TIDMHEIQ
RNS Number : 5801L
HeiQ PLC
04 January 2023
4 January 2023
HeiQ Plc
("HeiQ" or "the Company")
Trading Update & Acquisition
HeiQ Plc (LSE: HEIQ), a leading company in materials innovation
and hygiene technologies, announces a trading update for its year
ended 31 December 2022 (FY 2022), as well as the acquisition of
Tarn-Pure Holdings Ltd.
Trading update
As reported in the Company's interim results on 13 September
2022, HeiQ made solid progress in the first half of the financial
year, reporting a 17% increase in revenues, despite the continued
challenging global market conditions. The Company has continued to
execute on its long-term growth strategy, focussing on
strengthening its innovation and differentiation capabilities.
As previously announced, HeiQ has historically demonstrated
significantly stronger sales in the second half of the year,
underpinned by consumer driven seasonality of its core products.
The board previously commented that it remained cautiously
optimistic in a strong trading performance during the second half
of the year such that trading for FY 2022 would be in line with
market guidance. This view was supported through the anticipation
of securing additional revenues from new products and innovations,
including from milestone achievements related to HeiQ AeoniQ, the
world's first climate positive cellulosic fiber aiming to replace
polyester.
Whilst trading during the third quarter of FY 2022 remained
reasonable, worsening macroeconomic conditions into Q4 have
resulted in a significant deterioration in consumer demand which,
in turn, impacted the Group's sales during the period. This
reduction in sales has been compounded by brands having increased
their levels of inventory to all-time highs after the pandemic due
to persisting supply chain concerns. HeiQ's customer base had up to
70% less demand in Q4. HeiQ's sales in China suffered especially,
due to pandemic related regional lockdowns and half of the
forecasted annual sales did not materialize.
Brands have become more hesitant to invest in innovations at
this particular time. As such, revenues planned for Q4 2022 from
new partner brands related to milestone achievements have been
delayed and are expected to materialize in FY 2023 only.
Accordingly, the Company expects that Group revenues for FY 2022
will be approximately 20% below market expectations at between US$
54m to US$ 55m. Gross margin is also expected to be below market
expectations at 47% - 48%. As a consequence, the Company expects a
loss before tax of between US$ 2.5m and US$ 3.5m for the same
period. All FY 2022 numbers are subject to audit review and
considered "preliminary".
The Industry expects global markets to continue to experience
low demand for at least another six to nine months. The Company
also expects trading for FY 2023 to be below market guidance, with
anticipated sales and gross margins maintained at FY 2022 levels.
Given the macroeconomic headwinds the Company has started to
implement cost savings and will continue to review and adapt its
cost basis with the objective of returning to profit before tax in
FY 2023 .
While the macroeconomic headwinds have prevented the Company
from achieving its financial targets, this was not the case with
the progress made in blockbuster technologies; In particular, HeiQ
succeeded in:
- building a first pilot commercialization line for HeiQ AeoniQ,
the world's first cellulosic climate positive fibre, and secured
Hugo Boss as an investor and first launch partner in January
2023.
- securing the recommendation by the Robert Koch Institute for
HeiQ Synbio probiotic cleaners versus disinfectants for hospitals
following the publication by the Charitè Hospital Berlin.
- selling the first samples of HeiQ GrapheneX membrane to
leading players in the production of batteries and handheld mobile
devices and ordering the first pilot commercialization plant.
- developing the first transparent foils with HeiQ ECOS silver
nanowires, conferring infrared reflection for transparent
insulation of building windows and stealth technology for
defence.
Acquisition
The Company also announces that HeiQ Materials AG, Switzerland,
a 100% subsidiary of HeiQ Plc, has signed an agreement to acquire
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. HeiQ generates significant silver technology
sales and the acquired regulatory asset will enable it to further
increase these sales. Tarn-Pure expects to report total revenues of
approximately US$ 400,000 for the FY 2022, which are mostly derived
from royalty sales.
Due to European Union regulatory changes in 2022, several
high-volume organic and inorganic biocides are being phased out.
Elemental copper and silver have received a favourable regulatory
risk assessment and are poised to replace the phased-out biocides.
HeiQ expects strong growth in the use of the safe and effective
antimicrobials copper and silver, which are used in coatings,
plastics, textiles, and water purification. With the acquisition of
Tarn-Pure, HeiQ positions itself as the key supplier of elemental
copper and elemental silver to the wider hygiene industry.
To acquire Tarn-Pure, HeiQ will pay its vendors a consideration
of approximately GBP850,000, subject to adjustments for cash,
working capital and debt positions as of closing date. The
consideration is agreed to be paid 50% in cash and 50% through the
issue of new ordinary shares in HeiQ Plc to the vendors at a
significant premium to the closing market price as of 3 January
2023. The Company accordingly expects to issue approximately
613,000 new ordinary shares and the exact number of shares to be
issued will be announced upon closing of the transaction, which is
expected later this month.
HeiQ's EVP Tom Ellefsen said:
"The HeiQ group has an impressive product range of
antimicrobials. Thanks to the recent acquisitions of RAS Ltd., Life
Materials Ltd. and Touchguard's Patents, HeiQ has built a unique
capability to serve the hygiene industry with effective solutions.
The acquisition of Tarn-Pure's regulatory asset strengthens HeiQ's
ability to offer the market access to Europe and the UK for
products containing antimicrobial copper and silver. I expect our
sales in silver and copper technologies to significantly grow in
2023 thanks to now one of the strongest regulatory portfolios in
the market."
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) +44 (0) 207 397
Stephen Keys / Callum Davidson 8900
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SEC Newgate (Media Enquiries) +44 (0) 20 3757
Elisabeth Cowell / Axaule Shukanayeva 6882
/ Molly Gretton HeiQ@s ecnewgate
.co.uk
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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.
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