28 March 2024
HeiQ Plc
("HeiQ" or "the Company")
Unaudited Interim Results
HeiQ Plc (LSE: HEIQ), a leading company in materials innovation and hygiene technologies, announces its unaudited interim financial results for the 12 months ending 31 December 2023.
As announced on 14 March 2024, the Company has deemed it prudent to extend its accounting reference date to 30 June 2024. The next set of audited financial reports and accounts will therefore be for the period 1 January 2023 to 30 June 2024 and will be published by 31 October 2024, following the appointment of a new auditor.
Financial Overview:
· Revenue reduced 11.6% to
· Gross profit margin increased 8.5% to 37% (12 months to 31 December 2022: 28.5%)
· Adjusted LBITDA decreased to
· Operating loss of
· Loss after taxation of
· Cash at 31 December 2023 of
Operational Overview:
Challenging market conditions persisted during the period, leading to continued high inventories and weakened demand across the industry. HeiQ responded with decisive measures:
· New organizational structure established to drive growth and profitability of HeiQ's three venture initiatives (HeiQ AeoniQ, HeiQ GrapheneX and HeiQ ECOS).
· Strengthened financial reporting processes through the establishment of a central accounting function in
· Advanced harmonizing the Enterprise Resource Planning (ERP) system across the group.
· Comprehensive actions taken to address deficiencies outlined by the former auditor.
Post Period:
· Julien Born appointed as CEO of HeiQ AeoniQ Holding to lead scale up.
· Robert van de Kerkhof appointed as new Chair of HeiQ plc, effective 1 April 2024.
· Successful fundraising of
· Acquisition of
Investor Presentation:
Carlo Centonze, CEO, and Xaver Hangartner, CFO, will provide a live presentation for investors via the Investor Meet Company platform at 11:00 am GMT today. The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation. Investors can sign up to Investor Meet Company for free and click "Add to Meet" HEIQ PLC via:
https://www.investormeetcompany.com/heiq-plc/register-investor
Carlo Centonze, co-founder and CEO, HeiQ plc, said:
"As we look forward, we cautiously anticipate market conditions to improve in the second half of 2024. Until this time, we will continue to remain vigilant, focusing on operational efficiencies and adapting our cost base.
"With resilience, innovation, and collaboration at our core, we are confident in our ability to overcome these obstacles and emerge stronger from these testing times. I extend my gratitude to our investors, team members, advisors, and customers for their unwavering support and dedication. Together, we will chart a path forward towards sustainable growth and success in 2024 and beyond."
For further information, please contact:
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HeiQ Plc Carlo Centonze (CEO) |
+41 56 250 68 50 |
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Cavendish Securities plc (Broker) Stephen Keys / Callum Davidson |
+44 (0) 207 397 8900 |
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SEC Newgate (Media Enquiries) Elisabeth Cowell / Molly Gretton / Tom Carnegie |
+44 (0) 20 3757 6882 |
About HeiQ
HeiQ is a Swiss-based international company that innovates pioneering and differentiating materials in partnership with established global brands. We bridge the academic and commercial worlds to conceive performance-enhancing materials and technologies, working with aligned brands to research, manufacture and bring products to market, aiming for lab to consumer in months. Our goal is to improve the lives of billions by innovating the materials that go into everyday products, making them more hygienic, comfortable, protective, and sustainable.
Our strong IP portfolio positions us as an innovation leader for niche, premium and high-margin products in the textile chemicals, man-made fibers, paints and coatings, antimicrobial plastics, probiotics and household cleaner markets. We have also expanded into healthcare facilities, probiotic cleaning, and hygiene coatings markets to help make hospitals and healthcare environments more hygienic.
We have developed over 200 technologies in partnership with 300 major brands. With a substantial research and development pipeline, including key technology development projects HeiQ AeoniQ, HeiQ ECOS, HeiQ GrapheneX, and HeiQ Synbio, HeiQ aims to deliver shareholder value through sales growth and entry into new lucrative markets through disruptive innovation and M&A.
We have built a strong reputation for ESG & sustainable innovation, having won multiple awards including the Swiss Technology Award twice and the Swiss Environmental Award. Under experienced leadership, we are committed to driving our profit in close connection with people and the planet. For more information, please visit www.heiq.com.
Chairwoman's Statement
The market downturn which commenced in late 2022 continued to cause challenges for HeiQ throughout 2023. Contrary to predictions by many in the industry, market conditions failed to rebound during the period. Our revenues decreased by 11.6% to
In light of the challenges faced during the year, we are greatly appreciative of the support shown by our shareholders in our recent fundraise to support the Company's next phase of growth.
Strategy & Structure
Since listing on the London Stock Exchange on December 7, 2020, HeiQ has evolved significantly. Initially known as an innovation company with a focus on specialty chemicals for textile and flooring, HeiQ has since developed into a company with leading technology platforms that drive sustainability in strategic industries and applications.
This evolution means HeiQ, while still being recognized as a leader in textile performance chemicals and antimicrobials, today focuses are on sustainable technologies in textile fibres (HeiQ AeoniQ), probiotic healthcare cleaners (HeiQ Synbio), anode free solid state lithium metal batteries (HeiQ GrapheneX) and transparent conductive coatings (HeiQ ECOS). This evolution has been achieved both through acquisitions and HeiQ's own innovation and business development efforts.
HeiQ's organizational structure, consists of three distinct technology ventures alongside three growth-orientated business segments.
This Venture & Growth structure enables the organization to stay focused on growth and commercialization of existing as well as the incubation of new technologies. With dedicated teams for each unit, we can deploy and adjust resources and skills appropriate to the different maturity levels of the units.
Governance
The evolution of HeiQ over the last four years has led to a significant increase in administrative complexity, in turn, requiring our reporting processes and governance to evolve and improve. The Company acknowledges and is fully committed to implementing these improvements, and as such began making significant investments in 2023 to address them.
In Q1 2023, we established a central accounting function within our global shared service hub in
To address the deficiencies identified by Deloitte LLP in auditing the 2022 accounts we have undertaken a comprehensive set of actions:
• We engaged Ernst & Young (EY) to support the improvement of governance, reporting and financial accounting processes.
• We are adding two additional employees to manage the EY governance project implementation and to strengthen the internal controls system on an ongoing basis.
• We defined a roadmap to address the most severe deficiencies and those which will have the greatest positive impact on the 2023/24 financial reporting process.
• We have already implemented improvements for this interim report as of December 31, 2023, as far as practicable.
As previously announced, the Company continues to seek a replacement auditor following the resignation of Deloitte LLP. The Company will update the market in due course.
The Company has extended its accounting reference date to June 30, to enable an incoming auditor to properly onboard and complete the audit in a reasonable timeframe. Therefore, this financial report represents unaudited interim financial statements for the 12-month period ending December 31, 2023. The Company's next set of audited financial reports and accounts will be for the period January 1, 2023 to June 30, 2024 and will be published by October 31, 2024.
Changes to the Board of Directors
On January 1, 2024, Robert van de Kerkhof joined the Board of HeiQ plc as a non-executive director and chair of the Environmental, Occupation, Health & Safety and Sustainability Committee. With over 30 years' experience in management and sustainability leadership, including serving as Chief Commercial Officer, Chief Sustainability Officer and board member of the listed company Lenzing AG (
As previously announced, I will retire as Chair and non-executive director of HeiQ plc on March 31, 2024. Joining the Company just before its listing in 2020, it has been an intense and very fulfilling time. Together with fellow directors and a dedicated management team, we have navigated through a myriad of challenges and opportunities, culminating in the development of a compelling portfolio of high-potential platform technologies poised to sustainably revolutionize growing industries.
As HeiQ enters the next stage of its growth with the commercial launch and scaling of its venture technologies, I have concluded it is an appropriate moment to hand-over the Chair position. This will allow me to spend more time with my family while ensuring HeiQ has a new leader with exceptional experience and industry knowledge.
Following the proposal by the Nomination Committee after a thorough selection process, the Board of Directors has unanimously appointed Robert van de Kerkhof as the new Chair of HeiQ plc, effective April 1, 2024.
I am convinced that HeiQ is in very capable hands with Robert as Chair, as he is not only a technical expert, but also an exceptional leader with executive management experience on listed company boards.
I thank the entire HeiQ team for the last four years and extend my best wishes to all HeiQans, our investors as well as all our other stakeholders.
Esther Dale
Chair
March 28, 2024
Business Report & Outlook
I am pleased to provide an update on our company's performance for the twelve months ending December 31, 2023 and an outlook for 2024.
2023 continued to present challenges for our industry and commercialized businesses. Despite the strategic initiatives of relocation of capabilities, cost containment and strategic focus undertaken to mitigate the impact of market disruptions, our financial performance remained under pressure, especially as we kept investing in our venture innovation platforms. Sales for the year amounted to
Operating losses persisted in 2023, albeit with some improvement, amounting to
Innovation remains the cornerstone of our company's strategy, driving sustainable growth and differentiation in the market. We made significant strides in advancing our key commercial and venture innovation platforms in 2023:
· HeiQ AeoniQ, the world's first climate positive cellulosic filament fibre, launched to the market with Hugo Boss in 2023. Tennis star Matteo Berrettini featured the first t-shirt during the Australian Open 2023, and Hugo Boss prominently displayed a state-of-the-art fashion collection called "The Change" at the Milano Fashion Show. The uniqueness of HeiQ AeoniQ was awarded an ISPO award for product of the year. In Q1 2024 HeiQ purchased a large industrial plot of 25,000m2 in
· HeiQ ECOS, our transparent conductive coating technology platform, progressed well in application development with market leaders in thin film insulation for rapid retrofitting and energy efficiency improvement of buildings, climate control in advanced greenhouse foils, transparent car window heating, signature management for defence applications, as well as conductive layering for novel organic photovoltaics. We expect several of these potential applications to become first market prototypes in 2024.
· HeiQ GrapheneX, our highly porous graphene membrane, has secured its first external innovation funding from an electronics technology partner and progressed to demonstrate the performance benefits of its novel graphene membrane in building an anode-free solid-state lithium metal battery with double energy density. Considerable new IP was gained and is being filed in patent applications. In 2024 the first pilot commercialization plant will be commissioned in
· HeiQ Synbio, our biotech & life sciences platform, progressed rapidly in 2023 with the completion of the study conducted by the Charité University Hospital Berlin, sponsored by the German Government and the Bill and Melinda Gates Foundation. It established that probiotic HeiQ Synbio hospital cleaners perform equally well as Ecolab disinfectants but additionally prevent the formation of pathogens' multi-resistance buildup. Based on these stark results, the Robert Koch Institute recommended probiotic cleaners to German hospitals. The European Commission added probiotic cleaners to its new detergent regulation draft having previously awarded probiotic cleaners the EU Ecolabel. We therefore expect strong growth for our HeiQ Synbio platform in the years to come.
As we look ahead to 2024, we anticipate a continuation of the challenging market conditions experienced in 2023 during the first half of the year. The global economy remains uncertain, with ongoing geopolitical tensions and supply chain disruptions affecting various industries. However, as of today, we expect market conditions to start improving in H2 2024.
Considering the persisting challenges, focus for 2024 remains on:
· Lean Adaptation: Remaining agile and adaptive to changing market dynamics and consumer behaviours.
· Operational Efficiency: Continued emphasis on cost optimization measures to improve operational efficiency and preserve financial stability as well as liquidity.
· Innovation and Differentiation: Prioritizing rapid innovation initiatives that offer differentiation in the market and address evolving customer needs.
· Market Expansion: Exploring opportunities for market expansion in resilient sectors and geographies, while also strengthening existing partnerships.
· Sustainability: Upholding our commitment to sustainability by advancing our innovation initiatives that reduce environmental impact and promote responsible business practices.
As we navigate through present-day challenges and uncertainties of the current market landscape, we remain steadfast in our commitment to delivering long-term value for our shareholders, customers, and stakeholders. With resilience, innovation, and collaboration, we are confident in our ability to raise again and overcome obstacles and emerge stronger from these testing times.
I extend my gratitude to our investors, team members, advisors, and customers for their unwavering support and dedication. Together, we will chart a path forward towards sustainable growth and success in 2024 and beyond.
Carlo Centonze
CEO & Executive Director
March 28, 2024
Principal risks and uncertainties
The Group has an established, structured approach to identifying and assessing the impact of financial and operational risks on its business. The principal risks and uncertainties for the remainder of the financial year are not expected to change materially from those included on pages 38 to 42 of the Annual Report and Accounts 2022. The risks identified relate to the following areas: Delivery on growth strategy; Increase in competition; Geographical risks; IP protection and first mover advantage; Regulatory risks; Reputational risks and failure to build brand equity; Innovation pipeline; Supply chain disruptions; Personnel/Workforce; Interruption of IT system operations; Liquidity risk; currency risks; Product liability. Further information in relation to the Group's financial position and going concern is included in note 2.
Carlo Centonze
CEO & Executive Director
March 28, 2024
Financial Review
As outlined in the Chairwoman's statement and the Business Report, 2023 was a very challenging year for the Company. The continuously weak market conditions for our main commercial businesses led to a decrease in revenues for the 12-month period by -11.6% to
Gross profit of
Total selling, general and administrative expenses (SG&A) were
Accounting aspects relying on significant judgment and estimations and individual transactions that materially affected our interim financial statements as of December 31, 2023, are as follows:
Allowance on inventory
In line with existing accounting policies of the Company, an inventory allowance of
Impairment of intangible assets
The Company acquired in previous years certain intangible assets to secure its intellectual property position in relation to certain long-term customer contracts, including the exclusivity agreement with ICP Industrial Inc. As the exclusive agreement with ICP has been terminated, the Directors have deemed it appropriate to write-off the corresponding intangible assets, amounting in a write-off of
Settlement of litigation
As announced in November 2023, the Group settled the litigation and the termination of an exclusive agreement between its subsidiary HeiQ Materials AG and ICP Industrial Inc. ("ICP"). The settlement of the litigation included dismissal of claims and counterclaims by both parties with prejudice and ICP agreed to pay HeiQ Plc a total of
All the above contributed to a loss from operations for the 12 months ending December 31, 2023 of
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