ PLC (the "Company") and its subsidiaries (together, the
"Group") is an IP innovator and established global brand in
materials and textile innovation, adding hygiene, comfort,
protection and sustainability to the products we use every day.
Active in multiple markets: textiles, carpets, antimicrobial
plastics, conductive coatings, medical devices, probiotic household
cleaners, personal care and hospital hygiene, HeiQ has created some
of the most effective, durable and high-performance technologies in
these markets today. 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 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.
After the reverse takeover, the Company's enlarged share capital
was Re-admitted to the standard segment of the Official List and
initiation of trading on the London Stock Exchange's Main Market
commenced on December 7, 2020 under the ticker "HEIQ". The ISIN of
the Ordinary Shares is GB00BN2CJ299 and the SEDOL Code is
BN2CJ29.
2. Basis of preparation and measurement
a. Basis of preparation
The unaudited condensed consolidated interim financial
statements have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and
International Accounting Standard 34 "Interim Financial Reporting"
(IAS 34). Other than as noted below, the accounting policies
applied by the Group in the preparation of these interim financial
statements are the same as those set out in the Company's audited
financial statements for the year ended December 31, 2021. These
financial statements have been prepared under the historical cost
convention except for certain financial and equity instruments that
have been measured at fair value.
These condensed financial statements do not include all of the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Company's financial position
and performance since the audited financial statements for the year
ended December 31, 2021.
Statutory accounts for the year ended December 31, 2021 have
been filed with the Registrar of Companies and the auditor's report
was unqualified, did not contain any statement under Section 498(2)
or 498(3) of the Companies Act 2006 and did not contain any matters
to which the auditors drew attention without qualifying their
report.
The condensed interim financial statements are unaudited and
have not been reviewed by the auditors and were approved by the
Board of Directors on September 9, 2022.
Unless otherwise stated, the Condensed Consolidated Financial
Statements are presented in United States Dollars ($) which is the
presentational currency of the Group, and all values are rounded to
the nearest thousand dollars except where otherwise indicated.
b. Going concern
The Interim Financial Statements have been prepared on the going
concern basis, which contemplates the continuity of normal business
activity and the realization of assets and the settlement of
liabilities in the normal course of business. The Directors have
reviewed the Group's overall position and outlook and are of the
opinion that the Group is sufficiently well funded to be able to
operate as a going concern for at least the next twelve months from
the date of signing these financial statements.
c. Basis of consolidation
The Condensed Consolidated Financial Statements comprise the
financial statements of the Company and its subsidiaries.
On December 7, 2020, HeiQ Plc became the legal parent of HeiQ
Materials AG by way of reverse acquisition. The cost of the
acquisition is deemed to have been incurred by HeiQ Materials AG,
the legal subsidiary, in the form of equity instruments issued to
the owners of the legal parent. This acquisition has been accounted
for as a reverse acquisition.
Business combinations other than reverse acquisitions are
accounted for under the acquisition method.
d. New standards, interpretations and amendments effective for the current period
The following new standards and amendments were effective for
the first time in these financial statements but did not have a
material effect on the Group:
- Annual Improvements to IFRS: 2018-2020 Cycle
- Conceptual Framework for Financial Reporting (Amendments to IFRS 3)
- IAS 37 Provisions, Contingent Liabilities and Contingent
Assets (Amendment - Onerous Contracts - Cost of Fulfilling a
Contract)
- IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended Use)
3. Significant accounting policies
The Company has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 2021 financial statements.
New and amended standards and Interpretations issued by the IASB
that will apply for the first time in the next annual financial
statements are not expected to impact the Group as they are either
not relevant to the Group's activities or require accounting which
is consistent with the Group's current accounting policies.
Use of estimates and judgements
There have been no material revisions to the nature and amounts
of estimates of amounts reported in prior periods.
4. Significant events and transactions
Disposal of non-controlling interest in HeiQ AeoniQ LLC
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 LLC.
HeiQ AeoniQ LLC is the exclusive licensee of the AeoniQ
technology under an intragroup license agreement (the "HeiQ AeoniQ
License") between HeiQ and HeiQ AeoniQ LLC dated February 4,
2022.
The consideration for the transfer of such shares to Hugo Boss
was EUR875 (approximately US$1,000). Additionally, Hugo Boss agreed
to pay an amount of EUR2,229,125 into the capital reserves of HeiQ
AeoniQ LLC.
The sale and transfer of the shares in HeiQ AeoniQ LLC was
agreed on February 11, 2022 and the payment into the capital
reserves of HeiQ Aeonic LLC was collected in March 2022.
Furthermore, after HeiQ fulfilled certain contractually agreed
milestones, Hugo Boss paid an additional amount of EUR2,200,000
(approx. US$ 2,459,000) into the capital reserves of HeiQ AeoniQ
LLC in July 2022.
The effect of the disposal on the Group's financial statements
is summarized as follows:
Condensed consolidated statement of changes in shareholders'
equity US$'000
--------------------------------------------------------------- -------
Retained deficit 2,462
Non-controlling interests (3)
Equity 2,459
--------------------------------------------------------------- -------
Condensed consolidated statement of cash flows US$'000
--------------------------------------------------------------- -------
Proceeds from disposals of
non-controlling interests 2,459
Net cash (used in) / from
financing activities 2,459
--------------------------------------------------------------- -------
The net liabilities of HeiQ AeoniQ LLC were valued at US$136,000
as at February 11, 2022. Therefore, the value of the 2.5%
shareholding disposed was valued at US$3,000.
5. Segmental reporting
The Directors consider that the Group has one reportable
segment, that of materials innovation which focuses on scientific
research, manufacturing and consumer ingredient branding.
Accordingly, all revenues, operating results, assets and
liabilities are allocated to this activity.
The Group also analyses and measures its performance into
geographic regions, specifically Europe, North & South America
and Asia.
6. Revenue and other operating income
The Group's activities are materials innovation which focuses on
scientific research, manufacturing and consumer ingredient
branding. The primary source of revenue is the production and sale
of functional ingredients, materials, and finished goods. Other
sources of revenues include research and development services as
well as laboratory work.
The Group classifies the functionalities of the different type
of products into the functionalities of Comfort, Hygiene,
Protection and Resource efficiency.
Revenues were mainly generated in regions Europe, North &
South America and Asia. The following table reconciles HeiQ Group's
revenue for the periods presented:
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Revenue by type of product US$'000 US$'000 US$'000
------------------------------- ------------- ---------- -------------
Revenue recognized at point
in time
Functional ingredients 21,156 19,890* 43,661
Functional materials 434 249 850
Functional consumer goods 4,803 4,469* 10,069
Services, royalties and others 3,179 1,187 2,692
Revenue recognized over time
Licenses 707 - 602
Total revenue 30,280 25,795 57,874
------------------------------- ------------- ---------- -------------
*The comparative analysis of revenue for the six months ended
June 30, 2021 has been restated to more fairly reflect the revenues
from each product consistent with the analysis presented in the
audited financial statements for the year ended December 31,
2021.
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Revenue by functionality US$'000 US$'000 US$'000
------------------------- ------------- ---------- -------------
Comfort 5,689 5,419 12,979
Hygiene 12,912 13,790 29,314
Protection 1,439 997 2,076
Resource efficiency 10,241 5,589 13,505
Total revenue 30,280 25,795 57,874
------------------------- ------------- ---------- -------------
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Revenue by territory US$'000 US$'000 US$'000
------------------------- ------------- ---------- -------------
North & South America 11,820 9,551 21,689
Asia 8,955 8,880 19,636
Europe 9,327 7,093 16,237
Others 177 271 312
Total revenue 30,280 25,795 57,874
------------------------- ------------- ---------- -------------
During the period ended June 30, 2022, no customer individually
totaled more than 10% of total revenues (2021: one customer).
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Other operating income US$'000 US$'000 US$'000
----------------------------- ------------- ---------- -------------
Foreign exchange gains 2,334 2,030 5,032
Other 337 1,136 1,934
Total other operating income 2,671 3,166 6,426
----------------------------- ------------- ---------- -------------
7. Expenses by nature
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Cost of goods sold US$'000 US$'000 US$'000
-------------------------- ------------- ---------- -------------
Material expenses 12,114 10,033 24,581
Personnel expenses 1,477 1,070 2,164
Depreciation of property,
plant and equipment 342 280 706
Other costs of goods 2,194 1,457 3,447
-------------
Total cost of goods sold 16,127 12,840 30,898
-------------------------- ------------- ---------- -------------
Six months Six months
to to Year ended
June 30, June 30, December 31,
Selling and general administration 2022 2021 2021
expenses US$'000 US$'000 US$'000
----------------------------------------- ---------- ---------- -------------
Personnel expenses 7,808 5,468 13,074
Depreciation of property, plant
and equipment 302 311 549
Amortization of intangible assets 535 205 758
Depreciation of right-of-use assets 576 279 855
Other 4,657 4,313 9,229
Total selling and general administration
expenses 13,878 10,576 24,465
----------------------------------------- ---------- ---------- -------------
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Personnel expenses US$'000 US$'000 US$'000
-------------------------- ------------- ---------- -------------
Wages and salaries 7,930 5,363 12,708
Social security and other
payroll taxes 624 471 1,387
Pension costs 244 317 645
Share-based payments 486 387 498
Total personnel expenses 9,285 6,538 15,238
-------------------------- ------------- ---------- -------------
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Other operating expenses US$'000 US$'000 US$'000
------------------------------- ------------- ---------- -------------
Foreign exchange losses 1,620 1,583 4,671
Impairment expense - - 144
Other 86 655 1,005
Total other operating expenses 1,706 2,238 5,820
------------------------------- ------------- ---------- -------------
8. Taxation
The components of the provision for taxation on income included
in the "Condensed Consolidated Statement of Other Comprehensive
Income" are summarized below:
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Current income tax expense US$'000 US$'000 US$'000
--------------------------------- ------------- ---------- -------------
Swiss corporate income taxes 30 (6) (282)
United States state and federal
taxes 383 314 (33)
Taiwan corporate income taxes 78 83 200
Belgium corporate income taxes 76 176 186
Germany corporate income taxes (17) 127 301
Others 79 4 39
Total current income tax expense 629 698 411
--------------------------------- ------------- ---------- -------------
Six months
Six months to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Deferred income tax expense US$'000 US$'000 US$'000
---------------------------- ------------- ---------- -------------
Switzerland (69) (78) (190)
China (128) - (146)
United States (71) - 138
Spain - (38) 108
Others (74) (60) (109)
Total deferred income tax
expense (income) (342) (176) (199)
---------------------------- ------------- ---------- -------------
Total income tax expense 287 522 212
------------------------- --- --- ---
Six months
ended Year ended
June 30, December 31,
2022 2021
Tax liability US$'000 US$'000
--------------------------- ---------- -------------
Opening balance 51 1,495
Tax liability acquired in
business combinations - 638
Income tax expense for the
period / year 629 411
Taxes paid (529) (2,462)
Foreign currency movements (40) (31)
Closing balance 111 51
--------------------------- ---------- -------------
The Group had net deferred tax liabilities of US$863,000 as at
June 30, 2022 (Net deferred tax liabilities of US$ 1,193,000 at
December 31, 2021).
The components of the net deferred income tax assets and
liabilities are as follows:
Period ended Year ended
June 30, December 31,
2022 2021
Deferred taxes US$'000 US$'000
-------------------------------------- ------------ -------------
Deferred tax assets
Pension fund obligations 433 429
Tax losses recognized 285 178
Share-based payment expense 136 88
Others 16 6
Total deferred tax assets 874 701
-------------------------------------- ------------ -------------
Deferred tax liabilities
Capital allowances and depreciation (1,737) (1,894)
Total deferred tax liabilities (1,737) (1,894)
-------------------------------------- ------------ -------------
Net deferred tax assets (liabilities) (863) (1,193)
-------------------------------------- ------------ -------------
As at June 30, 2022, the Group had approximately US$285,000 of
tax losses available to be carried forward against future profits
(December 31, 2021: US$178,000; June 30, 2021: US$327,000).
In applying judgement in recognizing deferred tax assets,
management has critically assessed all available information,
including future business profit projections and the track record
of meeting forecasts. Management expects the deferred tax asset to
be substantially recovered in 2022.
9. Earnings per share
The calculation of earnings per share is based on the following
earnings and number of shares:
Six months Six months
to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Earnings per share US$'000 US$'000 US$'000
----------------------------------- ----------- ----------- -------------
Profit after tax attributable
to owners of the Company 1,112 3,126 2,676
Basic earnings per share (cents) 0.84 2.46 2.07
Diluted earnings per share (cents) 0.81 2.38 2.01
Basic weighted average number
of shares in issue 131,781,726 127,214,811 128,871,639
Diluted weighted average number
of shares in issue 136,936,164 131,222,146 132,718,333
10. Intangible assets
Brands
Internally & Customer Acquired Other intangible
Goodwill developed assets relations technologies assets Total
Cost US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
As at January 1,
2021 3,516 1,851 295 - 491 6,153
Reclasses - (725) - - 725 -
Additions through
business
combinations 18,599 3,226 2,501 580 24,906
Additions arising
from internal
development - 2,390 - - - 2,390
Other
acquisitions - - - - 579 579
Currency
translation
differences - (7) - - (43) (50)
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
As at December
31, 2021 22,115 3,509 3,521 2,501 2,332 33,978
Additions arising
from internal
development - 1,840 - - 106 1,946
Currency
translation
differences - (171) - - (50) (222)
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
As at June 30,
2022 22,115 5,177 3,521 2,501 2,388 35,702
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
Amortization
As at January 1,
2021 - 432 107 - 350 889
Reclasses - (19) - - 19 -
Amortization for
the year - 50 367 177 164 758
Impairment
expense 123 21 - - - 144
Currency
translation
differences - (10) - - (15) (25)
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
As at December
31, 2021 123 474 474 177 518 1,766
Amortization for
the period - 50 259 125 101 535
Currency
translation
differences - (23) - - (24) (47)
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
As at June 30,
2022 123 501 733 302 595 2,254
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
Net book value
As at December
31, 2021 21,992 3,035 3,047 2,324 1,814 32,212
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
As at June 30,
2022 21,992 4,676 2,788 2,199 1,793 33,448
------------------ ----------- ----------------- ----------------- ----------------- ----------------- ---------
11. Property, plant and equipment
Machinery and Motor vehicles Computers and Furniture and Land and
equipment software fixtures buildings Total
Cost US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
As at January 1,
2021 6,779 492 810 132 - 8,213
Additions
through
business
combinations 191 19 24 171 1,675 2,080
Additions 596 67 104 213 14 994
Disposals (30) (37) - (15) (68) (150)
Currency
translation
differences (248) (5) (24) (27) (98) (402)
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
As at December
31, 2021 7,288 536 914 474 1,523 10,735
Additions 950 2 74 27 7 1,060
Disposals (62) (6) - - - (68)
Currency
translation
differences (394) (6) (45) (30) (123) (598)
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
As at June 30,
2022 7,782 526 943 471 1,407 11,129
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
Depreciation
As at January 1,
2021 2,002 242 464 38 - 2,746
Charge for the
year 797 118 168 55 117 1,255
Eliminated on
disposal (13) (26) - (7) - (46)
Currency
translation
differences (63) (4) (13) (5) (85)
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
As at December
31, 2021 2,723 330 619 86 112 3,870
Charge for the
period 380 52 91 57 64 644
Eliminated on
disposal (25) (3) - - - (28)
Currency
translation
differences (125) (3) (32) (7) (13) (179)
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
As at June 30,
2022 2,953 376 678 136 163 4,306
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
Net book value
As at December
31, 2021 4,565 206 295 388 1,411 6,865
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
As at June 30,
2022 4,829 150 265 335 1,244 6,823
----------------- ---------------- --------------- ---------------- ----------------- ----------------- --------
12. Right-of-use assets
Land and Motor Machinery
buildings vehicles and equipment Total
Cost US$'000 US$'000 US$'000 US$'000
---------------------------------- ----------- ----------- --------------- ---------
As at January 1, 2021 3,701 76 41 3,818
Additions through business
combinations 1,186 300 150 1,636
Additions 5,147 289 393 5,829
Disposals due to expiry
of lease - (33) (9) (42)
Currency translation differences (120) (21) 2 (139)
---------------------------------- ----------- ----------- --------------- ---------
As at December 31, 2021 9,914 611 577 11,102
Additions 7 102 1,572 1,681
Disposals due to expiry
of lease - (36) - (36)
Modification to lease terms* (1,199) - - (1,199)
Currency translation differences (575) (49) (51) (675)
---------------------------------- ----------- ----------- --------------- ---------
As at June 30, 2022 8,147 628 2,098 10,874
---------------------------------- ----------- ----------- --------------- ---------
Depreciation
As at January 1, 2021 1,182 60 12 1,254
Charge for the year 655 89 111 855
Disposals due to expiry
of lease - (32) (9) (41)
Currency translation differences (34) (8) (3) (45)
---------------------------------- ----------- ----------- --------------- ---------
As at December 31, 2021 1,803 109 111 2,023
Charge for the period 442 70 64 576
Disposals due to expiry
of lease - (36) - (36)
Modification to lease terms* (693) - - (693)
Currency translation differences (82) (13) (17) (111)
---------------------------------- ----------- ----------- --------------- ---------
As at June 30, 2022 1,470 131 158 1,760
---------------------------------- ----------- ----------- --------------- ---------
Net book value
As at December 31, 2021 8,111 502 466 9,079
---------------------------------- ----------- ----------- --------------- ---------
As at June 30, 2022 6,677 497 1,940 9,114
---------------------------------- ----------- ----------- --------------- ---------
*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 as
follows:
Before revaluation After revaluation Revaluation
Revaluation US$'000 US$'000
--------------------- ------------------ ----------------- -----------
Right-of-use assets 1,385 879 (506)
Lease liabilities (1,453) (879) 574
Impact on net assets 68 - 68
The impact on net assets was recognized as non-operating
income.
Future minimum lease payments associated with these leases were
as follows:
Six months
ended Year ended
June 30, December 31,
2022 2021
Lease liabilities US$'000 US$'000
------------------------------- ---------- -------------
Not later than one year 1,373 1,115
Later than one year and not
later than five years 4,796 3,689
Later than five years 3,949 5,525
------------------------------- ---------- -------------
Total minimum lease payments 10,118 10,329
Less: Future finance charges (879) (1,099)
Present value of minimum lease
payments 9,239 9,230
------------------------------- ---------- -------------
Six months
ended Year ended
June 30, December 31,
2022 2021
Lease liabilities US$'000 US$'000
------------------------------- ---------- -------------
Current liability 1,262 1,054
Non-current liability 7,977 8,176
------------------------------- ---------- -------------
Present value of minimum lease
payments 9,239 9,230
------------------------------- ---------- -------------
13. Trade receivables
The majority of trade receivables are current, and the Directors
believe these receivables are collectible. The Directors
consistently assess the collectability of these receivables. As at
June 30, 2022, the Directors considered a portion of these
receivables uncollectable and recorded a provision in the amount of
US$1.3 million (June 30, 2021: US$716,000; December 31, 2021:
US$1.5 million).
As at As at
June 30, December 31,
2022 2021
Trade receivables US$'000 US$'000
------------------------------ --------- -------------
Trade receivables 22,784 19,523
Provision for expected credit
loss (1,272) (1,473)
------------------------------ --------- -------------
Total trade receivables 21,512 18,050
------------------------------ --------- -------------
14. Share capital and share options
Movements in the Company's share capital were as follows:
Number Share Capital Totals
of shares capital reserve
No. US$'000 US$'000 US$'000
------------------------------ ----------- -------- -------- -------
Balance as of January 1, 2021 125,891,904 49,559 134,537 184,096
Issue of shares to acquire
Chrisal NV 1,101,928 456 2,526 2,982
Issue of shares to acquire
RAS AG 1,701,821 710 3,946 4,656
Issue of shares to acquire
Life Materials 1,887,883 798 3,182 3,980
Balance as at December 31,
2021 130,583,536 51,523 144,191 195,714
------------------------------- ----------- -------- -------- -------
Issue of shares to vendors
of Life Materials (a) 347,552 141 471 612
Issue of shares as deferred
consideration (b) 3,461,615 1,359 2,921 4,280
Balance as at June 30, 2022 134,392,703 53,023 147,583 200,606
------------------------------- ----------- -------- -------- -------
The par value of all shares is GBP0.30. All shares in issue were
allotted, called up and fully paid.
During the six-month period ended June 30, 2022, the Company
made the following issues of shares:
a) On February 25, 2022, HeiQ Plc issued 347,552 new ordinary
shares of GBP0.30 each in the Company. These shares were allotted
to the vendors of Life Material Technologies Limited to satisfy a
closing working capital adjustment in the amount of US$ 612,000 in
connection with the Company's acquisition of Life in June 2021.
b) On May 12, 2022, HeiQ Plc issued a total of 3,461,615 ordinary shares as part of the deferred consideration paid pursuant to the acquisitions of RAS AG, Regensburg, Germany ("RAS AG") and Life Material Technologies Limited ("LIFE").
- In relation to the acquisition of RAS AG, the Company made a
payment of EUR2.6 million (approximately US$2.88 million), based on
RAS AG's performance for the year ended December 31, 2021. The
deferred consideration was settled entirely through the issue of
2,743,941 ordinary shares in the capital of the Company.
- In relation to the acquisition of LIFE, the Company made a
payment of US$2.8 million, based on LIFE's financial performance
for the year ended December 31, 2021. The deferred consideration
was settled equally in cash (US$1.4 million) and through the issue
of 717,674 ordinary shares (US$1.4 million) in the capital of the
Company. The share issue satisfied earnout payments as part of the
purchase consideration of US$640,000 as well as share-based
payments made as remuneration of US$764,000 which were not part of
the purchase consideration.
Share-based payment expense
Part of the US$764,000 remuneration mentioned above had
previously been accrued for as deferred consideration in relation
to the acquisition of Life Materials AG (year ended December 31,
2021: US$74,000). An additional expense of US$71,000 was recognized
in the period ended June 30, 2022. The remainder of approximately
US$619,000 is expected to be expensed over the period from July 1,
2023 to June 30, 2026.
Share Option Scheme
The Company has adopted the HeiQ plc Option Scheme.
Under the Option Scheme, awards may be made only to employees
and executive directors. The Board will administer the Option
Scheme with all decisions relating to awards made to executive
directors taken by the Remuneration Committee.
A total of 6,260,000 awards were made under the Option Scheme
pursuant to re-admission on December 7, 2020. On October 19, 2021,
a total of 2,447,658 share options were issued, with service
periods covering January 2022 to December 2024 and an exercise
price of GBP0.903 per share option. On June 15, 2022, a total of
1,472,725 share options were issued, with service periods covering
January 2022 to December 2024 and an exercise price of GBP1.002 per
share option.
398,872 options were forfeited during the period ended June 30,
2022 (December 31, 2021: nil). No options were exercised or lapsed
during the period ended June 30, 2022. Accordingly, as at June 30,
2022 9,781,511 options remained in place (December 31, 2021:
8,707,658).
The share-based payment expense arising from these share-based
payment transactions recognized in the period ended June 30, 2022
was US$415,000 ( year ended December 31, 2021: US$424,000).
15. Dividends paid by subsidiary
In June 2022, Chrisal NV declared and paid out a dividend in the
amount of EUR470,000 (approximately US$496,000) of which 49% or
US$243,000 was paid to minority shareholders.
16. Other non-current liabilities
As at As at
June 30, December 31,
2022 2021
Other non-current liabilities US$'000 US$'000
------------------------------------ --------- -------------
Defined benefit obligation IAS
19 2,293 2,281
Deferred consideration in relation
Chemtex acquisition - 88
Other - 250
Total other non-current liabilities 2,293 2,619
------------------------------------ --------- -------------
17. Borrowings and finance costs
The principal changes in borrowings during the period ended June
30, 2022 were as follows:
- a bank loan taken out in May 2022 which incurs interest at
1.05%. It is repayable by April 2023. As at June 30, 2021,
EUR208,515 (US$218,000) is outstanding; and
- a bank loan taken out in April 2022 which incurs interest at
2.45%. It is repayable by March 2023. As at June 30, 2022,
EUR408,000 (US$427,000) is outstanding.
The following table provides a reconciliation of the Group's
future maturities of its total borrowings for each period
presented:
As at As at
June 30, December 31,
2022 2021
Borrowings US$'000 US$'000
---------------------------------- --------- -------------
Not later than one year 1,503 1,004
Later than one year but less than
five years 538 457
After more than five years 130 213
Total borrowings 2,171 1,674
---------------------------------- --------- -------------
The following table represents the Group's finance costs for
each period presented:
Six months Six months
to to Year ended
June 30, June 30, December 31,
2022 2021 2021
Finance costs US$'000 US$'000 US$'000
-------------------------------------- ---------- ---------- -------------
Amortization of deferred finance
costs - acquisition costs - 71 58
Lease finance expense 95 42 145
Interest on borrowings 42 58 108
Bank fees 32 31 55
Loss on foreign currency transactions 368 80 231
-------------
Total finance costs 537 282 597
-------------------------------------- ---------- ---------- -------------
18. Other current liabilities
As at As at
June 30, December 31,
2022 2021
Other current liabilities US$'000 US$'000
----------------------------------- --------- -------------
Deferred consideration in relation
to acquisitions 92 5,995
Deferred consideration in relation
to share-based payments - 74
Total other current liabilities 92 6,069
----------------------------------- --------- -------------
As more fully described in Note 14, the Company settled a total
of US$5.5 million of deferred consideration relating to the
acquisition of RAS AG and Life Materials by way of cash and share
issues. A further US$187,000 in cash payments related to the
Chemtex acquisition in 2017.
The deferred consideration and related financing expense are
summarized below:
As at As at
June 30, December 31,
2022 2021
Deferred consideration US$'000 US$'000
------------------------------------ --------- -------------
Balance brought forward 6,083 1,116
Additions from acquisitions - 5,884
Amortization of fair value discount - 58
Gain on earnout calculation - (80)
Consideration settled in cash (1,587) (908)
Consideration settled through share
issue (4,132) -
Foreign exchange revaluation (272) 13
Deferred consideration carried
forward 92 6,083
------------------------------------ --------- -------------
Current liability 92 5,995
Non-current liability - 88
Total 92 6,083
------------------------------------ --------- -------------
19. Notes to the statements of cash flows
Net debt reconciliation:
Assumed Foreign
Opening on acquisition exchange Closing
balances New agreements Modi-fications of subsidiaries Cash movements differences balances
Six months ended
June 30, 2022 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------- -------------- -------------- ---------------- -------------- ------------ ---------
Cash and cash
equivalents 14,560 - - - (4,262) (810) 9,488
Leases (9,230) (1,681) 574 - 521 577 (9,239)
Borrowings (1,674) (818) - - 163 158 (2,171)
Totals 3,656 (2,499) 574 - (3,578) (75) (1,922)
---------------- --------- -------------- -------------- ---------------- -------------- ------------ ---------
Assumed Foreign
Opening on acquisition exchange Closing
balances New agreements Modi-fications of subsidiaries Cash movements differences balances
Year ended
December
31, 2021 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------- -------------- -------------- ---------------- -------------- ------------ ---------
Cash and cash
equivalents 25,695 - - - (10,525) (610) 14,560
Leases (2,652) (5,829) - (1,636) 790 97 (9,230)
Borrowings (1,573) (472) - (579) 803 147 (1,674)
Totals 21,470 (6,301) (6,301) (2,215) (8,932) (366) 3,656
---------------- --------- -------------- -------------- ---------------- -------------- ------------ ---------
Reconciliation of cash movements on business combinations:
Consideration payment for acquisition of
RAS AG 1,400
Consideration payment for acquisition of
Chemtex 187
Consideration payment for acquisitions of
businesses 1,587
-----
20. Contingencies and provisions
The Group is, from time to time, involved in claims and legal
proceedings.
As at June 30, 2022, there is a potential claim with regards to
a customer contract in the amount of up to US$ 175,000. As at June
30, 2022, no amounts had been accrued related to that matter (31
December, 2021: $nil).
As disclosed in the annual report for the year ended 2021, the
Group was contacted by the United States Environmental Protection
Agency ("EPA") in connection with potential alleged violations of
the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA")
pertaining to alleged mislabelling. As at June 30, 2022, the
Company has assessed the claim and made a provision for US$200,000
(31 December, 2021: $nil).
21. Related party transactions
In the six months ended June 30, 2022 goods that were in stock
as of December 31, 2021 have been sold to a company controlled by a
minority shareholder at cost value. However, the minority
shareholder is not considered a related party to the Group. The
value of the transaction amounts to US$900,000.
22. Material subsequent events
On July 26, 2022 the Company received an additional cash amount
of EUR2,200,000 (approx. US$ 2,459,000) from Hugo Boss as capital
contribution referred to in Note 4.
On August 9, 2022, the Company issued 164,721 new ordinary
shares for a consideration of GBP173,000 (approximately US$
208,000) to satisfy certain share payments due to the Company's
Innovation Advisory Board, as well as for consultancy and other
services provided by third parties.
23. Ultimate controlling party
As at June 30, 2022, the Company did not have any single
identifiable controlling party.
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END
IR FFFFIATIFLIF
(END) Dow Jones Newswires
September 13, 2022 02:01 ET (06:01 GMT)
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