Differentiate.
Innovate.
HeiQ plc
Annual report and accounts 2020
HeiQ plc Annual report and accounts 2020
ADJUST SPINE 6MM WHEN SENDING TO PRINT
Who we are
HeiQ creates innovative
technologies that add
functionality, comfort,
hygiene and sustainability
to apparel, home textiles,
technical textiles, medical
textiles and devices,
as well as functional
consumer products.
Our purpose
To improve lives by
innovating the materials
people use every day.
Our vision
Heiqed materials
that improve the
lives of billions.
Our mission
To pioneer
differentiating
materials through
co-creation.
Strategic
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Corporate
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Financial
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HeiQ plc
Annual report and accounts 2020
.001
2020 highlights
Operational
Broadened business areas and
product portfolio, entered into
new high growth markets
Rapid and deep innovation
capability gave us a product highly
relevant to help society during the
Covid-19 pandemic and deliver
during an adverse economic
situation
Unique go-to-market capability
and adaptable marketing
approach to launch product
with completely new media mix
(media presence +280% vs. 2019)
Business of regular products
unaffected by slowed economic
activities
Financial
Revenue | US$m
+80.3%
Gross profit margin | US$m
+700bpt
EBITDA (Adjusted) | US$m
+383.7%
EPS (Diluted) | US$
+493.0%
Contents
Strategic report
2020 highlights .001
At a glance .002
Our DNA .004
Investment case .006
Chairwoman’s Statement .008
Market overview .010
Business model .012
Our strategy .014
Strategy in action .016
Chief Executive Officer’s Review .020
Key performance indicators .024
Sustainability Report .026
Section 172 Statement .030
Financial Review .032
Risk management .036
Principal risks and uncertainties .038
Corporate governance
The Board .042
Chairwoman’s introduction .044
Corporate Governance Statement .044
Audit Committee Report .047
Nomination Committee Report .049
Remuneration Committee Report .050
Directors’ Report .054
Financial statements
Auditor’s Report .056
Financial Statements .062
Notes to the Consolidated Financial
Statements
.066
Company Financial Statements .098
Notes to the Company Financial
Statements
.101
Company Information .107
2020 50.4
2019 28.0
2018 26.2
2020 14.0
2019 2.9
2018 2.3
2020 0.0421
2019
N/A
0.0071
2020 55.6
2019 48.6
2018 42.8
HeiQ plc
Annual report and accounts 2020
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Strategic report
At a glance
HeiQ is a three-in-one company, focused on scientific
research, specialty materials manufacturing and
consumer ingredient branding. We further provide
value-adding services to facilitate our partners in
bringing innovations to market.
What we do
From ingredients to
finished goods, the key
products and services
we provide to our
brand partners can
be summarized in
four categories:
.01
.02
.03
.04
Functional ingredients
We are an innovator, creating ingredients based on natural
components or chemicals which are applied to textiles
and other products to give the end user an enhanced
experience. Our ingredients make products more
functional, more comfortable and more sustainable.
Functionalities provided by our ingredients include
enhanced cooling, warming, moisture management,
odor control, water and oil repellency, insect repellency,
hygiene, antiviral, antibacterial and antifungal protection
and microbial management. Our ingredients have been
used to make cooling sportswear, air purifying curtains,
antiviral mattresses and water-repellent trench coats,
among many other applications.
Functional materials
Our functional materials take our unique
ingredient technologies and processes and
apply them to textiles, fabrics, membranes,
filters and more. Our functional materials
have multiple applications. They can be
used to make masks and gowns that are
more resistant to microbes, winter jackets
that maintain more heat, and in coastlines
to preserve the maritime life and offset the
negative environmental impact of oil spills.
Finished goods
We use our functional materials to create
functional consumer goods and medical
devices that we market directly to the end
users. Recent examples include functional
garments that feature our technology.
Since 2020, we produce masks, gloves
and sprays featuring our HeiQ Viroblock
technology. In collaboration with our brand
customers, Coats, Sitip, Vagotex and
NYGUARD (2A SpA), we also created a
multi-functional travel jacket called Just5.
Support services
We provide expertise in product
development, testing, regulatory
affairs and technical support as part
of our full suite of solutions. We also
support our brand partners by enabling
them to communicate the benefits
of HeiQ technologies to consumers
through marketing and ingredient
branding services.
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Annual report and accounts 2020
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Head Offices
Innovation centers
Manufacturing sites
Distribution partners
Who we work with
In our 16-year history, we have built long-standing
relationships with clients all over the world. We
typically work with brands in fashion, home textiles,
sportswear and workwear. Recently, we have
broadened the industries we work with to include
water treatment, industrial laundry, detergent, paint,
coating and packaging. To date, we have partnered
with over 300 major brands and developed together
with them many of our over 200 technologies.
Where we operate
Including our most recent acquisitions in 2021, we employ over 140 people, based in 11 offices,
six R&D hubs and seven manufacturing facilities around the world. Over 20 distributors complete
our global presence.
Our global brand
partners include:
Employees worldwide
140+
Locations worldwide
11
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Annual report and accounts 2020
Strategic report
Our DNA
The idea for the company famously came
during a hike in 2004; how did you meet
before then?
Murray: After completing my PhD at the
Massachusetts Institute of Technology (MIT) in
2003, I accepted a postdoctoral research
position at ETH Zurich. When I moved to
Switzerland, a mutual friend introduced me to
Carlo and we soon became friends through
running, hiking and sports.
with our co-founders
Carlo Centonze | CEO
Dr. Murray Height | CSO
HeiQ: Born on a hike
After a week of hiking in the Swiss Alps, our
friends began to keep their distance from us
because we had smelly shirts. So we thought:
We will use science to
help brands manufacture
clothes that smell fresh
all week long!
HeiQ, pronounced [’haIkju],
stands for the “hike” on which
we came up with the HeiQ idea.
It also stands for high-quality
materials and for IQ.
Carlo Centonze
CEO
Dr. Murray Height
Chief Science
Officer
.005
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Annual report and accounts 2020
Why did you decide to start a
company? What made you think
you’d be a good team?
Carlo: We were curious whether our
solutions could solve the problems at
hand. I believe we make a great team
because we have complementary
capabilities. Murray has an amazing
ability to access science, tech and its
market viability, and my skills lie in
assessing the market opportunity and
delivering a go-to-market strategy.
Murray: We were both at a stage in
our lives where we thought we could
apply ourselves to building a company,
with the sense that no matter what
happened we could learn a lot by
creating a new enterprise together.
What was your original vision for
the Company?
Murray: The initial vision was to be a
producer of antimicrobial ingredients
for use in textiles, coatings and
medical implants. The thinking was
to produce unique materials through
scale-up of the patented flame spray
pyrolysis manufacturing process and
then sell the materials to the supply
chain of a wide range of final products.
Carlo: We wanted to be the material
innovation company that everyone
knows. Recognized by brands and
consumers for ingredients that provide
unrivaled functionality, performance,
quality and sustainability. Just like
Gore-Tex, Bluetooth or Intel Inside.
How has the Company’s progress
compared with your expectations?
Carlo: In some ways progress has
been slower than we’d have liked.
We have often had more arrows in
our quiver than we’ve been able to
shoot. One thing we are really proud
of is to have successfully bridged the
academic and commercial worlds,
bringing research and innovation
ideas from academia and finding
market space for them.
Murray: While the Company has grown
and developed in ways that we did not
foresee at the beginning, there remain
features and principles that we have
had since the start – a focus on novel
materials as a way to bring value to
products and a strong curiosity to try
new and better ways of doing things.
What have been your proudest
moments from the past 15 years?
Murray: Running our first pilot plant
with our first employee to produce
our first kilogram of product was a
special moment. But being able to
develop and deploy new technologies
during times of crisis, like antiviral
treatments and masks during the
global pandemic and Oilguard
nonwoven absorbers during the
2010 Gulf of Mexico oil disaster,
are probably my proudest moments.
Carlo: Listing on the LSE was a
long-desired moment. Agreeing our
first large acquisition (Chem-Tex
Laboratories Inc.) in 2017 to double
the size of HeiQ and increase our
capabilities, scope and business
reach. Running a Board of Directors
of seven industry veterans for over
100 high-net-worth investors for over
a decade.
Looking ahead, what are your
plans for the Company over the
next 15 years?
Carlo: To further establish a company
that is second to none, which creates
tech that improve people’s lives and
makes our planet more sustainable,
and deploys its innovation to the
market in an impactful way.
Murray: To re-double our focus on
building products and technologies
that have less environmental impact
on the planet while delivering
performance and value for people
all over the world. To build upon
HeiQ’s model of innovation co-
creation and boundless research
network collaboration to achieve
greater speed and impactful
innovation.
Key milestones in our history
2005
Company founded
Six months after the hike which
inspired the idea, the Company
was founded on March 21, 2005.
2008
First recurring customers, acquisition
of Tex-A-Tec and Series A
We gained our first recurring
customer, Odlo, in January 2008 and
raised CHF 6.4 million from Zürcher
Kantonalbank and 20 more investors
to conduct our first M&A of Tex-A-Tec
in an up-round closed ten days after
Lehman Brothers went bust.
2020
IPO
We achieved a long-time
ambition to go public by listing
on the LSE’s Main Market in
December 2020 via a reverse
takeover of SPAC Auctus
Growth Plc.
2019
Global expansion
Our global footprint grew with
the establishment of HeiQ
Portugal, HeiQ Shanghai and
HeiQ Taiwan, as well as a
dozen new distributors.
2017
Acquisition of Chem-Tex
Laboratories and Series C
The acquisition of Chem-Tex
Laboratories Inc., USA doubled the
size of the Company and enabled
us to enter the world of mass
manufacturing. We raised CHF
4 million from Kemin Industries
(USA) and ten more investors.
2010
Series B
We raised CHF 11.1 million
from Credit Suisse, Zürcher
Kantonalbank, OneLife and 30
more investors, to build up HeiQ
Australia and create additional
technology platforms.
HeiQ plc
Annual report and accounts 2020
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Strategic report
Investment case
Innovator
Differentiator.
HeiQ has built a reputation as a high intellectual
capital company, with world-leading innovation,
a global R&D and sales network, strong ESG
credentials and an established
presence in multiple high
growth markets.
Strong brand equity
enabling royalty and
licensing revenue model
Strong
financials
We are a cash-generative and
high margin business, with a
healthy balance sheet, diversified
revenue and a track record of
delivering financial growth. The
£20 million raised in conjunction
with the Company’s reverse
takeover in December 2020 has
further strengthened our
financial position, creating a
meaningful cash balance to fund
our growth initiatives.
Intellectual
property
We have substantial IP,
technology and regulatory
permits which create strong
barriers to entry for competitors.
Our unique technologies,
products, process methods
and materials are protected
by nine patent families with
three more pending and over
180 trademarks. In addition
to the directly owned patent
£20m
raised at our IPO has
further strengthened
our financial position
Substantial IP,
technology and
regulatory permits
create strong
barriers to entry
portfolio, HeiQ also engages
in patent licenses with
technology partners and
industry peers.
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Annual report and accounts 2020
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Strong innovation
HeiQ aims to achieve market
differentiation through rapid and
deep innovations. We have six
key technology platforms. To date,
we have developed over 200
technologies, many in partnership
with major brands. New products
(innovations launched in 2020)
make up over 40% of revenue as of
2020. We also have a healthy R&D
pipeline containing over 40 projects,
including one with the potential to
become a blockbuster in the
medium term.
In the wake of the Covid-19
pandemic, there is significant
global demand for our
world-leading antimicrobial
technology platform, HeiQ
Viroblock. As a textile
technology, it is already being
used by 150 brands and
applied on at least one billion
textile and medical products;
we also market products with
this technology directly to
consumers. Antimicrobial
technology is expected to
become a mainstream
requirement in response to
the pandemic. Further to
antimicrobials, HeiQ has
branched out to develop
greener, non-biocidal microbial
management technologies
such as probiotics and
synbiotics.
Our founders – CEO Carlo
Centonze and Chief Science
Officer Dr. Murray Height –
have an impressive track
record of creating innovations
and successfully marketing
them, generating value for
every stakeholder. They are
leading a fast-growing team,
supported by diverse and
knowledgeable global
leadership, an experienced
Board of Directors, and an
Innovation Advisory Board
with research experts in
many different fields.
HeiQ’s key technology
platforms:
Flame Spray Pyrolysis (FSP)
Short Polymer Fibers (SPF)
Chemical and physical
vapor deposition (CVD)
Synthesis and
polymerization
Textile finish formulation,
dispersions, emulsions
Probiotics and synbiotics
World-leading
antimicrobial range
Experienced
management
We are well established and
expanding across multiple
significant growth markets,
including the US$24 billion
textile chemicals market, the
US$10 billion antimicrobial
textiles market, the US$29
billion industrial filtration market
and we are newly entering the
US$50 billion probiotic market.
High growth
markets
$50bn
probiotic market
$24bn
textile chemicals market
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HeiQ plc
Annual report and accounts 2020
Strategic report
Chairwoman’s Statement
Esther Dale-Kolb
Chairwoman
IPO enhances
our advantage.
Having known HeiQ and its
founders for the last decade,
I am delighted to be writing my
first statement as Chairwoman
of HeiQ plc, and the first as a
constituent of the Main Market
of the London Stock Exchange.
HeiQ wants to expand to better serve
our customers and partners and to
create more value for our stakeholders.
After going public on the London Stock
Exchange in December 2020, the
Company raised £20 million (gross)
to fuel our future growth and we are
well placed to continue delivering on
this mission.
Overview
I am pleased to report on a year which
has seen HeiQ make significant
progress towards our long-term
objectives and deliver record results.
HeiQ has long been a cash-generative
and high margin business, with a
healthy balance sheet, diversified
revenue and a track record of delivering
financial growth. In 2020, we took this
further by generating revenues of
US$50.4 million, almost doubling the
previous year’s figure.
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HeiQ plc
Annual report and accounts 2020
The ability to rapidly adapt to a changing
environment in a smart way and with
innovative ideas is clearly one of HeiQ’s
core strengths. This has enabled us to
become well established and a rapidly
expanding company across multiple
significant growth markets, including the
US$24 billion textile chemicals market
and the US$10 billion antimicrobial
textiles market. During the last year, the
market for sanitation and disinfection
has grown enormously due to the
Covid-19 pandemic. We seized the
opportunity to contribute to combating
the pandemic and expand our product
assortment by launching HeiQ Viroblock
and by establishing ourselves in the
medical devices market, producing
personal protective equipment (PPE)
like antiviral face masks that are more
protective than conventional ones. Both
the outstanding success of HeiQ
Viroblock and entering the PPE market
have contributed strongly to our revenue
growth. At the end of the year, HeiQ
acquired a controlling stake in the
Spanish medical device production
plant MasFabEs in order to in-source
medical device manufacturing
knowhow for future R&D in the key
strategic field of PPE.
It is noteworthy that this all took place
whilst sustaining a healthy level of sales
activities with the regular products.
Despite the global economic headwinds
that affected many of our industry peers
severely, we were able to grow our
revenue with the regular product range.
New products and application ideas
are continuously being developed by
the HeiQ innovation hubs, in close
cooperation with customers, as well as
with over 20 universities around the
world. As demonstrated by HeiQ
Viroblock, HeiQ rapidly researches new
solutions for partners, quickly delivers
scale-up manufacturing from its sites
across the world and helps partners
market the product to end consumers
– from lab to consumer in months.
The continuous flow of our innovation
pipeline is ingrained, and 2021 has
commenced with a healthy, promising
innovation pipeline.
After such a boost in growth and going
public, other tasks like the refinement of
our strategy, Company structure and
corporate processes and systems are
being enhanced to cope with the
increased demands of the business, as
well as from a governance perspective.
These are in the process of being
diligently implemented. We also decided
to repay most current bank loans in
December 2020 whilst retaining
significant credit line facilities with
the banks.
Dividend
In order to take advantage of the
momentum created in 2020 and
invest into the growth opportunities,
the Board has decided not to pay a
dividend from 2020 retained earnings.
Board
At the time of re-admission to trading
on the London Stock Exchange, all
Board Members of the former
Auctus Growth Plc resigned and the
new HeiQ plc Board was appointed.
Of the five new directors, three were
Board members of the former parent
company of the Group (HeiQ Materials
AG): Ben Bergo (NED), Carlo Centonze
(Executive Director and Group CEO)
and me (NED). In addition, Karen
Brade (NED) and Xaver Hangartner
(Executive Director and Group CFO)
joined the Board. With a Board of five
directors (of which three are non-
executive), we believe we have a
balanced, diversified and experienced
team to lead the whole Group on
behalf of the shareholders in an
efficient and effective way. I have
been impressed with the approach
and achievements of the Board since
we became a public company and
look forward to working with this team
and building the Group.
The Board meets frequently to
challenge and support the dynamic
management team. Audit,
Remuneration and Nomination
Committees have also been in place
since Re-admission.
Governance
Upon admission to the London Stock
Exchange’s Main Market, HeiQ has
chosen to adopt the QCA Corporate
Governance Code (the ‘Code’) on a
comply or explain basis. The Code is
constructed around ten broad
principles and how we have complied
with each of these can be found in our
Corporate Governance report
contained within the Annual Report to
be posted to shareholders shortly.
Outlook
The £20 million of new capital raised
(before expenses) in December 2020
will support our ambitious expansion
strategy to diversify beyond textiles to
become a leader in materials
innovation. HeiQ is investing in
additional personnel, geographic
expansion, strategic alliances,
regulatory registrations, product
development, technology platforms
and M&A activities. We are in
discussion with a number of targets
which fit and complement our
offerings for our partners and
customers.
Since the start of the pandemic last
year, we have all become much more
aware of pathogens on the surfaces
we touch and the health risks
associated. This is driving increased
market demand for material
innovations that enable better
microbial management on surfaces,
such as packaging and other printed
surfaces, as highlighted by some
recent notable contract wins. We
acquired 51% of Chrisal NV, a Belgium
based company which offers expertise
in probiotics/synbiotics in March
2021. This is a new technology
platform for HeiQ and provides us with
access to the US$50 billion global
probiotic market.
We will also invest to develop existing
and new technologies, and to better
monetize them and expand into new
markets. Although this will increase
our cost base in the short term, it is
expected to contribute to a healthy
and profitable growth in the mid and
long term.
I am extremely proud to chair and to
be part of HeiQ. Its employees
continually surprise me. Despite not
having a lot of personal contact due to
the workforce being spread all over
the world under travel restrictions and
home office requirements, they are
nevertheless fulfilling their tasks with
enthusiasm, team spirit and a big
sense of responsibility.
On behalf of the Board, I would like to
thank the whole HeiQ team which has
performed in the most extraordinary
way to achieve the impressive overall
2020 result. We have set ourselves
ambitious goals for 2021 in an
uncertain environment and I am
confident that, through our dedication
and effort, we will achieve them.
Esther Dale-Kolb
Chairwoman
HeiQ plc
Annual report and accounts 2020
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.01 .02 .03
Strategic report
Market overview
Solutions for future
unmet needs.
Growing, urbanizing and
migrating global population
Technological advancements and
economic prosperity have enabled
improvements in medicine, sanitation,
food production and living conditions,
resulting in lower mortality rates and
a rapidly growing global population.
This growth has led to more people
flooding into towns and cities in
pursuit of increased quality of life, with
cities and urban areas now home to
over half of the world’s population.
This influx places huge strain on
infrastructure such as transportation,
sewage, housing and utilities in a
limited space.
Population growth and urbanization
result in increased air pollution,
meaning a greater requirement for low
emissions solutions and appropriate
filtration to mitigate these risks.
A denser populace also poses greater
threats of disease and future
pandemics due to more people living
in close quarters, putting substantial
emphasis on surface and air hygiene.
Climate change and
environmental degradation
The negative implications of earth’s
rising temperatures, increased CO
2
levels and biodiversity loss are
profound. The scientific community
has clearly stated the urgent need to
keep global warming below a 1.5˚C
increase to preserve stable living
conditions. Despite this, emissions
continue to rise, species are lost and
forests are felled.
The detrimental effects of climate
change include rising sea levels,
extreme weather events and habitat
loss, and will inevitably lead to
resource scarcity and social and
political unrest. Often the poorest in
society are most severely impacted
by these environmental changes,
meaning the developed world has a
heightened responsibility to address
its production and consumption
habits and the wider implications of
these habits on poorer communities.
Scarcity of and global
competition for resources
Humanity uses approximately 1.6
planets’ worth of resources to support
its current activities and if drastic
measures aren’t taken, this will
increase to two planets’ worth by
2030
1
. In short, we need to halve
our current activity levels to ensure
we are able to live within our planetary
boundaries.
We are already seeing the
interconnected problems arising from
the resource demands of a growing
population coupled with the impacts of
climate change on the availability of
resources. These two unstoppable forces
mean competition for limited resources
is fierce and management and mitigation
are vital to maintain a fair and balanced
society and avoid conflict.
The manufacturing of products that
use recycled materials and that are
recyclable at the end of their usable
life will preserve the raw material
value throughout its lifecycle. Focusing
on sustainable solutions for
production practices will support the
preservation of natural capital.
Political intervention and global
collaboration are essential to ensure
sustainable development and the
creation of closed-loop economies
and fair access to natural resources.
1. Source – www.footprintnetwork.org/
Our technology and solutions are created in response to
megatrends and market needs. We identify, or even foresee,
a problem and develop a science-based solution to solve it.
Anticipating future needs brought by global megatrends
Challenges facing the industries we operate in give us the opportunity to contribute and serve. A number of global,
long-term trends are having a major impact on the planet. These sustainability challenges are driving change in both
manufacturing processes and product development in the markets where we operate.
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HeiQ plc
Annual report and accounts 2020
The market opportunity for HeiQ
Acting as a translator and connector
between academic research and
market need, we work with our global
network of more than 20 academic
partners and over 300 brands to
understand how these megatrends
are necessitating material and
product innovation in terms of both
process and output.
Our partners, direct customers and
wider consumers are looking for
two things from HeiQ: materials and
products that allow them to minimize
the negative impacts during
manufacture and throughout the
product’s usable life, and modern
functionality and performance of
our products, which provide long-
term sustainable benefits and even
combat some of the effects of
outlined trends. For instance, in
2019 we created HeiQ Fresh AIR,
a technology that adds the ability
to purify indoor air to home textiles.
The pandemic has led people to
realize how much exposure to
pathogens they have in their daily
lives and to be much more aware of
the surfaces they come into contact
with. This will drive increased market
demand for microbial management
products, including coatings for
packaging, paints and products that
help maintain surface hygiene.
The markets we operate in
As an innovator in materials, there is
scope for our technology to be used
across many markets. We continue
to consolidate our strong position in
the textile industry and build up our
medical device offer. New markets
we will increasingly move into include,
for instance, probiotics, through the
acquisition of Chrisal NV in 2021,
and technical filtration, batteries and
electronics with our advanced R&D
project in regard to a highly porous
graphene membrane technology. The
magnitude of the markets we operate
in are as follows:
Antimicrobial textiles market
+$10bn
in 2019 | CAGR 9.8%
(Global Market Insights)
Textile chemicals market
+$24bn
in 2019 | CAGR 4.5%
(Grandview Research)
Industrial filtration market
+$29bn
in 2020 | CAGR 6.9%
(MarketsandMarkets
TM
)
Probiotic market
+$50bn
in 2019 | CAGR 6.9%
(Grandview Research)
How we are responding
to opportunities
Whether driven by a scientific
development or a new consumer
desire brought to us by a brand
partner, we have the unique ability
to respond to opportunities with
rapid and deep innovation and
turnkey solutions.
Sustainable manufacturing
We are responding to the need for
more sustainable and efficient
production by:
Embracing circularity
Improving process efficiency
Increasing material efficiency
Replacing dangerous goods with
non-dangerous goods
Replacing conventional ingredients
with natural, bio-based and recycled
alternatives
Extending the useful lifetime of
products by higher quality and less
maintenance
Innovative and functional products
We are creating materials and products
that:
Allow for efficient production and
help to reduce the environmental
footprint of the manufacturing
process
Promote safety and wellbeing
(microbial management, filtration,
water treatment, thermo regulation)
Are sustainable (recycled,
recyclable, non-dangerous, durable)
Help to reduce the footprint during
the usable life of the products
(clothes that require less washing,
sheets that can be cleaned
effectively with mild detergent and
cold water, clothes that dry
faster, etc.)
Please refer to the Sustainability Report on page 26
for more examples of how our innovations help our
customers to create more sustainable products.
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Strategic report
Business model
When partnering with a brand or manufacturer, we distinguish
ourselves from competitors by offering end-to-end turnkey solutions,
with experience and capabilities across the value-chain and project
lifecycle. When manufacturing finished goods that we directly market,
we combine our experience and capabilities to ensure excellent
product quality and effective communication to the consumers.
What we do
There are three key elements to our partner offering.
We are unrivaled in our overall blend of products and
services, and also bring a unique range of strengths
to each stage of the process.
.01
.02
.03
Scientific
research
Specialty materials
and ingredients
manufacturing
Consumer
marketing
and ingredient
branding
Our research is motivated by the problems
our market partners bring to us. We solve
problems following a three-step process.
Step 1: Define the problem and its single
components.
Step 2: Create a hypothesis and proof of
concept with our research partner network
for each component.
Step 3: Develop and assemble market-
ready products with our internal
development tech support and consumer
validation teams.
The HeiQ difference
Internally, 15% of our employees
are highly skilled scientists and
work in the area of research and
development; externally, we have
an extensive network of academic
research partners. Through our
co-creation approach, we share
and diversify the risk of exploratory
research projects with our
partners, and we have experience
navigating multiple global
government funding processes.
After research and a successful proof of
concept, projects move into a phase where
the initial recipe or prototype is developed,
refined and optimized to ensure it is
scalable. The production protocol is
documented and deployed to our
production sites. Our manufacturing
capacity also allows us to pursue large
manufacturing projects in our industry.
The HeiQ difference
Our knowledge, facilities and
IP enable us to manufacture
ingredients, materials, consumer
goods and medical devices in
industrial volumes and bring
to market at speed but with
validation and quality control.
We operate in markets that have
medium to high barriers to entry,
including increasingly complex
regulatory, registration and
compliance requirements.
For an innovation to be successful and
benefit as many people as possible, it is
crucial that we get the marketing and the
message right and communicate through
multi-media content. We work with our
partners to develop marketing narratives
and communication strategies together.
We join launch events, make press releases
and promote products. Often we also
participate in training our customer’s sales
organization how to sell and capture the
added value of the innovation. By helping
our ingredient brand customers maximize
the price premium and lowering their barrier
to innovate, we foster innovation spirits in
the industries in which we operate.
The HeiQ difference
We have a team of marketing
and branding professionals
with experience across a range
of markets. We have strong
knowledge and experience
of consumer behavior and
understand how to create
branding materials that translate
complex technical scientific
knowledge into plain consumer
language. We produce multi-
media content and have
expertise in all channels.
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HeiQ plc
Annual report and accounts 2020
How we generate
revenue
Our primary source of revenue is
the production and the sales of
functional ingredients, materials
and finished goods. Other
sources of revenues include
research and development
services as well as laboratory
work. Because of the highly
differentiating nature of the
products, we generally adopt
a value-based pricing strategy.
After we develop a production
protocol, we manufacture the
functional ingredients, materials
or products ourselves or
selectively license the IP to other
manufacturers for a licensee or
franchisee fee.
Some research projects are
financed through grant funding
or directly by customers,
either in the form of a research
partnership, or by their
purchases of existing
(off-the-shelf) technology.
The value we create
Partners and customers
Our brand partners and direct
customers benefit from access
to our differentiating technology.
Our performance-enhancing
materials improve their products.
We provide end-to-end support and
all the services required to bring
innovations to market.
Consumers
Products featuring our technology
offer tangible benefits for the
end user, including innovative
functionality, comfort, hygiene and
sustainability features.
Employees
Our employees have the chance to
work and develop in a meritocratic
and diverse environment, being
challenged and supported to help
the Company deliver on its purpose
and make a difference for a
better world.
Investors
HeiQ is in a robust financial position
with a healthy balance sheet and
diversified revenue. We have been
cash generative for many years, and
our investors benefit from the
ongoing growth of our business and
our willingness to create disruptive
innovation.
Suppliers
We develop strong and trusted
partnerships with our suppliers.
Our growth and momentum
will lead to increased spending
on raw materials in innovative
product applications.
Society
By helping many brands and
consumers to reduce their impact
on the environment, we are
indirectly improving the lives
of billions more. Through our
engagement with university
research partnerships, we play
a role in fostering the education
of new generations of scientists
and engineers.
HeiQ plc
Annual report and accounts 2020
.014
Strategic report
Our strategy
Our growth strategy is built around five pillars, which will
help us achieve our vision of delivering materials that
improve the lives of billions.
Strategic pillar Why we focus Progress in 2020
Growth
markets
.01
Textiles
In the textile industry, low margins are a major
barrier to take risks (innovate) and make change
(new ways of doing things more sustainably).
Our unique approach of innovation and
differentiation is the key to overcoming this
barrier and achieving above-average margins.
Medical devices
Innovation in medical devices is slow because
of a bureaucratic culture and long approval
processes as well as large, entrenched players.
However, the pandemic has demonstrated an
urgent need to have better, more protective
and safer medical devices.
Surface hygiene
Increasing awareness of pathogens on surfaces
and demand for sustainable solutions to
maintain surface hygiene.
Other materials
Any material can become better, more functional
and more sustainable.
Textiles
Increased sales from US$28 million in 2019 to
US$42 million in 2020
Doubled the number of customers
Medical devices
Entered the medical device and consumer goods
market, created direct-to-consumer sales channel
Achieved US$8 million sales
Surface hygiene
Ventured into this new market with our antimicrobial
ingredients
Innovation
.02
Innovation is the process of creating value by
doing things differently. Innovation is the only
way to become more sustainable.
The innovation pipeline featured over 40 projects
in 2020
Launch of HeiQ Viroblock NPJ03 antiviral textile
treatment
Helped the fight against the pandemic with our antiviral
textile technology, upgrading protection to one billion
face masks
Differentiation
.03
Our innovations benefit consumers and the
planet. However, the value we create needs
to be understood by consumers, so that our
customers are able to up-charge consumers for
the added value and therefore are willing to pay
us for our innovations. This is why we help our
customers to differentiate towards consumers
by explaining the value of our innovations and
making them tangible.
Successfully positioned HeiQ as the innovation leader
for textiles and materials, gaining brand equity for HeiQ
for future product launches and royalty business
Successful launch of HeiQ Viroblock brand
Started our direct-to-customer business (webshop) and
consumer goods business
HeiQ Smart Temp grew over 16% year-on-year thanks
to years of cultivating this into the leading “cooling
technology” brand
.015
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HeiQ plc
Annual report and accounts 2020
Strategic pillar Why we focus Progress in 2020
People and
sustainability
.04
Innovation needs high intellectual capacity and
human capital, and we are only as good as our
people. Sustainability is not only ingrained in our
DNA and drives us as a Group, but is also key to
the long-term success of any corporation.
Strengthened our human capital by expanding the
workforce in the office and lab in China and lab and
quality control center in Taiwan
Established a team and a new office and lab in Portugal
Acquired a team and facility for medical device
manufacturing in Spain
Applied our in-depth knowledge in textiles and created a
mask that is rated by consumers as “most comfortable”,
to lessen discomfort and enhance protection to the
users during the pandemic
Refer to the Sustainability Report (page 26) for some
examples of how we are helping our customers become
more sustainable as well
Digital
.05
Digital improvements can lead to process
efficiency, greater innovation and an enhanced
customer experience.
Launched direct-to-consumer webshop for protective
equipment and medical devices
Initiated the adaptation of several digital tools to
enhance administration and collaboration across a
multinational, decentralized organization to facilitate
efficiency for prolonged home office or remote working
HeiQ plc
Annual report and accounts 2020
.016
Rapid deep
innovation.
Strategic report
Strategy in action
.017
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Annual report and accounts 2020
Case study
Creating the most
comfortable mask
in Switzerland
As the pandemic unfolded in early 2020,
our teams quickly identified the added value
of our textile technology for this crisis.
We realized masks would be a necessary part of
life for the coming years, and that we had multiple
technologies that could be brought together to create
a highly effective and comfortable mask.
Major discomfort of face masks comes from the
trapping of water vapor between the face and
the mask. HeiQ rapidly lined up a supply chain to
manufacture masks designed with multiple
technologies: cooling and moisture wicking on the
innermost layer, antiviral in the filter layer, odor control
and water repellence on the outer layer. The team
also quickly set up a direct-to-consumer channel to
market these masks. To date, the HeiQ community
mask is widely praised as
“the most comfortable mask in Switzerland”.
We thought it would take a while until
a cure or a vaccine became globally
available to solve this problem. While the
pharmaceutical industry is doing its job,
we as a leader in textile innovation should
do our part too. We launched an antiviral
textile technology to mitigate or stall the
problem from getting worse too quickly.
Hoi Kwan Lam
Group Chief Marketing Officer
+1 billion
face masks and an enormous amount
of other textile and non-textile products
have been treated with HeiQ Viroblock.
HeiQ plc
Annual report and accounts 2020
.018
We are
“glocal”.
Strategic report
Strategy in action
.019
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HeiQ plc
Annual report and accounts 2020
Case study
Providing local
support in Portugal,
Shanghai and
Taiwan
HeiQ is proud to be a lean, global organization,
and our worldwide footprint proved to be
beneficial when international travel was halted
during 2020.
Nothing is more reassuring to customers at the time
of a global crisis than having a local contact person
to communicate with. Our new offices in Portugal,
Shanghai and Taiwan, all set up in 2019, were able to
provide local support to customers in the region, with
local staff also present at the customers’ facilities.
Technology also enabled our technical staff, locked
down outside of the manufacturing countries, to
supervise product applications and trials.
Since their establishment, these three offices have
continued to grow. Today, HeiQ Portugal runs an
innovation laboratory and an administration, sales
and logistics office, HeiQ Shanghai operates an
administration, sales and logistics office, and a
testing laboratory where customer products are
validated and local product development projects
take place. HeiQ Taiwan now has a sales office,
a local warehouse and a laboratory and carries
out the production of one of HeiQ’s product lines.
We set up HeiQ Shanghai and Taiwan
offices in 2019 with the goal to provide
customers in the Greater China region with
best support. When the Covid-19 pandemic
hit, countries were locked down and airline
fleet all grounded, it became obvious that
we had made the right decision. We are
continuing to build a strong team here.
Celine Huang
CEO Greater China
23
Number of employees
in Shanghai and Taiwan
140+
Number of employees worldwide
.020
HeiQ plc
Annual report and accounts 2020
Strategic report
Chief Executive Officer’s Review
Carlo Centonze
CEO
Improving
the lives
of billions.
Sixteen years ago we started a
venture, an unquenchable
adventure named HeiQ.
Conceived on a hike and born
through Schlieren’s first flame
spray pyrolysis reactor, HeiQ
today gives chase to the sun.
From New Zealand to Colorado, today
over 140 HeiQans work closely and
around the clock to innovate and
differentiate in order to improve the
lives of billions of people.
2020 has been a transformative and
momentous year for HeiQ,
characterized by fast growth. After
having successfully built an agile
business model that allows for rapid
deep innovation, in March 2020
as the World Health Organization
(WHO) declared the pandemic, HeiQ
stepped up to deliver an innovative
antiviral technology for the benefit
of the society.
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HeiQ plc
Annual report and accounts 2020
Over the years, we have developed
over 200 high-performance textile
technologies, many in partnership
with major brands. Until recently,
these have had a strong “lifestyle”
focus – a T-shirt that cools you, a
curtain that purifies the air in your
home, or the lightest but warmest
jacket for those climbing Mount
Everest are just a few of hundreds of
examples of our innovations. Our
strategy has successfully positioned
HeiQ as a global, cash-generative and
IP-backed leader in the US$24 billion
textile chemicals market.
We are known for creating some of
the most effective, durable and
high-performance technologies in the
market. Our research network with
over 20 universities, our seven
manufacturing plants and our
marketing and ingredient branding
prowess allow us to be trusted by
over 300 brands, including several
Fortune 500 companies, as their
innovation arm. Our skills and
reputation have enabled sales of
our core lifestyle range, HeiQ Smart
Temp, which has seen a +16%
year-on-year growth despite
pandemic economic headwinds.
Our business is evolving at a time of a
global emergency and we have shown
our agility in rapidly shapeshifting and
redeploying our innovation and
production resources to deliver a
best-in-class and Swiss Technology
Award-winning technology, HeiQ
Viroblock, to market, which has been
hugely satisfying during the period.
HeiQ is now known for another leading
innovation: we turn textiles and other
surfaces antiviral. The global health
crisis became a tipping point for
antimicrobial textiles. And over the past
12 months, we have been part of the
creation of the antiviral textile market,
which enlarges the US$10 billion
antimicrobial fabrics market (9.8%
CAGR) and positioned ourselves as
technology leaders in this space. In
doing so, we have demonstrated the
rapid growth and value creation that
we can deliver for our shareholders
through fast, disruptive and eco-
conscious innovation.
I am very proud of the can-do
mentality, spirit and dedication shown
by the entire HeiQ team in 2020. Our
culture and teamwork allowed us to
make a significant contribution to the
fight against Covid-19, and it has been
very rewarding for us all to know that
our technology is protecting people
around the world, allowing businesses
to keep operating and retain jobs.
Another proud moment of 2020 was
our listing on the Main Market of the
London Stock Exchange. Going public
has been a long-standing vision of the
Founders and Board, and we have
been preparing for it for several years.
We were very pleased with the support
for our listing, and the funds raised will
enable HeiQ to build on the significant
momentum achieved in 2020.
Operational and financial
performance
2020 saw the Group achieve its best
ever results in both financial terms and
operational output. We manufactured
an unprecedented quantity of products
and, as a result, we almost doubled
our revenue and delivered a strong
EBITDA figure. In a year of home
working, we managed to establish new
teams and facilities and on-board new
talents in all our locations.
Our excellent performance was driven
by the tremendous success of HeiQ
Viroblock, our world-leading
antimicrobial technology. We quickly
allocated our innovation resources to
satisfy the pressing demand for this
antiviral technology, and dedicated
much of our manufacturing capacity
to ramp up production. The team
quickly built a solid business around
antiviral medical devices, including
creating a new direct-to-consumer
business, which has strengthened
brand awareness of HeiQ and will
continue to do so going forward.
Since its launch, HeiQ Viroblock has
been embraced by existing clients and
attracted many new partners due to
its ability to provide brands with a
unique point of differentiation, which
protects their customers when they
need it most. Consequently, we have
doubled our customer base.
Thanks partly to our IP-licensing and
royalty model, which sees HeiQ
Viroblock production licensed to third
parties, we have been able to deploy
this innovation very quickly to achieve
a wide distribution of ingredient-
branded products and increased
consumer awareness of HeiQ. HeiQ
Viroblock has already been used by
over 150 brands and deployed in over
a billion face masks worldwide. We
continue to build relationships with
the medical industry by delivering
much needed PPE in the form of
surgical face masks and gowns.
150
Number of brands using
HeiQ Viroblock worldwide
HeiQ plc
Annual report and accounts 2020
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Strategic report
Chief Executive Officer’s Review continued
Despite the resource requirements of
our rapidly expanding antimicrobial
business, our fundamental
innovations and sales have not been
impacted. Many of our established
products continued to grow in 2020,
with demand following the growth rate
of previous years despite dire
conditions in the textile industry.
Delivering for stakeholders
The commitment and resilience of our
team enabled us to scale up HeiQ
Viroblock and protect many families
across the globe. With brand partners
we also made several mask donations
to big and small hospitals and
organizations such as the NHS (UK) or
the Blue Cross in Como (Italy).
We are thankful for the ongoing trust
and support of our customers. We
believe that our unique approach to
co-creation ensures that we can build
strong and long-lasting relationships
with our brand partners, and these
have been beneficial for both sides
during a challenging year.
Many of our manufacturing partners,
suppliers and customers in textiles
have been and still are severely
affected by the pandemic, and we
have engaged and supported them
wherever possible.
Current trading and outlook
2020 was a tipping point for HeiQ and
we continue to see strong demand for
our technologies. Despite the global
supply chain still being in distress, we
are gearing up to sustain the
momentum throughout 2021 and we
will invest the capital in talents,
capabilities and infrastructure to
facilitate this. I am pleased that,
despite Texas freezes, California
shortages, Suez blockages and
regional lockdowns, our first quarter
performance is in line with our
expectations for our antimicrobials
and comfort technologies. Our just
launched enhanced fluorine free
water repellent performance range
will have to prove its mettle in a year
of unprecedented opportunity where,
due to the ban of perfluorinated
chemicals, market shares will be
reallocated. Our medical devices
manufacturing facility acquired in
December 2020 will build its success
on innovations that we are launching
this May and beyond.
Our recent HeiQ Viroblock contract
wins with leading industrial laundry,
paint and packaging coating
manufacturers attest to our vision to
grow beyond textiles, as do the
completed acquisitions in the medical
device and industrial biotech arenas.
Through our acquisition of a majority
stake in Belgian industrial biotech
company Chrisal NV, we now have
access to the US$50 billion probiotic
market. In the synbiotic and probiotic
market our focus is on hospital
hygiene and microbial management.
Our strong pipeline of brand partners
underpins our confidence that market
demand for microbial management
technologies will continue to be very
strong going forward. We will work
tirelessly to maintain our leading
position, while entering new lucrative
markets such as durable antimicrobial
surface protection, synbiotic
healthcare and homecare cleaning as
well as synbiotic cosmetic ingredients.
Looking ahead, our focus lies in the
innovation of more sustainable
materials as well as increasing market
penetration of our core technologies.
HeiQ GrapheneX, our highly porous
graphene membrane research
project, remains an exciting potential
value trigger and we look forward to
building the pilot commercialization
plant. We expect it to be the stepping
stone for us to enter the US$29 billion
technical filtrations and membranes
market from a position of strength.
To ensure that we remain at the top
of our game, we will be expanding our
research, building our capabilities
and diversifying our tech platforms
into new markets and industries,
both organically and through strategic
M&A. HeiQ innovates systemically
and our technology and solutions are
created in response to megatrends
and market needs. We identify, or
even foresee, a problem and develop
a science-based solution to solve it.
It is solving the problems that
customers bring to us with
sustainable functional ingredients
and materials that will guide the
specific areas we target.
As a cash-generative, high margin
company expanding across multiple
significant growth markets, we have
built a strong platform for future
growth. While 2021 will remain a year
of regional disruption and limitations
for many businesses, for HeiQ it is a
capability building and investment
year that will see us enter new
industries, launch new innovations
and establish new revenue streams.
This is an exciting time for HeiQ and
I look forward to keeping the market
abreast of our progress.
I wish all our stakeholders a healthy
and prosperous year.
Carlo Centonze
CEO
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HeiQ plc
Annual report and accounts 2020
At the end of 2019, as we
recognized the signs of a
potential pandemic, we made
the decision to play an active
role in stemming the spread
of the virus while the world
waited for a vaccine or cure.
We identified the opportunity to
relaunch an innovation we had
developed for the Ebola crisis almost
a decade ago. In 2013, HeiQ
Viroblock masks were created with
the vision of providing a mask that not
only protected the wearer by filtering
virus particles, but deactivated the
virus particles as well. The textile
finishing formulation was ultimately
shelved as the crisis did not
turn into a global pandemic and the
demand for an antiviral textile
technology receded.
In early 2020, we rapidly revalidated
our antiviral textile technology,
fine-tuned it and scaled up
production. On March 16, 2020, two
hours after the Swiss Government
announced a state of emergency and
mobilized the army, HeiQ Viroblock
was relaunched with the mission to
mitigate the transmission and help
stop the state of affairs from rapidly
deteriorating. The global response to
HeiQ Viroblock has been way beyond
our wildest expectations, and thanks
to an agile team, we mobilized a
global task force to prioritize and work
relentlessly to serve this urgent need.
Nine months later, before any jabs of
vaccine were administered, over one
billion face masks and an enormous
number of other textile and non-textile
products have been treated with
HeiQ Viroblock.
Case study
Joining the
fight against
Covid-19
HeiQ plc
Annual report and accounts 2020
.024
We use a number of key performance indicators (KPIs)
to measure our performance over time. We select
KPIs that demonstrate the financial and operational
performance underpinning our strategic drivers.
Finance
.01
Innovation
.02
Revenue growth | US$m
+80.3%
2020 50.4
2019 28.0
2018 26.2
Sales growth is one of the most basic
barometers of success for any business.
Number of new projects that made
it into R&D process
12
2020 12
2019 10
2018 7
We never run out of creative ideas and there are
countless opportunities to innovate. HeiQ’s ability to
qualify the ideas through “proof of concept” and
market potential evaluation before bringing them into
our R&D pipeline is key to ensure we have the market
in mind before investing excessively into a project.
Gross profit margin | US$m
+700bpt
2020 55.6
2019 48.6
2018 42.8
This KPI gives insight into our operational
profitability.
Number of launched
innovations
5
2020 5
2019 3
2018 3
Innovations that made it to the market are ready
to give return on the R&D investments.
2020 performance Why we measure 2020 performance Why we measure
Strategic report
Key performance indicators
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Annual report and accounts 2020
Differentiation
.03
Total number of media mentions
7’610
2020 7’610
2019 2’000
2018 2’179
As a B2B, B2C and B2B2C ingredient brand, HeiQ
is building its brand awareness across different
target audience groups. Media mentions are
“earned” media, which shows our ability to gain
face time with the audience without having to
invest heavily in media-buying.
Royalties (number of enacted contracts)
8
2020 8
2019 1
2018 1
A brand’s worth is indicated by the premium
the buyers are willing to pay.
2020 performance Why we measure
HeiQ plc
Annual report and accounts 2020
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Strategic report
Sustainability Report
In our DNA
purpose.
Sustainability is deeply rooted
in the DNA of the Company and
anchored in its purpose.
We pursue sustainability initiatives
that simultaneously create business
value and address societal concerns.
We strive to act in the interests of all
stakeholders, including employees
and communities.
Sustainability at HeiQ
As global problems worsen, business
must take responsibility and show
leadership. At HeiQ, sustainability
comes from within, as a key mission
of founders Carlo Centonze and
Murray Height. Their purpose when
they created the Company in 2005 is
still alive today:
to run a profitable business;
to improve the lives of people by
innovating the materials they use
in their daily lives; and
to achieve this by creating
state-of-the-art, eco-friendly and
sustainable technologies.
This triple bottom line goes beyond
the acknowledgement that we have
a corporate social responsibility; it is
integrated into the core strategies
of the Group. The acquisition of the
industrial biotech company Chrisal NV,
Belgium in 2021 proves that
sustainability is already present in our
investment logic as the extra
technology platform that is acquired
through this acquisition, probiotics,
has the potential to become a more
sustainable alternative to
conventional antimicrobial
technologies. We look at global
sustainability problems as
opportunities to drive innovation,
collaboration and co-creation.
HeiQ is the second company I’ve founded.
The first one, myclimate, is a market-leading
NGO in carbon offsetting. I am a firm
believer that by using innovation technology
one can make a profitable business by
reducing the ecological footprint of everyone
that uses a service or buys products.
Carlo Centonze
CEO
HeiQ’s triple bottom line
Prosperity
.01
To run a profitable business, creating
value for all stakeholders, with respect
for all partners in the value chain such
as suppliers, industrial customers and
consumers. Purpose-driven companies
tend to outperform the market. People
who identify with our purpose will also
support our business.
People
.02
To improve the lives of billions by
innovating the materials they use in
their daily lives; to develop our own
people, foster diversity, communicate
our code of conduct transparently, to
measure employee engagement; to
empower our employees to make
decisions and trust them with
responsibilities; to provide them with
an environment where they are
encouraged to trial-and-error and
learn from failure.
The safety and happiness of our people,
of our customers and the health and
safety of the consumers are always at
our heart.
Planet
.03
HeiQ research is focused on
functionality and sustainability. We
strive to reduce the ecological impact
of our industrial activity and inspire,
convince and enable our partners in
the value chain to do the same.
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Annual report and accounts 2020
Developing our strategy
Sustainability is a process of
continuous improvement, of getting
better every day and securing this
progress.
We are laying the foundations to build
our sustainability strategy. We are
consulting with our stakeholders to
define materiality, to learn from
industry and best practice and to
establish a sustainability community
inside and outside the Company.
Preparations are being made to
deploy sustainability in all its aspects
and to report these efforts following
the guidelines of the Global Reporting
Initiative (GRI) going forward. The
transparent communication of these
ongoing efforts to our stakeholders
(investors, employees, customers,
industries, governments, NGOs,
regulators, communities and wider
society) is an essential element in
this process.
More than anything we are putting our
brains to work on disruptive
technologies, capable of dramatically
reducing the ecological footprint
humanity is having on our planet.
Culture and values
The success of our business is
grounded in our culture – the way we
think, behave and act towards each
other and our key stakeholders.
Our culture is reflected in our values,
which ensure everyone understands
and is aligned with the kind of
business we strive to be and how
we want to operate.
Sustainability
Entrepreneurship
Empowerment
Ownership
Dedication
Trust
Respect
Teamwork
Continuous Improvement
Excellence
Environmental
We are an environmentally conscious
organization. We aim to ensure that,
moving forward, we can grow
sustainably and maximize the
sustainability impacts and
opportunities not just of our products,
but also in how we operate. This is
done in multiple ways:
We develop bio-based products
that replace synthetics.
We promote upcycled, recycled and
recyclable products (for example,
Nylstar zero microplastic pollution
fabric). An increased production
volume of sustainable, renewable
fibers and the development of
recycled/recyclable fibers, suited
for circularity, will solve the acute
textile resource depletion problem.
We enable a better efficiency in
industrial processes. Do more with
less energy, less water and fewer
raw materials.
We maximize the use of green,
renewable energy.
We replace bad or less safe
ingredients with safer ingredients.
We operate close to the markets to
reduce shipping.
We improve product durability and
lifetime.
We provide solutions that reduce
leaching and pollution.
We develop products that reduce
the need of maintenance or the
washing frequency.
We encourage the consumer
to buy fewer, and better quality
products, making multi-purpose
and multifunctional garments the
preferred choice over fast fashion.
Streamlined Energy and Carbon
Reporting (SECR)
The SECR disclosure is omitted in this
report because it is not practical for
our organization to obtain all the
required energy and carbon
information on 2020. SECR
disclosures became mandatory for
the Group only upon Re-admission to
the LSE stock market on December 7
2020 as the Group did not include
any legal entity based in the United
Kingdom before that date. In the
2021 annual report, we will disclose
the Group boundaries and report our
2021 energy usage and carbon
emissions as requested by the SECR.
Throughout 2021 greenhouse gas
emissions will be calculated using
the industry standard conversion
factor of each country where we
operate. A HeiQ energy efficiency
task force will analyze this first set of
data and elaborate energy efficiency
measures for the Group. These
measures will be communicated in
the 2021 annual report.
Social
Covid-19
When society faces major problems,
like the current pandemic, HeiQ does
what it can to help. In view of the
severe shortage of medical personal
protective equipment (PPE) in many
countries, we mobilized our global
team and network to help source
these essentials to help hospitals,
first responders, essential services,
governments and businesses; our
people worked day and night to deliver
a technology that makes a huge
difference in the prevention of the
transmission of the disease.
By the end of 2020, before
any Covid-19 vaccine has
been officially given, our
antiviral technology, HeiQ
Viroblock, has been used
on at least one billion
face masks.
Musa Raibin
VP South Asia Brandforce
HeiQ plc
Annual report and accounts 2020
.028
Strategic report
Sustainability Report continued
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Corporate
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Financial
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HeiQ plc
Annual report and accounts 2020
Our people
Although sustainability starts at the
top, it involves all employees. We
believe talent gravitates towards
companies that make a difference,
and the awareness that our Company
is doing the right thing connects with
our personal ethics and morality and
is a strong motivator.
We currently employ over 140 people
in 14 countries and are committed to
a policy of equal opportunities in the
recruitment, engagement,
performance management and
retention of employees.
Diversity
The diversity of our teams is a
business requirement for the
Company. We are committed to
advancing collaboration, diversity,
equity and inclusion because these
differences enable us to create
better solutions as we change the
world of materials. We are proud
to have more than 40% female
leadership in the Company.
Our employees represent over
20 different nationalities.
Overall gender split
Male
Female
65%
35%
Learning and development
We believe that the development of
talent is important to achieve the
long-term strategic goals of the
business. We cultivate an open and
outspoken culture where employees
receive constant feedback on their
performance and are encouraged to
speak about their career aspirations
and plans, so that their job is
constantly adjusted to allow them to
create the best value to the Company.
We offer traineeship and internship
opportunities for career starters.
Wellbeing
HeiQ hires people with enthusiasm
and the right work ethic. We believe
with modern technology, most jobs
can be performed well regardless of
location and working hours. Even long
before the pandemic, our employees
have been allowed to work flexible
hours and had the freedom to work
from the office or home for them to
maintain the best work-life balance
while choosing the best way to
maximize their productivity. Therefore,
lockdowns and social distancing
measures have not affected HeiQ as
much as a lot of other companies.
Having said that, during the pandemic
we hosted regular online socializing
activities, such as virtual coffee breaks
and quarantine-style “happy-hour”, at
different times of the day to engage
employees in different time zones and
provide them the opportunity to chat
outside of work interactions.
Working with our partners
Sustainability is not done alone, but in
collaboration. We aim to build strong,
mutually beneficial relationships with
our brand partners, and through
co-creation, we innovate for brands and
help them become more sustainable.
Here are some examples of how we
have made our partners more
sustainable:
In 2020, we “Viroblocked” more
than one billion face masks,
mostly through our brand partners’
products.
We launched the world’s first air
purifying curtain with the largest
home furnishing retailer in 2019.
Our founding customer,
Odlo, asked us to develop
an antimicrobial odor control
treatment for its synthetic base
layers. Twelve years later, it
adopted a newer generation of
the treatment that is even more
sustainable. The durability of our
first-generation innovation to date
is still market leading – it lasts
100 washes – which also means
it extends the usable life of the
products.
Berger in India has teamed up with
us to make a paint which reduces
the risk of contamination and
transmission of virus from surfaces.
Burton adopts several innovations
by HeiQ to enhance the comfort
and sustainability in its products.
This includes HeiQ Eco Dry, a PFC-
free water repellent, and HeiQ Fresh
FFL, a bio-based, antimicrobial-free
odor control solution.
Gap Old Navy uses HeiQ Fresh FFL,
our silver-free, antimicrobial-free
odor control solution, which is fully
bio-based.
The Meryl
®
Skinlife Force zero-
pollution textile of Nylstar is recycled
and infinitely recyclable and it
prevents the release of microplastics
in the air and in the water through
stronger molecular cohesion and
natural elasticity of the yarn.
Patagonia worked with HeiQ
to convert several critical, high
volume raw materials to PFC-free
durable water repellency early
in Patagonia’s transition from
conventional treatments.
The North Face uses HeiQ XReflex,
a radiant barrier technology, in
certain of its styles that helps with
insulation saving.
Zara, part of the Inditex Group,
used HeiQ XReflex in a jacket as
part of its new Join Life sustainable
collection.
Upon Re-admission in 2020, the
Board formed a Nomination
Committee, comprising Esther
Dale-Kolb (Chairwoman), Benjamin
Bergo and Karen Brade. The Board
intends to constitute an
Environmental, Occupation, Health
and Safety Committee comprising
Carlo Centonze (Chair), Karen Brade
and Esther Dale-Kolb.
+41%
female leadership
in the Company
HeiQ plc
Annual report and accounts 2020
.030
Strategic report
Section 172 Statement
Section 172 Statement
The Directors of the Company, as
those of all UK companies, must act
in accordance with a set of general
duties. These duties are detailed in
section 172 of the UK Companies Act
2006, which is summarized as follows:
“A director of a company must act in
the way they consider, in good faith,
would be most likely to promote the
success of the company for the
benefit of the shareholders as a
whole and, in doing so have regard
(amongst other matters) to:
the likely consequences of any decisions
in the long term;
the interests of the company’s employees;
the need to foster the company’s business
relationships with suppliers, customers
and others;
the impact of the company’s operations
on the community and environment;
the desirability of the company maintaining
a reputation for high standards of business
conduct; and
the need to act fairly as between members
of the company.”
Stakeholder
engagement.
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Corporate
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Financial
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HeiQ plc
Annual report and accounts 2020
The following paragraphs summarize
how the Directors fulfill their duties:
Shareholders
HeiQ seeks to develop a broad
investor base with those who share
our values and are supportive of our
strategy and mission. Engagement
with shareholders is a key element to
this objective and is achieved through
various ways: besides engaging
through the Company’s AGM and
through publication of full and half-
year financial results, members of the
executive team, supported by the
Company’s broker and Investor
Relations advisors, will engage with
investors directly, mainly through
regulatory news, press releases and
other publications, as well as
presentations and investor talks.
Investors and other stakeholders can
also access information about the
Company on our website.
Employees
The Group’s staff are employed in
various countries, mainly outside the
United Kingdom. The Group maintains
a decentralized leadership structure so
that all staff are guided and supported
closely in a way which allows them to
grow and achieve their potential. The
Group has a meritocratic culture,
employs staff of different ethnicities
and has a high female ratio in its
management (41%). A global monthly
newsletter ensures that all employees
are aware of the important recent
developments of the Group, including
those of the headquarters as well as
each local office. The Group has an
informal culture and its employees are
engaged in social activities organized
by the headquarters or each local
office. Such activities include team
sports, group outings, yearly meetings
and team-building activities, after-work
drinks, an annual dinner and,
particularly popular during the
Covid-19 pandemic, virtual socializing
events. As an innovation company, the
Group encourages creativity and
innovation ideas. With a centralized
email address, every employee can
submit their product innovation ideas
for the R&D team to review and, if
qualified, add to the R&D pipeline.
Customers
We can only be successful if our
customers’ needs are satisfied.
Understanding our customers and
even their customers and what
matters to them is therefore of
paramount importance to us. We
listen and talk to them using all of
the tools at our disposal. We collect
product innovation ideas and learn
about our customers’ innovation
needs through “innovation seminars.”
We serve our customers directly or,
in certain regions, via our qualified
agents and distributors. We run
consumer polling to identify trends
and evaluate product or marketing
ideas. Our customers generally
appreciate that we share our learning
and consumer insights with them,
as these help them make better
informed business decisions.
Suppliers
We have long-standing, close
relationships with our suppliers and are
in regular contact with them. Fostering
good business relationships with key
stakeholders including suppliers is
important to the Company’s success
and we are committed to acting ethically
and with integrity in all business
dealings and relationships.
Community and environment
We are proud to employ people in the
communities in which we operate.
We have product standards, policies
and guidance covering the products
we make to help ensure that they
are manufactured safely, legally and
to the required quality standards.
Besides legally required standards,
most HeiQ products are also certified
for voluntary quality standards such
as ZDHC (Zero Discharge for
Hazardous Chemicals), bluesign
®
and OEKO-TEX
®
.
Business conduct
As more fully explained in the
Corporate Governance section on
page 45, values and culture are an
integral part of our strategy and the
Board strives to promote a culture
based on high business conduct
standards.
Acting fairly between members
of the Company
Having assessed all necessary factors,
and as supported by the processes
described above, the Directors
consider the best approach to
delivering on the Company’s strategy.
This is done after assessing the impact
on all stakeholders and is performed
in such a manner so as to act fairly as
between the Company’s members.
.032
HeiQ plc
Annual report and accounts 2020
Strategic report
Financial Review
Xaver Hangartner
CFO
Significant
progress on
our goals.
2020 was a game changing
year for HeiQ. After a very
strong start into the year with
strong sales in the first months,
HeiQ had been challenged from
early spring when Covid-19
pandemic arrived in the
western hemisphere.
Although our own sites did not cease
operations at any point, we faced
shutdowns of customer plants around
March/April directly impacting existing
product sales.
Thanks to the anticipation and our
proven ability to innovate and launch
a new product very quickly, we were
able to bring HeiQ Viroblock, a
treatment for textiles and other
chemicals with an antiviral effect, to
the market in only three months.
Therefore, we could not only hedge
our endangered business, but
significantly grow our sales and
become a brand known to a broader
audience beyond the textile industry.
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HeiQ plc
Annual report and accounts 2020
The steep growth in business required
additional financing for working capital
which was secured by extending
short-term credit lines from banks.
Based on the strong momentum
created by the significant growth (sales
increased by +80.3% 2020 vs. 2019)
and the again-proven capability to
innovate and differentiate coupled with
the huge attention from an audience
outside our traditional industry, the
Board of HeiQ Materials AG decided to
execute the long-ambitioned listing.
The listing was achieved through a
reverse takeover of the SPAC (Special
Purpose Acquisition Company) Auctus
Growth Plc and the readmission of the
renamed, enlarged group HeiQ plc to
the Standard Segment of the Main
Market at London Stock Exchange on
December 7, 2020. In the course of
the listing, HeiQ raised in total £60
million, comprising a £20 million new
capital raise as well as £40 million in
secondary transactions to realize value
for certain selling shareholders at a
valuation of £1.12 per HeiQ plc share.
Since the listing on December 7, 2020
the share price increased by 61.6% to
£1.81 as of December 31, 2020.
Revenues
Revenue increased in 2020 by
US$22.4 million to US$50.4 million,
an increase of +80.3% compared to
2019. This performance was driven
on the one hand by new business
generated from the launch of HeiQ
Viroblock in March 2020 and the
forward integration into functional
materials, medical and personal
protection devices like face mask and
other finished goods. On the other
hand, an existing product range
comprised of innovative technologies
and traditional ingredients provided
us with a balanced revenue. The
antimicrobial product family HeiQ Pure
as well as the dynamic cooling range
HeiQ Smart Temp product family both
had their best year, more than
offsetting the slowing down of
auxiliary product sales, giving us an
overall increase in revenue of the
existing product range brought to the
year under review from 2019 despite
the challenge posted by the economic
situation. This was an outstanding
achievement considering the textile
industry suffered significantly during
the pandemic with many stores
closed for a prolonged period in
various markets.
Another highlight in 2020 is the fact that
HeiQ was able to increase the number of
licensing/royalties contracts significantly,
although revenue contribution in 2020
was not yet material. This demonstrates
the strengthening of our brand and the
trust of the industry in our products. We
believe that licensing and royalty-pricing
models can become a significant
contributor to both top and bottom line in
the future though.
Gross profit
Our gross profit increased from
US$13.6 million in 2019 to US$28.0
million in 2020 – an increase of
106.3%. This is reflected in an
increased gross profit margin of 55.6%
(2019: 48.6%). In general, we were
able to maintain contribution margins
of individual products at similar levels
compared to 2019. As such the
increase in gross profit margin is
mainly derived from the favorable
development of the product mix sold.
The successful launch of HeiQ
Viroblock added a new, high margin
product to our range. Additionally, the
other key driver of the sales growth
(HeiQ Smart Temp and HeiQ Pure
product families) typically achieved
above-average contribution margins.
Results for the year
Note
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000 Growth
Revenue 8 50’401 27’954 80.3%
Cost of sales 9 (22’402) (14’382)
Gross profit 27’999 13’572 106.3%
Gross profit margin 55.6% 48.6%
Other operating income 8 4’744 1’585
Selling and general administrative expenses 9 (16’117) (12’048)
Other operating expenses (5’127) (1’687)
Operating profit 11’499 1’422 708.6%
Deemed cost of listing 5 (1’402) –
Transaction costs 5 (1’871) –
Other income – 24
Other costs (69) –
Finance income 22 68 8
Finance costs 22 (1’184) (428)
Share of (losses)/profits of associates 7 (15) 3
Income before taxation 7’026 1’029 582.8%
Taxation 10 (2’112) (314)
Income after taxation 4’914 715 587. 3%
Earnings per share (cents) – basic 11 4.41 0.71 521.1%
Earnings per share (cents) – diluted 11 4.21 0.71 493.0%
Adjusted EBITDA 13’970 2’888 383.7%
EBITDA margin (adjusted) 27.7% 10.3%
HeiQ plc
Annual report and accounts 2020
.034
Cost of goods sold also include a
major part of our logistic and
warehousing costs. These costs
significantly increased in 2020
compared to 2019. Faced with
lockdowns around the globe and air
traffic that dramatically decreased,
transportation costs have in general
considerably increased, and we had
to rely more often than usual on air
shipment to maintain a timely service
for our customers. In view of
increased uncertainty relating to
transportation systems and the low
forecast visibility due to moving
demand, we strategically increased
our stock of key raw materials and
products, which led to increased
warehousing costs.
Selling and general administration
expenses (SG&A)
SG&A increased by US$4.1 million
to US$16.1 million (2019 US$12.0
million) driven by the growth of the
business. SG&A represent 32.0%
of sales in 2020 vs. 43.1% in 2019.
The increase in the nominal
amount represents the growth of
our organization (average monthly
employees: +11 respectively or
+12.8%) and, based on the very
successful business performance,
higher accruals for variable
compensation components and
commissions. The rapid growth
also required higher expenses for
marketing and professional fees,
including consulting in regard to
regulatory matters. Other increased
cost items like insurance costs and
audit costs were mainly driven by
the fact that we became a listed
company in 2020.
Other income and expenses
The other operating income and
expenses are mostly related to foreign
exchange impacts on operating
assets and liabilities. The net foreign
exchange expenses amounts to
US$1.1 million compared to overall
net other operating expenses of
US$0.4 million.
Costs related to the reverse
takeover of Auctus Growth Plc
by HeiQ Materials AG
Deemed cost of listing: The
deemed cost of listing represents
the difference between the
notional consideration paid by
HeiQ plc for HeiQ Materials AG of
(US$28.1 million) and the HeiQ
plc net assets acquired of £20.4
million (US$26.7 million). It has
been charged to the Consolidated
Statement of Comprehensive
Income as a deemed cost of
listing amounting to £1.1 million
(equivalent to US$1.4 million)
with a corresponding entry to the
merger reserve.
The notional consideration paid
represents the fair value of
the notional number of equity
instruments that the legal
subsidiary would have had to have
issued to the legal parent to give
the owners of the legal parent the
same percentage ownership in
the combined entity which was
15.2% of the market value of the
shares after issues (£141 million
or US$184 million).
Transaction costs: Costs directly
attributable to the transaction
amounted to US$1.9 million and
are charged to the statement of
comprehensive income directly.
Adjusted EBITDA
US$’000 2020 2019
Operating profit 11’499 1’422
Depreciation 1’144 1’116
Amortization 110 149
Share options and rights granted to Directors
and employees 1’217 201
Adjusted EBITDA 13’970 2’888
Adjusted EBITDA
The significant growth in sales
coupled with increased gross profit
margins and decreasing SG&A ratio
is reflected in the Adjusted EBITDA
which increased by 384% from
US$2.9 million in 2019 to
US$14.0 million in 2020.
HeiQ adjusts EBITDA for share options
and rights granted to Directors and
employees.
Finance costs
Finance costs mainly include foreign
exchange rate impacts on non-operating
assets of in total US$0.7 million. Actual
interest paid on borrowings amount to
US$0.1 million.
Income after tax
Income after taxation amounted to
US$4.9 million, an increase of +587%
compared to 2019 (US$0.7 million).
Diluted earnings per share
increased from US$0.0071 (2019)
to US$0.0421 per share – an
increase of +493%.
Strategic report
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Corporate
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Financial
statements
HeiQ plc
Annual report and accounts 2020
Statement of financial position
Assets
Non-current assets increased by
US$2.7 million (+23.3%) from
US$11.6 million to US$14.3 million in
2020. The increase is driven by the
acquisition of HeiQ Medica in
December 2020, adding Machinery
and Equipment of in total US$1.2
million. Further additions of US$0.6
million represent capitalizations
related to internally developed
intangible assets. Deferred tax assets
also saw a significant increase by
US$0.4 million owing to tax losses
assessed to be recoverable in the
years to come.
Current assets increased by US$38.8
million and amount to US$55.1
million as of December 31, 2020
(2019: US$16.3 million). The main
increase relates to cash and cash
equivalents as the Group raised £20
million (gross amount) of new capital
in December 2020.
Inventories increase significantly as
well and amount to US$13.3 million
as of December 2020 (2019: US$3.2
million). The increase in inventory
reflects the overall growth of the
business as well as the fact that the
Group increased its minimum stock
for key materials in order to guarantee
supply to customers globally despite
the challenging circumstances owed
to the Covid-19 pandemic.
Liabilities
Non-current liabilities increased from
US$5.4 million (2019) to US$8.0
million as of December 2020 as the
newly acquired participation in HeiQ
Medica has a long-term loan received
from banks (US$1.4 million). Other
than the loan acquired with HeiQ
Medica, no long-term bank loans are
outstanding as of December 2020.
There was also a US$0.6 million in
deferred tax liabilities which arose
from temporary differences in the
reporting for tax purposes. Other
non-current liabilities have increased
due to higher defined benefit
obligations as per IAS 19 for the Swiss
pension plan (US$ +1.4 million) and
reduced deferred consideration
liabilities related to the Chem-Tex
acquisition (US$–0.7 million).
Current liabilities increased by US$2.9
million. The increased business in
2020 brought a US$3.9 million
increase in trade and other payables
as well as a US$1.5 million rise in tax
liabilities offsetting the US$2.3 million
repayment of borrowings.
Cash flow
Cash generated from operating
activities amounts to US$1.1 million
(2019: US$3.0 million) after
increasing the working capital by
US$10.5 million related to the strong
growth of business.
The cash from investing activities of
US$24.2 million reflects the reverse
takeover of HeiQ plc (formerly Auctus
Growth Plc) and therefore includes the
raised capital of £20 million (gross).
Financing activities of US$3.5 million
mainly related to US$2.7 million
repayments of borrowings.
Mergers & acquisitions
On December 11, 2020, HeiQ closed
the acquisition of a controlling-stake in
MasFabEs – renamed HeiQ Medica
upon closing. HeiQ Medica operates a
surgical mask production site in Spain
enabling HeiQ to further growth into
the medical device business and bring
new innovations in this field to market
quickly. HeiQ Medica was established
in Coin, Spain on May 18, 2020
building up a production site
and achieving medical industry
certifications in October 2020.
Commercial activities only started just
before the year end. HeiQ Medica is
fully consolidated into HeiQ Group as of
date of acquisition. Based on the fact
that the acquisition was only closed
shortly before year end, it had no
material impact on the consolidated
comprehensive income of HeiQ Group.
In March 2021, the Group executed
the acquisition of a controlling stake
of 51% in Chrisal NV, Belgium to
strengthen its position in the strategic
field of probiotics and hygiene
technologies.
Xaver Hangartner
CFO
HeiQ plc
Annual report and accounts 2020
.036
Risk
management
framework
.01
.02
.03
.04
.05
Identify
the potential risks
Measure
the risk regarding
probability of occurring
Examine
solutions
Manage
the identified risks
Monitor
the results on an
ongoing basis
Strategic report
Risk management
Corporate risk management is
an integral part of running a
company, particularly a public
company. A company’s ability
to manage risk can also greatly
impact its sustainability.
We strive to work in the interests of
all stakeholders. As a comprehensive
risk management strategy is an
essential part of a truly sustainable
business, HeiQ has adopted a
systematic method of identifying,
analyzing, evaluating, treating,
monitoring and communicating risks
in a way that will enable us to
minimize losses and maximize
opportunities.
Integral to
our business.
Risk management will not be able to
eliminate risks entirely, but it will
enable us to identify, prioritize and
manage risks and opportunities in a
way that a possible impact can be
absorbed by the organization. The
heat map appears on the leadership
team’s agenda quarterly, and a risk
report will also be reviewed and
discussed in Board meetings at least
twice a year.
As risks can arise from many
different angles, they need to be
identified top down and bottom up.
Having said that, while it is necessary
to have a formal risk management
system in place throughout the
organization, managing risk is also
the responsibility of each employee.
Risk management does not only
focus on preventing erosion of value
and addressing and minimizing risk
to an acceptable level, but it can be a
tool to set strategies and identify
business opportunities to create and
maintain value. HeiQ has
demonstrated this in the past year
clearly. With our diverse range of
products and specialized knowledge
in material science, we were able to
quickly identify one innovation that
could be of high demand for the
situation. We were able to validate
and launch the innovation quickly,
and adjust our operations as the
pandemic unfolded. By responding to
the new global situation, we were
able to build new businesses around
it very quickly.
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Financial
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HeiQ plc
Annual report and accounts 2020
Low Medium High
Low Medium High
Likelihood
Impact
1
3 115
4 9
6 7 10 2
8
.01
Identification of risks
We use five main risk categories
under which our key risks are listed,
as follows:
Environmental and hazard risks
Natural disasters like fires,
earthquakes, flooding as well as
accidents and injuries
Operational risks
Loss of personnel (talent, key
people), supply chain
interruptions, IT infrastructure or
systems breakdown, cyber-
attacks, management errors
Financial risks
Economic recession, currency
risk, fraud, liquidity, lack of growth
in revenue, tax
Strategic risks
Increased competition, regulatory
changes and governmental
restrictions regarding products
and production. Brand and
corporate reputation, theft of
intellectual property
Legal risks
Compliance of our products and
claims, compliance with capital
market rules
.02
Measure the risk
The risks must be identified and
assessed individually and should be
measured against the likelihood of
them occurring and the foreseeable
impact if they do occur. See our
heat map for our analysis of our
principal risks.
.03
Examine solutions
What are the various solutions to
manage the risks and what is
considered to be the optimal balance
between cost and effectiveness?
Organizations usually have the option
to accept, avoid, control or transfer
a risk.
.04
Manage the risk – decision
regarding solution and its
implementation
Once the solutions are listed and
prioritized, resources and personnel
including senior management,
possibly with external expertise, have
to be allocated. A process should be
established to implement the solution
and actively manage the risk.
.05
Monitor results
Since the organization, the
environment and potential risks
are constantly changing, risk
management is a continuous process
which needs to be monitored
regularly. A formalized process
ensures a more complete picture of
the organization which enables more
informed decision-making.
Risk heat map
This risk heat map demonstrates how
we consider the likelihood and impact
of our principal risks. It provides a
reliable basis for comparison and
classification of risks and allows
management to focus on the potential
risks which need the most urgent
attention, while not losing sight of all
the other types of risk.
1
Delivery of growth strategy/
growth rates not sustainable
2
IP protection and first-mover
advantage
3
Increase in competition
4
Innovation pipeline
5
Regulatory risks
6
Supply chain issues
7
Product liability
8
Geographical risks
9
Reputational risk/brand equity
10
Personnel
11
Currency risks
HeiQ plc
Annual report and accounts 2020
.038
Principal Risk Description and Impact Controls/Mitigation Trend
Delivery of growth
strategy/growth
rates not
sustainable
.01
If the Group does not successfully
implement its growth strategy for a high
margin business, this could have a material
adverse effect on its business, financial
condition and operating results.
Clear strategy communication
and alignment throughout the
organization with an Executive
Board (Lead Circle) sponsoring
each of the defined strategic
initiatives.
Leadership culture based on
objectives and key results
(OKR) that all are aligned with
the strategy.
Stable
IP protection
and first-mover
advantage
.02
Any failure to substantiate or successfully
assert HeiQ’s intellectual property rights
could make it less competitive and may have
a material adverse effect on net revenue.
HeiQ may face challenges to its intellectual
property rights from third parties. If HeiQ is
unable to successfully defend against
allegations of infringement, it may face
various sanctions, including injunctions,
monetary sanctions, product recalls and
alterations to its products and/or packaging,
which could result in significant expense and
negative publicity.
HeiQ’s business relies on
protecting its brands and claims
to a combination of intellectual
property rights, unique market
positioning, trade secrets and
freedom to operate strategies
and not only on intellectual
property rights alone.
It is key to the Group’s
intellectual property protection
strategy to constantly innovate
and further develop its existing
product portfolio to maintain a
first-mover advantage.
Stable
Increase in
competition
.03
As competing products come to market in
direct competition to HeiQ’s products,
particularly from large global companies, this
may result in a reduction in sales and
therefore in revenues and associated profit
margins. HeiQ faces substantial competition
throughout its business from international
and domestic companies.
HeiQ’s innovations typically open
up new markets and thus the
Group enjoys a first-mover
advantage before competitors
start to follow.
HeiQ, with its three-in-one
approach (innovation, production
and marketing), positions itself
as a partner to brands over the
entire lifecycle of a technology
which provides a lock-in effect.
Stable to increase
Innovation
pipeline
.04
Bringing innovations to market at high speed
and high pace is key to the Group’s growth
strategy and market positioning. Failure to
launch innovations at a high pace might
have a material adverse impact on the
Group’s growth and operating results.
HeiQ has a broad source for
innovation ideas and a clear,
lean process for assessing and
developing these ideas into
product offerings.
The Innovation Advisory Board
prioritizes innovation projects
based on technical feasibility
and market potential; the
Group’s network of research
partners allows it to access
knowledge needed for each
individual project.
Stable
Strategic report
Principal risks and uncertainties
Strategic
report
Corporate
governance
Financial
statements
HeiQ plc
Annual report and accounts 2020
.039
Principal Risk Description and Impact Controls/Mitigation Trend
Regulatory
risks
.05
The manufacturing and marketing of
chemicals and medical devices are subject
to medical, biocidal, chemical and
environmental regulations and permits. Such
regulations change constantly and require
HeiQ to invest in its regulatory portfolio in
order to maintain access to the markets and
licenses to operate. Failure to do so may
result in restricted market access or prevent
HeiQ from manufacturing its products in the
relevant plants.
Regulators in different jurisdictions might
restrict use of certain ingredients that
are included in HeiQ products and disallow
marketing of respective products in
different markets.
HeiQ follows closely
developments in the regulatory
environment and actively
manages its product portfolio
and innovation pipeline based on
regulatory trends.
It is an integral part of HeiQ’s
strategy to innovate and replace
today’s solution on the market
with “greener”, future-proof
technologies.
HeiQ engages actively in
regulatory discussions in
industries where it operates.
Increase
Supply chain
issues
.06
HeiQ faces the risk of interruptions to its
supply chain and disruptions in its
production facilities, which could materially
and adversely affect the results of
operations. Significant disruptions to HeiQ’s
suppliers’ or HeiQ’s own operations, such as
those resulting from natural catastrophes,
outbreaks of diseases, acts of war or
terrorism may affect HeiQ’s ability to source
raw materials and negatively impact its
costs. The failure of suppliers to fulfill their
contractual obligations in a timely manner
may result in delays or disruptions to HeiQ’s
business. Replacing suppliers may require a
new supplier to be qualified under industry,
governmental or HeiQ’s own internal
standards, which may take time. In addition,
a number of HeiQ’s facilities are critical to its
business. Major or prolonged disruption at
those facilities, whether due to accidents,
sabotage, strikes, closure by government
agencies or otherwise, could materially
and adversely affect operations. Moreover,
manufacturing sites are subject to
supervision by regulatory agencies, on both
an ongoing and ad hoc basis. If the Group
is unable to obtain or produce sufficient
quantities of a particular product, at
specifically approved facilities, whether due to
disruption to, or failure of, manufacturing
processes, or otherwise, it may fail to meet
customer demand on a timely basis, which
could undermine sales and result in customer
dissatisfaction and damage to reputation.
HeiQ sources raw and packaging
materials and finished goods
from a wide variety of
international chemical and
packaging companies and
co-producers.
HeiQ sources key (raw) materials
whenever possible from at least
two different suppliers.
HeiQ periodically assesses
potential for backward
integration for materials which
allow either a cost advantage or
strategic advantage including
supply security.
Increase
HeiQ plc
Annual report and accounts 2020
.040
Principal Risk Description and Impact Controls/Mitigation Trend
Product
liability
.07
As a product manufacturer, HeiQ is
subject, from time to time, to certain legal
proceedings and claims arising out of
its products, including as a result of
unanticipated side effects or issues that
become evident only after products are
widely introduced into the marketplace.
HeiQ may be required in the future to pay
compensation for losses or injuries that are
allegedly caused by its products. Product
liability claims may arise, among other
things, from claims that products are
defective, contain contaminants, provide
inadequate warnings or instructions, or
cause personal injury to persons or damage
to property. Product liability claims, if
resolved unfavorably, or if settled, could
result in injunctions and/or may require
HeiQ to pay substantial damages and
related costs, including punitive damages,
as well as result in the imposition of civil
and criminal sanctions. If one of HeiQ’s
products is found to be generally defective,
HeiQ could be required to recall the
product, and/or may be required to alter
trademarks, labels or packaging, which
could result in adverse publicity, significant
expenses, potential disruptions in the
supply chain and loss of revenue.
HeiQ operates with defined
quality control procedures
integrated in production to
ensure that products sold are
within specifications defined and
agreed with customers.
Stable
Geographical
risks
.08
HeiQ operates in a variety of countries which
have different laws, taxes and different levels
of maturity together with a range of
competitors and customer expectations.
HeiQ’s business and results of operations
are affected by changes in both global
economic conditions and the individual
markets in which it operates.
Terrorist acts, civil unrest and other
similar disturbances, as well as natural
catastrophes, can impact economic
conditions and consumer confidence,
degrade infrastructure, disrupt supply
chains and otherwise result in business
interruption. A variety of factors may
adversely affect results of operations and
financial conditions during periods of
economic uncertainty or instability, social
or labor unrest or political upheaval in the
markets in which it operates.
HeiQ’s strategy includes building
up a global footprint for
innovation and manufacturing
as well as sales and distribution
channels. This includes own
presences as well as cooperation
with, for example, distributors.
This ensures that the Group is
able to serve one market through
different channels both from
inside and outside the respective
geographical area.
HeiQ is building up local
presence in key markets
to ensure the local market
and regulatory framework
(including laws, taxes, etc.)
is well understood and
addressed properly.
Stable
Strategic report
Principal risks and uncertainties continued
Strategic
report
Corporate
governance
Financial
statements
HeiQ plc
Annual report and accounts 2020
.041
Principal Risk Description and Impact Controls/Mitigation Trend
Reputational risk/
brand equity
.09
Substantial harm to HeiQ’s reputation may
materially adversely affect its business.
Various factors may adversely impact HeiQ’s
reputation, including product quality
inconsistencies. Product defects may occur
due to human error or equipment failure,
among other things, which may be outside of
the direct control of HeiQ. Reputational risks
may also arise with respect to the methods
and practices of third parties that are part of
HeiQ’s supply chain, including labor
standards, health, safety and environmental
standards, and raw material sourcing. HeiQ
may also be the victim of product tampering.
Moreover, third parties have sold or may sell
products that are counterfeit or unauthorized
versions of HeiQ’s products or inferior
“lookalike” products that resemble HeiQ’s.
Consumers may confuse HeiQ’s genuine
products with such unauthorized products,
which may adversely affect HeiQ’s
reputation.
HeiQ has a clear strategy and
policy in regard to
communication, both in terms of
product marketing as well as on
a corporate level.
HeiQ actively manages claims
that are allowed in different
jurisdictions for different
products which is also reflected
in trademark license agreements
with our customers.
HeiQ actively follows and
manages communication both
off and online to ensure potential
issues can be addressed in a
timely and appropriate way.
Increase
Personnel
.10
HeiQ’s business depends, in part, on the
ability of executive officers and senior
management to provide uninterrupted
leadership and direction for its business,
and, in particular, on the ability to recruit,
train and maintain qualified personnel for
product research and development. This
need is all the more acute in the context
of a growing business and in the strategic
internal reorganizations and resource
planning programs to promote and manage
such growth.
HeiQ’s ability to attract and retain key
management and other personnel is
dependent on a number of factors,
including prevailing market conditions,
attractiveness of competitors as potential
employers, working conditions and culture
and the ability to offer attractive
compensation packages.
HeiQ has a structured hiring
process to ensure the cultural fit
of new hires.
HeiQ offers key senior
management and talent
participation via its share option
plan to align incentives of
individual employee to that of
the Group.
HeiQ supports employees’ growth
based on professional and
personal development.
HeiQ fosters an inclusive,
meritocratic work atmosphere
where employees can contribute
and participate and offers
flexible work models allowing
alignment of work with private
and family life.
Stable
Currency
risks
.11
HeiQ Group operates mainly in CHF, EUR,
CNY, TWD and US$ and reports in US$.
Consequently, changes in the GBP, CHF,
EUR, CNY, TWD and US$ exchange rates will
impact on the earnings of the Company. The
exchange rates are affected by numerous
factors beyond the control of the Group,
including international markets, interest
rates, inflation and the general economic
outlook and, as such, the Group may not be
able to adequately manage these risks in
some circumstances.
The Group, as far as possible,
aligns operational cash inflows
and outflows in the respective
currencies to achieve a natural
hedge.
Remaining short or long
positions are monitored centrally
and subject to hedging where
appropriate.
Increase
The Strategic Report was approved by the Board of
Directors and signed on its behalf by:
Carlo Centonze
Director
April 23, 2021
HeiQ plc
Annual report and accounts 2020
.042
Corporate governance
The Board
Esther Dale-Kolb
Chairwoman
Non-executive Director
Committees Committees
Esther was Chief Executive Officer
of Dr. W. Kolb Holding AG (Kolb),
a Swiss specialty chemicals
company. From 1991 until 2007
Esther was CEO of the Kolb Group,
with over 200 employees,
producing in Holland and
Switzerland as an internationally
operating specialty chemicals
company. Esther managed the
change from a pioneer-driven
family company to a process-
orientated modern business with
cooperative management style,
contributing to substantial growth
in production capacity, revenue
and EBIT. She then successfully
concluded the trade sale of the
Kolb Group to Kuala Lumpur
Kepong Berhad, KLK Malaysia
and remained on the board for a
further 18 months. Before leading
Kolb, Esther worked as a product
manager in paper chemicals and
started her career as a laboratory
technician at Dow Chemical. She
completed her apprenticeship at
the Swiss Federal Institute of
Technology, ETH Zurich, and
received her Bachelor of Science
degree at King’s College London.
Esther was active as a member
of the board of the Swisscross
Foundation, a Swiss charitable
foundation. Esther is the
Chairwoman of HeiQ.
Carlo Centonze
Co-founder and CEO
Executive Director
Carlo studied Environmental
Sciences and Forest Engineering
(MSc) at the Swiss Federal
Institute of Technology, ETH Zurich.
He earned his Executive MBA at
the University of St. Gallen (HSG).
After his service as an army pilot,
he started his professional career
as co-founder of the ETH spin-off,
myclimate, a non-profit
organization and prominent
provider of carbon offsetting
measures. Since 2004, Carlo has
served HeiQ as co-founder and
CEO, developing the firm from a
two-employee company to an over
140-employee company. He also
serves as chairman of ECSA
Group, a 108-year-old Swiss
chemical and energy distributor
with an annual consolidated
turnover of over US$300 million
and is a member of the executive
board of Science Industries, the
Swiss association of the
pharmaceutical, biotech and
chemical industries.
Xaver Hangartner
CFO
Executive Director
Committees
Xaver started his career in finance
in 2005 after obtaining a
bachelor’s degree in Business
Administration from the University
of St. Gallen (HSG). At the
beginning of his professional
career, he worked with EY
Switzerland as an auditor for
industrial clients and graduated as
a Swiss Certified Public Accountant
in 2009. He later worked in various
finance positions and led the
global finance and accounting
team of a listed Korean specialty
chemical producer before
joining HeiQ in 2018 as Head
of Controlling. He was appointed
Group Chief Financial Officer in
October 2019.
.043
Strategic
report
Corporate
governance
Financial
statements
HeiQ plc
Annual report and accounts 2020
Overall gender split
Male
Female
65%
35%
Board structure
Executive
Non-executive
40%
60%
Benjamin Bergo
Non-executive Director
Committees
Ben brings a wealth of experience
in high growth technology
operations and venture capital.
He currently serves as President
and CEO of Visus Therapeutics,
Inc., an ophthalmic drug
development company. He also
serves as a non-executive director
at Lumos Diagnostics Holdings Pty
Ltd, a leading full-service provider
of point-of-care diagnostic
solutions. Ben previously served as
a non-executive director of Planet
Innovation Holdings Limited, a
healthtech innovation and
commercialization company, and
led investments into life sciences
transactions at a seed stage
venture fund between 2007 and
2011. Prior to this, Ben held
management roles at Vision
BioSystems, until the sale of Vision
Systems Limited to Danaher
Corporation in 2006.
Karen Brade
Non-executive Director
Committees
Karen has extensive experience of
project finance, private equity and
asset management. She started her
career at Citibank working on
multinational project finance
transactions. Karen worked at CDC
(Commonwealth Development
Corporation), the UK Government’s
development finance institution,
where she held positions in equity
and debt investing, portfolio
management, fund raising and
investor development. Karen has
been an advisor to hedge funds,
family offices and private equity
houses. She currently serves as chair
of Aberdeen Japan Investment Trust
plc; chair of Keystone Positive Change
Investment Trust plc; non-executive
director and chair of audit at
Augmentum Fintech plc and is an
external panel member of the Albion
Capital VCT investment committee.
Audit Committee
Nomination Committee
Remuneration Committee
Key: Committee membership
HeiQ plc
Annual report and accounts 2020
.044
Corporate governance
Corporate Governance Statement
Esther Dale-Kolb
Chairwoman
Chair’s Introduction
Dear Shareholder
I have pleasure in introducing
HeiQ’s Corporate Governance
Report, our first since the Re-
admission of the Company’s
securities on the London Stock
Exchange in December 2020
(“Re-admission”). As we stated at
that time, the Board is committed to
the principles underpinning good
corporate governance. We aim to
apply these in a manner which is
most suited to the Company, and
best addresses the Board’s
accountability to shareholders and
other stakeholders. The Company,
therefore, voluntarily observes the
requirements of the QCA Corporate
Governance Code (the “Code”) as
the Board feels that this Code is
more appropriate for the Company’s
size and stage of development than
the more prescriptive UK Corporate
Governance Code.
During the period under review the
Company has complied with the QCA
Corporate Governance Code with
the exception of, inter alia, the
expectation that each member of
the Remuneration Committee be
independent and each independent
non-executive director be re-elected
on an annual basis. The Company
will keep these matters and its
governance framework under review
as it continues to grow and develop.
In this report, we have set out how we
have applied the ten principles of the
Code in the year ended December 31,
2020.
Esther Dale-Kolb
Chairwoman
Delivering growth
Strategy and business model
Principle one of the Code requires
that companies establish a strategy
and business model which promotes
the long-term value for shareholders.
Our strategy, and the key challenges
we face in executing the strategy, are
set out in the Strategic Report on
pages 14 to 15. HeiQ’s leadership
team meets regularly and focuses on
the delivery of the Group’s strategic
plan which is set by the Board. The
Chief Executive Officer reports to the
Board on progress, and the Board
supports and challenges the
leadership team. Employees are kept
informed of strategy and progress
through regular employee briefings
and newsletters.
Shareholder relations
Under principle two of the Code, we
are required to seek to understand
and meet the needs and expectations
of our shareholders. In order to
achieve this, we plan to make our
Executive Directors available to
shareholders through regular
meetings throughout the year along
with investor roadshows around the
time of our financial results
announcements.
Stakeholder engagement
Principle three of the Code requires us
to take into account wider stakeholder
and social responsibilities and their
implications for long-term success. We
consider our key stakeholders, in
addition to our shareholders, to be our
employees, our partners, our
customers, our suppliers, our bankers
and our lenders, the local
communities in which we operate and
the environment. More information on
our engagement with our key
stakeholders can be found in our
s172 Statement on pages 30 to 31
of this report.
Risk management
Principle four of the Code requires the
Company to embed effective risk
management, considering both
opportunities and threats, throughout
the organization. The Company’s
significant risks and uncertainties are
set out on pages 38 to 41 of this
report together with a summary of
how risk management is executed
within the Group.
.045
Strategic
report
Corporate
governance
Financial
statements
HeiQ plc
Annual report and accounts 2020
Maintaining a dynamic
management framework
The Board
Principle five of the Code calls for the
maintenance of the Board as a
well-functioning, balanced team led
by the Chair.
The Board is led by Esther Dale-Kolb,
who is the non-executive Chairwoman.
The Board also includes two non-
executive Directors who both have
extensive experience with international
and/or UK listed companies, and two
Executive Directors. All Directors,
including the Chairwoman, hold shares
in the Company. The two Executive
Directors and the Chairwoman are
not considered independent, while the
two non-executive Directors are
considered independent.
There are three Board Committees:
the Audit Committee, the
Remuneration Committee and the
Nomination Committee. A fourth
Committee – the Environmental,
Occupation, Health and Safety
Committee (EOHSC) – is intended to
be established in the course of 2021.
More information on the Audit,
Nomination and Remuneration
Committees can be found on pages
47 to 53.
There has been one Board meeting
since the Re-admission until December
31, 2020 and all Directors attended.
Directors are expected to attend all
Board meetings and the meetings
of the Committees on which they sit.
They are also required to devote
sufficient time to the Company to
enable them to fulfill their duties
as Directors. The time commitment
expected of the non-executive
Directors is set out in their letters
of appointment.
The Board’s skills and capabilities
Principle six of the Code requires that
the Company ensures that, between
them, the Directors have the
necessary up-to-date experience,
skills and capabilities. The Board
comprises five individuals with a mix
of skills and experience that is most
appropriate for the Company at this
stage in its development. More
information on the background and
skills of the individual Directors can
be found on pages 42 to 43. The
Board’s gender balance is good, being
two female and three male Directors.
The Board’s training and development
needs will be met by implementing
appropriate periodical training during
the course of 2021. The Company
Secretary tables a report at each Board
meeting which covers any significant
developments in corporate governance.
Board performance and evaluation
The seventh Code principle requires
the Board to evaluate its performance
based on clear and relevant
objectives, seeking continuous
improvement. The Directors feel that
it is too early to have conducted a
Board evaluation but have committed
to running an internal evaluation in
the latter part of 2021.
Succession planning will be
addressed by the Nomination
Committee which will make
recommendations to the Board.
Corporate culture
Principle eight of the Code requires
that the Company promotes a
corporate culture that is based on
ethical values and behaviors. At HeiQ,
we strive to ensure that our business
success is in accordance with the best
environmental, ethical and social
standards. We aim to provide diligent
product stewardship and deliver value
to all our stakeholders. We have an
entrepreneurial culture where
disciplined execution is key. We expect
all our employees to work hard and
with determination and in return we
care for our people who respect each
other. We pride ourselves on being
customer-focused thinkers who act
with integrity, honesty and trust.
Sustainability is our guiding star in all
our actions, processes and products.
The Board will monitor and promote a
healthy corporate culture by
conducting an annual employee survey
with the aim to capture strategic
alignment, the level of satisfaction, as
well as suggested improvements.
Governance structure
Principle nine of the Code requires the
Company to maintain governance
structures and processes that are fit
for purpose and support decision-
making by the Board. The Board
meets at least four times a year and
the Audit and Remuneration
Committees meet at least two and
one times a year respectively. The
Nomination Committee meets at least
once a year and more if circumstances
require it.
The Board provides strategic
leadership and sets the culture and
practices that should be followed
throughout the business. The Board
maintains a schedule of matters
reserved for its decision and these
include:
Management structure and
appointments:
senior management
responsibilities;
Board and other senior
management appointments or
removals;
Board and senior management
succession, training, development
and appraisal;
appointment or removal of the
Company Secretary;
appointment or removal of the
internal auditor;
remuneration, contracts,
grants of options and incentive
arrangements for senior
management;
delegation of the Board’s powers;
agreeing to membership and terms
of reference of Board Committees
and task forces;
establishment of managerial
authority limits for smaller
transactions; and
matters referred to the Board by
the Board Committees.
Strategic/policy considerations:
business strategy;
diversification/retrenchment
policy;
specific risk management policies
including insurance, hedging,
borrowing limits and corporate
security;
agreement of codes of ethics and
business practices;
receipt and review of regular
reports on internal controls;
annual assessment of significant
risks and effectiveness of internal
controls;
calling of shareholders’ meetings;
and
avoidance of wrongful or
fraudulent trading.
HeiQ plc
Annual report and accounts 2020
.046
Transactions:
acquisitions and disposals of
subsidiaries or other assets over
10% of net assets/profits;
investment and other capital
projects over a similar level;
substantial commitments
including:
– pension funding;
– material contracts in excess of
one year’s duration; and
– giving securities over significant
Group assets (including
mortgages and charges over
the Group’s property);
contracts not in the ordinary
course of business;
actions or transactions where
there may be doubt over property;
approval of certain
announcements, prospectuses,
circulars and similar documents;
disclosure of Directors’ interests;
and
transactions with Directors or other
related parties.
Finance:
raising new capital and
confirmation of major financing
facilities;
treasury policies including
foreign currency and interest rate
exposure;
discussion of any proposed
qualification to the accounts;
final approval of annual and
interim reports and accounts and
accounting policies;
appointment/proposal of auditors;
material charitable donations;
approval and recommendation of
dividends; and
approval before each year starts of
operating budgets for the year and
periodic review during the year.
Liaison with investees:
liaison with investees regarding the
Group’s financial commitments;
and
liaison with investees regarding the
Group’s working and net revenue
interests.
General:
governance of Company pension
schemes and appointment of
Company nominees as trustee;
and
allotment, calls or forfeiture of
shares.
The Board has approved terms of
reference for each of the Board
Committees to which certain
responsibilities are delegated. The
chair of each Committee reports to
the Board on the activities of that
Committee. Further information on
the Committees can be found on
pages 47 to 53 of this report.
The Chair is responsible for the
leadership of the Board, ensuring its
effectiveness on all aspects of its role
and the setting of its agenda. She
ensures the Directors receive
accurate, timely and clear information
and she is responsible for ensuring
the Board’s effective communication
with shareholders. In leading Board
meetings, the chair facilitates the
effective contribution of non-executive
Directors and ensures constructive
relations between Executive and
non-executive Directors.
The Chief Executive Officer is
responsible for the leadership and
management of the Company, and
the implementation of objectives and
strategies agreed by the Board.
Build trust
Stakeholder communication
Principle ten of the Code requires
the Company to communicate
how the Company is governed and is
performing by maintaining a dialogue
with shareholders and other relevant
stakeholders.
During the period under review we
have had over 30 interactions with
shareholders, have conducted several
audits by regulatory counterparts and
interacted with our 10,000 consumer
strong customer base. Further
information on our engagement with
shareholders can be found on page
31 of this report.
Corporate governance
Corporate Governance Statement continued
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Strategic
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Corporate
governance
Financial
statements
HeiQ plc
Annual report and accounts 2020
Corporate governance
Audit Committee Report
Karen Brade
Chair
On behalf of the Committee,
I am pleased to present the Audit
Committee Report for the year
ended December 31, 2020.
There are two members of the Audit
Committee. I chair the Committee
and the other member is Benjamin
Bergo. Our biographies setting out
our skills and qualifications can
be found on page 43 of this report.
We are both non-executive
Directors. It is intended that the
Audit Committee meets at least
twice a year and the Committee is
responsible for ensuring that the
Group’s financial performance is
properly monitored, controlled and
reported. I report to the Board after
each Committee meeting and I will
attend each Annual General
Meeting of the Company.
In the period between Re-admission
on December 7, 2020 and December
31, 2020, the Committee has met
once, with both its members in
attendance.
Duties of the Audit Committee
Internal control and risk assessment
The Committee assists the Board in
discharging its duty to ensure that the
financial statements presented by the
Company to its shareholders conform
with all legal requirements and that
the Company and its subsidiaries’
financial reporting and internal control
policies and procedures for the
identification, assessment and
reporting of risks are adequate,
by keeping such matters under
review and making appropriate
recommendations to the Board. The
Committee also considers the major
findings of internal investigations and
responses of service providers and
reviews its own performance,
constitution and terms of reference.
External audit
The Committee considers and makes
recommendations to the Board
regarding the appointment and
reappointment of the Company’s
external auditor, as well as any
questions relating to their resignation or
removal. The Committee oversees the
relationship with the external auditor,
including, but not limited to, the
approval of their remuneration and
terms of engagement, whether in
relation to audit or non-audit services,
and annually assesses the auditor’s
independence, objectivity, qualifications,
expertise, resources and effectiveness.
The Audit Committee meets the external
auditor at least twice a year and reviews
the findings of the audit.
Financial statements
The Committee monitors the integrity
of the financial statements of the
Company, including the annual and
interim reports, preliminary results
announcements and any other formal
announcement relating to its financial
performance. It reviews any significant
financial reporting issues and
judgments, and challenges, where
necessary, the Company’s financial
statements before submission to the
Board. The Committee keeps under
review the consistency of accounting
policies and practices on a year-to-
year basis, and across the Company.
The Company has implemented
control procedures designed to
ensure complete and accurate
accounting for financial transactions
and to limit the exposure to loss of
assets and fraud. Measures taken
include segregation of duties and
reviews by management.
HeiQ plc
Annual report and accounts 2020
.048
Reporting responsibilities
The Committee meets formally with
the Board at least once a year to
discuss matters such as the annual
report and the relationship with the
external auditor and also makes
whatever recommendations to the
Board it deems appropriate.
Internal audit and review of
third-party service providers
At present, the Company does not
have an internal audit function. The
decision of whether or not to set up an
internal audit function will be made
by the Board, on the recommendation
of the Audit Committee, based on
the growth of the Company, the scale,
diversity and complexity of the
Company’s activities and the number
of employees, as well as cost and
benefit considerations.
Work of the Audit Committee
For the period since establishment of
the Committee on December 7, 2020
the Audit Committee discharged its
responsibilities by considering the
following matters:
Significant issues in relation to the
financial statements
When considering the financial
statements, the Committee
considered among others the issues
set out in the table below.
External auditor
The Committee considered the
independence and effectiveness of the
external auditor. The annual report
2020 is the first year Crowe U.K. LLP
has been auditing and Ian Weeks has
been the audit partner for the same
period. The Committee was satisfied
with the service provided by Crowe U.K.
LLP and recommended that the Board
should propose their reappointment at
the forthcoming Annual General
Meeting. When assessing the
independence of the external auditor
the Committee took into account the
fees paid to Crowe U.K. LLP for
non-audit services. The auditor has
not provided any non-audit services
to the Company since readmission
on December 7, 2020.
Whistleblowing
The Company has a whistleblowing
policy in place which sets out the
formal process by which an employee
of the Group may, in confidence, raise
concerns about possible improprieties
in financial reporting or other matters.
As the Committee has been
established only upon Re-admission
on December 7, 2020, no review of
the policy and its effectiveness has
taken place yet.
Corporate governance
Audit Committee Report continued
Issue How this was addressed
Annual Report
and Accounts
The Committee was required to provide advice to the Board on whether the Annual Report and Accounts, taken
as a whole, provide a fair, balanced and understandable assessment of the Company’s financial position and
future prospects and provide all information necessary to a shareholder to assess the Group’s performance,
business model and strategy.
The assessment was assisted by an internal verification of the factual content by management and a
comprehensive review by the senior management team and the external auditors.
Following its review, the Committee was of the opinion that the Annual Report and Accounts 2020 were
representative of the year and present a fair, balanced and understandable overview, providing the necessary
information for shareholders to assess the Group’s position and performance, business model and strategy.
Financial
Reporting
The Committee reviewed whether suitable accounting policies had been adopted, and whether management
had made the appropriate estimates and judgments. In addition, support and assessment were sought from
the external auditor. To do so, the Committee received presentations from the CFO and also received reports
from the external auditor covering the key risk areas addressed during the year end audit, and the auditors’
view of key judgments made by management.
Specific issues addressed by the Committee for the period ended December 31, 2020 included revenue
recognition for take of pay contracts and provisions for expected credit losses.
Based upon the business assurance process and discussions with management and the external auditor,
the Committee was satisfied that the accounting disclosures and assumptions were reasonable and appropriate
for a business of the Group’s size and complexity, that the external auditor had fulfilled its responsibilities in
scrutinising the financial statements for any material misstatements and that the disclosures were satisfactory.
Anti-bribery
The Company has an anti-bribery and
anti-corruption policy which sets out
its zero-tolerance position and
provides information and guidance to
employees on how to recognize and
deal with bribery and corruption
issues. As the Committee has been
established only upon Re-admission
on December 7, 2020, no review of
the policy and its effectiveness has
taken place yet.
Assessment of the effectiveness of
the Committee
The Committee members feel that it
is too early to have conducted a
Committee evaluation but intends to
take part in the Board and Committee
internal evaluations planned for the
latter part of 2021.
Karen Brade
Chair
April 23, 2021
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Financial
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HeiQ plc
Annual report and accounts 2020
Corporate governance
Nomination Committee Report
Esther Dale-Kolb
Chair
On behalf of the Committee, I am
pleased to present the Nomination
Committee Report for the year
ended December 31, 2020.
There are three members of the
Nomination Committee. I chair the
Committee and the other members
are Karen Brade and Benjamin
Bergo. We are all non-executive
Directors. The Committee meets at
least annually, close to the end of
each financial year, and at such
other times as the Nomination
Committee requires.
In the period between Re-admission
on December 7, 2020 and
December 31, 2020, the Committee
has not held any meetings.
Duties of the Nomination
Committee
Regular reviews
The Committee reviews regularly,
and at least annually, the time
required from a non-executive
Director and whether each
non-executive Director is spending
enough time to fulfill his or her
duties. The Committee reviews the
structure, size, composition, skills,
knowledge and experience of the
Board and the leadership needs of
the Group to ensure that the Group
continues to compete effectively in
its marketplace. The Committee
undertakes to consider its own
performance, constitution and
terms of reference and makes
recommendations to the Board
about any matters arising.
Board appointments
The Committee is responsible for
identifying and nominating, for the
approval of the Board, candidates
taken from a wide range of
backgrounds to fill Board vacancies as
and when they arise for any reason,
including retirement by rotation. It
evaluates, before making an
appointment, the balance of skills,
knowledge and experience on the
Board and, in the light of this
evaluation, prepares a description of
the role and capabilities required for
particular appointments. The
Committee is required to give full
consideration to succession planning
in the course of its work, taking into
account the challenges and
opportunities facing the Group and
the skills and expertise that will be
needed on the Board in the future.
The Committee ensures that, on
appointment to the Board, non-
executive Directors receive a contract
setting out clearly what is expected of
them in terms of time commitments,
Committee service and involvement
outside of Board meetings.
Recommendations to the Board
The Committee undertakes to make
recommendations to the Board about
plans for an orderly succession of the
Chairman and non-executive Directors
and a formal, rigorous and
transparent procedure to be used by
them. The Committee also considers
and recommends, if appropriate, the
reappointment of any non-executive
Director at the conclusion of their
specified term of office or under the
retirement by rotation provisions in
the Company’s Articles of Association.
The Committee considers and makes
recommendations on the
membership of the Audit Committee,
the Nomination Committee and the
Remuneration Committee in
consultation with the Chairmen/
Chairwomen of those Committees.
The Committee may also, at any time,
recommend to the Board the
appointment of additional non-
executive Directors and any Executive
Directors (if such are considered
to be appropriate).
Assessment of the effectiveness
of the Committee
The Committee members feel that it is
too early to have conducted a
Committee evaluation but intends to
take part in the Board and Committee
internal evaluations planned for the
latter part of 2021.
Esther M. Dale-Kolb
Chair
April 23, 2020
HeiQ plc
Annual report and accounts 2020
.050
Benjamin Bergo
Chair
Overview
The Remuneration Committee was
established upon Re-admission of
trading of the enlarged Group as of
December 7, 2020. The Committee
comprises two non-executive
Directors, Benjamin Bergo (Chair)
and Esther Dale-Kolb, and one
Executive Director, Carlo Centonze.
In the remaining period to
December 31, 2020, no meetings
of the Remuneration Committee
were held. Going forward, the
Remuneration Committee will meet
at least annually, and the
Committee Chair shall attend each
Annual General Meeting of the
Company. No one shall be present
during the discussion of, or vote on,
matters regarding her/his own
position. The Chairwoman of the
Board shall not chair the Committee
meeting when it is dealing with the
appointment of her successor.
Summary of the Committee’s
responsibilities
The Committee’s responsibilities
include the following:
Regular reviews – to regularly
review: the time required from
a non-executive Director and
whether each non-executive
Director is spending enough
time fulfilling his or her duties;
comparable Company data to
ensure that the Board is being
adequately remunerated and
to a level which will allow the
Company to attract new Directors,
the Remuneration Committee’s
own performance, constitution
and terms of reference and
remuneration to ensure it is
aligned to the implementation of
the Company strategy and effective
risk management, taking into
account the views of shareholders
and consultants as required.
Recommendations to the Board
– to make recommendations
about matters arising from the
Remuneration Committee’s regular
reviews and the annual review of
fees paid to the Board and any
changes to the current levels of
remuneration.
Option Scheme awards – to make
all decisions relating to awards to
be made to Executive Directors
under the Option Scheme.
Other matters – to make a
statement in the annual report,
to keep up to date and fully
informed about strategic issues
and commercial changes affecting
the Company and the market in
which it operates and to ensure an
annual review of the Board and its
operations is undertaken.
Chair’s statement
The Directors are pleased to present
their annual report on remuneration
for 2020. The aim of the
Remuneration Committee is to set
clear objectives for each individual
Executive Director and executive
management team member relating
to the Company’s KPIs plus individual
and strategic targets taking into
account where an individual has
particular influence and
responsibility. As the Remuneration
Committee was only established
upon Re-admission on December 7,
2020, targets for Executive Directors
and management had not been
defined by the Remuneration
Committee itself. All five Directors
of the Company, both executive and
non-executive, are shareholders of
the Group. During the year, the two
Executive Directors were granted
share options upon Re-admission
to trading of the enlarged Group.
Directors’ remuneration policy
The Company’s policy is to maintain
levels of remuneration sufficient to
attract, motivate and retain senior
executives of the highest caliber
who can deliver growth in shareholder
value. Executive Directors’
remuneration currently consists of
basic salary, benefits (including
pensions allowance), performance-
related bonus and participation in
a share option plan.
The Company continues to seek to
strike an appropriate balance between
fixed and performance-related rewards,
reinforcing a clear link between pay
and performance. The performance
targets for staff, senior executives
and the Executive Directors continue
to be aligned to the key drivers of the
business strategy, thereby creating a
strong alignment of interest between
staff, Executive Directors and
shareholders. The Remuneration
Committee will continue to review the
Company’s remuneration policy and
make amendments, as and when
necessary, to ensure it remains
fit for purpose and continues to drive
high levels of executive performance
and remains both affordable and
competitive in the market.
The policy is subject to shareholder
approval through the votes cast at the
upcoming AGM to be held on
June 25, 2021.
Benjamin Bergo
Chair
Corporate governance
Remuneration Committee Report
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HeiQ plc
Annual report and accounts 2020
.051
Policy table
Base salary
Purpose and link
to strategy
To provide fixed remuneration to:
help recruit and retain key individuals; and
reflect the individual’s experience, role, rank and
contribution within the Company.
Operation The Remuneration Committee takes into account a
number of factors when setting salaries, including:
the scope and complexity of the role;
the skills and experience of the individual;
salary levels for similar roles within the industry;
pay elsewhere in the Company.
Salaries are reviewed, but not necessarily increased,
annually with any increase usually taking effect in Q1.
Performance
conditions
None
Maximum
opportunity
The current base salaries of the Directors can be
found in the Directors’ Remuneration section.
The Board retains discretion to make higher
increases in certain circumstances, for example,
following an increase in the scope and/or
responsibility of the role or the development of the
individual in the role or by benchmarking.
Other benefits
Purpose and link
to strategy
To provide a basic benefits package, in order to help
recruit and retain key individuals.
Operation The Group may provide Directors and management
as well as employees with accident insurance,
pension insurance and similar benefits in line with
legal requirements in the jurisdiction of employment
of the respective employee.
Performance
conditions
None
Maximum
opportunity
Maximum opportunity will be the expense of providing
the benefit.
Annual bonus
Purpose and link
to strategy
To incentivize and reward the achievement of annual
financial, operational and individual objectives which
are key to the delivery of the Company’s short-term
strategy.
Operation Executive Directors and staff are eligible to participate
in a discretionary bonus plan.
Maximum bonus levels and the proportion payable
for on-target performance are considered in
the light of market bonus levels for similar roles
among the industry sector.
From 2021 objectives will be set annually to
ensure that they remain targeted and focused on
the delivery of the Company’s short-term goals,
which will usually be based on the annual budget.
The Remuneration Committee sets targets which
require appropriate levels of performance, taking
into account internal and external expectations of
performance.
As soon as practicable after the year end, the
Remuneration Committee meets to review
performance against objectives and determines
payout levels.
Performance
conditions
At least 60% of the award will be assessed against
Company metrics including operational, financial and
non-financial performance. The remainder of the
award will be based on performance against
individual objectives.
A sliding scale of between 0% and 100% of the
maximum award is paid dependent on the level of
performance.
Maximum
opportunity
The maximum potential bonus entitlement for
Executive Directors under the plan is up to 100% of
base salary.
HeiQ plc
Annual report and accounts 2020
.052
Corporate governance
Remuneration Committee Report continued
Share Option Plan
Purpose and link
to strategy
To incentivize and reward the creation of long-term
shareholder value.
To align the interests of the eligible employees with
those of shareholders.
To help recruit and retain key individuals.
Operation Under the terms of the share option plan (the “Share
Option Plan”), the Remuneration Committee may
issue options over shares up to 10% of the issued
share capital of the Company from time to time.
Executive Directors and employees are eligible
for awards.
The exercise of options may be subject to the
satisfaction of such performance conditions, if any,
as may be specified and subsequently varied and/or
waived by the Remuneration Committee.
Performance
conditions
Vesting of the awards is dependent on financial,
operational and/or share price measures, as set by
the Remuneration Committee, which are aligned with
the long-term strategic objectives of the Company.
The relevant performance conditions will be set
by the Remuneration Committee on the award
of each grant.
Annual report on Directors’ remuneration (audited)
All current Directors have taken office upon Re-admission of the enlarged Group for trading on December 7, 2020. The
Executive Directors are employed under a service agreement, which is capable of termination by either party giving 12
months’ notice in writing. The non-executive Directors are employed under service agreements with notice periods of
three months. The non-executive Directors are required to retire and seek re-election by the shareholders at the next
AGM, which is expected to take place on June 25, 2021, and at any subsequent AGM as required by the Articles or as the
Board resolves. The Articles require all Directors to retire and seek re-election at the second AGM or general meeting (as
the case may be) at which he or she was previously appointed.
The Executive Directors have – in addition to the Director’s service agreement – entered into employment contracts with
HeiQ Materials AG with aligned terms in regard to notification periods. The disclosed emoluments include the total
compensation under both agreements.
Directors’ emoluments for the year were as follows:
Currency
of
payment
Salary/Fee Pension benefits Cash bonus payments Total
2020 2019 2020 2019 2020 2019 2020 2019
Carlo
Centonze
CHF 208’800.00 208’800.00 16’070.00 16’328.00 17’400.00 – 242’270.00 225’128.00
GBP 2’397. 26 – – – – – 2’397. 26
Xaver
Hangartner
CHF 162’400.00 141’850.00 7’928.00 6’955.00 27’066.70 – 197’394.70 148’805.00
GBP 2’397. 26 – – – – – 2’397. 26
Esther
Dale-Kolb
CHF – – – – – – – –
GBP 4’794.52 – – – – – 4’794.52 –
Karen Brade
CHF – – – – – – – –
GBP 12’739.73 – – – – – 12’739.73 –
Benjamin
Bergo
CHF – – – – – – – –
GBP 2’739.73 – – – – – 2’739.73 –
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Annual report and accounts 2020
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Before the reverse takeover of Auctus Growth Plc and the respective Re-admission to trading of the enlarged Group, the
HeiQ Materials AG compensation structure for Board of Directors members and key employees included share-based
payments with HeiQ Materials AG shares. Since Re-admission however, this share-based compensation is no longer in
place. The number of shares and the value accounted for in the financial statements of the enlarged Group are as follows:
Share-based payment (HeiQ Materials AG shares)
Year
Number of shares
allocated
Value included in
the financial
statements (CHF)
Carlo Centonze
2020 3’600 234’000.00
2019 1’000 65’000.00
Xaver Hangartner
2020 2’000 130’000.00
2019 600 39’000.00
Esther Dale-Kolb
2020 250 16’250.00
2019 – –
Karen Brade
2020 – –
2019 – –
Benjamin Bergo
2020 500 32’500.00
2019 250 16’250.00
The Directors’ interests for disclosure purposes are as follows (audited):
Numbers of shares
held as of
Re-admission
December 7, 2020
Number of options
granted as of
Re-admission
December 7, 2020
Total beneficial
interest as of
December 7, 2020
Shares purchased/
sold on market
December
7 – 31, 2020
Total beneficial
interest as of
December 31, 2020
% shares and
options held of total
shares in issue as at
December 31, 2020
Carlo Centonze
1
14’523’362 1’120’000 15’643’362 – 15’643’362 12.43%
Xaver Hangartner 493’746 1’120’000 1’613’746 – 1’613’746 1.28%
Esther Dale-Kolb 902’986 – 902’986 – 902’986 0.72%
Karen Brade – – – 7’976 7’976 0.01%
Benjamin Bergo 284’853 – 284’853 – 284’853 0.23%
1. Including shares owned by close relatives and controlled entities.
Share options issued in 2020 are subject to the following conditions:
Exercise price £1.23 per option share
Employment period Three years
Performance conditions
65% of the options are conditional upon sales growth targets
35% of the options are conditional upon annual operating
margin targets
Changes of conditions compared to prior year/since grant date None
Share options awarded to Executive Directors in the year are as follows:
2020 2019
Carlo Centonze 1’120’000 –
Xaver Hangartner 1’120’000 –
No share options have been awarded to non-executive Directors.
Payments to past Directors (audited)
Ross Ainger, former director of Auctus Growth Plc until December 7, 2020, was paid a director’s fee of £20’000 for his
services during 2020. In addition, consultancy fees amounting to £40’000 relating to work undertaken on the reverse
takeover of HeiQ Materials AG were paid by Auctus Growth Plc to RFA Consulting Limited, a company of which Ross Ainger
is a director.
Payments for loss of office (audited)
No payments were made to Directors for loss of office in the year.
HeiQ plc
Annual report and accounts 2020
.054
Corporate governance
Directors’ Report
The Directors’ Report for the year ended December 31, 2020 comprises pages
54 to 55 of this report, together with the sections of the annual report
incorporated by reference.
Directors
The names and biographical details of the current Directors are shown on
pages 42 to 43 of this report.
Changes during the year/period under review are as follows:
Name Date of appointment Date of resignation
Benjamin Bergo December 7, 2020
Karen Brade December 7, 2020
Carlo Centonze December 7, 2020
Esther Dale-Kolb December 7, 2020
Xaver Hangartner December 7, 2020
Ross Ainger January 10, 2020 December 7, 2020
Michael Burne December 7, 2020
Charles Cannon-Brookes January 10, 2020
Nathan Steinberg December 7, 2020
Particulars of the Directors’
emoluments and their beneficial and
non-beneficial interests in the shares
of the Company are shown on pages
52 to 53.
Powers of the Directors
The Directors manage the business
under the powers set out in the
Company’s Articles of Association.
These powers include the ability to
issue or buy back shares.
Shareholders’ authority to empower
the Directors to buy back up to 10%
of the Company’s issued share capital
will be sought at the Annual General
Meeting. The Company’s Articles of
Association can only be amended, or
new Articles adopted, by a resolution
passed by shareholders in a general
meeting by at least three-quarters of
the votes cast.
Directors’ indemnity provisions
Throughout the year/period under
review the Company has maintained
directors’ and officers’ liability
insurance cover in respect of the acts
or omissions of its Directors and
continues to do so. Details of the
policy are provided to new Directors
on appointment. In common with
other companies, the Group has
made qualifying third-party indemnity
provisions for the benefit of its
Directors against liabilities incurred
in the execution of their duties.
Political donations
The Company made no political
donations and incurred no political
expenditure during the year/period
under review.
Dividend
The Directors have declared that no
dividend would be paid in year 2021.
Post balance sheet events
In March 2021 the Company acquired
51% of Belgian industrial biotech
company Chrisal NV, which is active in
the research, development and
manufacturing of products with
probiotics and symbiotic ingredients.
Substantial interests
Information provided to the Company
pursuant to the Financial Conduct
Authority’s (FCA) Disclosure Guidance
and Transparency Rules (DTRs) is
published on a Regulatory Information
Service and on the Company’s
website. As at April 23, 2021, the
following information has been
received, in accordance with DTR 5,
from holders of notifiable interests in
the Company’s issued share capital.
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Financial
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HeiQ plc
Annual report and accounts 2020
Notifiable interest Voting rights
% of capital
disclosed Nature of holding
Amati Global Investors Limited 11,607,000 9.14% Ordinary shares
Carlo Centonze 8,667,909 6.83% Ordinary shares
Dr. Murray Height 8,018,063 6.31% Ordinary shares
Premier Miton Group plc 6,827,50 0 5.38% Ordinary shares
Bombyx Growth Fund SC 6,4 07,120 5.05% Ordinary shares
FIL Limited 5,357,000 4.22% Ordinary shares
Cortegrande AG
1
5,186,237 4.08% Ordinary shares
Darren Morcombe 5,019,486 3.95% Ordinary shares
Mike Smith 4,268,628 3.36% Ordinary shares
1. A company wholly owned by Carlo Centonze and of which he is the sole director.
Annual General Meeting
The Company’s Annual General
Meeting will be held at Ruetistrasse
12, 8952 Schlieren (Zurich)
Switzerland, with a satellite meeting
place at the offices of Charles Russell
Speechlys LLP, 5 Fleet Place, London
EC4M 7RD on Friday 25 June 2021 at
11.00 a.m. Swiss time/10.00 a.m.
London time. The AGM is being held
at the Company’s offices in Zurich to
ensure that the Executive Directors
and the Chair are able to attend the
AGM in person, given the current
ever-changing travel restrictions
imposed by governments and the
potential that further restrictions may
come into force before the date of
the Meeting.
Disclosure of information
to the auditors
The Directors, who were in office on
the date of the approval of this report,
confirm that, so far as they are aware,
there is no relevant audit information
of which the Company’s auditor is
unaware and that they have taken all
reasonable steps to make themselves
aware of any relevant audit
information and to establish that the
Company’s auditor is aware of that
information.
Statement of Directors’
responsibilities in respect of
the annual report and financial
statements
The Directors are responsible for
preparing the annual report and the
Consolidated Financial Statements in
accordance with applicable law and
regulations.
The Directors of the Company are
responsible for preparing the financial
information in accordance with
International Financial Reporting
Standards (IFRSs).
The Directors must not approve the
financial statements unless they are
satisfied that they give a true and fair
view of the state of affairs of the
Group and of the profit or loss of the
Group for that period. In preparing
these financial statements, the
Directors are required to:
select suitable accounting policies
and then apply them consistently;
make judgments and estimates
that are reasonable and prudent;
state whether they have been
prepared in accordance with
IFRSs; and
prepare the financial statements
on the going concern basis unless
it is inappropriate to presume
that the Company will continue in
business.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Company’s transactions and
disclose with reasonable accuracy
at any time the financial position of
the Company. They have general
responsibility for taking such steps
as are reasonably open to them to
safeguard the assets of the Company
and to prevent and detect fraud and
other irregularities.
The Directors are responsible for the
maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the UK governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Directors’ responsibilities
pursuant to DTR4
The Directors confirm to the best of
their knowledge:
the financial statements have been
prepared in accordance with IFRSs
and Article 4 of the IAS regulation
and give a true and fair view of the
assets, liabilities, financial position
and profit or loss of the Group; and
the management report includes a
fair review of the development and
performance of the business and
the financial position of the Group,
together with a description of the
principal risks and uncertainties
that they face.
Ross Ainger
Company Secretary
April 23, 2020
Other information relevant to this Directors’ Report can be found on the
following pages of this report:
Topic Page(s)
Share capital 87
Future developments 22
Research and development 12
Financial instruments 93
Employee share option schemes 87
Restrictions on voting rights 105
Branches outside the UK 107
Environmental matters 26
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Annual report and accounts 2020
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Financial statements
Independent Auditor’s Report to the Members of HeiQ plc
Opinion
We have audited the financial statements of HeiQ plc
(the “Parent Company”) and its subsidiaries (together
the “Group”) for the period ended December 31, 2020
which comprise:
• the Consolidated Statement of Comprehensive
Income for the year ended December 31, 2020;
• the Consolidated and Company Statements of
Financial Position as at December 31, 2020;
• the Consolidated and Company Statements of Cash
Flows for the year then ended
• the Consolidated Statement and Company
Statements of Changes in Equity for the year then
ended; and
• the notes to the financial statements, including a
summary of significant accounting policies.
The financial reporting framework that has been
applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
In our opinion the financial statements:
• give a true and fair view of the state of affairs of the
Group and of the Parent Company as at December
31, 2020 and of the Group’s profit for the year then
ended;
• have been properly prepared in accordance with
International Financial Reporting Standards in
conformity with the requirements of the Companies
Act 2006 and international financial reporting
standards adopted pursuant to Regulation (EC)
No.1606/2002 as it applies to the European Union;
• have been prepared in accordance with the
requirements of the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of
the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial statements
section of our report. We are independent of the Group
and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s
Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded
that the Directors’ use of the going concern basis of
accounting in the preparation of the financial
statements is appropriate.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group and Parent Company’s
ability to continue as a going concern for 12 months from
the date the Annual Report and accounts are signed.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the
concept of materiality. An item is considered material
if it could reasonably be expected to change the
economic decisions of a user of the financial
statements. We apply the concept of materiality both
in planning and performing our audit to evaluate the
results arising from undertaking our planned testing
procedures and the impact of any unadjusted
misstatements arising therefrom. Importantly,
misstatements below the assessed level of materiality
will not necessarily be evaluated as immaterial as we
also take account of the nature of identified
misstatements, and the particular circumstances of
their occurrence, when evaluating their effect on the
financial statements as a whole.
Materiality for the Group was set at US$445’000 and
was based upon approximately 5% of profit before tax.
We applied this benchmark as we believe it represents
the key measure by which the Group’s performance is
evaluated. Materiality for the Parent Company financial
statements was set at US$400’000, determined with
reference to a benchmark of Parent Company total
assets. It represents 2% of total assets, a key metric
given the investment held in its subsidiary.
We use a different level of materiality (“performance
materiality”) to determine the extent of our testing for
the audit of the financial statements. Performance
materiality is set based on the financial statement
materiality as adjusted for the judgments made as to
the entity risk and our evaluation of the specific risk of
each audit area having regard to the internal control
environment. On the basis of our risk assessment of
the Group’s overall control environment, our judgment
was that Group performance materiality was 75% of
our planning materiality, namely US$333’750 (2019:
not reported). Parent Company performance materiality
was set at US$300’000 (2019: not reported). Where
considered appropriate, performance materiality may
be reduced to a lower level, such as for related party
transactions and Directors’ remuneration.
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We agreed with the Audit Committee to report to it all
identified errors in excess of US$20’000 (2019: not
reported). Errors below that threshold would also be
reported to it if, in our opinion as auditor, disclosure
was required on qualitative grounds.
Where comparative materiality figures are referred to,
these were set by the previous auditor.
Overview of the scope of our audit
Our audit approach was developed by obtaining an
understanding of the Group structure, the activities of
each entity, the jurisdiction and regulatory environment
in which each entity operates.
Through this understanding we identified the following
key audit components:
• HeiQ plc, the Parent Company;
• HeiQ Materials AG, a Swiss corporation based in
Zurich that manufactures and develops specialist
textiles and acts as holding company for the rest of
the Group; and,
• HeiQ ChemTex Inc, a US corporation specializing
in carpet research and development, production
and trading.
These components account for 96% of income
receivable and 98% of net assets as represented
within the Group financial statements.
A full scope audit for Group purposes was applied to all
Group entities and was performed by the audit
engagement team. Due to Covid-19 related travel
restrictions we were unable to conduct physical site
visits from the UK. We accessed supporting
documentation via document sharing platforms and
arranged for local members of the Crowe Global
International network to attend physical stock counts.
We gained an understanding of:
• the nature of the activities;
• the nature, scale, complexity and level of judgment
of the transactions and balances of the Group; and
• the overall control environment and the level of
oversight of the Board in respect of outsourced
activities.
Based on this understanding we assessed those
aspects of the Group and Parent Company’s
transactions and balances which were most likely to
give rise to a material misstatement and were most
susceptible to irregularities including fraud or error.
Specifically, we identified what we considered to be key
audit matters and planned our audit approach
accordingly.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the financial statements of the current period
and include the most significant assessed risks of
material misstatement (whether or not due to fraud)
that we identified. These matters included those which
had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters
were addressed in the context of our audit of the
financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.
HeiQ plc
Annual report and accounts 2020
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The key audit matters we identified and how the scope of our audit responded to these is set out below.
The following table is limited to key audit matters and is not a complete list of all risks identified by our audit.
Key audit matter How the scope of our audit addressed the key audit matter
Revenue recognition
The Group has a number of sources of
income. Its main income is derived by the
sale of functional chemicals and
functional consumer goods. Revenue for
the sale of goods is generally recognized
on despatch, but as some ‘take or pay’
arrangements exist, judgment is required
in determining accrued income.
The Group also has service income
including product development
agreements which cover multiple periods.
Judgment is required to determine stage
of completion under these agreements.
We gained an understanding of:
• the principal terms and conditions relating to each income stream;
and
• the controls and review procedures applied by the Group to
identify the right to and recognition of income.
Based on that understanding we:
• evaluated and tested the operation of the key controls;
• performed analytical review procedures to determine whether
movements are consistent with our knowledge of the business
and results for the year. Investigated reasons for any deviations
from expectation corroborating explanations provided;
• reviewed the basis for recognising accrued income focusing on
non-standard arrangements including ‘take or pay’, product
development and grant income; and
• agreed a sample of transactions to supporting documentation.
We have no adverse findings to report from our testing of revenue.
Carrying value of intangible assets may
be overstated
The Group has both internally generated
development assets and acquired
intangible assets arising on the
acquisition of some of its subsidiaries.
Judgment is required in determining
whether a need for an impairment
provision arises.
We reviewed the Board’s assessment of the carrying value of the
intangible assets. We split our work between intangibles arising from
acquisitions and those that were internally generated.
For internally generated development expenditure we:
• evaluated and tested the operation of the key controls
implemented to assess the development projects;
• discussed with key operational staff and scientists the technical
feasibility of the projects on a sample basis; and
• obtained current and budgeted profitability of a sample of the
products under development to assess their commercial viability.
For acquired intangible assets we:
• evaluated and tested the operation of the key controls
implemented to identify potential impairments;
• obtained the Board’s impairment review calculation and confirmed
its arithmetical accuracy; and
• challenged the basis for key assumptions and agreed them to
supporting evidence.
We have no adverse findings to report from our testing of intangible
assets.
Inventory existence and valuation
The Group has material levels of
inventory in multiple locations. A risk
exists that profit is manipulated by
overstating inventory either by
overstating physical quantities or by
overvaluing individual inventory items.
We gained an understanding of:
• the nature and location of the Group’s inventory holdings;
• the basis of valuation of inventory; and
• the controls applied by the Group to ensure that inventory is
accurately recorded in the accounting records.
Based on that understanding we:
• evaluated and tested the operation of the key controls;
• obtained and agreed year-end inventory reconciliations to the
accounting records;
• performed in-person inventory sample counts in the Swiss entity
and remote sample counts for the US and Spanish entities via
video link to confirm existence;
• obtained direct confirmation of inventory held by third parties;
• agreed a sample of inventory items to purchase invoices to
confirm cost and to subsequent sales invoices to confirm that cost
was not greater than net realisable value; and
• reviewed the inventory ageing reports for potentially unsaleable
items and compared this to inventory provisions.
We have no adverse findings to report from our testing of inventory.
Financial statements
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Our audit procedures in relation to these matters were
designed in the context of our audit opinion as a whole.
They were not designed to enable us to express an
opinion on these matters individually and we express
no such opinion.
Other information
The Directors are responsible for the other information.
The other information comprises the information
included in the annual report, other than the financial
statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the
other information and, except to the extent otherwise
explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the
other information is materially inconsistent with the
financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether there is a material misstatement of the
financial statements or a material misstatement of the
other information. If, based on the work we have
performed, we conclude that there is a material
misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the Directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the Strategic Report and
the Directors’ Report for the financial year for which
the financial statements are prepared is consistent
with the financial statements;
• the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
Group and the Parent Company and its environment
obtained in the course of the audit, we have not
identified material misstatements in the Strategic
Report or the Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by
the Parent Company, or returns adequate for our
audit have not been received from branches not
visited by us; or
• the Parent Company financial statements and the
part of the Directors’ remuneration report to be
audited are not in agreement with the accounting
records and returns; or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities
statement set out on page 55, the Directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a true
and fair view, and for such internal control as the
Directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of
accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
HeiQ plc
Annual report and accounts 2020
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Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole are
free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these financial statements.
Extent to which the audit is capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The risk
of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent to
which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
However, the primary responsibility for the prevention
and detection of fraud rests with both those charged
with governance of the Parent Company and
management.
In identifying and assessing risks of material
misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations,
our procedures included the following:
• enquiring of the Company Secretary and the Audit
Committee, including obtaining and reviewing
supporting documentation, concerning the Group’s
policies and procedures relating to:
– identifying, evaluating and complying with laws
and regulations and whether they were aware of
any instances of non-compliance;
– detecting and responding to the risks of fraud
and whether they have knowledge of any actual,
suspected or alleged fraud; and
– the internal controls established to mitigate risks
related to fraud or non-compliance with laws and
regulations.
• discussing among the engagement team on how
and where fraud might occur in the financial
statements and any potential indicators of fraud. As
part of this discussion, we identified potential for
fraud in the valuation of intangible assets, valuation
and existence of inventory and recognition of
income; and
• obtaining an understanding of the legal and
regulatory frameworks that the Group operates in,
focusing on those laws and regulations that had a
direct effect on the financial statements or that had
a fundamental effect on the operations of the
Group. The key laws and regulations we considered
in this context included the UK Companies Act and
the Listing Rules.
Audit response to risks identified
As a result of performing the above, we identified
valuation of intangibles, recognition of income and
inventory existence and valuation as key audit matters
and our response to this risk is set out on the following
page.
In addition to the above, our procedures to respond to
risks identified included the following:
• reviewing the financial statement disclosures and
testing to supporting documentation to assess
compliance with relevant laws and regulations
discussed above;
• performing analytical procedures to identify any
unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
• reading minutes of meetings of those charged with
governance and reviewing correspondence with
HMRC; and
• in addressing the risk of fraud through management
override of controls, testing the appropriateness of
journal entries and other adjustments; assessing
whether the judgments made in making accounting
estimates are indicative of a potential bias; and
evaluating the business rationale of any significant
transactions that are unusual or outside the normal
course of business.
We gained an understanding of the legal and regulatory
framework applicable to the Group and the industry in
which it operates, and considered the risk of acts by
the Group which were contrary to applicable laws and
regulations, including fraud. These included but were
not limited to compliance with Companies Act 2006,
the FCA Listing Rules, the principles of the QCA Code
and International Financial Reporting Standards.
We designed audit procedures to respond to the risk,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery,
misrepresentations or through collusion.
We focused on laws and regulations that could give rise
to a material misstatement in the Group’s financial
statements. Our tests included, but were not limited to:
• agreement of the financial statement disclosures to
underlying supporting documentation;
• enquiries of management;
• review of minutes of Board meetings throughout the
period; and
• considering the effectiveness of the control
environment in monitoring compliance with laws and
regulations.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
Financial statements
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Other matters which we are required to address
We were appointed by the Audit Committee on
December 15, 2020. The period of total uninterrupted
engagement is less than a year, covering the year
ended December 31, 2020.
The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group or the Parent
Company and we remain independent of the Group and
the Parent Company in conducting our audit.
Our audit opinion is consistent with the additional
report to the Audit Committee.
Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the
Company and the Company’s members as a body, for
our audit work, for this report, or for the opinions we
have formed.
Ian Weekes
Senior Statutory Auditor
April 23, 2021
For and on behalf of
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
HeiQ plc
Annual report and accounts 2020
.062
Financial statements
Consolidated Statement of Comprehensive Income
For the year ended December 31, 2020
Note
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Revenue 8
Cost of sales 9
Gross profit
Other operating income 8
Selling and general administrative expenses 9
Other operating expenses 9
Operating profit
Deemed cost of listing 5
Transaction costs of relisting 5
Other income – 24
Other costs –
Finance income 22 68 8
Finance costs 22
Share of (losses)/profits of associates 7 3
Income before taxation
Taxation 10
Income after taxation
Earnings per share (cents) – basic 11
Earnings per share (cents) – diluted 11
Other comprehensive income:
Exchange differences on translation of foreign operations
Items that may be reclassified to profit or loss in subsequent periods
Actuarial losses from defined benefit pension plans (731 )
Items that will not be reclassified to profit or loss in subsequent periods (731 )
Total comprehensive income for the year
Income attributable to:
Equity holders of HeiQ
Non-controlling interests (77 )
Comprehensive income/(loss) attributable to:
Equity holders of the Company
Non-controlling interests (77 )
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Annual report and accounts 2020
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Consolidated Statements of Financial Position
As at December 31, 2020
Note
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
ASSETS
Intangible assets 12
Property, plant and equipment 13
Right-of-use assets 14
Investments 6,7 – 44
Deferred tax assets 10 826 380
Other non-current assets 15 73
Non-current assets
Inventories 16
Trade receivables 17
Other receivables and prepayments 17
Cash and cash equivalents
Current assets
Total assets
EQUITY AND LIABILITIES
Share capital 18
Capital reserve 18
Other reserve 19
Share-based payment reserve 19 50 –
Merger reserve 5
Currency translation reserve 19
Retained deficit 19
Equity attributable to owners of the parent
Non-controlling interests (20 ) 23
Total equity
Lease liabilities 14
Deferred tax liability 10 216
Long-term borrowings 22
Other non-current liabilities 21
Total non-current liabilities
Trade and other payables
Accrued liabilities
Income tax liability 10
Deferred revenue – 50
Short-term borrowings 22
Lease liabilities 14 349 339
Other current liabilities 23 967
Total current liabilities
Total liabilities
Total liabilities and equity
The Notes on pages 66 to 97 form an integral part of these Consolidated Financial Statements. The Financial
Statements on pages 62 to 65 were approved and authorized for issue by the Board of Directors on April 23,
2021 and signed on its behalf by:
Xaver Hangartner
Chief Financial Officer
April 23, 2021
HeiQ plc
Annual report and accounts 2020
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Financial statements
Consolidated Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2020
Note
Share
capital
US$’000
Capital
reserve
US$’000
Other
reserve
US$’000
Share-
based
payment
reserve
US$’000
Merger
reserve
US$’000
Currency
translation
reserve
US$’000
Retained
deficit
US$’000
Non-
controlling
interests
US$’000
Total
equity
US$’000
Balance on
January 1, 2019
Income after taxation – – – – –
Other comprehensive
(loss)/income – – – – 53 –
Total comprehensive
(loss)/income for the
year – – – – 53 563
Issuance of shares 19 32 396 – – – – – – 428
Dividends paid from
capital contributions 19 – – – – – – –
Capital contributions
from non-controlling
interests – – – – – – – 34 34
Transactions with
owners 32 247 – – – – – 34
Balance on
December 31, 2019
Income after taxation – – – –
(77 )
Other comprehensive
(loss)/income – – (731 ) –
Total comprehensive
(loss)/income for the
year – – (731 ) –
Reverse acquisition
adjustment
Issuance of shares
19
Cost of share issues
Share-based payment
charges – – – 50 – – – – 50
Capital contributions
from non-controlling
interests – – – – – – – 34 34
Transactions with
owners
Balance on
December 31, 2020
(126912 ) (20 ) 49397
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Consolidated Statement of Cash Flows
For the year ended December 31, 2020
Cash flows from operating activities
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Income before taxation
1
029
Cash flow from operations reconciliation:
Depreciation and amortization
Loss on disposal of property, plant and equipment 46 2
Loss on disposal of investments 22 –
Finance costs 399
Finance income (8 )
Expected credit loss on trade receivables 377 –
Pension expense 176 –
Non-cash equity compensation
Share of loss/(profit) of associates 15 (3 )
Deemed cost of listing
Foreign exchange differences
Working capital adjustments:
(Increase)/decrease in inventories
(Increase) in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Consideration for acquisitions of businesses (Note 26)
Cash assumed on acquisitions of businesses (Note 26)
Purchase of property, plant and equipment (370 )
Proceeds from the disposal of property, plant and equipment 10 4
Development of intangible assets
Investment in associated company –
Proceeds from the disposal of associated company 7 –
Finance income 68 8
Net cash from/(used in) investing activities
Cash flows from financing activities
Finance costs
Repayment of leases
Proceeds from borrowings 2 929
Repayment of borrowings
Dividends paid from capital contributions –
Net cash (used in)/from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents – beginning of the year
Effects of exchange rate changes on the balance of cash held in foreign currencies 270 20
Cash and cash equivalents – end of the year
Note: Non-cash transactions: Certain shares were issued during the year for a non-cash consideration as described in Note 19.
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Annual report and accounts 2020
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1. General information
and textile innovation which operates in high-growth markets, creating some of the most effective, durable and
high-performance textile effects available worldwide. The principal activity of the Company is that of a holding
The Company was admitted to listing on the Official List by way of a Standard Listing in accordance with
Chapter 14 of the Listing Rules and to trading on the London Stock Exchange’s Main Market for listed securities
on August 22, 2014.
Following the reverse takeover by the Company of HeiQ Materials AG (“HeiQ”), an established global brand in
materials and textile innovation, the Company’s enlarged share capital was 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 Consolidated Financial Statements have been prepared in accordance with IFRS, issued by the International
Accounting Standards Board, including interpretations issued by the International Financial Reporting
Interpretations Committee, applicable to companies reporting under IFRS, and the Companies Act 2006
applicable to companies reporting under IFRS.
Unless otherwise stated, the Consolidated Financial Statements are presented in United States Dollars (US$)
which is the presentational currency of the Group, and all values are rounded to the nearest thousand dollars
except where otherwise indicated.
The individual entities’ functional currencies are listed below:
Entity: Functional currency
HeiQ plc GBP
HeiQ Materials AG CHF
HeiQ ChemTex Inc. USD
HeiQ Pty Ltd AUD
HeiQ Australia Pty Ltd AUD
HeiQ GrapheneX AG CHF
HeiQ Company Limited TWD (Taiwan Dollar)
HX Company Limited TWD
HeiQ Medica S.L. EUR
HeiQ Iberia Unipessoal Lda EUR
On a single entity level, transactions in foreign currencies are translated into the functional currency at the rate of
exchange ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies
are translated at the exchange rate ruling at the reporting date. The resulting gain or loss is reflected in the
Consolidated Statement of Comprehensive Income within operating income or operating expense if the account
in the Statement of Financial Position is of an operating nature – e.g., trade and other receivables/payables and
within either “Finance income” or “Finance costs” if the account is of a non-operating nature – e.g., cash and cash
equivalents, loans receivable, payable.
Single entities with a functional currency other than US$ are translated into US$ as part of the consolidation
where assets and liabilities are translated at closing rate and profit and loss items are translated at an average
rate for the year. Equity transactions are translated at the historic rate. The residual value flows into the currency
translation reserve.
The Consolidated Financial Statements have been prepared under the historical cost convention except for
certain financial and equity instruments that have been measured at fair value.
Financial statements
Notes to the Consolidated Financial Statements
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The Consolidated 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.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgment and complexity, or areas where assumptions and
estimates are significant to the Consolidated Financial Statements, are disclosed in Note 3.
Transaction costs of equity transactions relating to the issue and re-admission of the Company’s shares are
accounted for as a deduction from equity where they relate to the issue of new shares and listing costs are
charged to the Statement of Comprehensive Income.
b. Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the Company and its subsidiaries
listed in Note 6 “Subsidiaries” to the Consolidated Financial Statements.
The basis of consolidation of the acquisition of HeiQ Materials AG by the Company in December 2020 is described
in the basis of preparation above in Note 2(a).
Business combinations other than reverse acquisitions as described in Note 5 are accounted for under the
acquisition method.
A subsidiary is defined as an entity over which the Company has control. The Company controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated from the date that control ceases.
Intra-group transactions, balances and unrealized gains on transactions are eliminated; unrealized losses are also
eliminated unless the cost cannot be recovered. Where necessary, adjustments are made to the financial
statements of subsidiaries to ensure consistency of accounting policies with those of the Group.
The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the
non-controlling interests in proportion to their relative ownership interests.
c. Investment in associates
The Group has applied IFRS 11 “Joint Arrangements” to its investment in associates. Under IFRS 11 “Joint
Arrangements”, investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations of each investor. The Directors have assessed the nature of
the Company’s joint arrangements and determined them to be that of an associated company, accounted for
using the equity method.
Under the equity method of accounting, interests in associated companies are initially recognized at cost and
adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses and movements in
other comprehensive income. When the Group’s share of losses in an associated company equals or exceeds its
interests in the associated company, the Group does not recognize further losses, unless it has incurred
obligations or made payments on behalf of the associated company.
d. New standards, interpretations and amendments effective for the current period
Adopted
• Amendments to IFRS 3: Definition of a Business
• Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform
• Amendments to IFRS 16: COVID-19-Related Rent Concessions
• Amendments to IAS 1 and IAS 8: Disclosure Initiative – Definition of Materiality
The Group has considered the above new standards, interpretations and amendments and has concluded that
they are either not relevant to the Group or they do not have a significant impact on the Group’s consolidated
financial statements.
New standards, interpretations and amendments not yet effective for the current period
There are a number of standards, amendments to standards, and interpretations which have been issued by the
IASB that are effective in future accounting periods that the Group has decided not to adopt early. The most
significant of these are as follows:
• Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract
• Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use
• Amendments to IFRS 3 References to Conceptual Framework
Management is currently assessing the impact of these new standards on the Group.
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3. Significant accounting policies
The preparation of the Consolidated Financial Statements in compliance with IFRS requires the Directors to
exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of
judgment or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial
Statements are disclosed in Note 4 “Significant accounting judgments, estimates and assumptions” to the
Consolidated Financial Statements.
a. Foreign currency transactions and translation
The Consolidated Financial Statements are presented in US Dollars (US$), which is the Group’s principal
functional currency.
The results and financial position of all Group entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
• assets and liabilities are translated at the closing rate at the date of the Statement of Financial Position;
• income and expenses are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions); and
• all resulting exchange differences are recognized in other comprehensive income.
On consolidation, the Group recognizes in other comprehensive income the exchange differences arising from the
translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries
for which settlement is neither planned nor likely to occur in the foreseeable future.
b. Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
The cost of an item of property, plant and equipment initially recognized includes its purchase price and any cost
that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of
operating in the manner intended by the Group.
Property, plant and equipment are generally depreciated on a straight-line basis over their estimated useful lives:
Furniture and fixtures 5–7 years
Motor vehicles 5 years
Machinery and equipment 5–15 years
Computers and software 5 years
Property, plant and equipment held under leases are depreciated over the shorter of the lease term and
estimated useful life.
c. Research and development expenditure
Research expenditure is recognized as an expense when it is incurred.
Development expenditure is recognized as an expense except those costs incurred on development projects are
capitalized as long-term assets to the extent that such expenditure is expected to generate future economic
benefits. Development expenditure is capitalized if, and only if, an entity can demonstrate all of the following:
• its ability to measure reliably the expenditure attributable to the asset under development;
• the product or process is technically and commercially feasible;
• its future economic benefits are probable;
• its ability to use or sell the developed asset; and
• the availability of adequate technical, financial and other resources to complete the asset under development.
Capitalized development expenditure is measured at cost less accumulated amortization and impairment losses,
if any. Certain internal salary costs are included where the above criteria are met. These internal costs are
capitalized when they are incurred in respect of products developed for sale. Development expenditure initially
recognized as an expense is not recognized as assets in subsequent periods.
Capitalized development expenditure in respect of such products is amortized on a straight-line method over a
period of five to ten years when the products or services are ready for sale or use. In the event that it is no longer
probable that the expected future economic benefits will be recovered, the development expenditure is written
down to its recoverable amount.
d. Intangible assets
All intangible assets, except goodwill, are stated at cost less accumulated amortization and any accumulated
impairment losses.
Financial statements
Notes to the Consolidated Financial Statements continued
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The estimated useful lives are as follows:
Patents and trademarks 5–10 years
Internally developed assets 5–10 years
Goodwill
Goodwill represents the amount by which the fair value of the cost of a business combination exceeds the
fair value of the net assets acquired. Goodwill is not amortized and is stated at cost less any accumulated
impairment losses.
The recoverable amount of goodwill is tested for impairment annually or when events or changes in circumstance
indicate that it might be impaired. Impairment charges are deducted from the carrying value and recognized
immediately in the income statement. For the purpose of impairment testing, goodwill is allocated to each of the
Group’s cash-generating units expected to benefit from the synergies of the combination. If the recoverable
amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill
is not reversed in a subsequent period.
Acquisition-related intangible assets
Net assets acquired as part of a business combination includes an assessment of the fair value of separately
identifiable acquisition-related intangible assets, in addition to other assets, liabilities and contingent liabilities
purchased. These acquisition-related intangible assets are amortized on a straight-line basis over their useful
lives which are individually assessed.
The estimated useful lives are as follows:
Patents and trademarks 10 years
Brand names 10 years
e. Impairment of financial assets
The expected credit loss model defined in IFRS 9 “Financial Instruments” requires the Group to account for
expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in
credit risk since initial recognition of the financial assets. The credit event does not have to occur before credit
losses are recognized. IFRS 9 “Financial Instruments” allows for a simplified approach for measuring the loss
allowance at an amount equal to lifetime expected credit losses for trade receivables and contract assets.
The Group has one type of financial asset subject to the expected credit loss model: trade receivables.
The expected loss rates are based on the Group’s historical credit losses experienced over the three-year period
prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on
macroeconomic factors affecting the Group’s customers.
f. Impairment of non-financial assets
At each reporting date, the Directors assess whether indications exist that an asset may be impaired. If
indications do exist, or when annual impairment testing for an asset is required, the Directors estimate the
asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s
fair value less costs to sell and its value-in-use, and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the
carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the Directors consider the
asset impaired and write the subject asset down to its recoverable amount. In assessing value-in-use, the
Directors discount the estimated future cash flows to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. In determining fair
value less costs to sell, the Directors consider recent market transactions, if available. If no such transactions can
be identified, the Directors utilize an appropriate valuation model.
When applicable, the Group recognizes impairment losses of continuing operations in the Statements of
Comprehensive Income in those expense categories consistent with the function of the impaired asset.
g. Right-of-use assets
A right-of-use asset is recognized at the commencement date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and an estimate
of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
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3. Significant accounting policies continued
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Right-of-use assets are subject to impairment or
adjusted for any re-measurement of lease liabilities.
The Group has elected not to recognize a right-of-use asset and corresponding lease liability for short-term leases
with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
h. Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at inception date; whether fulfillment of the arrangement is dependent on the use of a specific asset
or assets or the arrangement conveys a right to use the asset.
Identifying leases
The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset
for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:
• there is an identified asset;
• the Group obtains substantially all the economic benefits from use of the asset; and
• the Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive substitution rights. If the supplier does have those
rights, the contract is not identified as giving rise to a lease.
In determining whether the Group obtains substantially all the economic benefits that arise from use of the asset,
the Group considers only the economic benefits that arise from use of the asset, not those incidentals to legal
ownership or other potential benefits.
In determining whether the Group has the right to direct use of the asset, the Directors consider whether the
Group directs how and for what purpose the asset is used throughout the period of use. If there are no significant
decisions to be made because they are pre-determined due to the nature of the asset, the Directors consider
whether the Group was involved in the design of the asset in a way that predetermines how and for what purpose
the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these
criteria, the Group applies other applicable IFRSs rather than IFRS 16 “Leases”.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the
case) this is not readily determinable, in which case the Group’s incremental borrowing rate on commencement of
the lease is used, which the Directors have assessed to be between 1.75% and 5%, depending on the nature of
the asset and location.
Variable lease payments are only included in the measurement of the lease liability if they depend on an index or
rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are expensed in the period to which
they relate.
On initial recognition, the carrying value of the lease liability also includes:
• amounts expected to be payable under any residual value guarantee;
• the exercise price of any purchase option granted in favor of the Group if it is reasonably certain to assess that
option; and
• any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of
termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for:
• lease payments made at or before commencement of the lease;
• initial direct costs incurred; and
• the amount of any provision recognized where the Group is contractually required to dismantle, remove or
restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on
the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortized on a
straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely,
this is judged to be shorter than the lease term.
Financial statements
Notes to the Consolidated Financial Statements continued
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When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability
of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to
reflect the payments to make over the revised term, which are discounted at the same discount rate that applied
on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of
future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to
the carrying value of the right-of-use asset, with the revised carrying amount being amortized over the remaining
(revised) lease term.
i. Taxation
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and
expected to apply when the related deferred tax is realized, or the deferred liability is settled.
Deferred tax assets are recognized to the extent that it is probable that the future taxable profit will be available
against which the temporary differences can be utilized.
Income taxation
Current income tax assets and liabilities are measured at the amount to be recovered from, or paid to, the
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date in the jurisdictions where the Group operates and generates
taxable income.
j. Revenue from contracts with customers and other income
The Group’s revenue represents the fair value of the consideration received or receivable for the sale of functional
ingredients (including chemicals), materials or finished goods directly to retail or wholesale customers and the
rendering of services, net of value added tax and other similar sales-based taxes, rebates and discounts after
eliminating intercompany sales.
For fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the value of
services rendered by the Group exceed the payment received, an amount recoverable on contracts asset is
recognized. Conversely, if the payments exceed the value of services rendered, a liability is recognized. If the
contract is time-and-materials based and includes an hourly fee, revenue is recognized over time in the amount
to which the Group has the right to invoice.
Take or pay arrangements
Certain customers have agreed, under a “take or pay” contract, to purchase a specified minimum quantity of a
range of particular products over a specified period of time. However, the customer has to pay for the full quantity
stated in the contract, irrespective of whether the customer takes delivery of the minimum quantity to which they
are entitled. Upon payment of the full amount, the contract allows customers to defer its unexercised rights and to
consume the remaining units to a later date, although there is no compulsion to do so. If the Group expects to
benefit from such future exercise by the customer, it recognizes the expected amount as revenue in proportion to
the pattern of rights exercised by the customer (by comparing the goods delivered to date with those expected to
be delivered overall).
The Directors have therefore considered likely future customer behavior and thus estimated the proportion of
revenues to be recognized under such contracts.
Framework agreements
For services revenue from framework agreements, the stage of completion is determined based on the proportion
of contract costs incurred compared to total estimated contract costs. The outcome of a development project can
be determined with reasonable certainty when a project budget is agreed which sets out milestones and costs for
all project deliverables. Staff and contractors record their actual time and external costs spent on each project
which is regularly reviewed against budget.
In making their estimation as to the amounts recoverable on contracts, the Directors consider estimates of
anticipated revenues and costs from each contract and monitor the need for any provisions for losses arising from
adjustments to underlying assumptions if this indicates it is appropriate.
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3. Significant accounting policies continued
Contract work in progress is stated at costs incurred, less those amounts transferred to profit or loss, after
deducting foreseeable losses and payments on account not matched with revenue. Amounts recoverable on
contracts are included in current assets and represent revenue recognized in excess of payments on account.
The revenue recognized and deferred from such agreements was as follows:
Revenue from framework agreements
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Amounts invoiced – –
Amounts recognized 50 300
Amount recognized in revenue 50 300
Deferred revenue
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Amount brought forward 50 350
Recognized as income (50) (300)
Amount carried forward to be recognized in future periods – 50
k. Share-based payments
The Group accounts for share-based payments under IFRS 2 “Share-based Payment”. All of the Group’s share-
based awards are equity settled.
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at
the grant date. Equity-settled share-based payments to non-employees are measured at the fair value of services
received, or if this cannot be measured, at the fair value of the equity instruments granted at the date that the
Group obtains the goods or counterparty renders the service. The fair value of such shares issued has been
estimated by reference to the cash consideration received for shares issued or material third-party transactions
at or close to the dates for such non-cash issues.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Directors’ estimate of equity instruments that will eventually vest,
with a corresponding increase in equity. Where the conditions are non-vesting, the expense and equity reserve
arising from share-based payment transactions is recognized in full immediately on grant.
At the end of each reporting period, the Directors revise their estimate of the number of equity instruments
expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such
that the cumulative expense reflects the revised estimate, with a corresponding adjustment to other reserves.
l. Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of
past service provided by the employee and the obligation can be estimated reliably.
Long-term benefits
Defined benefit plans
The Group operates a defined benefit pension plan in Switzerland, which requires contributions to be made to a
separately administered fund. The cost of providing benefits under the defined benefit plan is determined using
the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts
included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts
included in net interest on the net defined benefit liability), are recognized immediately in the statement of
financial position with a corresponding debit or credit to retained earnings through other comprehensive income
in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Financial statements
Notes to the Consolidated Financial Statements continued
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Past-service costs are recognized in profit or loss on the earlier of:
• the date of the plan amendment or curtailment; and
• the date that the Group recognizes related restructuring costs.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group
recognizes the following changes in the net defined benefit obligation under “cost of sales”, “administration
expenses” and “selling and distribution expenses” in the Consolidated Statement of Profit or Loss (by function):
• service costs comprising current service costs, past-service costs, gains and losses on curtailments and
non-routine settlements; and
• net interest expense or income.
Defined contribution plans
The income statement expense for the defined contribution pension plans operated represents the contributions
payable for the year.
m. Finance income and expenses
Finance expenses comprise interest payable, lease expenses recognized in profit or loss using the effective
interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognized
in the income statement.
Finance income comprises interest receivable on cash deposits and net foreign exchange gains.
Interest income and interest payable are recognized in profit or loss as it accrues, using the effective
interest method.
Foreign currency gains and losses are reported on a net basis.
n. Cash and cash equivalents
For the purpose of presentation in the Consolidated Statement of Cash Flows, cash and cash equivalents include
cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts.
o. Trade and other receivables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest method, less provision for impairment.
p. Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is based on the weighted average
principle and includes expenditure incurred in acquiring the inventories and other costs in bringing them to their
existing location and condition.
q. Provisions
A provision is recognized when the Group has a present obligation, legal or constructive, as a result of a past
event and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate can be made. Provisions are reviewed at each reporting date and adjusted to
reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required
to settle the obligation, the provision is reversed. Where the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the
liability. When discounting is used, the increase in the provision due to the passage of time is recognized as an
interest expense.
r. Contingent liabilities
Contingent liabilities are possible obligations whose existence depends on the outcome of uncertain future events
or present obligations where the outflow of resources is uncertain or cannot be measured reliably. Contingent
liabilities are not recognized in the Consolidated Financial Statements but are disclosed unless they are remote.
s. Segmental reporting
The Directors consider that the Group has one reportable segment, that of textile innovation focused on scientific
research, specialty materials 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.
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4. Significant accounting judgments, estimates and assumptions
The Directors have made the following judgments which may have a significant effect on the amounts recognized
in the Consolidated Financial Statements:
a. Basis of consolidation
The Directors consider that the share-for-share exchange between Auctus Growth Plc and HeiQ Materials AG to
be a reverse acquisition as HeiQ Materials AG is considered to be the acquirer. Further details of the basis of
consolidation and how the Directors developed the most appropriate accounting policy are outlined in the basis of
consolidation within accounting policy Note 2(b). The difference between the consideration shares transferred in
the combination (“Consideration Shares”) and the fair value of the net assets acquired has been charged to the
Consolidated Statement of Income as a deemed cost of listing.
b. Revenue from take or pay arrangements
Certain customers have agreed, under a “take or pay” contract, to purchase a specified minimum quantity of a
range of particular products over a specified period of time. However, the customer has to pay for the full quantity
stated in the contract, irrespective of whether the customer takes delivery of the minimum quantity to which they
are entitled. Upon payment of the full amount, the contract allows the customer to defer its unexercised rights
and to consume the remaining units to a later date, although there is no compulsion to do so. If the Group expects
to benefit from such future exercise by the customer, it recognizes the expected amount as revenue in proportion
to the pattern of rights exercised by the customer (by comparing the goods delivered to date with those expected
to be delivered overall).
The Directors have therefore considered likely future customer behavior and thus estimated the proportion of
revenues to be recognized under such contracts. Any changes to such estimates would not have a material impact
on the amount of revenue recognized in each year.
c. Impairment of non-financial assets
IFRS requires the Directors to undertake an annual test for impairment of indefinite lived assets and, for finite
lived assets, to test for impairment if events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable.
Impairment testing is an area involving judgment in determining estimates, requiring assessment as to whether
the carrying value of assets can be supported by the net present value of future cash flows derived from such
assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net
present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain
matters, including management’s expectations of:
• growth in EBITDA, calculated as adjusted operating profit before depreciation and amortization;
• the level of capital expenditure to support long-term growth; and
• the selection of discount rates to reflect the risks involved.
The Directors prepare and approve cash flow projections which are used in the fair value calculations.
Changing the assumptions selected by the Directors, in particular the discount rate and growth rate assumptions
used in the cash flow projections, could significantly affect their impairment evaluation and hence the
Group’s results.
Goodwill of £3.4 million relating to the acquisition of the Chem-Tex Assets in 2017 was allocated to the Chem-Tex
business and represents a group of cash-generating units and tested for impairment as of the reporting date. The
carrying value of the Chem-Tex Assets was tested for impairment on the basis of value-in-use, including a gross
margin of 47.5%, capital expenditure of US$400’000 and a discount rate of 16% based on the rate that would be
used by a market participant. The impairment test indicated that no impairment loss is required.
The sensitivity of impairment tests to changes to underlying assumptions is summarized below. Impairment would
result from the following changes to assumptions:
• An increase in the discount rate to 23%
• A gross margin of 41% or below
• Capital expenditure of US$1’100’000 per annum or higher.
d. Defined benefit plans (pension benefits)
The costs of the Group’s defined benefit pension plan and other post-employment medical benefits and the
present value of the pension obligation are determined using actuarial valuations. An actuarial valuation involves
making various assumptions that may differ from actual developments in the future. These include the
determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to
the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive
to changes in these assumptions. All assumptions are reviewed at each reporting date.
Further details about pension obligations are provided in Note 20 “Pensions and other post-employment benefit plans”.
Financial statements
Notes to the Consolidated Financial Statements continued
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5. Business combinations
Reverse acquisition
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.
This transaction is deemed outside the scope of IFRS 3 and not considered a business combination because the
Directors have made a judgment that, prior to the transaction, Auctus Growth Plc was not a business under the
definition of IFRS 3 Appendix A and the application guidance in IFRS 3.B7- B12 due to Auctus Growth Plc being a
shell company that had no processes or capability for outputs (IFRS 3.B7).
On this basis, the Directors have developed an accounting policy for this transaction, applying the principles set
out in IAS 8.10-12, in that the policy adopted:
• is relevant to the users of the financial statements;
• is more representative of the financial position, performance and cash flows of the Group;
• reflects the economic substance of the transaction, not merely the legal form; and
• is free from bias, prudent and complete in all material aspects.
The accounting policy adopted by the Directors applies the principles of IFRS 3 in identifying the accounting acquirer
and the presentation of the Consolidated Financial Statements of the legal parent (HeiQ plc) as a continuation of the
accounting acquirer’s Financial Statements (HeiQ Materials AG). This policy reflects the commercial substance of this
transaction as the original shareholders of the subsidiary undertakings were the most significant shareholders post
transaction, owning 84.8% of the enlarged issued share capital of the Company.
Accordingly, the following accounting treatment and terminology was applied in respect of the reverse acquisition:
• the assets and liabilities of the legal subsidiary, HeiQ Materials AG, are recognized and measured in the Group
Financial Statements at the pre-combination carrying amounts, without reinstatement to fair value;
• the retained earnings and other equity balances recognized in the Group Financial Statements reflect the
retained earnings and other equity balances of HeiQ Materials AG and its subsidiaries immediately before the
business combination, and the results of the year from January 1, 2020 to the date of the business
combination are those of HeiQ Materials AG. However, the equity structure appearing in the Consolidated
Financial Statements reflects the equity structure of the legal parent (Auctus Growth Plc), including the equity
instruments issued under the share-for-share exchange to effect the business combination; the cost of the
combination has been determined from the perspective of HeiQ Materials AG.
The fair value of the shares in HeiQ Materials AG has been determined from the admission price of the HeiQ plc
shares on Re-admission to trading on the London Stock Exchange’s Main Market of £1.12 per share. The value
of the consideration shares was £119’571’088 (equivalent to US$156’889’584). The fair value of the notional
number of equity instruments that the legal subsidiary would have had to have issued to the legal parent to give
the owners of the legal parent the same percentage ownership in the combined entity was 15.2% of the market
value of the shares after issues, being £21’428’000 (US$28’124’000). The difference between the notional
consideration paid by HeiQ plc for HeiQ Materials AG and the HeiQ plc net assets acquired of £20’360’000
(US$26’722’000) has been charged to the Consolidated Statement of Comprehensive Income as a deemed
cost of listing amounting to £1’068’000 (equivalent to US$1’402’000) with a corresponding entry to the
merger reserve.
The transaction costs associated with the reverse acquisition and readmission totaled $1’871’000 and have been
charged to profit and loss.
Details of net assets acquired and the deemed cost of listing are as follows:
US$’000
Consideration effectively transferred 28’124
Net assets acquired:
Cash and cash equivalents 27’105
Trade and other receivables 163
Trade and other payables (546)
Net assets acquired 26’722
Deemed cost of listing 1’402
HeiQ plc
Annual report and accounts 2020
.076
5. Business combinations continued
The amounts transferred to the merger reserve were as follows:
US$’000
HeiQ equity capital pre-combination 29’095
Deemed cost of acquisition 1’402
Consideration shares issued on acquisition (156’894)
Retained losses of Company at combination (515)
Merger reserve as at December 31, 2020 (126’912)
Acquisition of MasFabEs
On December 15, 2020, the Group completed the acquisition of a 50.01% interest in a leading Spanish mask
manufacturer MasFabEs S.L. for a consideration of €132’751 (equivalent to US$156’570). The company was
renamed HeiQ Medica S.L. and will manufacture medical devices with the Group’s cutting-edge textile
technologies.
The following table summarizes the consideration paid for the goodwill, the fair value of assets acquired, liabilities
assumed and non-controlling interests at the acquisition date:
US$’000
Fair value of consideration 157
Net assets acquired:
Property, plant and equipment 1’195
Inventories 1’152
Cash 6
Net working capital (886)
Deferred tax asset 112
Borrowings (1’512)
Total identifiable net assets acquired at fair value 67
Non-controlling interests (33)
Goodwill recognized on acquisition 123
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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HeiQ plc
Annual report and accounts 2020
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6. Subsidiaries
Details of the Company’s subsidiaries as at December 31, 2020 are as follows:
Company
Country of
registration or
incorporation Registered office Principal activity
Percentage of
Ordinary Shares
held
HeiQ Materials AG Switzerland Rütistrasse 12, 8952 Schlieren
Zurich
Development,
production and
sale of chemicals
100%
HeiQ ChemTex Inc. United States 2725 Armentrout Dr
Concord, NC 28025
Development,
production and
sale of chemicals
100%
HeiQ Pty Ltd
1
Australia Level 20/181 William Street
Melbourne, VIC 3000
Research and
development
100%
HeiQ GrapheneX AG Switzerland Rütistrasse 12, 8952 Schlieren
Zurich
Inactive 100%
HeiQ Company Limited Taiwan No. 14 & 16, Ln. 50, Wufu 1st Rd.
Luzhu District, Taoyuan City 33850
Distribution 100%
HX Company Limited Taiwan No. 14 & 16, Ln. 50, Wufu 1st Rd.
Luzhu District, Taoyuan City 33850
Trading and
production
66.7%
HeiQ Medica S.L. Spain Plaza de la Estación s/n, 29560
Pizarra
Manufacture of
medical devices
50%
HeiQ Iberia Unipessoal
Lda
Portugal Rua Engº Frederico Ulrich, nº 2650,
4470-605 Maia
Sales agency
company
100%
With the exception of HeiQ Materials AG, all subsidiaries are held indirectly.
1. The HeiQ Group held a 50% interest up until May 2017, when it acquired the remaining 50%. HeiQ Pty Ltd comprised HeiQ Pty Ltd and its wholly owned subsidiary,
HeiQ Australia Pty Ltd, until HeiQ Australia Pty Ltd filed for voluntary deregistration on July 17, 2020 as part of a consolidation of the local businesses into a single
entity. Subsequently, the business name “HeiQ Australia” was registered on July 20, 2020 by HeiQ Pty Ltd to be used for trading purposes and on October 4, 2020,
trading as a single entity commenced. The official registered address for HeiQ Pty Ltd (and the business name HeiQ Australia) is as above.
HeiQ operates a sales representative office in the People’s Republic of China registered as HeiQ Materials Company Limited at Room 2011, Xuhui Commercial
Mansion, No. 168 Yude Road, Shanghai, China.
7. Associated companies
Details of the Group’s investments in associated companies are as follows:
Company
Country of
registration or
incorporation Registered office Principal activity
Percentage of
Ordinary Shares
held by HeiQ
HeiQ-RAS GmbH Germany An der Irler Höhe 3a, 93055
Regensburg
Regulatory services 50%
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
HeiQ-RAS GmbH – 15
Microbe Investigations AG – 29
Carrying value – 44
HeiQ-RAS GmbH (“HeiQ Germany”)
In June 2019, the Group incorporated HeiQ Germany with a paid-in capital of €25’000 and, upon incorporation,
agreed to sell a 50% interest to RAS AG, Germany for consideration of €12’500, equivalent to approximately
US$15’000.
HeiQ plc
Annual report and accounts 2020
.078
7. Associated companies continued
The investment has been accounted for using the equity method of accounting whereby the investment is initially
recognized at cost and the carrying value is increased or decreased to recognize the Group’s share of the profit or
loss of the associate after the date of acquisition.
As at December 31, 2020, the carrying value of the investment is summarized as follows:
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Balance brought forward 15 –
Consideration paid – 15
Group’s share of post-acquisition losses (15) –
Carrying value – 15
Summarized financial information
Set out below is summarized financial information for HeiQ Germany which is accounted for using the equity
method. The information reflects the amounts presented in the financial information of HeiQ Germany, adjusted
for differences in accounting policies between the Group and the associated company where appropriate, and not
the Group’s share of those amounts.
Summarized statement of comprehensive income
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Revenue – –
Loss from continuing operations (42) –
Tax – –
Loss after tax (42) –
Total comprehensive income for the year (42) –
Microbe Investigations AG
On June 7, 2012, HeiQ subscribed for a 49% interest in Microbe Investigations AG for a total consideration of
CHF 24’500 (US$25’634).
The investment was accounted for using the equity method of accounting, as summarized below:
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Balance brought forward 29 23
Group’s share of post-acquisition results – 6
Proceeds received on disposal (7) –
Loss on disposal (22) –
Carrying value – 29
On October 23, 2020, the Group disposed of its interest in Microbe Investigations AG for a consideration of CHF
6’000 (approximately US$7’000).
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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8. Revenue and other operating income
The Group’s activities are materials innovation which focuses on scientific research, manufacturing and consumer
ingredient branding. The primary source of revenue is the production and sale of functional ingredients, materials
and finished goods. Other sources of revenues include research and development services as well as laboratory
work. Revenues were mainly generated in the regions of Europe, North & South America and Asia.
The following table reconciles HeiQ Group’s revenue for the periods presented:
Revenue split by product type
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Functional ingredients sales 42’023 27’526
Functional materials sales 764 42
Finished goods sales 7’444 –
Other third-party revenues 170 386
Total revenue 50’401 27’954
Revenue split by region
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
North & South America 19’813 17’218
Asia 19’887 7’098
Europe 10’429 3’513
Others 272 125
Total revenue 50’401 27’954
During the year ended December 31, 2020, no customers individually totaled more than 10% of total revenues
(2019: two customers totaling more than 10% at 12% and 11% respectively).
Other operating income
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Foreign exchange gains 3’986 1’401
Other 758 184
Total other operating income 4’744 1’585
HeiQ plc
Annual report and accounts 2020
.080
9. Expenses by nature
Cost of goods sold
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Material expenses 17’586 11’016
Personnel expenses 1’279 1’285
Depreciation of property, plant and equipment 382 395
Other costs of goods 3’155 1’686
Total cost of goods sold 22’402 14’382
Selling and general administration expense
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Personnel expenses 9’091 6’783
Commissions 1’133 1’117
Audit expense 108 (9)
Depreciation of property, plant and equipment 394 317
Amortization 110 149
Depreciation of right-of-use assets 368 404
Other 4’913 3’287
Total selling and general administration expense 16’117 12’048
Personnel expenses
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Wages and salaries 8’290 7’496
Social security and other payroll taxes 415 283
Pension costs 448 89
Share-based payments 1’217 201
Total personnel expenses 10’370 8’069
The average monthly number of employees was as follows: 97 86
Other operating expenses
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Foreign exchange losses 5’124 1’687
Other 3 –
Total other operating expenses 5’127 1’687
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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10. Taxation
For the year ending December 31, 2020, the Group had a tax expense of US$2’112’000 (2019: US$314’000).
The effective tax rate was 28.8% (2019: 30.5%). The effective tax rate was primarily impacted by non-deductible
expenditure.
The components of the provision for taxation on income included in the Statement of Profit or Loss and Other
Comprehensive Income are summarized below:
Current income tax expense
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Swiss corporate income taxes 304 46
United States state and federal taxes 1’112 147
Taiwan corporate income taxes 161 35
Total current income tax expense 1’577 228
Deferred income tax expense
Switzerland 588 86
Portugal (28) –
Taiwan (25) –
Total deferred income tax expense 535 86
Total income tax expense 2’112 314
Tax liability
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Opening balance – (Prepaid taxes) (42) (92)
Income tax expense for the year 1’577 228
Taxes paid (48) (178)
Foreign currency movements 8 –
Closing balance 1’495 (42)
The differences between the statutory income tax rate and the effective tax rates are summarized as follows:
US$’000
Year ended
December 31,
2020
Expected tax at statutory Swiss income tax rate of 20% 1’469 20.0%
Increase/(decrease) in tax resulting from:
Effect of different tax rates in foreign jurisdictions 175 2.4%
Tax credits (60) (0.8%)
Net recognized tax losses (329) (4.5%)
Non-deductible expenditure 567 7.7%
Other – net 290 4.0%
Total income tax expense 2’112 28.8%
US$’000
Year ended
December 31,
2019
Expected tax at statutory Swiss income tax rate of 20% 206 20.0%
Increase/(decrease) in tax resulting from:
Effect of different tax rates in foreign jurisdictions (19) (1.8%)
Net unrecognized tax losses 100 9.7%
Capital allowances less depreciation (6) (0.6%)
Other – net 33 3.2%
Total income tax expense 314 30.5%
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Annual report and accounts 2020
.082
10. Taxation continued
The Group had net deferred tax liabilities of US$31’000 at December 31, 2020 (2019: Net deferred tax assets of
US$164’000). The deferred tax assets relate to taxable temporary differences.
The components of the net deferred income tax assets included in non-current assets are as follows:
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Deferred tax assets
Pension fund obligations 655 370
Tax losses recognized 171 –
Deferred revenue – 10
Total deferred tax assets 826 380
Deferred tax liabilities
Capital allowances and depreciation (857) (216)
Deferred tax liabilities (857) (216)
Net deferred tax assets (liabilities) (31) 164
As at December 31, 2020, the Group had approximately US$171’000 of tax losses available to be carried forward
against future profits (2019: US$2.2 million). Approximately US$1.5 million of the losses brought forward expired
in 2020.
In applying judgment in recognizing deferred tax assets, management has critically assessed all available
information, including future business profit projections and the track record of meeting forecasts. Management
expects the deferred tax asset to be substantially recovered in 2021.
11. Earnings per share
The calculation of earnings per share is based on the following earnings and number of shares:
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Profit after tax attributable to owners of the Company 4’991 726
Basic earnings per share (cents) 4.41 0.71
Diluted earnings per share (cents) 4.21 0.71
Basic weighted average number of shares in issue 113’143’731 102’959’511
Diluted weighted average number of shares in issue 118’666’601 102’959’511
Basic earnings per share is calculated by dividing the profit/loss after tax attributable to the equity holders of the
Company by the weighted average number of shares in issue during the year.
Diluted earnings per share is calculated by dividing the profit/loss attributable to the equity holders of the
Company by the weighted average number of Ordinary Shares outstanding during the year plus the weighted
average number of Ordinary Shares that would be issued on conversion of all the dilutive potential Ordinary
Shares into Ordinary Shares.
In calculating the weighted average number of Ordinary Shares outstanding (the denominator of the earnings per
share calculation) during the period in which the reverse occurs:
(a) the number of Ordinary Shares outstanding from the beginning of that period to the acquisition date shall be
computed on the basis of the weighted average number of Ordinary Shares of the legal acquiree (accounting
acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement; and
(b) the number of Ordinary Shares outstanding from the acquisition date to the end of that period shall be the actual
number of Ordinary Shares of the legal acquirer (the accounting acquiree) outstanding during that period.
The basic earnings per share for each comparative period before the acquisition date presented in the
Consolidated Financial Statements following a reverse acquisition shall be calculated by dividing;
(a) the profit or loss of the legal acquiree attributable to Ordinary Shareholders in each of those periods; by
(b) the legal acquiree’s historical weighted average number of Ordinary Shares outstanding multiplied by the
exchange ratio established in the acquisition agreement.
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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12. Intangible assets
Cost
Goodwill
US$’000
Trademarks
and patents
US$’000
Internally
developed
assets
US$’000
Brands
US$’000
Total
US$’000
As at January 1, 2019 3’393 378 1’030 295 5’096
Additions arising from internal development – 39 79 – 118
Currency translation differences – – 19 – 19
As at December 31, 2019 3’393 417 1’128 295 5’233
Additions through business combinations 123 – – – 123
Additions arising from internal development – 33 602 – 635
Currency translation differences – 41 121 – 162
As at December 31, 2020 3’516 491 1’851 295 6’153
Amortization
As at January 1, 2019 – 170 336 48 554
Amortization for the year – 78 41 30 149
Currency translation differences – 1 7 – 8
As at December 31, 2019 – 249 384 78 711
Amortization for the year – 70 11 29 110
Currency translation differences – 31 37 – 68
As at December 31, 2020 – 350 432 107 889
Net book value
As at December 31, 2020 3’516 141 1’419 188 5’264
As at December 31, 2019 3’393 168 744 217 4’522
Goodwill, brands and certain trademarks were recognized in earlier years arising from the acquisition of certain
assets (the “Chem-Tex Assets’’) through a newly established subsidiary, HeiQ USA, in April 2017.
Additional goodwill was recognized on the acquisition of MasFabEs S.L. in December 2020 as described in
Note 5 above.
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating unit (‘CGU’) that is
expected to benefit from that business combination. Management considers that the goodwill is attributable to
the textile innovation CGU, because that is where the benefits are expected to arise from expansion opportunities
and synergies of the business. The Directors consider that the Group has one reportable segment, that of textile
innovation focused on scientific research, specialty materials manufacturing and consumer ingredient branding.
The Group tests goodwill annually for impairment or more frequently if there are indications that these assets
might be impaired. The recoverable amounts of the CGU are determined from fair value less costs to sale. The
value of the goodwill comes from the future potential of the assets rather than using the assets as they are
(i.e., there is assumed expansionary capex which supports growth in revenues and the value of the business
and therefore goodwill).
The key assumptions for the fair value less costs to sale approach are those regarding sales prices, margins and
a discount rate.
The Group monitors its pre-tax Weighted Average Cost of Capital and those of its competitors using market data.
In considering the discount rate applying to the CGU, the Directors have considered the relative size and risks of
its CGU.
The impairment review uses a discount rate adjusted for post-tax cash flows. The Group prepares cash flow
forecasts derived from the most recent financial plan approved by the Board and extrapolates revenues, net
margins and cash flows for the following five years based on forecast growth rates of the CGU. Cash flows beyond
this period are also considered in assessing the need for any impairment provisions. A discount rate of 16% and
expenditure of US$2’000’000 to maintain the assets in their current use over the five years has been assumed.
The terminal growth rate used for the fair value calculation thereafter is 1%. The directors consider these
assumptions are consistent with that which a market participant would use in determining fair value.
HeiQ plc
Annual report and accounts 2020
.084
12. Intangible assets continued
The Company tested goodwill for impairment and determined that the recoverable amount relating to the
acquisition of the Chem-Tex Assets in excess of its carrying amount and therefore no impairment is
considered necessary.
In calculating the net present value of the future cash flows, certain key input assumptions were used, including:
• Long-term revenue growth of 1% per annum
• A gross margin of 47.5%
• Capital expenditure of US$400’000 per annum
• A discount rate of 16%
Goodwill in respect of MasFabEs S.L. was not tested as the business was acquired in December 2020 and the net
assets recognized at their estimated fair value at this time.
Internally developed assets and other intangibles
Internally generated assets represent expenditure incurred on development projects.
The Group tests internally developed assets and other intangibles for impairment only if there are indications that
these assets might be impaired. The Company has not identified any impairment indicators and accordingly, has
concluded that no impairment is necessary.
13. Property, plant and equipment
Cost
Machinery
and
equipment
US$’000
Motor
vehicles
US$’000
Computers
and
software
US$’000
Furniture
and
fixtures
US$’000
Total
US$’000
As at January 1, 2019 4’811 332 641 100 5’884
Additions 348 10 12 – 370
Disposals (7) – – – (7)
Currency translation differences 37 1 12 – 50
As at December 31, 2019 5’189 343 665 100 6’297
Acquisition on business combination 1’224 – 1 12 1’237
Additions 629 191 77 35 932
Disposals (628) (46) (2) (18) (694)
Currency translation differences 365 4 69 3 441
As at December 31, 2020 6’779 492 810 132 8’213
Depreciation
As at January 1, 2019 1’393 109 150 21 1’673
Charge for the year 504 71 127 10 712
Disposals (1) – – – (1)
Currency translation differences 21 – 8 – 29
As at December 31, 2019 1’917 180 285 31 2’413
Acquisition on business combination 42 – – – 42
Charge for the year 538 84 142 12 776
Eliminated on disposal (607) (24) – (7) (638)
Currency translation differences 112 2 37 2 153
As at December 31, 2020 2’002 242 464 38 2’746
Net book value
As at December 31, 2020 4’777 250 346 93 5’467
As at December 31, 2019 3’272 163 380 69 3’884
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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14. Right-of-use assets
Cost
Land and
buildings
US$’000
Motor
vehicles
US$’000
Office
equipment
US$’000
Total
US$’000
As at January 1, 2019 3’748 111 22 3’881
Additions 9 – – 9
As at December 31, 2019 3’757 111 22 3’890
Additions 76 - 32 108
Disposals due to expiry of lease (306) (43) (14) (363)
Currency translation differences 174 8 1 183
As at December 31, 2020 3’701 76 41 3’818
Depreciation
As at January 1, 2019 698 61 13 772
Depreciation for the year 379 19 6 404
As at December 31, 2019 1’077 80 19 1’176
Depreciation for the year 345 16 7 368
Disposals due to expiry of lease (306) (43) (14) (363)
Currency translation differences 66 7 0 73
As at December 31, 2020 1’182 60 12 1’254
Net book value
As at December 31, 2020 2’519 16 29 2’564
As at December 31, 2019 2’680 31 3 2’714
Future minimum lease payments associated with these leases were as follows:
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Not later than one year 385 390
Later than one year and not later than five years 1’346 1’265
Later than five years 1’162 1’413
Total minimum lease payments 2’893 3’068
Less: Future finance charges (240) (284)
Present value of minimum lease payments 2’653 2’784
Current liability 349 339
Non-current liability 2’304 2’44 5
Present value of minimum lease payments 2’653 2’784
15. Other non-current assets
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Deposits 55 57
Amounts due from third parties 151 16
Other non-current assets 206 73
HeiQ plc
Annual report and accounts 2020
.086
16. Inventories
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Raw materials 7’951 1’045
Semi-finished goods 2’692 956
Finished goods 2’685 1’201
Total inventories 13’328 3’202
17. Trade and other 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 December 31, 2020, the Directors
considered a portion of these receivables uncollectible and recorded a provision in the amount of US$551’000
(2019: US$174’000).
Trade receivables
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Not past due 3’975 6’113
<30 days 1’304 860
31–60 days 763 191
61–90 days 115 9
91–120 days 482 –
>120 days 7’349 2’176
Total trade receivables 13’988 9’349
Provision for expected credit loss (551) (174)
Total trade receivables 13’437 9’175
The Group uses a simplified approach to recognize lifetime expected losses on trade and other receivables.
Expected losses consider payment performance history, external information available regarding credit ratings as
well as future expected credit losses.
The provision for expected loss rates is based on the Group’s historical credit losses experienced over the
three-year period prior to the period end. Most significantly, in the case of take-or-pay contracts, the rate of
provision is 5% for amounts more than one year past due, 20% for amounts more than two years past due and
25% for amounts more than three years past due. The historical loss rates are then adjusted for current and
forward-looking information on macroeconomic factors affecting the Group’s customers. The Directors have
identified the gross domestic product, unemployment rate and inflation rate as the key macroeconomic factors
in the countries in which the Group operates.
Other receivables and prepayments
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Other receivables – from tax authorities 1’372 262
Prepayments and other receivables 1’237 80
Total other receivables and prepayments 2’609 342
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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18. Share capital and share options
Movements in the Company’s share capital were as follows:
Note
Number of
shares
No.
Share
capital
US$’000
Share
premium
US$’000
Totals
US$’000
Balance as of January 1, 2019 and December 31,
2019 2’668’999 350 1’305 1’655
Consolidation of shares (i) (1’779’346) – – –
Placing of shares (ii) 11’789’142 4’641 12’684 17’325
Subscription for shares (iii) 6’068’000 2’389 6’529 8’918
Issue of shares to acquire HeiQ Materials AG (iv) 106’759’900 42’027 114’865 156’892
Shares issued in lieu of fees (v) 385’209 152 414 566
Costs of share issues (vi) – – (1’260) (1’260)
Balance as at December 31, 2020 125’891’904 49’559 134’537 184’096
The par value of all shares is £0.30. All shares in issue were allotted, called up and fully paid.
i. On December 4, 2020, the Company’s share capital was reorganized such that every three existing Ordinary
Shares of £0.10 each were consolidated into one new Ordinary Share of £0.30 each.
ii. On the same date, the Company completed a conditional placing of 11’789’142 new Ordinary Shares in the
capital of the Company at £1.12 per Ordinary Share, raising £13’203’839 (equivalent to US$17’325’158).
iii. A conditional subscription to raise gross proceeds of £6’796’160 (US$8’917’448), through the issue of
6’068’000 new Ordinary Shares at £1.12 per share was also completed on the same date.
iv. On December 4’ 2020, the Company announced that it had agreed to acquire the entire issued and to
be issued share capital of HeiQ Materials AG, the consideration for which was £119’571’088 (equivalent
to US$156’892’850), satisfied by the issue and allotment to the HeiQ Shareholders of 106’759’900
Consideration Shares at a deemed issue price of £1.12 per Ordinary Share. The Acquisition constituted
a reverse takeover under the Listing Rules as it resulted in a fundamental change in the business and
management of the Company.
v. On the same date, the Company issued a further 385’209 new Ordinary Shares at £1.12 per Ordinary Share to
satisfy the payment of certain fees amounting to £431’434 (US$566’098) in connection with the acquisition.
vi. Costs directly associated with the raising of equity funds totaling £960’500 (US$1’260’275) were expensed
against share premium.
For the purposes of the financial statements, each of the share transactions have been translated to US Dollars
at £1:US$1.312.
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.
Awards under the plan will be market value options, but participants resident in jurisdictions where local
securities laws or other regulations are considered problematic may be awarded cash-based equivalents. Any
awards made are not pensionable.
All awards made will be subject to one or more performance conditions at the discretion of the Board. Ordinary
Shares received on exercise of any options awarded under the Option Scheme may be required to be held for a
period of time before they can be disposed of (other than disposals to satisfy any tax payable on exercise).
The total number of Ordinary Shares which can be issued under the Option Scheme (together with any other
employees’ share scheme operated by the Company) may not exceed 10% of the Company’s Ordinary Share
capital from time to time.
A total of 6’260’000 awards were made under the Option Scheme pursuant to Re-admission on December 7, 2020.
The key performance indicators attaching to these awards relate to targets for sales growth (65% of the award)
and operating margin (35% of the award) over a period of three years.
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Annual report and accounts 2020
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18. Share capital and share options continued
An option-holder has no voting or dividend rights in the Company before the exercise of a share option.
The weighted average share price of options granted at grant date was £1.12 and the estimated fair value of each
share option granted was £0.269. This estimated fair value was calculated by applying a Black-Scholes option
pricing model. A 0.25% risk-free interest rate and an expected volatility of the Company’s share price has been
used in these calculations. The weighted average exercise price of options granted during the year was £1.23.
The expense and equity reserve arising from these share-based payment transactions recognized in the year
ended December 31, 2020 was US$50’000 (year ended December 31, 2019: nil).
Other share-based transactions
During the year ended December 31, 2020, HeiQ Materials AG issued 18’000 shares (2019: 9’000 shares) to
employees in respect of contractual obligations for a total consideration of US$1’167’000 (2019: US$428’000).
19. Reserves
The share-based payment reserve arises from the requirement to value share options in existence at the year end
at fair value. Further details of share options are included in Note 18.
The currency translation reserve represents cumulative foreign exchange differences arising from the translation
of the financial statements of foreign subsidiaries and is not distributable by way of dividends.
The share premium account represents the amount received on the issue of Ordinary Shares by the Company in
excess of their nominal value and is non-distributable.
The other reserve comprises the cumulative re-measurement of defined benefit obligations and plan assets to fair
value and which are recognized as a component of other comprehensive income. Such actuarial gains and losses
from defined benefit pension plans are not reclassified to profit or loss in subsequent periods.
The retained deficit comprises all other net gains and losses and transactions with owners not recognized
elsewhere.
The merger reserve was created in accordance with IFRS3 ‘Business Combinations’. The merger reserve arises
due to the elimination of the Company’s investment in HeiQ Materials AG. Since the shareholders of HeiQ
Materials AG became the majority shareholders of the enlarged Group, the acquisition is accounted for as though
there is a continuation of the legal subsidiary’s financial statements. In reverse acquisition accounting, the
business combination’s costs are deemed to have been incurred by the legal subsidiary.
20. Pensions and other post-employment benefit plans
The Group operates a defined benefit pension plan in Switzerland, which requires contributions to be made to a
separately administered fund. The cost of providing benefits under the defined benefit plan is determined using
the projected unit credit method.
Correspondingly, the value of the defined benefit obligation at valuation date is equal to the present value of the
accrued pro-rated service considering expected salary at eligibility date and the future pension increase.
The pension scheme is with Swisscanto pension fund (“Swisscanto Sammelstiftung”).
Pension plan description
The pension plans grant disability and death benefits which are defined as a percentage of the salary insured.
Upon reaching retirement age, the savings capital will be converted with a fixed conversion rate into an
old age pension. In the event that an employee leaves employment prior to reaching pensionable age, the
cumulative balance of the savings account is withdrawn from the pension plan and invested into the pension
plan of the employee’s new employer.
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Regulatory framework
Pension plan legal structure
HeiQ Materials AG is affiliated to a collective foundation. The collective foundation operates one defined benefit
pension plan for HeiQ Materials AG. Under Swiss law, all employees are required to be a member of the pension
plan. There are minimum benefits requested by law (for old age, disability, death and termination). The pension
plans cover more than legally requested. Each affiliated company has a pension plan committee. The committee
is represented by 50% of employer representatives and the remaining 50% are employee representatives.
Responsibilities of the board of trustees (and/or the employer on the board of trustees)
The highest corporate body of the collective foundation is the board of trustees. The board of trustees is elected
out of the affiliated companies and is also represented by 50% of employee and employer representatives (on the
level of the collective foundation). This board handles the general management of the pension scheme, ensures
compliance with the statutory requirements, defines the strategic objectives and policies of the pension scheme
and identifies the resources for their implementation. This board decides also on the asset allocation and is
responsible to the authorities for the correct administration of the collective foundation.
Special situation
The pension scheme has no minimum funding requirement (when the pension fund is in a surplus position),
although the pension scheme has a minimum contribution requirement as specified below. Under local
requirements, where a pension fund is operated in a surplus position, limited restrictions apply in term of the
trustee’s ability to apply benefits to the members of the locally determined “free reserves”. In instances where the
pension fund enters into an underfunded status as per statutory valuation (which follows different valuation
principles than IFRS and is not to be compared with the funding status per IFRS mentioned above), the active
members, along with the employer, are required to make additional contributions until such time the pension fund
is in a fully funded position.
Funding arrangements that affect future contributions
Swiss law provides for minimum pension obligations on retirement. Swiss law also prescribes minimum annual
funding requirements. An employer may provide or contribute a higher amount than as specified under Swiss law
– such amounts are specified under the terms and conditions of each of the Swiss employee’s individual terms
and conditions of employment.
In addition, employers are able to make one-off contributions or prepayments to these funds. Although these
contributions cannot be withdrawn, they are available to the company to offset its future employer cash
contributions to the plan. Although a surplus can exist in the fund, Swiss law requires minimum annual funding
requirements to continue.
For the active members of the pension plan, annual contributions are required by both the employer and
employee. The employer contributions must be at least equal to the employee contributions, but may be higher,
separately mentioned in the constitution of the pension plan.
Minimum annual contribution obligations are determined with reference to an employee’s age and current salary;
however, as indicated above these can be increased under the employee’s terms and conditions of employment.
In the event of the winding up of HeiQ Materials AG, or the pension fund, HeiQ Materials AG has no right to any
refund of any surplus in the pension fund. Any surplus balance is allocated to the members (active and
pensioners).
General risk
The Group faces the risk that its equity ratio can be affected by a poor performance of the assets of the pension
fund or change of assumptions. Therefore, sensitivities of the main assumptions have been calculated and
disclosed (see below).
The following tables summarize the components of net benefit expense recognized in the Statement of
Comprehensive Income and the funded status and amounts recognized in the Statement of Financial Position
for the plan:
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Annual report and accounts 2020
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20. Pensions and other post-employment benefit plans continued
Net benefit obligations
The components of the net defined benefits obligations included in non-current liabilities are as follows:
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Fair value of plan assets 6’311 4’454
Defined benefit obligation (9’587) (6’374)
Funded status (net liability) (3’276) (1’920)
Duration (years) 18.9 19.0
Expected benefits payable in following year (269) (194)
Development of obligations and assets
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Present value of funded obligations, beginning of year (6’374) (6’178)
Employer service cost (391) (356)
Employee contributions (237) (213)
Past service cost – 301
Interest cost (21) (53)
Benefits (paid)/refunded (1’044) 784
Actuarial (loss)/gain on benefit obligation (809) (544)
Currency (loss)/gain (711) (115)
Present value of funded obligations, end of year (9’587) (6’374)
Defined benefit obligation participants (8’942) (5’775)
Defined benefit obligation pensioners (645) (599)
Defined benefit obligation, end of year (9’587) (6’374)
Fair value of plan assets, beginning of year 4’454 4’420
Expected return on plan assets 14 38
Employer’s contributions 237 213
Employees’ contributions 237 213
Benefits (paid)/refunded 1’044 (784)
Admin expense (15) (14)
Actuarial gain/(loss) on plan assets (141) 289
Currency gain 481 79
Fair value of plan assets, end of year 6’311 4’454
Movements in net liability recognized in statement of financial position:
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Net liability, beginning of year (1’920) (1’758)
Expense recognized in profit and loss (413) (85)
Employer’s contributions (following year expected contributions) 237 213
Prepaid/(accrued) pension cost: 176 (129)
– operating income/(expense) (169) 144
– finance expense (7) (15)
Total gains recognized within other comprehensive income (950) (256)
Currency loss (230) (34)
Net liability, end of year (3’276) (1’920)
Actual return on plan assets –2.37% 7.50 %
Expected employer’s cash contributions for following year 295 212
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Asset allocation
As at
December 31,
2020
As at
December 31,
2019
Cash 0.5% 0.6%
Bonds 24.5% 24.5%
Equities 34.5% 34.6%
Property (incl. mortgages) 24.2% 18.8%
Other 16.3% 21.5%
Total 100.0% 100.0%
Amounts recognized in other comprehensive income
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Actuarial (losses)/gains arising from plan experience (553) 177
Actuarial gains/(losses) arising from financial assumptions (256) (722)
Re-measurement of defined benefit obligations (809) (544)
Re-measurement of assets (141) 289
Deferred tax asset recognized 286 51
Other (96) –
Total recognized in OCI (760) (204)
Principal actuarial assumptions (beginning of year)
The principal assumptions used in determining pension and post-employment benefit obligations for the plan are
shown below:
As at
December 31,
2020
As at
December 31,
2019
Discount rate 0.30% 0.90%
Interest credit rate 1.00% 1.00%
Expected net return on plan assets 0.30% 0.90%
Average future salary increases 1.50% 1.50%
Future pension increases 0.00% 0.00%
Mortality tables used BVG 2015 GT BVG 2015 GT
Average retirement age 65/64 65/64
Expected life expectation at regular retirement age (male/female) 22.83/25.85 22.61/25.64
Sensitivities
A quantitative sensitivity analysis for significant assumptions is as follows:
Sensitivities
Impact on defined benefit obligation
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Discount rate + 0.25% (401) (293)
Discount rate – 0.25% 432 315
Salary increase + 0.25% 61 49
Salary decrease – 0.25% (59) (48)
Pension increase + 0.25% 216 156
Pension decrease – 0.25% (not lower than 0%) – –
A negative value corresponds to a reduction of the defined benefit obligation, a positive value to an increase of
the defined benefit obligation.
The sensitivity analyses above have been determined based on a method that extrapolates the impact on the
defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the
reporting period. The sensitivity analyses are based on a change in a significant assumption, keeping all other
assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined
benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.
HeiQ plc
Annual report and accounts 2020
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21. Other non-current liabilities
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Defined benefit obligation IAS 19 (Note 20) 3’276 1’920
Deferred consideration in relation to the acquisition of the Chem-Tex Assets (see below) 149 856
Other non-current liabilities – 4
Other non-current liabilities 3’425 2’780
Deferred consideration pertains to the acquisition of assets from Chem-Tex Inc. in 2017 and is payable other than
in a short timeframe. The fair value of the deferred consideration has been discounted using an imputed interest
rate of 6% (being the Group’s estimated cost of debt) to take into account the time value of money.
The deferred consideration and related financing expense are summarized below:
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Consideration:
Balance brought forward 2’103 3’102
Amortization of fair value discount 245 245
Consideration settled in cash (1’267) (1’290)
Foreign exchange differences 35 46
Deferred consideration carried forward 1’116 2’103
Current liability 967 1’247
Non-current liability 149 856
Total 1’116 2’103
The maturity profile of other non-current liabilities is shown in paragraph (g) “Liquidity risk” of Note 25 “Financial
risk management” to the Consolidated Financial Statements.
22. Borrowings
As at December 31, 2020, the Group’s borrowings consist primarily of:
• a bank loan taken out in October 2020 which incurs interest at 2.25% and which is secured on property owned
by a company which is controlled by a minority shareholder of HeiQ Medica. It is repayable in equal monthly
instalments of €8’000 (US$9’500) over eight years up to September 2028. As at December 31, 2020,
€777’000 (US$951’000) is outstanding – the short-term portion being €93’000 (US$114’000) and the
long-term portion being €684’000 (US$838’000);
• a loan of €459’000 (US$562’000) payable to a company controlled by a minority shareholder of HeiQ Medica.
The loan is repayable by December 31, 2022 and does not incur any interest; and
• a short-term bank loan of €45’000 (US$55’000) which was repaid in January 2021 and did not incur any
interest.
In 2019, the Group’s borrowings consisted of a short-term revolving credit facility which incurred interest at Libor
plus a margin of 0.8%. This loan was repaid during 2020.
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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The following table provides a reconciliation of the Group’s future maturities of its total borrowings for each year
presented:
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Not later than one year 173 2’478
Later than one year but less than five years 1’043 –
After more than five years 357 –
Total borrowings 1’573 2’478
The following table represents the Group’s finance costs for each year presented:
Year ended
December 31,
2020
US$’000
Year ended
December 31,
2019
US$’000
Amortization of deferred finance costs – acquisition costs 245 245
Lease finance expense 52 58
Interest on borrowings 108 88
Bank fees 46 33
Loss on foreign currency transactions 733 4
Total finance costs 1’184 428
23. Other current liabilities
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Deferred consideration in relation to the acquisition of the Chem-Tex Assets (Note 21) 967 1’247
Other current liabilities 967 1’247
24. Fair value and financial instruments
a. Fair value
The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that
liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of
a principal market) for such asset or liability. In estimating fair value, the Directors utilize valuation techniques
that are consistent with the market approach, the income approach and/or the cost approach. Such valuation
techniques are consistently applied. Inputs to valuation techniques include the assumptions that market
participants would use in pricing an asset or liability. IFRS 13 “Fair Value Measurement” establishes a fair value
hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets
or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is defined as follows:
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets at the measurement date.
Level 2: Inputs (other than quoted prices included in Level 1) can include the following:
• observable prices in active markets for similar assets;
• prices for identical assets in markets that are not active;
• directly observable market inputs for substantially the full term of the asset; and
• market inputs that are not directly observable but are derived from or corroborated by observable market data.
Level 3: Unobservable inputs which reflect the Directors’ best estimates of what market participants would use in
pricing the asset at the measurement date.
All financial instruments measured at fair value use Level 2 valuation techniques for the each of the years ended
December 31, 2019 and December 31, 2020.
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Annual report and accounts 2020
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24. Fair value and financial instruments continued
Level 2 fair value measurements are those including inputs other than quoted prices included within Level 1 that
are observable for the asset or liability directly or indirectly.
There were no transfers between fair value levels during the year ended December 31, 2020 (2019: none).
b. Financial instruments
For trade receivables, the Group applies the simplified approach permitted by IFRS 9 “Financial Instruments”,
which requires expected lifetime losses to be recognized from initial recognition of the receivables.
Financial liabilities are initially measured at fair value and subsequently measured at amortized cost.
The Group is not a financial institution. The Group does not apply hedge accounting and its customers are
considered creditworthy and pay consistently within agreed payments terms.
A classification of the Group’s financial instruments is included in the table below:
As at
December 31,
2020
US$’000
As at
December 31,
2019
US$’000
Cash and cash equivalents held at amortized cost 25’695 3’603
Trade receivables and accrued income held at amortized cost 13’437 9’175
Financial assets at amortized cost 2’815 415
Financial liabilities at amortized cost (14’820) (9’070)
Borrowings and leases (4’225) (5’262)
Total 22’902 (1’139)
25. Financial risk management
For the purposes of capital management, capital includes issued capital and all other equity reserves attributable
to the equity holders of the Company. The primary objective of the Directors’ capital management is to ensure that
the Group maintains a strong credit rating and healthy capital ratios in order to support its business and maximize
shareholder value.
To maintain or adjust the capital structure, the Directors may adjust the dividend payment to shareholders, return
capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes
during the year.
The Directors manage the Group’s capital structure and adjust it in light of changes in economic conditions and
the requirements of the financial covenants. The Group includes in its net debt, interest-bearing loans and
borrowings, trade and other payables, less cash and short-term deposits.
The Group’s principal financial liabilities comprise borrowings and trade and other payables, which it uses
primarily to finance and financially guarantee its operations.
The Group’s principal financial assets include cash and cash equivalents and trade and other receivables derived
from its operations.
a. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect
the Group’s income or the value of its holdings of financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimizing the returns.
b. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. As the Group’s borrowings are either on fixed interest terms or interest-free,
the Group is not subject to interest rate risk.
c. Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument will not meet its obligations under
a contract and arises primarily from the Group’s cash in banks and trade receivables.
Financial statements
Notes to the Consolidated Financial Statements continued
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d. Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes
in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily
to its financing activities (when financial liabilities and cash are denominated other than in a company’s functional
currency).
Most of the Group’s transactions are carried out in US Dollars (US$). Foreign currency risk is monitored closely on
an ongoing basis to ensure that the net exposure is at an acceptable level.
The Group maintains a natural hedge whenever possible, by matching the cash inflows (revenue stream) and cash
outflows used for purposes such as capital and operational expenditure in the respective currencies. The Group’s
net exposure to foreign exchange risk was as follows:
As at December 31, 2020
Functional currency
CNY
US$’000
EUR
US$’000
GBP
US$’000
US$
US$’000
Others
US$’000
Total
US$’000
Financial assets denominated in US$ 248 2’145 717 17’190 5 20’305
Financial liabilities denominated in US$ (102) (268) (475) (129) 23 (951)
Net foreign currency exposure 146 1’877 242 17’061 28 19’354
As at December 31, 2019
Functional currency
CNY
US$’000
EUR
US$’000
GBP
US$’000
US$
US$’000
Others
US$’000
Total
US$’000
Financial assets denominated in US$ 2’030 2’253 8 7’093 2 11’386
Financial liabilities denominated in US$ – (200) (96) (7) 21 (282)
Net foreign currency exposure 2’030 2’053 (88) 7’086 23 11’104
Foreign currency sensitivity analysis:
The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency exchange
rates, with all other variables held constant.
The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities.
The Group’s exposure to foreign currency changes for all other currencies is not material.
A 10% movement in each of the Chinese Yuan (CNY), Euro (EUR), British Pound (GBP) and US Dollar (US$) would
increase/(decrease) net assets by the amounts shown below. This analysis assumes that all other variables, in
particular interest rates, remain constant.
As at December 31, 2020
CNY
US$’000
EUR
US$’000
GBP
US$’000
US$
US$’000
Others
US$’000
Effect on net assets:
Strengthened by 10% 15 188 24 1’706 3
Weakened by 10% (15) (188) (24) (1’706) (3)
As at December 31, 2019
CNY
US$’000
EUR
US$’000
GBP
US$’000
US$
US$’000
Others
US$’000
Effect on net assets:
Strengthened by 10% 203 205 (9) 709 2
Weakened by 10% (203) (205) 9 (709) (2)
e. Cash and cash equivalents
The credit risk from its cash and cash equivalents is limited because the counterparties are banks with high credit
ratings and have not experienced any losses in such accounts.
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Annual report and accounts 2020
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25. Financial risk management continued
f. Trade receivables
Trade receivables are due from customers and collectability is dependent on the financial condition of each
individual company as well as the general economic conditions of the industry. The Directors review the financial
condition of customers prior to extending credit and generally does not require collateral in support of the Group’s
trade receivables. The majority of trade receivables are current and the Directors believe these receivables are
collectible. As at December 31, 2020, the Group had two customers that individually accounted for more than
10% of total receivables, totaling 38% of total trade receivables (2019: two customers that individually accounted
for more than 10% of total receivables, totaling 65%).
g. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they are due. The
Directors manage this risk by:
• maintaining adequate cash reserves through the use of the Group’s cash from operations and bank
borrowings; and
• continuously monitoring projected and actual cash flows to ensure the Group maintains an appropriate amount
of liquidity.
The table below summarizes the maturity profile of the Group’s financial liabilities, based on contractual
undiscounted payments:
Year ended December 31, 2020
Less than
1 year
US$’000
2 to 5
years
US$’000
> 5
years
US$’000
Total
US$’000
Trade and other payables 5’815 – – 5’815
Borrowings 1’573 – – 1’573
Leases (gross cash flows) 385 1’346 1’162 2’893
Other liabilities 4’283 5’675 – 9’958
Retirement obligations – – 3’276 3’276
As at December 31, 2020 12’056 7’021 4’438 23’515
Year ended December 31, 2019
Less than
1 year
US$’000
2 to 5
years
US$’000
> 5
years
US$’000
Total
US$’000
Trade and other payables 1’930 – – 1’930
Borrowings 2’478 – – 2’478
Leases (gross cash flows) 390 1’265 1’413 3’068
Other liabilities 4’360 2’780 – 7’140
Retirement obligations – – 1’920 1’920
As at December 31, 2019 9’158 4’045 3’333 16’536
26. Notes to the statements of cash flows
Net debt reconciliation:
Year ended December 31, 2020
Opening
balances
US$’000
New
agreements
US$’000
Assumed on
acquisition
of
subsidiaries
US$’000
Cash
movements
US$’000
Foreign
exchange
differences
US$’000
Closing
balances
US$’000
Cash and cash equivalents 3’603 – – 21’822 270 25’695
Leases (2’784) (222) – 354 – (2’652)
Borrowings (2’478) (61) (1’512) 2’735 (257) (1’573)
Totals (1’659) (283) (1’512) 24’911 13 21’470
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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Year ended December 31, 2019
Opening
balances
US$’000
New
agreements
US$’000
Cash
movements
US$’000
Foreign
exchange
differences
US$’000
Closing
balances
US$’000
Cash and cash equivalents 2’163 – 1’420 20 3’603
Leases (3’162) (8) 386 – (2’784)
Borrowings (1’522) – (929) (27) (2’478)
Totals (2’521) (8) 877 (7) (1’659)
Reconciliation of cash on business combinations:
Cash assumed on reverse acquisition of HeiQ plc 27’105
Cash assumed on acquisition of HeiQ Medica 6
Cash assumed on acquisitions of businesses 27’111
Consideration payment for acquisition of Chem-Tex (1’267)
Consideration payment for acquisition of HeiQ Medica (157)
Consideration payment for acquisitions of businesses (1’424)
27. Contingencies and provisions
The Directors are not aware of any contingencies or other provisions which might impact on the Group’s
operations or financial position.
28. Related party transactions
Two companies controlled by a director of HeiQ USA are the landlord for two buildings in the United States which
are leased to HeiQ USA. These leases have been capitalized as right-of-use assets in accordance with IFRS 16
“Leases”. The total amount paid during the year ended December 31, 2020 was US$160’000 (2019: US$160’000).
A company controlled by a director of HeiQ Materials AG supplied materials and services totaling US$145’000 in
the year ended December 31, 2020 (2019: US$48’000).
As at December 31, 2020, the Group has a balance receivable from its associated company, HeiQ-RAS GmbH,
of US$17’000 (2019: US$nil).
A bank loan of €800’000 (US$950’000) is secured on property owned by a company which is controlled by
a minority shareholder of HeiQ Medica.
A loan of €459’000 (US$562’000) is payable to a company controlled by minority shareholders of HeiQ Medica.
See note 22 for further details.
Details of the remuneration of the directors are contained in the Remuneration Committee Report on pages
50 to 53.
29. Material subsequent events
On March 9, 2021, HeiQ Iberia Unipessoal Lda acquired 51% of the share capital and voting rights of Chrisal NV,
a company incorporated in Belgium, to be renamed HeiQ Chrisal. Chrisal NV is a biotechnology company and a
leader in innovative ingredients and consumer products that incorporate the benefits of probiotics and synbiotics.
It has three technology platforms, all with the purpose of creating healthy and sustainable microbial ecosystems.
The application of its proprietary technology includes cosmetics, personal care, textiles, wound dressings, water
purification, air treatment and cleaning products. The company has its office, manufacturing site and bottling
facility in Lommel, Belgium.
The purchase consideration was payable partly in cash (€5’000’000) and partly by the issue of 1’101’928
new ordinary shares for €2’500’000.
The acquisition is part of the Group’s strategy of becoming a global leader in materials innovation and allows
access to the broader market of microbial surface management and a bio-based green complementary
technology platform to its successful antimicrobials.
30. Ultimate controlling party
As at December 31, 2020, the Company did not have any single identifiable controlling party.
HeiQ plc
Annual report and accounts 2020
.098
Note
As at
December 31,
2020
£’000
As at
December 31,
2019
£’000
ASSETS
Non-current assets
Investments 4 119’571 –
Amounts due from subsidiaries 5 18’000 –
137’571 –
Current assets
Trade and other receivables 7 191 15
Cash and bank balances 6 1’554 859
1’745 874
TOTAL ASSETS 139’316 874
LIABILITIES
Current liabilities
Trade and other payables 8 (483) (18)
(483) (18)
NET ASSETS 138’833 856
EQUITY
Share capital 9 37’767 267
Share premium account 9 102’536 994
Share-based payment reserve 10 38 –
Accumulated losses (1’508) (405)
TOTAL EQUITY 138’833 856
The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included a Profit and
Loss account in these separate financial statements. The loss attributable to members of the Company for the
year ended December 31, 2020 is £1’103’000 (year ended December 31, 2019: loss of £57’000).
The notes on pages 101 to 106 form an integral part of these Financial Statements. The Financial Statements on
pages 98 to 100 were authorized for issue by the board of Directors on April 23, 2021 and were signed on its
behalf by:
Xaver Hangartner
Director
Financial statements
Company Statement of Financial Position
(registered company number: 09040064)
As at December 31, 2020
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Company Statement of Changes in Equity
For the year ended December 31, 2020
Share
capital
£’000
Share
premium
account
£’000
Share-based
payment
reserve
£’000
Accumulated
losses
£’000
Total
£’000
For the year ended December 31, 2019:
Balance as at January 1, 2019 267 994 – (348) 913
Loss for the year – – – (57) (57)
Balance as at December 31, 2019 267 994 – (405) 856
For the year ended December 31, 2020:
Loss for the year – – – (1’103) (1’103)
Issue of shares 37’500 102’502 – – 140’002
Cost of issuing shares – (960) – – (960)
Share-based payment charges – – 38 – 38
Transactions with owners 37’500 101’542 38 – 139’080
Balance as at December 31, 2020 37’767 102’536 38 (1’508) 138’833
The Notes on pages 101 to 106 are an integral part of these financial statements.
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Annual report and accounts 2020
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Financial statements
Company Statement of Cash Flows
For the year ended December 31, 2020
Cash flows from operating activities
Year ended
December 31,
2020
£’000
Year ended
December 31,
2019
£’000
Loss before taxation (1’103) (57)
Cash flow from operations reconciliation:
Finance income (21) –
Share-based payment charges 38 –
Transaction costs settled in shares 431 –
Working capital adjustments:
(Increase) in trade and other receivables (180) (4)
Increase in trade and other payables 469 –
Cash used in operations (366) (61)
Taxes paid – –
Net cash used in operating activities (366) (61)
Cash flows from investing activities
Finance income 21 –
Amounts advanced to subsidiaries (18’000) –
Net cash used in investing activities (17’979) –
Cash flows from financing activities
Proceeds from equity issuance 20’000 –
Costs of share issues (960) –
Net cash from financing activities 19’040 –
Net increase/(decrease) in cash and cash equivalents 695 (61)
Cash and cash equivalents – beginning of the year 859 920
Cash and cash equivalents – end of the year 1’554 859
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Notes to the Company Financial Statements
For the year ended December 31, 2020
1. General information
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, with an investment strategy to undertake an acquisition
of a target company or business. The Company was re-registered as a public company on July 24, 2014.
On December 4, 2020, the Company’s name was changed to HeiQ plc. The Company’s registered office is
5th Floor, 15 Whitehall, London, SW1A 2DD.
The Company was admitted to listing on the Official List by way of a Standard Listing in accordance with Chapter
14 of the Listing Rules and to trading on the London Stock Exchange’s Main Market for listed securities on
August 22, 2014.
Following the reverse takeover by the Company of HeiQ Materials AG (“HeiQ”), an established global brand in
materials and textile innovation, the Company’s enlarged share capital was 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.
The principal activity of the Company is that of a holding company for the Group, as well as performing all
administrative, corporate finance, strategic and governance functions of the Group.
The Company’s financial statements are prepared in Pounds Sterling, which is the presentational currency for
the financial statements.
2. Summary of significant accounting policies
(a) Basis of preparation
These financial statements have been prepared in accordance with IFRS, issued by the International Accounting
Standards Board, including interpretations issued by the International Financial Reporting Interpretations
Committee, applicable to companies reporting under IFRS, and the Companies Act 2006 applicable to companies
reporting under IFRS.
These financial statements are prepared under the historical cost convention. Historical cost is generally based on
the fair value of the consideration given in exchange of assets. The principal accounting policies are set out below.
The Company produces consolidated accounts which include the results of the Company.
The financial statements have been prepared on a going concern basis which contemplates the continuity of
normal business activities and the realization of assets and the settlement of liabilities in the ordinary course
of business.
The Directors have assessed the Company’s ability to continue in operational existence for the foreseeable future
in accordance with the Financial Reporting Council’s Guidance on the going concern basis of accounting and
reporting on solvency and liquidity risks issued in April 2016.
The Company has prepared forecasts and projections which reflect the expected trading performance of the
Company and the Group on the basis of best estimates of management using current knowledge and
expectations of trading performance.
As at December 31, 2020, the Company had £1’554’000 (2019: £859’000) in cash, which is considered
sufficient for its present needs.
Based on the above, the Directors consider there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable, as well as to fund the Company’s future operating
expenses. The going concern basis preparation is therefore considered to be appropriate in preparing these
financial statements.
(b) Investments
Investments are carried at cost less, where appropriate, any provision for impairment.
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Annual report and accounts 2020
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2. Summary of significant accounting policies continued
(c) Loans to subsidiaries
Loans to subsidiaries are measured at the present value of the future cash payments discounted at a market rate
of interest for a similar debt instrument unless such amounts are repayable on demand. The present value of
loans that are repayable on demand is equal to the undiscounted cash amount payable reflecting the Company’s
right to demand immediate repayment.
(d) Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated using the contracted rate or the
rate of exchange ruling at the statement of financial position date and the gains or losses on translation are
included in the profit and loss account.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances, deposits with financial institutions and
short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
(f) Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost
using the effective interest method, less provision for impairment.
(g) Income taxes
The charge for taxation is based on the profit/loss for the year and takes into account taxation deferred because
of timing differences between the treatment of certain items for taxation and accounting purposes.
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax
assessments in periods different from those in which they are recognized in the financial statements. The
following timing differences are not provided for: differences between accumulated depreciation and tax
allowances for the cost of a fixed asset if and when all conditions for retaining the tax allowances have been met;
and differences relating to investments in subsidiaries, to the extent that it is not probable that they will reverse in
the foreseeable future and the reporting entity is able to control the reversal of the timing difference. Deferred tax
is not recognized on permanent differences arising because certain types of income or expense are non-taxable
or are disallowable for tax or because certain tax charges or allowances are greater or smaller than the
corresponding income or expense.
(h) Share-based payment arrangements
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at
the grant date. Equity-settled share-based payments to non-employees are measured at the fair value of services
received, or if this cannot be measured, at the fair value of the equity instruments granted at the date that the
Company obtains the goods or counterparty renders the service. Details regarding the determination of the fair
value of equity-settled share-based transactions are set out in Note 18 to the Consolidated Financial Statements.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest,
with a corresponding increase in equity. Where the conditions are non-vesting, the expense and equity reserve
arising from share-based payment transactions is recognized in full immediately on grant.
At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to other reserves.
(i) Trade and other payables
Trade and other payables are initially recognized at fair value and thereafter stated at amortized cost using
the effective interest method unless the effect of discounting would be immaterial, in which case they are stated
at cost.
(j) Share capital
Proceeds from issuance of Ordinary Shares are classified as equity. Incremental costs directly attributable to the
issuance of new Ordinary Shares or options are shown in equity as a deduction from the proceeds.
Financial statements
Notes to the Company Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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(k) Financial instruments
Financial instruments are recognized in the statements of financial position when the Company has become
a party to the contractual provisions of the instruments.
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual
arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability are
reported as an expense or income. Distributions to holders of financial instruments classified as equity are
charged directly to equity.
Financial instruments are offset when the Company has a legally enforceable right to offset and intends to settle
either on a net basis or to realize the asset and settle the liability simultaneously.
A financial instrument is recognized initially at its fair value plus, in the case of a financial instrument not at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the
financial instrument.
Financial instruments recognized in the statements of financial position are disclosed in the individual policy
statement associated with each item.
(i) Financial liabilities
Financial liabilities are recognized when, and only when, the Company becomes a party to the contractual
provisions of the financial instrument.
All financial liabilities are recognized initially at fair value plus directly attributable transaction costs and
subsequently measured at amortized cost using the effective interest method other than those categorized
as fair value through profit or loss.
Fair value through profit or loss category comprises financial liabilities that are either held for trading or are
designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise
arise. Derivatives are also classified as held for trading unless they are designated as hedges. There were no
financial liabilities classified under this category.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When
an existing financial liability is replaced by another from the same party on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognized in the profit or loss.
(ii) Equity instruments
Ordinary Shares are classified as equity. Dividends on Ordinary Shares are recognized as liabilities when approved
for appropriation.
(iii) Other financial instruments
Other financial instruments not meeting the definition of basic financial instruments are recognized initially at fair
value. Subsequent to initial recognition, other financial instruments are measured at fair value with changes
recognized in profit or loss except investments in equity instruments that are not publicly traded and whose
fair value cannot otherwise be measured reliably shall be measured at cost less impairment.
HeiQ plc
Annual report and accounts 2020
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3. Critical accounting judgments and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in Note 2, management is required
to make judgments, estimates and assumptions about the carrying values of assets and liabilities that are not
readily apparent from other sources. The estimates and underlying assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and future periods.
The key sources of judgment that have a significant effect on the amounts recognized in the financial statements
are described below.
Impairment of investments and amounts due from subsidiaries
As described in Note 2 to the financial statements, investments are stated at the lower of cost less provision for
impairment. The present value of loans to subsidiaries that are repayable on demand is equal to the undiscounted
cash amount payable reflecting the Company’s right to demand immediate repayment.
At each reporting date investments and loans made to subsidiaries are reviewed to determine whether there is
any indication that those assets have suffered an impairment loss. If there is an indication of possible
impairment, the recoverable amount of any affected asset is estimated and compared with its carrying amount.
If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable
amount, and an impairment loss is recognized immediately in profit or loss. The Directors have carried out an
impairment test on the value of the loans due from subsidiaries and have concluded that no impairment provision
is necessary.
The investments in and loans to subsidiaries are supported by the intangible assets in the subsidiaries, tangible
fixed assets, cash and receivables.
The Company tests investments in and loans receivable from subsidiaries for impairment only if there are
indications that these assets might be impaired. The Company considers that there are no such indications of
impairment and impairment testing has not been performed. Accordingly, the Company considers that the value
of investments in and loans to subsidiaries are not impaired.
4. Investments
Investments in subsidiary undertakings
As at
December 31,
2020
£’000
As at
December 31,
2019
£’000
Balance brought forward – –
Additions 119’571 –
Balance at end of year 119’571 –
Details of the Company’s subsidiaries as at December 31, 2020 are set out in Note 6 to the Consolidated
Financial Statements.
5. Amounts due from subsidiaries
As at
December 31,
2020
£’000
As at
December 31,
2019
£’000
Balance brought forward at beginning of year – –
Amounts advanced 18’000 –
Balance at end of year 18’000 –
The amounts owing from subsidiaries are unsecured, interest-free and are to be settled in cash. The present value
of amounts that are repayable on demand is equal to the undiscounted cash amount payable, reflecting the
Company’s right to demand immediate repayment.
Financial statements
Notes to the Company Financial Statements continued
For the year ended December 31, 2020
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Annual report and accounts 2020
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6. Cash and cash equivalents
As at
December 31,
2020
£’000
As at
December 31,
2019
£’000
Bank balances 1’554 859
Cash and cash equivalents 1’554 859
7. Trade and other receivables
As at
December 31,
2020
£’000
As at
December 31,
2019
£’000
Prepayments 88 11
VAT receivable 67 –
Other receivables 36 4
Trade and other receivables 191 15
8. Trade and other payables
As at
December 31,
2020
£’000
As at
December 31,
2019
£’000
Trade payables 226 –
Accruals 230 18
Taxes and social security 7 –
Other payables 20 –
Trade and other payables 483 18
The Directors consider that the carrying amounts of amounts falling due within one year approximate to their
fair values.
9. Share capital and share options
Share capital
Details of the Company’s allotted, called-up and fully paid share capital are set out in Note 18 to the Consolidated
Financial Statements.
Movements in the Company’s share capital were as follows:
Number of
shares
No.
Share
capital
£’000
Share
premium
£’000
Totals
£’000
Balance as of January 1, 2019 and December 31, 2019 2’668’999 267 994 1’261
Consolidation of shares (1’779’346) – – –
Placing of shares 11’789’142 3’537 9’667 13’204
Subscription for shares 6’068’000 1’820 4’976 6’796
Issue of shares to acquire HeiQ Materials AG 106’759’900 32’028 87’543 119’571
Shares issued in lieu of fees 385’209 115 316 431
Costs of share issues – – (960) (960)
Balance as at December 31, 2020 125’891’904 37’767 102’536 140’303
The par value of all shares is £0.30. All shares in issue were allotted, called up and fully paid. The Ordinary Shares
of the Company carry one vote per share and an equal right to any dividends declared.
Share options
Details of the Company’s share option scheme and options issued during the year are set out in Note 18 to the
Consolidated Financial Statements.
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Annual report and accounts 2020
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10. Reserves
The share premium account represents the amount received on the issue of Ordinary Shares by the Company in
excess of their nominal value and is non-distributable.
The share-based payment reserve arises from the requirement to value share options in existence at the year end
at fair value (see Note 18 to the Consolidated Financial Statements).
11. Share-based payments
Details of the Company’s share options and related expense are contained in Note 18 to the Consolidated
Financial Statements.
12. Segment information
Operating segments are identified on the basis of internal reports about components of the Company that are
regularly reviewed by the Board. Until its acquisition of HeiQ Materials AG on December 7, 2020, the Company
was an investing company and did not trade. On completion of the acquisition of HeiQ Materials AG and its
subsidiaries, the Company became the holding company of the Group.
The Company has one segment, namely that of a parent company to its subsidiaries. Accordingly, no segmental
analysis has been provided in these financial statements.
13. Employees
The number of employees including Directors was as follows:
Year ended
December 31,
2020
No.
Year ended
December 31,
2019
No.
Directors 5 3
Total 5 3
14. Related party transactions
The only key management personnel of the Company are the Directors. Details of their remuneration are
contained in the Remuneration Committee report on pages 50 to 53.
Details of amounts due between the Company and its subsidiaries are shown in Note 5 above.
15. Subsequent events
Disclosures in relation to events subsequent to December 31, 2020 are shown in Note 29 to the Consolidated
Financial Statements.
16. Ultimate controlling party
As at December 31, 2020, no one entity owns greater than 50% of the issued share capital. Therefore, the
Company does not have an ultimate controlling party.
Financial statements
Notes to the Company Financial Statements continued
For the year ended December 31, 2020
Company information
Directors
Carlo Centonze, Chief Executive Officer
Xaver Hangartner, Chief Financial Officer
Esther Dale-Kolb, non-executive Chairwoman
Karen Brade, non-executive Director
Benjamin Bergo, non-executive Director
Company Secretary
Ross Ainger
Company number
09040064
Registered address
5th Floor, 15 Whitehall
London
SW1A 2DD
Independent auditors
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
Financial advisor and joint broker
Arlington Group Asset Management Limited
15 Whitehall
London
SW1A 2DD
Joint broker
Cenkos Securities plc
6 7 8 Tokenhouse Yard
London
EC2R 7AS
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
UNITED KINGDOM (Ultimate parent)
1st floor 47/48 Piccadilly
London
W1J 0DT
SWITZERLAND (Operational headquarters)
HeiQ Materials AG
Ruetistrasse 12
8952 Schlieren (Zurich)
AUSTRALIA
HeiQ PTY
c/ Deakin ManuFutures
75 Pidgons Rd
Waurn Ponds VIC 3216
BELGIUM
HeiQ Chrisal NV
Priester Daensstraat 9
3920 Lommel
GREATER CHINA
Representative Office
Room 2501
Xuhui Commercial Mansion
No. 168 Yude Road
Shanghai
HeiQ Company Ltd / HX Company Ltd
No. 14 & 16, Ln. 50, Wufu 1st Rd.
Luzhu District
Taoyuan City 33850
Taiwan
JAPAN
Representative Office
NIU Bldg 2F
2-1-17 Nihonbashi
Chuo-ku
Tokyo, 103-0027
PORTUGAL
HeiQ Iberia Unipessoal Lda
Tecmaia
Rua Engº Frederico Ulrich, nº 2650
4470-605 Maia
SPAIN
HeiQ Medica SL
Plaza de la Estación s/n
29560 Pizarra (Málaga)
USA
HeiQ ChemTex Inc.
180 Gee Rd NE
Calhoun GA 30701
2725 Armentrout Drive
Concord NC 28025
www.heiq.com
HeiQ plc Annual report and accounts 2020