TIDMHEIQ
RNS Number : 0824O
HeiQ PLC
29 September 2023
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the EU Market Abuse Regulation (2014/596) which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended and supplemented from time to time.
29 September 2023
HeiQ Plc
("HeiQ" or the "Company" or the "Group")
Accounts update
Further to its AGM Statement announced on 29 June 2023, the
Company provides the following update on the progress of its
audited accounts for the year ended 31 December 2022 ("2022
Accounts") alongside an update on current trading for the six
months ended 30 June 2023.
Accounts update
The Company is concluding its annual report and audit in
conjunction with its auditor, Deloitte LLP and expects to publish
its Full Year 2022 Accounts shortly, together with its interim
results, following which the Company expects trading in its shares
to recommence.
Following the completion of several acquisitions, the Group has
grown significantly in terms of capabilities and technology
platforms but also in terms of organizational complexity. The
Company has seen a number of businesses with different systems,
processes and cultures join the Group since 2017 and, in
particular, during 2021. To integrate the different businesses, the
Group commenced the harmonization of processes, systems, and
operating practices across the organization in 2022. While this is
a challenging project for any organization, the significant changes
in market conditions in the year have made this process more
onerous. All of these factors contributed to a significantly
extended year end reporting timetable for 2022, with a related
impact on the timing of the external audit work.
Previous announcements detailed the challenging market
conditions that HeiQ has been enduring, which have impacted top
line performance and Group profitability. Whilst management
considers the Company to be performing better than many of its
peers, the significant disruption in market demand across HeiQ's
value chains has impacted the Company's financial performance for
FY2022. HeiQ expects to report FY2022 revenue in line with the most
recently published guidance but gross profit and loss from
operations for FY 2022 are expected to be materially below previous
market guidance as the significant drop in market demand has
required HeiQ to review aspects of the accounting processes which
rely on significant judgement. Key factors impacting profitability
are set out below:
-- Goodwill from acquisitions: The challenging market dynamics
impaired the ability of its recently acquired businesses to achieve
their initial business plans. Reviewing key judgements inherent in
the Company's impairment review, including operating margins and
long-term growth rates, has caused significant goodwill impairments
in the period.
-- Inventory valuation: Judgements surrounding allowances
required for inventory have also been reassessed to reflect
management's updated views on recoverability and caused the
recording of significant allowances on inventory.
Furthermore, in the process of reviewing significant judgements
with the auditors also for the prior year, the Company has had to
record prior year restatements. Specifically, restatements have
been recorded around impairment of goodwill from acquisitions as
well as in relation to the accounting treatment of a significant
take-or-pay contract. This contract has been renegotiated in 2023
and accounts receivable have been waived in exchange for a right of
first refusal on the supply of a wide product range to a large
industry player. While the Group is confident that the amendment to
this contract will be beneficial going forward, the historical
accounting treatment of this contract has been reviewed and it was
determined that a restatement of prior year reported revenue and
profits is appropriate, as recognition criteria had not been
met.
The cash balance as of 31 December 2022 was US$8.5 million, in
line with market guidance. To manage its cash balance, the Group
has access to credit facilities totalling CHF9 million
(approximately US$9.8 million). The facilities are in place with
two different banks and both contracts have materially the same
conditions. The facilities are not limited in time, can be
terminated by either party at any time and allow overdrafts and
fixed cash advances with a duration of up to twelve months. In case
one or the other party terminates the agreement, fixed cash
advances become due upon their defined maturity date. 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. Nevertheless, the Board acknowledges the
uncommitted status of the facilities which could be terminated
requiring the refinancing of debts, and which casts material
uncertainty on the going concern assessment. The Board therefore
expects the auditor to make reference to this material uncertainty
in their audit opinion. The Board is in discussions with financial
institutions to replace the currently uncommitted credit facilities
by committed, long-term facilities, but the outcome of these
discussions remain uncertain.
As at June 30, 2023, the Company had cash balances amounting to
US$7.3 million with a total of CHF6.3 million drawn under the
facilities.
Current trading and outlook
Since the start of FY 2023, HeiQ has focused on reducing its
cost base and reorganizing the business, and the Company is pleased
to report that it is already seeing the benefits of this. Whilst
the Board has not yet seen the challenges abate in H1 2023, the
action taken since the start of the year means the Company is
expected to be in a better position in H2 2023 to manage the
ongoing challenging macro-economic environment, continue building
value in core innovations and preserve the Company's ability to
deliver when the market demand turns.
For H1 2023, the Company expects to report sales of US$21
million (H1 2022: US$30 million) and a decrease in margins in a
buyers-market, driven by current overcapacity. For H2 2023, the
Company expects a stabilization of the financial performance and
operating cashflows based on implemented cost measures becoming
effective.
The Board believes that the medium and long-term opportunities
for the Company's technology offering remain strong and the
leadership team is focused on gaining market share for the
commercialized core businesses, while also prioritizing innovation
projects which have near-term market potential or significant
long-term value creation potential. Each of HeiQ's key technology
development projects has a significant market opportunity, and the
Company's business infrastructure has been established to ensure
effective rollout globally once market conditions change.
Further detail will be included in the Company's audited results
for FY 2022 as well as its interim results. Financial reporting on
H1 2023 performance will be published together with the Annual
Accounts 2022.
PDMR Notifications
The Company also announces that, on 26 September 2022, options
over 224,000 new ordinary shares in HeiQ ("Options") were made to
each of Carlo Centonze and Xaver Hangartner pursuant to the
Company's 2022 Option Plan. The Options have a strike price of
70.2p per share, being the trailing 5-day mid-market share price at
the time of grant, a vesting period of three years and are subject
to performance criteria as set out below.
--Vesting of 65% of the Options are conditional upon sales
growth targets. Performance is measured over the years 2022-2024
and the performance target is 7.5% for each individual year or
24.2% compound sales growth over the three years 2022-2024.
--Vesting of 35% of the remaining Options are conditional upon
annual operating margin targets. Performance is measured each year
2022-2024 and the performance target is 25%.
Further information is set out below pursuant to the
requirements of the UK Market Abuse Regulation.
1 Details of the person discharging managerial responsibilities
/ person closely associated
a) Name Mr. Carlo Centonze
-------------------------- ---------------------------------------------
2 Reason for the notification
-------------------------------------------------------------------------
a) Position/status Chief Executive Officer
-------------------------- ---------------------------------------------
b) Initial notification Initial Notification
/Amendment
-------------------------- ---------------------------------------------
3 Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
-------------------------------------------------------------------------
a) Name HeiQ plc
-------------------------- ---------------------------------------------
b) LEI 213800IGT65IMJDO4S03
-------------------------- ---------------------------------------------
4 Details of the transaction(s): section to be repeated for
(i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions have
been conducted
-------------------------------------------------------------------------
a) Description of the Options over new ordinary shares of 30 pence
financial instrument, each in the Company
type of instrument
Identification code GB00BN2CJ299
-------------------------- ---------------------------------------------
b) Nature of the transaction Grant of options pursuant to 2022 Company
Share Option Plan
-------------------------- ---------------------------------------------
c) Price(s) and volume(s) Price(s) Volume(s)
Exercise price of
70.2p per share 224,000
----------
-------------------------- ---------------------------------------------
d) Aggregated information N/A
- Aggregated volume
- Price
-------------------------- ---------------------------------------------
e) Date of the transaction 26 September 2022
-------------------------- ---------------------------------------------
f) Place of the transaction Outside a trading venue
-------------------------- ---------------------------------------------
1 Details of the person discharging managerial responsibilities
/ person closely associated
a) Name Xaver Hangartner
-------------------------- ---------------------------------------------
2 Reason for the notification
-------------------------------------------------------------------------
a) Position/status Chief Financial Officer
-------------------------- ---------------------------------------------
b) Initial notification Initial Notification
/Amendment
-------------------------- ---------------------------------------------
3 Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
-------------------------------------------------------------------------
a) Name HeiQ plc
-------------------------- ---------------------------------------------
b) LEI 213800IGT65IMJDO4S03
-------------------------- ---------------------------------------------
4 Details of the transaction(s): section to be repeated for
(i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions have
been conducted
-------------------------------------------------------------------------
a) Description of the Options over new ordinary shares of 30 pence
financial instrument, each in the Company
type of instrument
Identification code GB00BN2CJ299
-------------------------- ---------------------------------------------
b) Nature of the transaction Grant of options pursuant to 2022 Company
Share Option Plan
-------------------------- ---------------------------------------------
c) Price(s) and volume(s) Price(s) Volume(s)
Exercise price of
70.2p per share 224,000
----------
-------------------------- ---------------------------------------------
d) Aggregated information N/A
- Aggregated volume
- Price
-------------------------- ---------------------------------------------
e) Date of the transaction 26 September 2022
-------------------------- ---------------------------------------------
f) Place of the transaction Outside a trading venue
-------------------------- ---------------------------------------------
For further information, please contact:
HeiQ Plc
Carlo Centonze (CEO) +41 56 250 68 50
Cavendish Securities plc (Broker) +44 (0) 207 397
Stephen Keys / Callum Davidson 8900
------------------
SEC Newgate (Media Enquiries) +44 (0) 20 3757
Elisabeth Cowell / Molly Gretton / Tom 6882
Carnegie HeiQ@s ecnewgate
.co.uk
------------------
About HeiQ
HeiQ is a Swiss-based international company that innovates
pioneering and differentiating materials in partnership with
established global brands. We bridge the academic and commercial
worlds to conceive performance-enhancing materials and
technologies, working with aligned brands to research, manufacture
and bring products to market, aiming for lab to consumer in months.
Our goal is to improve the lives of billions by innovating the
materials that go into everyday products, making them more
hygienic, comfortable, protective, and sustainable.
Our strong IP portfolio positions us as an innovation leader for
niche, premium and high-margin products in the textile chemicals,
man-made fibers, paints and coatings, antimicrobial plastics,
probiotics and household cleaner markets. We have also expanded
into healthcare facilities, probiotic cleaning, and hygiene
coatings markets to help make hospitals and healthcare environments
more hygienic.
We have developed over 200 technologies in partnership with 300
major brands. With a substantial research and development pipeline,
including key technology development projects HeiQ AeoniQ, HeiQ
ECOS, HeiQ GrapheneX, and HeiQ Synbio, HeiQ aims to deliver
shareholder value through sales growth and entry into new lucrative
markets through disruptive innovation and M&A.
We have built a strong reputation for ESG & sustainable
innovation, having won multiple awards including the Swiss
Technology Award twice and the Swiss Environmental Award. Under
experienced leadership, we are committed to driving our profit in
close connection with people and the planet. For more information,
please visit www.heiq.com.
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END
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