HeiQ PLC

Annual Report and Accounts

for the 18-months period ended June 30, 2024

Who we are

Headquartered in Switzerland, HeiQ is an IP creator and

established global brand in materials and textile innovation, adding

hygiene, comfort, protection and sustainability to the products we

use every day. This is how we contribute to protecting our planet

and improving the lives of billions of people.

Our purpose

To improve lives by innovating the materials in the products people

use every day.

Our vision

“HeiQed” materials that improve the lives of billions.

Our mission

To pioneer differentiating materials through co-creation.

Our strategy

Our strategy to achieve sustainable growth and to materialize our

ambitions is based on three pillars:

• People: To create a diverse, agile and entrepreneurial high-

performance global team, driven by our purpose to improve

lives by enabling a reduction of mankind’s footprint on the

planet with disruptive technologies.

• Innovation: To commercialize a steady stream of sustainable,

circular and high-performance ingredients and materials.

• Differentiation: To effectively communicate the added value of

our innovations to our downstream customers, as well as their

customers, by providing best-in-class ingredient branding.

Contents

Strategic report

Chair’s statement ................................................................................................................ .............................................................. ..................... 1

Market overview .................................................................................................................................................................................. .................... 2

Business model .............................................................................................................................................................. ......................................... 3

Value Creation ..................................................................................................................................................................................... .................... 4

Chief Executive Officer’s review ......................................................................................................................................................... .................... 5

Key performance indicators ............................................................................................................................................................... .................... 7

Sustainability report (including TCFD disclosures)........................................................................................................................... .................... 8

Section 172 statement ....................................................................................................................................................................................... 14

Financial Review .................................................................................................................................................................................................. 17

Risk management ................................................................................................................................................................................................ 20

Principal risks and uncertainties ........................................................................................................................................................................ 20

Non-financial information statement ................................................................................................................................................................. 23

Corporate Governance

The Board ............................................................................................................................................................................................................. 24

Corporate governance statement ....................................................................................................................................................................... 26

Audit committee report ........................................................................................................................................................................................ 29

Environmental, occupational, health and safety committee report ................................................................................................................ 32

Nomination committee report ............................................................................................................................................................................ 33

Remuneration Committee Report ...................................................................................................................................................................... 34

Annual report on Directors’ remuneration (audited) ........................................................................................................................................ 37

Directors’ report ................................................................................................................................................................................................... 41

Financial Statements

Independent auditor’s report to the members of HeiQ plc .............................................................................................................................. 44

Consolidated statement of profit and loss and other comprehensive income .............................................................................................. 51

Consolidated statement of financial position .................................................................................................................................................... 52

Consolidated statement of changes in equity ................................................................................................................................................... 53

Consolidated statement of cash flows ............................................................................................................................................................... 54

Notes to the Consolidated Financial Statements for the 18-month period ended June 30, 2024 .............................................................. 55

Company Statement of Financial Position (registered company number:09040064) ................................................................................. 96

Company Statement of Changes in Equity ........................................................................................................................................................ 97

Company statement of Cash Flows .................................................................................................................................................................... 98

Notes to the Company Financial Statements for the period ended June 30, 2024 ...................................................................................... 99

Company Information

Company information ........................................................................................................................................................................................ 105

HeiQ plc Annual Report 2023/24 Strategic Report

Chair’s statement

Re-position for growth

Over the reporting period, HeiQ has been challenged with, on one side the continued suppressed market conditions for our Textile &

Flooring, and Antimicrobial businesses, while on the other side, the LifeSciences business and the three new ventures continue to

deliver against our expectations.

Considering the limited visibility of when the suppressed markets will recover, and the short term need to invest in the growth

ventures, the Board has made two important decisions.

First, it initiated a major restructuring project which will reduce costs by an additional 20% by the end of 2025. This project includes

the merger of the Textile & Flooring and Antimicrobials into one business unit “Advanced Materials”, headcount reduction, and the

optimization of our geographical presence.

The impact of the project is essential for the future value creation of HeiQ for its investors as it allows the Company to focus on

materializing on the significant growth potential of the LifeSciences business (HeiQ Synbio), as well as investing in the three venture

businesses HeiQ AeoniQ, HeiQ Graphenex, and HeiQ Xpectra despite suppressed markets for today’s main commercial businesses.

Second, the Board has decided to cancel the listing of HeiQ PLC at the London Stock Exchange effective November 19, 2024 for two

main reasons: The cost burden associated with maintaining the Company’s listing is disproportionate to the benefits and secondly,

each of our venture businesses is making great progress and will require capital over the next year to take the next, value creating

steps. In particular HeiQ AeoniQ will require significant investments for the first commercial plant in Portugal in the near future. The

Directors believe that de-listing and operating as a private company benefits fundraising at appropriate valuations for the ventures

and enables their growth and value creation for the Company’s shareholders accordingly.

Outlook

For the merged business unit Advanced Materials, we expect markets to remain weak until at least the second half of 2025 and thus,

we are consolidating the business capabilities into three main hubs (USA, Portugal, Thailand) in the course of 2025. The LifeSciences

business unit is expected to grow significantly as industrial pro-/postbiotic solutions gain market acceptance in various applications.

For each of our three venture units, 2025 will be a critical year in terms of proof of concept (HeiQ GrapheneX), market launch of first

applications (HeiQ Xpectra) and financing of the first commercial plant (HeiQ AeoniQ).

Therefore, it is vital that the venture teams can focus on delivering these milestones and that the corporate structure enables them to

do so.

On behalf of the full Board, I sincerely thank the HeiQ management team and all employees for their dedication, resilience and

commitment over the past 18 months. It has not been an easy period, but your hard work and passion have been instrumental in

advancing our mission.

I also truly thank all our long- and shorter-term investors for their support as a public company and hope that we can count on most of

them also throughout our next chapter as a private company again.

Robert van de Kerkhof

Chair

HeiQ plc Annual Report 2023/24 Strategic Report

Market overview

As an Innovator, we create technology solutions in response to real world problems, megatrends and specific market needs from our

brand clients. We anticipate future needs brought by global problems & megatrends and develop science-based solutions to address

them swiftly. 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 in which we operate, giving us the opportunity to

contribute and bring enhanced sustainability downstream.

Global Megatrends

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 migrating to 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 pollution and hygiene needs, meaning a greater

requirement for sustainable and more effective technologies to mitigate these risks. Increasing population

densities also pose greater threats of disease while the excessive usage of disinfectants contributes to

increasing antimicrobial resistance, these all put substantial emphasis on effective but sustainable surface and

air hygiene technologies such as HeiQ Synbio

Climate change

and

environmental

degradation

The negative implications of earth’s rising temperatures, increased CO2 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 become

endangered, and deforestation continues.

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, leading to migrations. 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 for poorer communities.

Microplastic pollution to our oceans is a major issue and there is an urgent need to mitigate our damage to the

marine ecosystem, which is responsible for up to a quarter of this world’s annual CO2 absorption. According to

the Ellen MacArthur Foundation* and the World Economic Forum, by 2050 there will be more plastics than fish

in our oceans. And synthetic textiles are a key contributing industry already responsible for over 30% of all

oceanic microplastics. A problem we aim to solve by substituting polluting Polyester with circular, promptly

biodegradable HeiQ AeoniQ

climate positive fibers.

* The New Plastics Economy, Ellen MacArthur Foundation, 2016

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 is set to increase to two planets’ worth by 2030. In short, we need to halve our

current impact to ensure we are able to live within our planetary boundaries.

We are already seeing interconnected problems arising from the resource demands of a growing population

coupled with the impact of climate change on resource availability. 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 to avoid conflict.

Extending product lifecycle, manufacturing products using recycled materials or waste 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 ensuring sustainable development and the creation of

closed-loop economies and fair access to natural resources.

By using biobased and bio-derived raw materials in our textile technologies we enable functionality and a

longer textile lifetime. Apparel functionalized with HeiQ Mint

technology allows for less frequent washing

thanks to an inbuilt life-long odor control.

Markets we operate in

As an innovator for novel materials and disruptive technologies, providing solutions to consumers as their demands change based on

megatrends, there is scope for our products to be used across many markets. We continue to consolidate our strong position in

Textiles & Flooring and to build up our Antimicrobials and LifeSciences (probiotics) footprint. New markets we will increasingly move

into include, for instance, man-made cellulosic fibers (HeiQ AeoniQ

), and at an earlier stage, anode-free lithium metal batteries

enabled by our disruptive porous graphene membrane current collector technology (HeiQ GrapheneX

). The size of the markets we

operate in are as follows:

Market Size* Market Growth*CAGR HeiQ Business Unit serving the market

Textile chemicals $28bn 4.6% Business Unit Advanced Materials

Man-made fibers $135bn 3.5% Venture Unit HeiQ AeoniQ

Paints & coatings $200bn 5.4% Business Unit Advanced Materials

Antimicrobial plastics $37bn 10.1% Business Unit Advanced Materials

Probiotics $53bn 6.8% Business Unit LifeSciences

Hospital & household cleaners $55bn 5.2% Business Unit LifeSciences

*Statista

HeiQ plc Annual Report 2023/24 Strategic Report

Business model

Our purpose is to improve lives by innovating the materials people use every day. To achieve that, it is important for us to bring our

innovations to multiple industries. Over our almost 20 years of history, we have grown organically as well as through strategic,

capability-building acquisitions. All our acquisitions bring us either technological know-how to innovate for the segments we are

already active in, extend our customer base or give us access to a new segment. Following five acquisitions in the most recent years,

the HeiQ Group today organizes its activities in two Business Units and three Venture Units as well as an Innovation Service function

serving customers across the board. HeiQ has a special push-and-pull business model, meaning we do not only try to push our product

downstream to the next immediate user but also promote our innovations to their customers so as to create a “pull” force to receive

nomination and increase the speed of consumer adoption for our technologies.

Business

Venture

Unit

(Status)

im Key products / offering

Typical customers who

directly purchase from us

Typical influencers for our

customers’ decision-making

(downstream customers of our

customers)

dvanced Materials

(Business Unit)

Provide innovative

ingredients to make

textiles & flooring

more functional,

durable and

sustainable.

Specialty functional

textile finishing

Fabric manufacturing

mills in South- / South-

east Asia, EMEA &

Central America

Apparel and home textiles

brands in Europe, Asia &

North America

Auxiliaries and process

chemical that improve

efficiency in the

manufacturing process

Carpet & flooring

manufacturing mills

Carpet and flooring brands

Functionalize

different hard

surfaces in everyday

products and our

surroundings

Inorganic, organic and

botanical antimicrobial

technologies for

plastics and coatings

Masterbatchers,

compounders, and

coatings manufacturers

Brands of bathroom and

kitchen products, home

appliances, and consumer

paints

LifeSciences

(Business Unit)

Offer biotech

solutions to replace

harmful substances in

domestic, commercial

and industrial usage,

for a more balanced

microbiome and

environment

Synbiotic professional

and household

cleaning products

Cleaning products

manufacturers, cleaning

service providers

Stakeholders of care homes,

medical facilities, schools

and office buildings

Synbiotic ingredients

for cosmetics

Cosmetic product

manufacturers

Cosmetic consumer brands

Synbiotic cleaning

agents for industrial

water treatment and

air conditioning

Water and HVAC service

companies

Industrial manufacturers

Ingredients and

manufacturing

solutions for medical

devices

Medical device product

manufacturers

Over-

he-counter retailers of

medical devices

HeiQ AeoniQ

(Venture Unit)

Scale-up cellulosic

filament fibers from

circular feedstock to

replace oil-based

Synthetic fibers

Filament fibers for

textile apparel and

footwear as well as

technical textile e.g.

automotive

Fabric manufacturing

mills in South- / South-

east Asia, EMEA &

Central America

Apparel and home textiles

brands in Europe, Asia &

North America

HeiQ GrapheneX

(Venture Unit)

Scale-up a current

collector with our

graphene membrane

to enable anode-free

lithium metal

batteries

Graphene membrane

enhanced current

collector

Battery manufactures in

China, Korea and Japan

Handheld mobile device

manufacturers in USA,

Japan, China and Korea

HeiQ Xpectra

(Venture Unit)

Scale-up a

transparent heat-

reflective coating for

simple, rapid and

cost-effective building

insulation as well as

signature

management

Heat reflective

insulation varnish and

transparent

conductive, low-E and

radar shielding coating

solutions

Manufacturers of

building materials,

automotive and

aeronautical materials

Architects and building

insulation solution providers,

as well as car and

aeronautical industry

Innovation Services Enable customers in

all business areas to

innovate beyond their

in-house capability

Innovation project

management service,

grants applications

consulting and

research network

support

Customers from all the

above sectors

Customers from all the above

sectors

HeiQ plc Annual Report 2023/24 Strategic Report

Value Creation

Our two commercial business units generate value along three key activities:

Key activities The HeiQ difference Revenue generation Value creation

Scientific research

20+% of our employees are highly

skilled scientists working in

research and development; we

also leverage our extensive

network of 30+ global academic

partners through government

grants

Our co-creation approach provides

us with a steady stream of

innovation ideas from different

sectors, forming the basis of

future commercialized products.

For projects that include milestone

payments or project financing

from our customers, revenue is

generated directly during the R&D

process.

Partners and customers

Our brand partners and direct

customers benefit from access to

our differentiating technologies.

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,

protection 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

Our investors benefit from the

high value growth potential of our

business and our willingness to

create disruptive innovation.

Specialty material

manufacturing

Our strong IP profile and seven

technology platforms give us a

strong competitive advantage on

all the ingredients and materials

we manufacture and sell to

various sectors.

Our primary source of revenue is

the sale of products we

manufacture. Our second source

of revenue is royalties on IP we

license.

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

Consumer

marketing &

ingredient

branding

As innovations are created in the

laboratory and used by

consumers, we have built

competence in explaining the

impact of our products to all

downstream stakeholders,

including consumers.

Strong consumer marketing and

ingredient branding allow HeiQ to

generate visibility and potential

revenues from royalty bearing

licenses and exclusivity terms.

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,

engineers and entrepreneurs.

HeiQ plc Annual Report 2023/24 Strategic Report

Chief Executive Officer’s review

Advancing innovation in curtailed markets

The beating heart of our innovation engine is to solve real world problems brought to us by our customers, with science. Over the past

18 months we were able to advance the technology readiness level of all our three disruptive venture platforms. With HeiQ AeoniQ, the

climate positive cellulosic filament fibers from our Austrian pilot plant, we went to market with the capsule collection by Hugo Boss

“The Change” and demonstrated the potential to replace 70 million tons of oil-based synthetic fibers. With HeiQ GrapheneX we

secured a joint development agreement with a fortune 500 player in handheld mobile devices for our novel double energy density

anode free lithium metal battery. With HeiQ Xpectra we secured a fortune 500 company to co-develop a transparent heat-reflective

coating for simple, rapid and cost-effective building insulation. At the same time we signed a multi-year exclusive strategic partnership

with a further fortune 500 company, Ecolab, for the distribution of our HeiQ Synbio probiotic cleaner line for hospitals and industrial

customers (BU LifeSciences). A publication in the Lancet and more recently in the Antimicrobial Resistance & Infection Control

confirmed that HeiQ Synbio indeed is a unique solution to reduce antibiotic resistant genes in pathogens causing hospital acquired

infections.

Our traditional business in textile, flooring and antimicrobials did its very best to cross-finance the advancement of our disruptive

venture technology platforms; replacing oil-based and microplastic polluting synthetic fibers; enabling double energy density batteries;

insulating rapidly and cost-efficiently the 50% poor building cohorts of Europe and blunting the damocletian sword of antimicrobial

resistant genes in hospitals. It did so in adverse market conditions, with our loyal customer base operating at a reduced 50% to 70%

capacity over the past two years.

There were plenty of headwinds in the reporting period. We held the line and advanced our venture innovations, yet at high cost.

Trading Update

Markets remained a challenge throughout the period for our industry and our business. At the start of 2023, we took steps to reduce

our cost base and reorganize the business. We have not seen the challenges abate in 2024 and thus have taken further restructuring

actions to be in a better position going forward to manage the challenging macro-economic environment, to continue building value in

our core innovations and to preserve our ability to deliver when the market demand turns.

Our credit facilities continue to be uncommitted in nature, which casts a material uncertainty on the going concern assessment until

appropriate longer-term funding is in place, as disclosed in the Notes to the financial statements.

While the financial statements continue to be prepared on a going concern basis, the Board is of the view that, pending

implementation of the restructuring, the Group has adequate resources. The main cash burn is related to investments in the ventures

which could be reduced or stopped in case needed. HeiQ is in discussions to raise additional equity for those ventures and adapting

the speed of investment accordingly.

Restructuring and divesting

In an effort to drive additional savings while maintaining key capabilities we are merging two business units (Textile & Flooring and

Antimicrobials) to form a new business unit Advanced Materials. Advanced Materials and LifeScience each have their dedicated CEO,

management team, and P&L responsibility: Advance Materials, under the leadership of Mr. Mike Abbott, headquartered in the US and

LifeSciences, led by Dr. Robin Temmerman, headquartered in Belgium

Besides continuing the streamlining and relocating of various support functions out of Switzerland to lower-cost locations, we have

created clear goals and responsibilities for all our business and service organizations to optimize operations and to focus resource

allocation rigorously. We are increasingly grouping our operations around our four hubs, USA, Belgium, Portugal and Thailand to serve

our customer base.

In Innovation, we keep focusing on technologies which are closest to cash-flow generation or are already being financed by brand

partners or through grants. In Differentiation we are leveraging our brand customers to promote HeiQ to a broader (consumer)

audience thereby reducing our costs. We have further streamlined our internal service organization, particularly in finance by

implementing a centralized accounting function to strengthen our financial reporting processes.

Further restructuring currently being implemented, will aim to reduce our cost base by an additional 20%. The announced de-listing

contributes significantly to the overhead cost reduction. However, refinancing will be necessary to push forward with the scaling of our

disruptive venture innovations. HeiQ AeoniQ needs a large fundraise to build its first production plant and has engaged an Investment

Bank to support us in the task. The Board has judged that fundraising is best achieved by raising capital in the private markets and

thus decided to cancel the listing of HeiQ plc as of November 19, 2024.

Advanced Materials (Merger between Textiles & Flooring & Antimicrobials)

We have taken decisive steps to strengthen our position as the market leader for branded, nominated textile innovation. Our top-

selling products have been further integrated backwards to improve margins. We have right sized our presence in China and are

building out our south Asia hub from Thailand. We have moved the semi-specialty part of our production from Switzerland to the US

and our Innovation and Differentiation services to Portugal. We have worked hard to reduce our net working capital and improve the

market availability in our main regions Asia, Europe and the Americas and we are integrating our distributors better to have more retail

and service power. We are considering a divestment of one of our operational assets should we receive attractive offers from the

market.

LifeSciences

Following our break-through publication in the Lancet with the University Hospital Charité Berlin study sponsored by the Melinda & Bill

Gates foundation and the German state, we secured the US based fortune 500 market leader in Hygiene, Ecolab. Following changing

regulations in the EU, we secured a potent exclusive channel partner. Our task now is to invest and scale for growth to disrupt the

market with the market leader.

HeiQ plc Annual Report 2023/24 Strategic Report

Venture Innovation

HeiQ AeoniQ successes to date include the launch to market with Hugo Boss the world’s first plastic minimized sneaker. With Robert

van de Kerkhoff, former CCO of man-made cellulosic fiber market leader Lenzing (Austria), we secured a Chairman for HeiQ AeoniQ

with deep fiber expertise. With Julien Born, former CEO of The Lycra company, we have a CEO for HeiQ AeoniQ who brings the expertise

to finance and build our first two production plants. The asset heavy and CAPEX intensive scale-up is a new challenge for HeiQ, one

that we must master to capture the technology value creation. At the end of 2023 we purchased an industrial production site in Maia,

Portugal to be the cornerstone of the HeiQ AeoniQ scale-up and growth.

HeiQ GrapheneX has secured a joint development agreement with a fortune 500 player in handheld mobile devices for our novel

double energy density anode free lithium metal battery. For the next phase, we have reached out to possible partners in Korea and

Japan to access established battery clusters for the further acceleration of our development. A first prototype is planned to be ready by

the end of 2024.

HeiQ Xpectra secured an extension of the joint development agreement with a fortune 500 partner for the further development of

electromagnetic signature management for stealth functionality. A further fortune 500 partner was secured for the co-development of

a transparent heat reflective coating for simple, rapid and cost-effective building insulation with a joint commercialization launch

planned for Q1 2025.

Outlook

Looking ahead, our vision remains firm: striving to improve the lives of billions by bringing sustainable material technology solutions to

market that can make an impact. To achieve this and to weather current challenging market conditions and financial uncertainties, we

have taken and will take further actions as and when needed to control our costs and sharpen our strategy. This includes prioritizing

innovations close to positive cash flow generation, to put appropriate emphasis on operational excellence as well as to drive to market

our high potential venture innovation initiatives with their superior performance and sustainability profiles.

We expect the above-mentioned additional restructuring measures to flow through to our bottom line in H2 2025 with corresponding

stabilization of our financial performance. However, we remain alert to take additional corrective action or seek additional fundraising

should markets deteriorate further.

As always, I would like to end my statement by thanking our investors, team, advisors and customers for their support during what has

been a very challenging period for the market and the Group. As a significant shareholder and a founder of HeiQ, my commitment to

grow HeiQ and materialize its technological potential remains unchanged.

Carlo Centonze

CEO

HeiQ plc Annual Report 2023/24 Strategic Report

Key performance indicators

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 KPI’s Revenue

(in $m)

Growth vs

prior year

Finance KPI’s Gross profit

margin in %

2023

24 62.3 (12.0%)* 2023

24 36.6

2022 47.2 (14.8%) 2022 28.5

2021 55.4 9.9% 2021 45.8

2020 50.4 80.0% 2020 55.8

2019 28.0 6.9% 2019 48.6

2018 26.2 2018 42.8

Why we

measure

Sales growth reflects the increasing impact

of our business on improving lives for

millions.

*) based on annualized sales 2023/24

Why we

measure

This KPI gives insight into our

operational profitability.

Innovation KPI’s Number of new projects that made it into our R&D

pipeline

Innovation KPI’s Number of launched innovations

2023/24 47 2023/2024 10

2022

34 2022 10

2021 22 2021 21

2020

12 2020 5

2019

10 2019 3

2018

7 2018 3

Why we

measure

We never run out of innovation ideas and

there are many 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 ensuring we have the

market in mind before investing excessively

into a project.

Why we

measure

Innovations that are launched

generate returns on our R&D

investments.

Differentiation

KPI

Number of media mentions

2023/24 8,641

2022 3,732

2021 3,360

2020 n/a*

2019 n/a*

2018 n/a*

Why we

measure

s a B2B, B2C and B2B2C ingredient brand,

HeiQ is building its brand awareness across

different target audience groups. Media

mentions are “earned” media, which show

our ability to gain face time with the audience

without having to invest heavily in media-

buying.

* In 2024, the company changed the tool/service provider

for measuring. The new service provider is only providing

data back to 2021.

HeiQ plc Annual Report 2023/24 Strategic Report

Sustainability report (including TCFD disclosures)

“WE DID NOT INHERIT THE EARTH FROM OUR ANCESTORS BUT BORROW IT FROM OUR CHILDREN.”

Therefore, we aspire to improve the lives of billions by innovating their everyday products and our purpose defines our reason for

being, beyond being profitable. HeiQ is dedicated to improving the lives of billions of people and society as a whole by establishing

better and more sustainable materials and technologies.

Our core focus is to replace harmful substances with more sustainable alternatives, to extend the useful lives of consumer goods, to

replace resistance creating biocides, and to improve energy utilization in buildings, electric vehicles and mobile devices.

We help fight air, water and soil pollution and resource depletion. We help to reduce energy consumption, water usage, microplastics

and textile waste. And we are convinced that only innovation can drive the systemic and disruptive change that is urgently needed.

Our ESG strategy

• HeiQ’s core business strategy is to improve lives through innovation for more functional and more sustainable materials which

largely overlaps with our ESG strategy. Everything we do, all our innovation, has sustainability at the core.

• As a provider of both functional and sustainable material ingredients, we inspire and enable the entire value chain to develop

more eco-friendly, durable, biobased, renewable, recyclable and circular, enhanced products.

• People are our biggest asset. The global success of HeiQ is indebted to their knowledge, skills, agility, cultural diversity (30+

nationalities) and a shared passion for our purpose. HeiQ is a proud equal opportunity employer. We follow the UK Government’s

Environmental Reporting Guidelines: Including streamlined energy and carbon reporting requirements.

Energy consumption and carbon emissions disclosures

For the calculation of energy consumption and carbon emissions we follow the UK Government’s Environmental Reporting Guidelines:

Including streamlined energy and carbon reporting requirements.

Principles applied for reporting on energy

consumption and carbon emissions as per

the UK Government’s Environmental

Reporting Guidelines: Including

streamlined energy and carbon reporting

requirements (“SECR”)

We subscribe to the principles of the Competition and Markets Authority in the UK and

engage to be truthful and accurate, clear and unambiguous, substantiated, not

omitting or hiding important information, only making fair and meaningful comparisons

and avoiding all inconsistencies between claims and reality, between intentions and

practice.

We realize that reporting sustainability impacts is a process of continuous

improvement and acknowledge that we may face blind spots. We invite all

stakeholders and readers to point these out to us.

Sources of information

Our SECR reporting is based on in-house data on the combustion of primary fuel at

owned sites and installations and purchased electricity. We continuously work to

improve the quality of our data, collected from invoices for electricity, natural gas,

propane, gasoline and diesel, the energy sources used in our HeiQ entities. Gaps in the

data are filled by extrapolation or assumptions based on usage in other months.

Our contact for questions and remarks about the SECR reporting is HeiQ sustainability

officer Mr. Philip Ghekiere philip.ghekiere@heiq.com

Scope

Physical locations operated by a controlled legal entity are in scope of these

disclosures. This includes: HeiQ operational headquarters and laboratories in Schlieren

(Switzerland), HeiQ production site in Bad Zurzach (Switzerland), HeiQ Chrisal

(Belgium), HeiQ ChemTex in Concord, North Carolina and Calhoun, Georgia (USA), HeiQ

Taiwan, HeiQ Iberia (Portugal), HeiQ RAS (Germany), HeiQ China, HeiQ Life (Thailand)

and HeiQ AeoniQ GmbH (Austria).

Conversion tables

For the conversion of liters, kg, lbs., gallons and Centum Cubic-Feet of Scope 1 primary

fuel to kWh and tCO2-e (tons of carbon dioxide equivalent) we used the gross caloric

values of the ‘UK Government Greenhouse Gas Conversion Factors for Company

Reporting’ version June2023 that is available for consultation at www.gov.uk

For the Scope 2 conversion of purchased electricity, the CO2-e values depend on the

carbon intensity of the electricity production and the energy mix in the country where

the electricity is produced. Our World in Data provides a global overview and a detailed

summary of the countries that are relevant for HeiQ reporting.

https://ourworldindata.org/grapher/carbon-intensity-electricity

Energy consumption

Under SECR Scope 1 we report primary fuel for combustion at owned sites and in owned installations. Natural gas was again the main

fuel type used for combustion (5,552,732, kWh) and more than 80% of this volume was used in our US manufacturing plants.

In the reporting period the group used small volumes of diesel (324,564 kWh), gasoline (232,221 kWh) and propane (50,097 kWh).

Under SECR Scope 2 we report 1,403,415 kWh of purchased electricity, 43% of the total volume relates to our manufacturing plants

in the US.

Whenever possible we purchase electricity from renewable sources: in total 414,671 kWh or 29.5% of the reported Scope 2 energy

comes from a renewable source.

HeiQ plc Annual Report 2023/24 Strategic Report

Period ended Year ended

June 30, December 31,

Energy in kW

2024 2022

Scope 1 combustion Fuel

606,871 422,652

natural gas

5,552,732 3,632,408

Total Scope 1

6,159,603 4,055,060

Scope 2 purchased electricity

1,403,415 884,479

otal Scope 1 + Scope 2

7,563,018 4,939,539

Carbon Emissions

In the period ended June 30, 2024 we report 1,147 tCO2-e emissions from combustion and 403 tCO2-e from purchased electricity, in

total 1,550 tons of Carbon Equivalent. This is, taking the reporting 18-months period into account, about the same quantity as in

2022.

Period ended Year ended

June 30, December 31,

Emissions in tC

2024 2022

Scope 1 combustion Fuel

147 102

natural gas

1,000 654

Total Scope 1

1,147 756

Scope 2 purchased electricity

403 270

otal Scope 1 + Scope 2

1,550 1,026

Intensity ratios

Intensity ratios allow analysis of the effect of our actions to reduce energy consumption and carbon emissions irrespective of

fluctuations in revenue. The aggregated and reported revenue for the period ended June 30, 2024 was US$62.10 million and

US$47.20 million for 2022.

Period ended

Year ended

June 30,

December 31,

Energy in kW

2024

ratio

2022

ratio

Scope 1 combustion Fuel

9,772 8,954

natural gas

89,409 76,955

Total Scope 1

99,181 85,909

Scope 2 purchased electricity

22,597 18,738

otal Scope 1 + Scope 2

121,778 104,647

Period ended Year ended

June 30, December 31,

Emissions in tC

2024

ratio

2022

ratio

Scope 1 combustion Fuel

2.37 2.16

natural gas

16.10 13.86

Total Scope 1

18.47 16.02

Scope 2 purchased electricity

6.49 5.72

otal Scope 1 + Scope 2

24.96 21.74

Policies

In the 2021 Annual Report, we published the HeiQ Human Rights Policy and in the 2022 Annual Report the HeiQ Equal Opportunity

Employer Policy. In this report, we are proud to share our Workplace Harassment Policy.

Third-party harassment, and sexual harassment policies, The HeiQ Code of Ethics, The Supplier and Business Partner Code of

Conduct, and The Employee Code of Conduct will be communicated in future annual reports.

All policies are embedded via a Content Management System that is accessible to everyone (with physical copies in selected locations

like manufacturing sites). Employees are informed globally and/or locally when new policies are published or changed.

HeiQ Workplace Harassment Policy

Purpose

Our anti-harassment policy expresses our commitment to maintain a workplace that's free of harassment, so our employees can feel

safe and happy. We will not tolerate anyone intimidating, humiliating or sabotaging others in our workplace. We also prohibit willful

discrimination based on age, sexual orientation, ethnicity, racial, religion or disability.

HeiQ plc Annual Report 2023/24 Strategic Report

Scope

This workplace harassment policy applies to all employees, contractors, public visitors, customers and anyone else whom employees

come into contact with at work. For more details on how to recognize, report and deal with sexual harassment and harassment from

outside our company, please refer to our sexual harassment policy and our third party harassment policy.

Policies

What is the definition of

harassment in the workplace?

Harassment includes bullying, intimidation, direct insults, malicious gossip and victimization. We

can’t create an exhaustive list, but here are some instances that we consider harassment:

• Sabotaging someone’s work on purpose.

• Engaging in frequent or unwanted advances of any nature.

• Commenting derogatorily on a person’s ethnic heritage or religious beliefs.

• Starting or spreading rumors about a person’s personal life.

• Ridiculing someone in front of others or singling them out to perform tasks unrelated to their

job (e.g. bringing coffee) against their will.

Sexual harassment is illegal, and we will seriously investigate relevant reports. If an employee is

found guilty of sexual harassment, they will be terminated.

How to address harassment

If you’re being harassed, whether by a colleague, customer or vendor, you can choose to talk to

any of these people:

Offenders: If you suspect that an offender doesn’t realize they are guilty of harassment, you could

talk to them directly in an effort to resolve the issue. This tactic is appropriate for cases of minor

harassment (e.g. inappropriate jokes between colleagues.) Avoid using this approach with

customers or stakeholders.

Your supervisor: If customers, stakeholders or team members are involved in your claim, you may

reach out to your manager. Your manager will assess your situation and may contact HR if

appropriate.

HR: Feel free to reach out to HR in any case of harassment no matter how minor it may seem. For

your safety, contact HR as soon as possible in cases of serious harassment (e.g. sexual

advances) or if your manager is involved in your claim. Anything you disclose will remain

confidential. You can also find information on how to report misconduct under this page:

Misconduct Reporting.

Disciplinary Consequences

Punishment for harassment depends on the severity of the offence and may include counselling,

reprimands, suspensions or termination.

Other relevant disclosures

Grievance mechanisms for employees

We plan to introduce an anonymous grievance hotline submittance system for employees to raise sensitive concerns through the

Company ticketing system. Grievances would go to global People Operations (HR) who could either, where appropriate, a) redistribute

to local HR, b) manage directly/globally or c) escalate to the Board.

Mechanisms for raising concerns on business conduct for individuals

The workplace harassment and sexual harassment policies outline the procedure for raising concerns. In a case where an employee

thinks that the offender might not be aware of their behavior, the employee may try and raise the concern directly with the offender.

Where appropriate, or if a customer, other third parties or multiple team members are involved, the employee can report their

concerns to their supervisor. In any case, People Operations (HR, local or global) can be involved as a first point of contact, mediator or

escalation point.

Non-compliance with employment laws and regulations

No significant instances of non-compliance with laws and regulations were reported in the period.

Collective bargaining

No collective bargaining agreements reported in the period.

Important memberships

• USA: Corporate Members of AATCC (American Association of Textile Chemists and Colorists).

• USA: Member of ASQ (American Society for Quality) and certified auditor through ASQ.

• Switzerland: Carlo Centonze Member of the Economic Council at Swiss Textiles. Member of the Board and Economic Council at

Science Industries, Member of the Women’s Wear Daily Global Impact Council.

Climate reporting: TCFD Recommended Disclosures

Compliance statement

As an innovator and supplier of sustainable material ingredients, we inspire and enable the entire value chain to develop more eco-

friendly, durable, energy saving, biobased, renewable, recyclable, and circular consumer products.

HeiQ has complied with FCA listing rule 9.8.6R(8) that requires standard listed companies to make disclosures consistent with the

TCFD recommendations. TCFD is a comply or explain disclosure requirement. For the year ended June 2024, HeiQ is explaining on six

of eleven of the recommended TCFD disclosures. As such, and in line with the listing rule requirements, the table below outlines our

reasons for explaining, and our plans including timeframes for remedial action.

HeiQ plc Annual Report 2023/24 Strategic Report

TCFD

recommendation

TCFD recommended

disclosure

Compliance

position

Rationale Remediation plans Timeline

Governance a. Describe the

Board’s oversight of

climate-related risks

and opportunities.

Compliant The board of HeiQ Plc does not currently have

oversight of climate-related risks and opportunities,

and as such there is no process nor frequency for

informing the board on these matters.

The board and/or board committees do not currently

systematically consider climate-related risks and

opportunities when reviewing and guiding strategy,

major plans of action, risk management policies,

annual budgets, and business plans as well as setting

the organization’s performance objectives, monitoring

implementation and performance, and overseeing

major capital expenditures, acquisitions, and

divestitures.

There are no climate-related goals and targets, and so

he board does not monitor progress.

N/A N/A

b. Describe

management’s role

in assessing and

managing climate-

related risks and

opportunities.

Compliant HeiQ Plc has not assigned specific climate-related

responsibilities including assessing and/or managing

climate-related issues to management-level positions

or committees and as such, no management positions

or committees report to the Board or a committee of

the Board on such topics. Management are not

currently routinely informed about climate-related

risks and opportunities and there is no formal

organizational structure nor monitoring process in

place for this purpose.

N/A N/A

Strategy

a. Describe the

climate-related risks

and opportunities

the organization has

identified over the

short, medium and

long-term.

Explain We have not yet undertaken scenario analysis

including defining timeframes, considering materiality,

or selecting scenarios. As such we’ve not identified

the climate-related risks and opportunities that might

be material to HeiQ Plc under different scenarios and

different timeframes, nor have we considered how

these risks and opportunities might vary by sector and

/ or geography.

In a first step, the Company plans to define

climate-related risk management processes in

order to identify respective risks. The

Company foresees to engage support from

external advisors if and when deemed

necessary by the Board to support this

process.

We appreciate the importance of undertaking

scenario analysis and are looking to complete

this in time for 2025 Annual Report. We will

be working closely as a senior management

team in defining timeframes, materiality and

scenarios, before approving the climate-

related risks and opportunities that we intend

to report in our 2025 annual report. We might

consider to engage a third party to support us

with this work.

b. Describe the

impact of climate-

related risks and

opportunities on the

organization’s

businesses, strategy

and financial

planning.

Explain Having not undertaken scenario analysis we have not

been able to commence quantification of our climate-

related risks and opportunities, nor provide

commentary as to the impacts, mitigations, and

actions we are undertaking as a business. As yet we

also have not developed a transition plan and have

not been able to make the appropriate disclosures as

a result.

Once climate-related risk management

processes are in place and respective risks

have been identified, the Company intends to

run a scenario analysis in order to evaluate

the impact of those identified climate-related

risks on the Company’s business, strategy

and financial planning. In order to do so, the

Board will engage support from external

advisors if and when deemed necessary.

Our work on quantification is contingent on

our work outlined in strategy (a) above on

scenario analysis. Once this is complete we

will commence quantification; this is a

medium term priority. We will provide a

progress update in our next annual report

with outputs provided subsequently.

HeiQ plc Annual Report 2023/24 Strategic Report

TCFD

recommendation

TCFD recommended

disclosure

Compliance

position

Rationale Remediation plans Timeline

c. Describe the

resilience of the

organization’s

strategy, taking into

consideration

different climate-

related scenarios,

including a 2°C or

lower scenario.

Explain HeiQ Plc has not yet undertaken any scenario analysis

and therefore has not been able to assess HeiQ’s

resilience to a 2°C degree or lower climate scenario in

detail.

We do not plan to undertake a scenario

analysis for a 2°C or lower scenario before

2025 as we intend to focus on implementing

other TCFD recommendations beforehand.

2°C or lower scenario analysis and respective

resilience reporting is a medium-term goal

and will therefore be addressed earliest by

the 2025 annual report.

Risk management

a. Describe the

organisation’s

processes for

identifying and

assessing climate-

related risks.

Compliant HeiQ Plc does not currently have risk management

processes in place for identifying and assessing

climate-related risks and as such does not determine

the relative significance of climate-related risks in

relation to other risks. The Company has not yet

formally assessed existing and emerging regulatory

requirements related to climate change or other

relevant factors. HeiQ Plc does not currently have

processes for assessing the potential size and scope

of identified climate-related risks nor does it have

specific definitions of risk terminology or references to

existing risk classification frameworks.

N/A N/A

b. Describe the

organisation’s

processes for

managing climate

related risks.

Compliant HeiQ Plc does not currently have processes for

managing climate-related risks, including those to

make decisions to mitigate, transfer, accept, or

control those risks. In addition, HeiQ plc does not

currently have processes for prioritizing climate-

related risks, nor for undertaking materiality

determinations.

N/A N/A

c. Describe how

processes for

identifying,

assessing, and

managing climate-

related risks are

integrated into the

organisation’s

overall risk

management.

Compliant HeiQ Plc has not integrated identification, assessment

or management of climate-related risks into overall

risk management.

N/A N/A

Metrics & targets

a. Disclose the

metrics used by the

organisation to

assess climate-

related risks and

opportunities in line

with its strategy and

risk management

process.

Explain Beyond reporting scope 1 and 2 emissions, HeiQ Plc

does not measure and report any other climate-

related metrics. HeiQ Plc don’t use an internal carbon

price.

HeiQ Plc will develop metrics that align to the

identified material risks and opportunities

once the exercise outlined above in the

strategy (a) section is done. We will consider

the TCFD all sector and sector-specific

guidance when identifying suitable metrics.

Disclosure of metrics used is a medium-

erm

goal and will therefore be addressed earliest

by the 2025 annual report.

HeiQ plc Annual Report 2023/24 Strategic Report

TCFD

recommendation

TCFD recommended

disclosure

Compliance

position

Rationale Remediation plans Timeline

b. Disclose scope 1,

scope 2 and, if

appropriate, scope 3

greenhouse gas

(GHG) emissions

and the related

risks.

Explain HeiQ Plc has reported its scope 1 and 2 emissions on

page 9. To date we have not been able to measure

our scope 3 emissions, but we estimate that they will

account for over 40% of our total emissions and will

therefore be considered material.

Given the complexity of assessing scope 3

emissions, addressing our scope 3

measurement is a long-term objective only.

Scope 3 reporting is a long-

erm goal only and

will therefore be addressed earliest by the

2025 annual report or later.

c. Describe the

targets used by the

organization to

manage climate

related risks and

opportunities and

performance against

targets.

Explain HeiQ Plc currently does not use any climate-related

targets.

As metrics used by the organization to assess

climate-related risks and opportunities are not

yet defined, the Company considers the target

definition and measurement of performance

against these targets as a medium-term goal

to be implemented at the same time as the

definition of the metrics to be measured and

in alignment with identified risks and

opportunities.

Definition of targets and tracking against

them is a medium-term goal and will therefore

be addressed earliest by the 2025 annual

report.

HeiQ plc Annual Report 2023/24 Strategic Report

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 its members 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.”

Ongoing engagement with our stakeholders remains a priority and is critical to HeiQ’s success.

The Directors of HeiQ consider, both individually and together, that they have acted in the way they consider, in good faith, would be

most likely to promote the success of the Company for the benefit of its members as a whole having regard to the stakeholders and

matters set out in s172 of the Companies Act 2006 (“section 172”) in the decisions taken during the period ended June 30, 2024.

In doing so, the Directors have taken account of the likely long-term consequences of decisions made in the period, the interests of

HeiQ’s employees, the Company’s business relationships with its clients, suppliers, and the impact of the Company’s operations on

the community and the environment. The Directors strive to maintain a reputation for exacting standards of business conduct, and the

need to act fairly between members of the Company.

When formulating the Company’s strategy, the Directors consider the longer-term and broader consequences and implications of its

business on key stakeholders and society in general. The need to be a responsible company in this context is embedded in HeiQ’s

ethos and is the focus of the Company’s ESG and Sustainability strategy.

Stakeholder engagement

As part of HeiQ’s commitment to effective stakeholder engagement, and in accordance with section 172, the Company sets out its key

stakeholder groups and corresponding approach to engagement with them.

HeiQ’s stakeholder engagement strategies are tailored for each of these key audiences to continue a mutually beneficial dialogue with

those who are invested in, or impacted by, the Company’s operations.

The following paragraphs summarize how the Directors fulfil their duties. Information collected by management in the course of their

interaction with any stakeholder group is typically considered by the Board at its regular Board meetings (there were fourteen such

meetings in the reporting period). The Board holds an annual strategy workshop where the strategy of individual Business Units as well

as the Group as a whole is presented by the Business Unit leaders, the Executive Directors and reviewed by the Board.

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 fulfilling this objective. Besides engaging through the Company’s shareholder

meetings, Executive Directors engage with investors directly in face-to-face meetings in course of investor roadshows typically

organized at least three times a year around the publication of financial results and the AGM. The Directors typically all attend the

AGM in person, a decision that was taken to facilitate more effective face to face engagement with shareholders, allowing them to ask

questions directly to the Board. Upon publication of financial results, the Executive Directors hold additional investor calls focused on

retail investors with extensive Q&A sessions. Feedback on presentations and investor talks has been collected by the Company’s

broker and Investor Relations advisors and has been reported to the Board on an anonymous basis. This feedback has been taken

into consideration for future shareholder communications and incorporated into the strategic decision-making process by the Board.

Employees

The Directors engage with the workforce and management team in different ways both directly and indirectly.

Periodical leadership meetings: The Executive Directors meet with the leadership team typically every other week to discuss

operational questions including such concerning employees. Typically, three times a year, the leadership team meets physically for

more strategic discussions with the Executive Directors. Topics of interest and/or concern for the entire Board are reported by the

Executive Directors at Board meetings.

Periodical meetings of the entire Board with executive management: Several times a year, the Board holds meetings with each Business Unit

leader to discuss the strategy and operational performance of the individual unit. This allows the Directors to make informed decisions

on the performance of individual Business Units, consider longer term strategies for where to invest further or where to scale back.

Quarterly townhall meetings: The Group CEO hosts mandatory quarterly townhall meetings with all employees and participation of

Directors with an extensive Q&A session. The Directors believe this is an essential forum to allow employees access to the upper tiers

of management and the Board that they may not be afforded during their day-to-day work life. It is also a useful forum for the Board to

receive honest and direct feedback on concerns from the ground up, facilitating discussion and longer-term planning around employee

satisfaction in the workplace and specific issues that may need to be addressed.

Informal meetings with senior staff by individual Directors: Directors, in particular the Chair, periodically meet with senior staff members for

an informal exchange on a one-to-one basis.

Further, a global quarterly newsletter ensures that all employees and Directors are aware of important recent developments in the

Group, including those of the headquarters as well as each local office.

HeiQ plc Annual Report 2023/24 Strategic Report

Whistleblowing: HeiQ’s whistleblowing policy provides a mechanism for employees to raise concerns in confidence and anonymously,

with any serious matters being escalated to the Board to review and ensure arrangements for proportionate and independent

investigation and for follow-up action if required.

Customers

Understanding our customers and their customers (consumers) and what matters to them is of paramount importance to HeiQ. HeiQ

aims to establish long term win-win customer relationships which might, from time to time, require re-alignment and/or re-negotiation

of critical business terms. The Group CEO therefore is involved in customer meetings on a regular basis and in particular is

significantly involved in the business development which typically is done in collaboration with an application partner, i.e. with future

customers like Hugo Boss and MAS in the case of HeiQ AeoniQ. The Executive Directors are further kept informed about any significant

development with particular customers in of their periodical meetings with the Leadership team. The Group CEO provides feedback on

specific customers and market situation in general to the Directors in Board meetings. In meetings between the Board and the

Business Unit leaders, Directors benefit from getting direct insight into customer issues from the Leadership team.

Suppliers

Fostering good business relationships with suppliers is important to the Company’s success. HeiQ aims to establish long term win-win

supplier relationships which might, from time to time, require re-alignment and/or re-negotiation of critical business terms. While the

key contact to suppliers typically happens with the individual business leaders, the Group CEO meets periodically with major suppliers

and is also involved in negotiations with them. This is the case in particular in relation to key strategic business development

initiatives like HeiQ GrapheneX or HeiQ AeoniQ. Critical supplier situations are always discussed by the Executive Directors and the

Leadership team in their regular meetings. The Board is briefed on any possibly critical situation as needed during their regular

meetings.

Community and environment

HeiQ is 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, HeiQ operates a significant part of its business under ISO standards and additionally, most HeiQ products are also

certified for voluntary quality standards such as ZDHC (Zero Discharge for Hazardous Chemicals), bluesign® and OEKO-TEX®. Various

members of HeiQ’s workforce are members of local industry associations (e.g. the Group CEO is a member of the Board of

ScienceIndustries Switzerland (Business Association Chemistry Pharma Life Sciences) and HeiQ is a member of the European Silver

Task Force.

Business conduct

As explained in more detail in Corporate Governance on page 26, 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 to act fairly between the Company’s members. The Board is committed to sharing information publicly so that all members of

the Company have access to the same information at the same point in time and in accordance with the requirements of the Financial

Conduct Authority’s Listing Rules, the Disclosure and Transparency Rules and the UK Market Abuse Regulation.

Key Board decisions and Section 172 considerations

The following are examples of some of the principal decisions made by the Board during the period under review which demonstrate

how employee interests, the need to foster business relationships with other key stakeholders and other Section 172 matters have

been taken into account in discussions and decision making.

Key Board decision Consideration of stakeholder interests

ppointment of a new Board

Member and Chair

As announced November 27, 2023, Robert van de Kerkhof was appointed as a new Board member

as of January 1, 2024 to strengthen the Boards expertise in view the HeiQ AeoniQ venture with a

cellulosic fiber technology and sustainability expert. Robert brings also along significant public

company experience.

Following the retirement of Esther Dale as Chair on March 31, 2024, Robert was appointed as new

Chair.

ppointment of a new

Auditor

On May 30, 2024 the Company announced the appointment of RPG Crouch Chapman LLP as its

auditor.

Extension of the accounting

reference date

In order to allow an incoming auditor to execute

he audit of the Annual Accounts in an orderly

manner, the Board considered it to be appropriate to extend the financial reporting period by six

months and decided to move the accounting reference date to June 30, 2024 as announced on

February 15, 2024.

HeiQ plc Annual Report 2023/24 Strategic Report

Engagement of an

accounting firm to support

addressing control

deficiencies

In order to further improve governance structure and process of the Group and as a response to key

audit matters raised by the external auditor on the 2022 Annual Accounts, the Board decided to

engage Ernst & Young in early 2024 to review our internal control and governance processes and to

recommend implementation measures to improve the same.

Capital raise

In order to finance the acquisition of industrial property, the Company announced on February 15,

2024 to raise additional capital. In order to allow participation of as many interested shareholders as

possible and in order to ensure full subscription of the fund raise, the Board decided to raise funds

with a mix of a convertible loan note, a placing as well as a retail offer. With the issuance of

28’000’000 shares the capital raise was successfully concluded on March 14, 2024.

Option grant under the long-

term incentive schemes:

The Board, as advised by the Remuneration committee, agreed to grant options over ordinary shares

in the Company to a broader range of employees. The intention behind this decision was to align

employees with the longer-term success of the Company. Options have been granted to 40

individuals, representing around 20% of the entire workforce. Further details on granted options can

be found in Note 27 to the financial statements. Granting options to a wider range of employees is a

way to incentivize employees driving the Group’s future performance in a way that is aligned with

investors’ interests.

HeiQ plc Annual Report 2023/24 Strategic Report

Financial Review

Difficult market conditions for our main commercial business remained through-out the 18-months reporting period ending June 30,

2024. Revenues suffered from continuing reduced market demand and the anticipated recovery did not yet occur. Since the second

half of 2022 we have seen revenues remaining at a low level of roughly US$20 million per each six-month period as a reflection of

continuing low market demand mainly in the textile industry. On an annualized basis revenues decreased by 12.3% in the reporting

period compared to 2022.

Following the recording of a significant allowance on inventory in 2022, the overall gross margin has recovered to 36.6% in the

reporting period (2022: 28.5%).

In order to adapt to the decrease in revenues, the Board has implemented various cost reduction measures throughout the period. On

an annualized basis, these measures have contributed to reduce selling and general administration expenses (SG&A) by 5.8%

compared to 2022, whereas not all implemented measures have fully materialized by the end of the reporting period yet.

The improved margin and reduced SG&A expenses are the key drivers for the significantly improved adjusted EBITDA in the reporting

period compared to the prior period (annualized: reduction of adjusted EBITDA loss by 45.6%).

The proceeds (gross amount US$2.75 million) from the out-of-court settlement of the ICP case are a key driver of Other Income in the

reporting period.

Financial performance

Period ended Year ended

June 30, 2024 December 31, 2022

Financial performanc

US$’000 US$’000

Revenue

62,318 47,202

Gross profit

22,833 13,457

Gross profit margin

36.6% 28.5%

Selling and general administrative expenses

(43,769) (30,969)

Impairment losses

(323) (12,381)

Net other income/(expenses)

2,277 648

Operating loss

(18,982) (29,245)

Operating margin

(

30.5%)

(

62.0%)

Loss after taxation

(21,338) (29,814)

djusted EBITDA

(9,935) (12,174)

EBITDA margin (adjusted)

(

15.9%)

(

25.8%)

Adjusted EBITDA

Reported adjusted EBITDA loss was US$9.9 million for the period compared to a EBITDA loss of US$12.2 million in 2022.

EBITDA is a way of measuring cash generation. HeiQ therefore adjusts EBITDA for share options and rights granted to Directors and

employees and significant non-cash items being impairments of goodwill and intangible assets.

Period ended Year ended

June 30, 2024 December 31, 2022

US$’000 US$’000

Operating loss

(18,982) (29,245)

Depreciation

3,888 2,220

Amortization

3,238 1,435

Impairment losses and write-offs

1,742 13,278

Share options and rights granted to Directors and employees

179 138

djusted EBITDA

(9,935) (12,174)

Reporting as per new Business Unit structure

Following the merger of the two former Business Units Textiles & Flooring and Antimicrobials into Advanced Materials, HeiQ reports

three segments: the two commercial Business Units as well as "Other activities”. Other activities include the Venture Units as well as

not allocated items including Innovation Service function. In 2022 SG&A expenses have been allocated to Business Units only to a

limited extent with focus on commercial activities. For 2023 and going forward, the Group had allocated costs more extensively to the

Business Units.

HeiQ plc Annual Report 2023/24 Strategic Report

dvanced Materials LifeSciences Other activities

otal

US$’00

Period

23/24

Yea

2022

Period

23/24

Year

2022

Period

23/24

Yea

2022

Period

23/24

Yea

2022

Revenue

50,697 38,366 6,988 6,164 4,633 2,672 62,318 47,202

Operating profits (loss)

(4,391) (14,347) (1,385) (5,537) (13,206) (9,361) (18,982) (29,245)

Financial result

(1,441) (590)

Loss before taxation

(20,423) (29,835)

Taxation

(915) 21

Loss after taxation

(21,338) (29,814)

Depreciation and amortizatio

Property, plant and equipment

1,200 362 453 335 662 585 2,315 1,282

Right-of use assets

383 165 218 145 972 628 1,573 938

Intangible Assets

1,512 773 837 550 889 112 3,238 1,435

Impairment los

Property, plant and equipment

--- 730 - - - 730

Intangible Assets

323 8,247 - 2,402 - 1,002 323 11,651

On an annualized basis, both Business units show a decrease in revenues. While for Advanced Materials this is driven by the general

market conditions, for LifeSciences this is rather driven by the discontinued face mask business and related revenues that were still

significant in 2022.

Revenues allocated to other activities encompass mainly Innovation Services provided to 3rd party customers and from the Venture

Units.

Statement of Financial Position

Total assets were US$62.6 million as of June 30, 2024 (December 31, 2022: US$71.1 million) with equity amounting to US$25.4

million and liabilities of US$37.1 million as of June 30, 2024 (December 31, 2022: US$40.3 million equity and US$30.8 million of

liabilities). This corresponds to an equity ratio of 41% (2022: 57%).

Non-current assets increased from US$38.7 million (December 31, 2022) to US$40.1 million as of June 30, 2024, mainly driven by

acquisition of two industrial sites in Portugal in 2024.

Current assets decreased by 30.8% to US$22.5 million as of June 30, 2024 (US$32.4m as of December 31, 2022) driven by a

reduction of inventories. The cash balance decreased by US$3.5 million and was US$5.0 million as of June 30, 2024 (December 31,

2022: US$8.5 million).

The increase in total liabilities was mainly driven by short- and long-term borrowings, reflecting the increased use of credit facilities.

Total liabilities increased by US$6.3 million (20.5%) from US$30.8 million as of December 31, 2022 to US$37.1 million as of June 30,

2024. Net debts (including lease liabilities) amount to US$13.4 million as of June 30, 2024 (December 31, 2022: US$3.7 million).

In March 2024 the Company completed a fund raise of GBP 2.436 million through the issuance of 28 million new ordinary shares. At

the same time, the general meeting approved a capital reorganization in course of which each existing ordinary share was subdivided

into one new ordinary share of 5 pence and one deferred share of 25 pence. Following the fund raise, the Company has 168’537’907

ordinary shares of 5 pence each in issue.

Cash Flow Statement

Net cash generated from operating activities in the 18-months period continued to be negative and amounted to US$-3.7 million

(2022: US$-2.5 million). On an annualized basis, this represents a decrease of -1.3% versus revenues being down by -12.3%

compared to the prior period.

Cash used in investing activities amounts to US$8.4 million in the reporting period (2022: US$8.8 million) and is largely driven by the

acquisition of two industrial sites in Portugal in relation to HeiQ AeoniQ for a total consideration of €5.0 million including taxes.

Net cash from financing activities amounted to US$8.7 million (2022: US$5.9 million net cash used). This includes US$3.0 million net

proceeds from the fund raise in March 2024 as well as an increase in borrowings.

The Group reports a cash balance of US$5.0 million as of June 30, 2024 (December 31, 2022: US$8.5 million).

Going Concern Assessment

To manage its cash balance, the Group has access to credit facilities totaling CHF8.06 million (approximately US$9.3 million as of

September 30, 2024). The credit facilities are in place with two different banks and both contracts have materially the same

conditions. The facilities are not limited in time, can be terminated by either party at any time and allow overdrafts and fixed cash

advances with a duration of up to one month. One credit facility is being reduced monthly by CHF0.02 million (approximately US$0.02

million) and the other facility is being reduced quarterly by CHF0.2 million (approximately US$0.23 million) until December 31, 2024

and CHF0.25 million (approximately US$0.29 million) per quarter thereafter.

The facilities are not committed, but the Board has not received any indication from financing partners that facilities are at risk of

being terminated and mentioned repayment schedules have been agreed only recently. As of September 30, 2024, the Group has

drawn fixed advances of CHF7.06 million and EUR0.4 million of the facilities with maturity date within the month of October 2024.

HeiQ plc Annual Report 2023/24 Strategic Report

The Group’s directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for

the foreseeable future and operate within its credit facilities for a period of 12 months from date of approval of these financial

statements. Nevertheless, the Board acknowledges the uncommitted status of the facilities which could be terminated without notice

during the forecast period requiring the refinancing of debts as per above maturity dates, indicates that a material uncertainty exists

that may cast significant doubt on the Group's ability to continue as a going concern. Additionally, should intended financing events for

the venture units not materialize within the expected timeframe, the Group might need to delay or discontinue the scaling of

respective ventures in order to continue as a going concern. Further disclosures on the going concern assessment are made in Note

3b to the financial statements.

Xaver Hangartner

Chief Financial Officer

HeiQ plc Annual Report 2023/24 Strategic Report

Risk management

In the period, the Board has reviewed its Enterprise Risk Management (ERM) process supported by external advisors to confirm

alignment with good practice.

At HeiQ, ERM is a comprehensive strategy for identifying, evaluating, and addressing risks throughout the organization. ERM is

essential for optimizing decision-making and enhancing resilience in achieving our objectives.

We systematically identify, analyze, evaluate, treat, monitor, and communicate risks to minimize losses and maximize opportunities.

Leveraging our material science expertise, we innovate according to global megatrends, quickly responding to market needs.

Risk appetite

The Board defines our risk appetite and sets clear guidelines for investments. In existing markets, we finance investments from

internally generated cash. For new technologies and ventures, we seek external financing, ensuring our investments do not

compromise liquidity or debt/equity ratios.

Enterprise Risk Management Macro Process

Risk assessment is a regular item on our leadership agenda. We employ both top-down and bottom-up approaches to identify risks.

While a formal risk management system is in place, every employee is responsible for managing risk, fostering a culture of proactive

risk mitigation across the organization. ERM unfolds as follows:

Enterprise Risk Management Macro Process

1. Scope, Context,

Criteria

At least annually and event driven:

• Identify internal and external boundaries, stakeholders, and risk sources;

• Understand the organizational context;

• Establish risk management objectives and guidelines (such as risk appetite, criteria for likelihood

and impact)

• Define ERM timeline

2. Risk

ssessment At least annually and event driven:

• Identify risks that could affect the organization (top-down and bottom-up);

• Assess identified risks against an impact and likelihood scale;

• Evaluate the risks, deciding whether/how to treat that risk.

3. Risk Treatment At least annually for identification, and ongoing for implementation and execution:

• Identify and select the risk treatment strategies (e.g., avoid, mitigate, transfer or accept);

• Define risk treatment measures, plan and implement them.

4. Risk Monitoring At least quarterly for

op down and at least annually for bottom up:

• Monitor risks and evaluate the adequacy and effectiveness of relevant risks as well as mitigation

measures;

• Review risk management process to ensure its continued effectiveness and suitability.

5. Risk Reporting At least quarterly for top down and at least annually for bottom up:

• Document and report the risk management process and its outcomes to promote and simplify the

communication of ERM activities and results to relevant stakeholder;

• Obtain useful information for decision-making and improve the ERM-related activities.

Principal risks and uncertainties

The Board has identified the following principal risks that include emerging risks and which are discussed in more detail on the

following pages.

Risk Category Principal risk Impact Likelihood

Strategic risks 1 Technology

Portfolio risk Medium High

2 Difficulty determining the group's scaling strategy for each

echnology

Medium Medium

3 Exposure to economical and geopolitical changes Medium High

4 High competition levels Medium High

Operational risks

5 Varying maturity levels for the multiple businesses Medium Medium

6 Cybersecurity threats High High

7 Demanding talent recruitment and retention Medium High

Financial risks

8 Exposure

o inflation and unfavorable global economy Medium Medium

9 Difficulty managing liquidity and cash within the group High High

10 Exposure to currency

luctuations Low High

Compliance/ legal

risks

11 Intricate Reporting Requirements

12 Exposure to Multiple Geographies with different Tax

Regulations

HeiQ plc Annual Report 2023/24 Strategic Report

Principle Risk Description Controls / Mitigation Impact Likelihood Trend

Technology Portfolio

Risk

As a technology innovator, HeiQ invests in scaling

various technology platforms. Failure to select the

appropriate platforms or to scale the chosen ventures

successfully may lead to financial constraints for the

Group due to investments in unsuccessful projects.

The Board periodically reviews the performance and progress of the various

Business and Venture Units. Annual budgets and mid-term planning are

implemented to ensure appropriate financing is in place.

For Venture Units, establish clear stage gates to determine the release of funds.

Medium High Stable

Difficulty determining

the group's scaling

strategy for each

technology platform

The absence of an appropriate strategy for each

technology platform (Business or Venture Unit), or poor

execution of the defined strategy, can lead to adverse

financial performance for the individual Business or

Venture Unit.

The Board periodically reviews the strategy for each Business and Venture Unit,

approving the annual budget and three-year financial planning. Additionally, the

Board is regularly updated on each unit's performance against their plans.

Medium Medium Stable

Exposure to

economical and

geopolitical changes

Exposure to economic and geopolitical changes, driven

by global economic fluctuations, political instability,

and shifts in trade policies or regulations, may result in

financial volatility, disrupted supply chains, and

uncertainty in business operations. These factors

include changes in geopolitical tensions, trade

agreements, and currency exchange rates.

The Board periodically reviews the strategy for each Business and Venture Unit,

approving the annual budget and three-year financial plan. Additionally, the

Board receives regular updates on each unit's performance against their plans.

Implement a diversified risk management strategy, including securing multiple

supply chain sources, conducting regular economic and geopolitical risk

assessments, and maintaining flexible financial and operational plans.

Additionally, hedging strategies and scenario planning can help buffer against

fluctuations in currency exchange rates and trade policies.

Medium High Increase

High Competition

Levels

Exposure to high competition levels, driven by market

saturation, evolving consumer preferences, and

aggressive strategies from competitors, may lead to

financial pressures, reduced market share, and

increased uncertainty in business performance. These

factors include shifts in competitive dynamics, pricing

pressures, and the need for continuous innovation.

Increased investment in Research and Development, as well as testing and

expanding to new markets.

Adopt a proactive competitive strategy, including market analysis to anticipate

shifts in competitive dynamics, and continuously innovate to meet evolving

consumer preferences. Implementing flexible pricing strategies and enhancing

operational efficiency can also help mitigate financial pressures and maintain

market share

Medium High Increase

Varying maturity levels

for the multiple

businesses

Different types of businesses at varying maturity levels

may require distinct management approaches,

business processes, and cultures within the Group.

Forcing individual businesses to adhere to processes

that do not suit their needs could jeopardize the

successful execution of their defined business

strategies.

Communication alignment efforts.

Tailor management approaches, business processes, and cultural practices to

align with the specific requirements of each unit. Customizing these elements

ensures that each business can effectively execute its strategy without being

constrained by incompatible processes.

Medium Medium Increase

6 Cybersecurity threats

Exposure to cybersecurity threats, such as data

breaches, hacking attempts, and malicious software

attacks, may result in significant financial losses,

reputational damage, and operational disruptions.

These threats encompass unauthorized access to

sensitive information, system vulnerabilities, and the

potential for widespread data compromise.

The Group invests significantly in cyber security – both in internal resources and

training of employees as well as professional services related to cyber security.

The CRM and ERP system migration is supported by external consultants to help

navigate through the transition period and ensure a smooth implementation of

new systems. There is a complete cybersecurity program to protect IT systems

and data from external cyber threats.

Implement a comprehensive cybersecurity strategy, including robust security

protocols, regular vulnerability assessments, and employee training on best

practices. Investing in advanced threat detection and response systems can help

prevent data breaches, protect sensitive information, and minimize potential

financial and reputational damage.

High High Increase

HeiQ plc Annual Report 2023/24

Strategic Report

Principle Risk Description Controls / Mitigation Impact Likelihood Trend

Demanding talent

recruitment and

retention

As an innovator, the Group relies on its ability to recruit

and retain talent and industry experts, especially for

early-stage ventures that often depend heavily on

specific individuals.

Hiring of new Global HR director. Organization charts under review and

transferring of responsibilities from CEO to Chief of staff allowing refocus.

Implement competitive compensation packages, create a compelling employee

value proposition, and foster a supportive and innovative work environment.

Additionally, investing in talent development programs and succession planning

can help ensure that early-stage ventures have the necessary expertise to thrive.

Medium High Stable

Exposure Inflation and

unfavorable global

economy

Exposure to inflation and an unfavourable global

economy can lead to increased operational costs,

reduced consumer purchasing power, and overall

financial strain. These economic conditions may result

in higher prices for goods and services, squeezed

profit margins, and challenges in maintaining financial

stability and growth.

Reducing current manufacturing costs, localizing production to minimize transit

time and expenses, and strategically increasing the offering of "Basic" products to

ensure stable sales volumes. While cost reduction is not always critical,

maintaining a robust lineup of basic products provides a reliable revenue stream

during periods when high-technology products or new launches are delayed by

brands.

Implement cost-control measures, explore pricing strategies to offset increased

expenses, and enhance operational efficiencies. Additionally, conducting regular

economic impact assessments and diversifying revenue streams can help

maintain financial stability and support long-term growth.

Medium Medium Increase

Difficulty managing

liquidity and cash

within the group

As a Group with both commercially active Business

Units and capital-intensive Venture Units, it is essential

to ensure that sufficient funds are always available for

each unit.

After a predetermined period during which projects or ventures are funded

through commercial business activities, each venture must be capable of raising

its own capital.

Establish a comprehensive financial planning and monitoring system. This

includes maintaining a robust cash flow management strategy, securing access

to diverse funding sources, and conducting regular financial reviews to align

resources with each unit's needs.

High High Stable

Exposure to Currency

Fluctuations

Fluctuations in foreign exchange rates may adversely

affect the Group's financial performance.

Employ a strategic currency hedging policy, regularly review and adjust its foreign

exchange exposures, and implement robust financial forecasting and risk

assessment practices. This approach will help stabilize financial performance

and protect against adverse currency movements.

Low High Stable

Intricate Reporting

Requirements

As a publicly listed company, the Group must comply

with various reporting requirements, including financial

reporting, ESG reporting, and ad-hoc disclosures.

Failure to meet these requirements can lead to

reputational risks, difficulties in raising capital, and

increased costs.

Hiring external entities that assure the quality of reporting and controlling, as well

as provide legal advice.

Establish a robust compliance framework, including comprehensive reporting

procedures and regular audits. Investing in dedicated compliance personnel and

advanced reporting technologies can ensure timely and accurate disclosures,

thereby minimizing reputational risks and facilitating capital raising efforts while

controlling costs.

Medium Medium Increase

Exposure to Multiple

Geographies with

different Tax

Regulations

Given that the Group operates across multiple

jurisdictions, there is a risk of non-compliance with

applicable tax laws, particularly concerning internal

transactions and transfer pricing regulations.

To mitigate the risk of non-compliance with tax laws across multiple jurisdictions,

the Group should implement a rigorous tax compliance program, including

regular audits and reviews of internal transactions and transfer pricing practices.

Engaging with experienced tax advisors and maintaining up-to-date knowledge of

international tax regulations can help ensure adherence to legal requirements

and minimize the risk of penalties.

Medium Medium Stable

HeiQ plc Annual Report 2023/24 Strategic Report

Non-financial information statement

Our non-financial information statement is set out below in compliance with Sections 414CA and 414CB of the Companies Act 2006.

It is intended to guide our stakeholders to where relevant non-financial information can be found in this Annual Report.

Reporting requirement Policies and standards which govern our approach

dditional information and risk management

Environmental matters

ESG Policy

Code of Business Ethics Policy

Health, Safety, Environmental and Quality Policy

Stakeholder engagement (pages 14

o 16)

Sustainability Report (pages 8 to 13)

Task Force on Climate-related Financial

Disclosures (pages 10

o 13)

Employees

Code of Business Ethics Policy

ESG Policy

GDPR Policy

Whistleblowing Policy

Corporate Major Accident Prevention Policy

Grievance Disciplinary Policy

Health, Safety, Environmental and Quality Policy

Stakeholder engagement (pages 14 to 16)

Sustainability Report (pages 8 to 13)

EHOS Committee report (page 32)

Nomination Committee report (page 33)

Remuneration Committee Report (pages 34 to 36)

Report on Directors’ remuneration (pages 37 to

40)

Social matters

Code of Business Ethics Policy

ESG Policy

GDPR Policy

Health, Safety, Environmental and Quality Policy

Lobbying Policy

Stakeholder engagement (pages 14 to 16)

Sustainability Report (pages 8 to 13)

Directors’ report (pages 41 to 43)

Respect for human rights Code of Business Ethics Policy Stakeholder engagement (pages 14 to 16)

Sustainability Report (pages 8

o 13)

nti-corruption and

bribery

Code of Business Ethics Policy

Share Dealing Policy

Whistleblowing Policy

Anti-Bribery and Corruption Policy

Corporate Governance Statement (pages 26

28)

Directors’ report (pages 41 to 43)

Description of the

business model

Market Overview (pages 2)

Business model (pages 3 to 4)

Description of principal

risks and impact of

business activity

Business model (pages 3 to 4)

Principal risks and uncertainties (pages 20 to 22)

Task Force on Climate-related Financial

Disclosures (pages 10

o 13)

Non-financial key

performance indicators

Strategic Report (pages 1 to 23)

Key performance indicators (page 7)

The Strategic Report was approved by the Board of Directors and signed on its behalf by:

Carlo Centonze

Director

October 30, 2024

HeiQ plc Annual Report 2023/24 Corporate Governance

The Board

Esther Dale-Kolb, former Chair has retired from the Board as of March 31, 2024. Robert van de Kerkhof has joined the Board as of

January 1, 2024 as Non-executive Director and has been appointed as Chair as of April 1, 2024. The Board currently consists of the

following members:

Robert van de Kerkhof

Chair

Non-executive Director

Robert brings over three decades of comprehensive experience in general management and sustainability

leadership to his role as Chairman of HeiQ’s Board of Directors. With a profound understanding of the

textiles industry, particularly in cellulosic fiber technology, Robert is a visionary leader committed to

driving sustainable transformation. Robert has demonstrated his dedication to advancing sustainable

practices within the industry. His profound insights and strategic acumen have been instrumental in his

role as Chief Sustainability Officer and Board Member of Lenzing AG, a position he held until December

31, 2023. Robert has held prominent positions, including President of the Austrian Fiber Institute,

President and Board Member of CIRFS – the European Man-made Fibres Association, and Chairman of

the ReHubs Business Council for Euratex. As Chairman of HeiQ’s Board of Directors, Robert van de

Kerkhof is poised to guide the company toward a future where innovation and sustainability converge to

create a positive impact on both the industry and the planet.

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 200-

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

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.

Benjamin Bergo

Non-executive Director

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 with

offices in Seattle, WA, and Irvine, CA. He has previously served on the board of several high growth

companies, including as a non-executive director at Lumos Diagnostics Holdings Ltd (ASX:LDX), a leading

full-service provider of point-of-care diagnostic solutions; as a non-executive director of Planet Innovation

Holdings Limited, a HealthTech innovation and commercialization company, and he led investments into

LifeSciences 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

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 British

International investment, 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

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.

Gender identity & ethnic background of the Board

The following tables explain the composition of the Board by gender identity and ethnic backgrounds. Disclosures are made based on

data records received by our human resource department from the Directors. Whilst the Board acknowledges that the Company has

not met the UK’s Financial Conduct Authority’s (FCA) diversity targets (being at least 40% of the board members should be female and

that at least one of the senior board positions should be held by a woman) as of June 30, 2024, it had done previously since the

Company’s IPO (two female directors and three males directors) until December 31, 2023. The reason for not meeting these targets

since January 1, 2024 principally relates to the resignation of Esther Dale-Kolb during March 2024. During an extensive search for a

replacement the most appropriately experienced candidate was male, and as such Robert Van de Kerkhof was subsequently

appointed to the Board as of January 1, 2024. Under the QCA Corporate Governance Code the appointment of a Senior Independent

Director is not a mandatory requirement and was not deemed appropriate by the Board at this point in time. However, Karen Brade

holds the position of chair of the Audit Committee. The composition of the Board remains unchanged as of date of approval of these

annual accounts.

HeiQ plc Annual Report 2023/24 Corporate Governance

Number of board

members

Percentage of the

board

Number of senior

positions on the

board (CEO, CFO,

SID and chair)

Number in

executive

management

Percentage of

executive

management

Gender identity

Men 4 80% 3 2 100%

Women 1 20% - - 0%

Not specified/prefer not to say - 0% - - 0%

Ethnic background

White British or other White

(including minority-white groups)

5 100% 3 2 100%

Mixed/Multiple ethnic groups - 0% - - 0%

Asian/Asian British - 0% - - 0%

Blach/African/Caribbean/Black

British

- 0% - - 0%

Committees of the Board and its composition:

Committee Chair Members

udit committee Karen Brade Benjamin Bergo

Robert van de Kerkhof

Nomination committee Robert van de Kerkhof Benjamin Bergo

Karen Brade

Remuneration committee Benjamin Bergo Rober

van de Kerkhof

Carlo Centonze

Environmental, occupation, health and safety

committee

Robert van de Kerkhof Carlo Centonze

Karen Brade

HeiQ plc Annual Report 2023/24 Corporate Governance

Corporate governance statement

Chair’s Introduction

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 Group’s size and stage of development than the more prescriptive UK Corporate Governance Code.

As per the Code, companies need to deliver growth in long-term shareholder value. This requires an efficient, effective and dynamic

management framework and should be accompanied by good communication which helps to promote confidence and trust.

Therefore, the Code has grouped the ten principles into three categories: “Deliver growth”, “Maintain a dynamic management

framework” and “Build trust”.

During the period under review, the Company has complied with the QCA Corporate Governance Code except for, inter alia, the

expectation that each member of the Remuneration Committee be independent. At present, each independent non-executive Director

is re elected in accordance with the Company’s Articles of Association. 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 June 30, 2024.

Robert van de Kerkhof

Chair

Delivering growth

Principle How HeiQ applies the principle

Establish a strategy and business

model which promote 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 1 to 6. 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.

Seek to understand and meet

shareholder needs and expectations

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.

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 14

to 16 of this report.

Embed effective risk management,

considering both opportunities and

threats, throughout the organization

The Group’s significant risks and uncertainties are set out on pages 20

o 22 of this

report together with a summary of how risk management is executed within the Group.

Disclosures on management of climate-related risk and opportunities (TCFD) are made

on page 10 to 13 of this report.

Maintaining a dynamic management framework

Principle How HeiQ applies the principle

Maintain the board as a well-

functioning, balanced team led by the

chair

The Board is led by Robert van de Kerkho

, who is the non-executive Chair. 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

except for the Chair, hold shares in the Company. The two Executive Directors are not

considered independent, while the two non-executive Directors and the Chair are

considered independent.

There are four Board Committees: The Audit Committee, the Remuneration Committee,

the Nomination Committee and the Environmental, Occupation, Health and Safety

Committee (EOHSC). More information on the Audit, Environmental, Occupation, Health

and Safety Committee, Nomination and Remuneration Committees can be found on

pages 29 to 34.

There have been fourteen Board meetings during the financial period to June 30, 2024.

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 fulfil their duties as Directors. The time commitment expected of the non-

executive Directors is set out in their letters of appointment.

Ensure 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 page 24. The Board’s

gender balance has shifted following the retirement of Esther Dale and now includes one

female and four male Directors.

HeiQ plc Annual Report 2023/24 Corporate Governance

The Board’s training and development needs will be met by implementing appropriate

training periodically during the course of 2025 as the composition of the Board has

changed in course of 2024. The Company Secretary tables a report at each Board

meeting which covers any significant developments in corporate governance.

Evaluate board performance based on

clear and relevant objectives, seeking

continuous improvement

The Board conducted an internal evaluation during the first quarter of 2024. A

questionnaire with 5 categories and 51 questions was given to and completed by all

Board members. The categories entailed the following, how well has the Board done its

job, how well has the Board conducted itself, it asked about the Boards relationship with

Executive Directors , the performance of the individual Board Members and about

Feedback to the chair of the Board.

On a scale from poor to satisfactory to good to very good and to excellent the result was

between satisfactory and very good. To further evolve, the Board’s main focus will be on

management evaluation including strategic goals and priorities,

Succession planning will be addressed by the Nomination Committee which will make

recommendations to the Board as required.

Promote a corporate culture that is

based on ethical values and behaviors

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. 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 with the aim of capturing

strategic alignment, employee satisfaction, as well as suggested improvements.

Maintain governance structures and

processes that are fit for purpose and

support good decision-making by the

board

The Board meets at least four times a year. The Audit, Environmental, Occupation, Health

and Safety Committee (EOHSC) and Remuneration Committees meet at least twice, twice

and once a year respectively. The Nomination Committee meets at least once a year and

more frequently if circumstances so require.

As disclosed on page 10, in 2023/24, the Company is compliant with 6 out of 11 TCFD

recommended disclosures.

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. A list of matters reserved for decision by the Board is included

further below.

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 29 to 34 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.

Matters reserved for decision by the Board:

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

• 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

• avoidance of wrongful or fraudulent

trading

HeiQ plc Annual Report 2023/24 Corporate Governance

Transactions

• acquisitions and disposals of

subsidiaries or other assets over

10% of net assets/profits

• investment and other capital

projects over a similar level

• contracts not in the ordinary course

of business

• substantial commitments including:

o pension funding

o material contracts in excess of

one year’s duration

o giving security over significant

Group assets (including

mortgages and charges over

the Group’s property)

• actions or transactions where there

may be doubts 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

• approval before each year starts of

operating budgets for the year and

periodic review during the year

Liaison with investors at

• AGM

• Investor roadshow

• Site visits for institutional investors • Online retail presentations with Q&A

General

• governance of Company pension

schemes and appointment of

Company nominees as trustee

• allotment, calls or forfeiture of

Build trust

Principle How HeiQ applies the principle

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 multiple interactions with shareholders,

have conducted several audits by regulatory counterparts and interacted with strong

customer base. Further information on our engagement with shareholders can be found

on page 14 of this report.

Robert van de Kerkhof

Chair

October 30, 2024

HeiQ plc Annual Report 2023/24 Corporate Governance

Audit committee report

The following is the Audit Committee Report for the period ended June 30, 2024.

RPG Crouch Chapman LLP was newly appointed as our auditor for the period ended June 30, 2024.

A major focus for the Audit Committee during the period was to address the high priority recommendations from the previous audit in

relation to improving the control environment. Good progress was made by developing operating procedures particularly for the year

end topics such as inventory, impairment testing, ECLs and overhead allocation. However, it was recognized that controls against

these procedures would need to be rolled out.

Ernst & Young was engaged on April 1, 2024 to undertake an end to end review of processes and controls and to design the

subsequent implementation of a new financial risk management framework and wider group governance structure. This project was

overseen by the CFO and project managed by our finance team in Portugal. As Chair of the Audit Committee, I regularly attended

meetings with Ernst & Young and the finance team, including a site visit to Portugal. I am pleased to report that significant progress

has been made during the period in this regard.

The finance team has worked tirelessly during the period to ensure that this audit process ran smoothly, with additional resources

allocated to the task.

There are three members of the Audit Committee. I chair the Committee and the other members are Robert Van de Kerkhof and

Benjamin Bergo. Our biographies setting out our skills and qualifications can be found on page 24 of this report. We are all 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, and

I will attend each Annual General Meeting of the Company.

In the period between January 1, 2023 and June 30, 2024, the Committee met three times, with all members in attendance.

Members of the Audit Committee met regularly during the process of selecting a new auditor and gave frequent updates to the Board

on these conversations.

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 Group, 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 Group’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 Group.

The Company needs to undertake a detailed assessment of the 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 will include segregation of

duties and reviews by management.

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 Group’s activities and the number of employees, as well as cost and benefit considerations.

Work of the Audit Committee

For the reporting period for the period ended June 30, 2024 the Audit Committee discharged its responsibilities by considering the

following matters:

Issue How this was addressed

nnual 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 Group’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 2023/24 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.

HeiQ plc Annual Report 2023/24 Corporate Governance

Financial

Reporting

2023/2024

The Committee reviewed whether suitable accounting policies had been adopted, and whether management

had made the appropriate estimates and judgments. In addition, views were sought from the external

auditor. To do so, the Committee 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 June 30, 2024 included:

• analyzing forward looking budgets

• advising on accounting for acquisitions and the impairment of goodwill and intangibles.

• advising on the provision for inventory given the disrupted market conditions.

• Review and discussion of the going concern assumptions both with management and the external auditor

• review and discussion of the key audit matters raised by the auditors. The view of the Audit Committee on

the key audit matters raised by the auditors in their audit opinion is discussed below.

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

scrutinizing the financial statements for any material misstatements and that the disclosures were

satisfactory.

Other topics

Other topics addressed by the Committee within the financial period 2023/24 included:

• Review and discussion of the recommendations on improvements of governance systems by the external

consultant.

Key audit matters related to the financial accounts for the period ended June 30, 2024

Key audit matters are those matters that, in the judgment of the auditor, are most significant to their audit and which include the most

significant assessed risks of material misstatements that they as auditor identified. Key audit matters are defined and discussed by

the auditor in their opinion on page 44 to 50 of this annual report “5. Key audit matters”.

udit matter Observation by the auditor Company view on audit matter

Material uncertainty

related to going concern

The auditors have drawn attention to the disclosure

made within the financial statements that a material

uncertainty exists in the going concern assessment

but concluded that the use of the Going Concern basis

of accounting is appropriate.

As disclosed in the financial statement, the

uncommitted nature of key credit facilities casts a

doubt on the Group’s ability to continue as a going

concern in a scenario where financing partners might

terminate existing credit facilities within the next

twelve months requiring refinancing. The Board

recognizes the short-term nature of the Groups’

external borrowing and the ability for facilities to be

withdrawn with no notice. However, they remain

confident that the facilities will remain available,

although they will reduce steadily to reflect the

reduction in the Swiss based business activity. It is

intended to arrange debt facilities in Portugal and the

US.

Deficiencies in the

internal control

environment

The auditor’s are of the view that the internal controls

have not yet reached the maturity level expected for a

listed Group and they have identified many significant

improvements that need to be made.

The Audit Committee acknowledges that the

implementation of robust controls and processes is a

priority for the organization. The work to improve the

robustness of processes including controls has

commenced and includes the implementation of

harmonized systems across the Group. Significant

resources have been added in the finance team

building up a centralized accounting function. In 2024,

and in response to the previous auditor’s feedback,

the Group has reviewed its financial reporting process

and internal control set-up in detail with an external

consulting firm (Ernst & Young). The results and

conclusions from this assessment are now being

implemented.

Management Override of

Control – presumed by

ISA’s

Management override of controls is a presumed risk of

fraud under the International Auditing Standards.

Professional standards require the auditor to

communicate the fraud risk from management

override of controls as significant because

management is typically in a unique position to

perpetrate fraud because of its ability to manipulate

accounting records and prepare fraudulent financial

statements by overriding controls that otherwise

appear to be operating effectively.

The Audit Committee acknowledges that management

override of control is a presumed risk by default. The

Group’s processes are based on four-eyes principles

and the Group fosters an open communication culture,

including a whistleblower process. The independent

Directors are in contact with the extended

management team on a regular basis. The Board and

Audit Committee is not aware of any circumstances

that would indicate an increased risk of management

override of control.

Revenue recognition on

long-term contracts with

customers – Presumed

by ISA’s

Revenue recognition is a presumed risk of fraud under

the International Auditing Standards.

There is a risk around the occurrence and cut-off of

revenues. Management can manipulate revenues and

may do so to inflate profits and the attractiveness of

the group. This risk is considered more significant

because the group is reliant upon external funding.

For lon

erm contracts with customers our internal

process foresees that a memorandum on accounting

treatment of such a contract is compiled by the

finance department which is reviewed by the Group

CFO and subsequently shared with the Audit

Committee. During the reporting period, two new long-

term contract with customers were identified and

corresponding memorandums on accounting

reatment were duly prepared.

HeiQ plc Annual Report 2023/24 Corporate Governance

udit matter Observation by the auditor Company view on audit matter

Impairment of intangible

assets and goodwill

The Group carries a material amount of goodwill

relating to the subsidiary undertakings acquired in

previous years. Within 12 months of acquisition,

Management are required under IFRS 3 to conduct a

purchase price allocation to allocate the goodwill,

where applicable, to separately identifiable intangible

assets and to finalize their assessment of the fair

value of assets and liabilities acquired. Both areas

require management judgement and estimation.

Furthermore, internally developed assets should

comply with IAS 38. HeiQ has a material amount of

internally developed assets and therefore this carries

a material risk of overstatement in the financial

statements.

The Audit Committee acknowledges the assessment

by the auditors. During the reporting period, the

Company reviewed its processes and accounting

policies around impairment testing of intangible assets

and goodwill. As part of the external review of financial

reporting processes, management reviewed its

impairment testing approach and valuation models

used for the impairment tests conducted as of June

30, 2024.

Carrying Value of

Investments in

subsidiaries /

associates (parent

company only)

The parent company has material investments in

subsidiary undertakings. The carrying value of this

balance is ultimately dependent on the performance of

those subsidiaries.

The parent company also has material receivables

owed by subsidiaries.

The valuation and recoverability of these amounts is

therefore a risk, on the basis that their values may be

impaired.

The Audit Committee acknowledges the dependency of

the parent company on its subsidiaries and thus the

financial performance of the consolidated Group. The

carrying value of investments in subsidiaries is

therefore compared against the market capitalization

based on the recent share price. Should the market

capitalization of the Group be lower than the carrying

value of the aggregated investment in subsidiaries

(including receivables), an allowance on the

investment is recorded within the parent company’s

and-alone financial statements.

Provision for obsolete

and excess inventory

Stock represents a material balance within the

financial statements (US$8.3 million net of allowances

as at June 30, 2024). The Group's accounting policy

for providing for obsolete and excess inventory is

based upon the forecast of market demand and the

assessment of whether stock on hand is likely to be

used. The inventory obsolescence provision is an

accounting estimate with high estimation uncertainty

due to the significance of judgements and

assumptions made including future projected sales. In

addition, specific provisions are made for known

products which management considers unlikely to be

sold at a positive margin. The calculation of the

inventory provision requires management judgement

to assess the demand from customers and the

expected net realizable value based on the quantities

held and expected sell through patterns. There is a

risk that the stock is not valued at the lower of cost

and NRV. There is also a risk that the inventory does

not exist at year end and inventory is therefore

misstated in the financial statements.

The Audit Committee acknowledges the assessment

by the auditors. During the reporting period, the

Company has reviewed its processes and accounting

policies around inventory management, stock counting

and inventory valuation. In addition, there has been a

specific in-scope topic for the external financial

reporting process review conducted in cooperation

with Ernst & Young following the previous auditor’s

feedback. To address this specific risk, updated and

externally validated financial reporting processes and

procedures around inventory have been put in place

as of June 30, 2024.

Whistleblowing

The Group 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.

Anti-bribery

The Group 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.

Assessment of the effectiveness of the Committee

The Board conducted a formal assessment of its performance and that of its Committees during Q4 2024.

External auditor

The Committee considered the independence and effectiveness of the external auditor. This Annual Report is the first period RPG

Crouch Chapman LLP has been auditing HeiQ and Paul Randall has been the audit partner for this period. When assessing the

independence of the external auditor the Committee considered the fees paid to RPG Crouch Chapman LLP for non-audit services. The

auditor has not provided any non-audit services to the Company during the period January 1, 2023 to June 30, 2024.

Karen Brade

Chair

October 30, 2024

HeiQ plc Annual Report 2023/24 Corporate Governance

Environmental, occupational, health and safety committee report

The following is the EOHS Committee Report for the period ended June 30, 2024.

There are three members of the EOHS Committee. I chair the Committee and the other members are Carlo Centonze and Karen

Brade. Our biographies setting out our skills and qualifications can be found on page 44 to 45 of this report. Karen Brade and I are

non-executive Directors. It is intended that the EOHS Committee meets at least twice a year, and the Committee is responsible for

ensuring that the EOHS policy and practices are a core consideration across all functions of the Group. I report to the Board after each

Committee, and I will attend each Annual General Meeting of the Group.

In the period between January 1, 2023 and June 30, 2024, the Committee has met three times, with all members in attendance.

The EOHS Committee plays a vital role at HeiQ by ensuring that the Group has effective and appropriate EOHS policy and practices in

place. I will ensure that the EOHS Committee provides the appropriate guidance, governance and oversight to the Board and

management teams to ensure environmental, social and governance considerations continue to be an integral component of HeiQ’s

global operations.

Duties of the EOHS Committee

Regular reviews

Review the Group’s operations to ensure that the environment and making a positive contribution to society, is incorporated in all

aspects of the Group’s development and the Group’s stated responsibilities with respect to environmental, social and EOHS policy.

Conduct an assessment of the Group’s internal controls used to demonstrate and record conformity with the Group’s stated EOHS

goals. The Committee shall review its own performance, constitution, and terms of reference and make recommendations to the

Board about any matters arising. Furthermore, the Committee shall keep abreast of external trends or regulatory changes that may be

relevant to the Group and its operations and understand shareholders’ views and expectations with regards to EOHS matters and take

account thereof.

Recommendations to the Board

The Committee shall make recommendations to the Board with regards to changes to the Group’s existing environmental,

occupational, health & safety, and policies and practices that it sees fit to ensure that the Group’s commitment to these is maintained

and demonstrated. As the Group progresses through the financial year ending June 30, 2024 the Committee shall continue to assist

the Board with the development of internal KPIs to allow the Group to assess its activities with respect to its stated goals and the

method of monitoring and reporting on those KPIs.

Robert van de Kerkhof

Chair

October 30, 2024

HeiQ plc Annual Report 2023/24 Corporate Governance

Nomination committee report

The following is the Nomination Committee Report for the period ended June 30, 2024.

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 January 1, 2023, and June 30, 2024, the Committee has met three times with all members in attendance.

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 fulfil 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 appointments. The Committee is required to give full consideration to succession

planning in the course of its work, considering 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 commitment, 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 Environmental, Occupation, Health and Safety 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 Board conducted a formal assessment of its performance and that of its Committees during Q4 2022.

Robert van de Kerkhof

Chair

October 30, 2024

HeiQ plc Annual Report 2023/24 Corporate Governance

Remuneration Committee Report

The following is the Remuneration Committee Report for the period ended June 30, 2024.

The Committee comprises two non-executive Directors, Benjamin Bergo (Chair) and Robert van de Kerkhof, and one Executive

Director, Carlo Centonze.

In the period January 1, 2023 to June 30, 2024, three meetings of the Remuneration Committee were held. 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 Chair of the Board shall not chair the

Committee meeting when it is dealing with the appointment of her successor. The committee may seek assistance from remuneration

consultants if deemed necessary. During the period, no such assistance has been required.

Duties of the Remuneration 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 fulfilling his or her duties. The Committee reviews 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

The Committee undertakes 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

The Committee is responsible for making all decisions relating to awards to be made to Executive Directors under the Option Scheme.

Other matters

The Committee shall 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 the period 2023/24. 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 no substantial changes were made to the remuneration of Executive and Non-Executive Directors, the major decision on directors’

remuneration was related to the annual cash bonus whereas it was decided not to pay any bonus amount in 2023 as performance

measures have not been met. No discretion has been exercised in the award of directors’ remuneration. The second major decision

was the grant of in total 10.300.000 share options for employes (none for Executive Directors) in 2024 as detailed in Note 27 to the

Financial Statements.

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 as detailed below was approved by shareholders on June 25, 2021 by Annual General Meeting and requires renewal by the

Annual General Meeting in the year 2024.

Benjamin Bergo

Chair

October 30, 2024

HeiQ plc Annual Report 2023/24 Corporate Governance

Policy table

Base salary

Purpose and lin

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.

nnual 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-

erm 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.

• Objectives are 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.

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.

HeiQ plc Annual Report 2023/24 Corporate Governance

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

lon

erm strategic objectives of the Company.

The relevant performance conditions will

be set by the Remuneration Committee on

the award of each grant.

HeiQ plc Annual Report 2023/24 Corporate Governance

Annual report on Directors’ remuneration (audited)

All current Directors except for the Chair took office upon Re-admission of the enlarged Group for trading on December 7, 2020 and

have been re-elected at the Company’s annual shareholder meeting held on June 25, 2021. The Chair took office as a Director as of

January 1 2024 and as Chair as of April 1 2024. 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 as

required by the Articles or as the Board resolves. The Articles require all Directors to retire and seek re-election at the third AGM or

general meeting (as the case may be) at which he or she was previously appointed. All Directors are required to seek re-election on the

next general meeting.

The Executive Directors have – in addition to the Director’s service agreement – entered into employment contracts with HeiQ

Materials AG. The disclosed emoluments include the total compensation under both agreements.

Single figure of total Directors’ remuneration

Salary/fee Pension benefits Cash bonus payments

Currency of

payment

Period

23/24

Year

2022

Period

23/24

Yea

2022

Period

23/24

Yea

2022

Carlo Centonze

CHF

269,767 260,999 20,187 22,340 --

GBP

52,500 35,000 -– --

otal in CHF*

329,134 302,281 20,187 22,340 --

Xaver Hangartner

CHF

271,826 183,499 16,255 10,788 --

GBP

52,500 35,000 -– --

otal in CHF*

331,193 224,782 16,255 10,788 --

Esther Dale-Kolb

GBP

87,500 70,000 -- --

Robert van de

Kerkhof

GBP

20,000 n/a -n/a - n/a

Karen Brade

GBP

60,000 40,000 -- --

Benjamin Bergo

GBP

60,000 40,000 -- --

otal

CHF

541,592 444,498 36,442 33,128 --

GBP

332,500 220,000 -- --

otal

hereof fix remuneration

hereof variable remuneration

Currency of

payment

Period

23/24

Year

2022

Period

23/24

Yea

2022

Period

23/24

Yea

2022

Carlo Centonze

CHF

289,954 283,339 289,954 283,339 --

GBP

52,500 35,000 52,500 35,000 --

otal in CHF*

349,321 324,621 349,321 324,621 --

Xaver Hangartner

CHF

288,081 194,287 288,081 194,287 --

GBP

52,500 35,000 52,500 35,000 --

otal in CHF*

347,448 235,570 347,448 235,570 --

Esther Dale-Kolb

GBP

87,500 70,000 87,500 70,000 --

Robert van de

Kerkhof

GBP

20,000 n/a 20,000 n/a - n/a

Karen Brade

GBP

60,000 40,000 60,000 40,000 --

Benjamin Bergo

GBP

60,000 40,000 60,000 40,000 --

otal

CHF

578,034 477,626 578,034 477,626 --

GBP

332,500 220,000 332,500 220,000 --

*To convert GBP into CHF, an average rate of 1.1308 was used for 2023/24 and of 1.1795 for 2022.

The only share-based compensation scheme is the option plan as set out in the policy table and as per further details on option grants

below. In the period ended June 30, 2024 485,334 options vested (year ended December 31, 2022: Nil).

Accrual Cash Bonus 2023 & 2024

The Executive Directors did participate in the annual cash bonus plan in 2022 and 2023 which is depending on the performance

during the year 2022 and 2023 respectively. However, as performance conditions have not been achieved, no cash bonus was paid in

2023 nor in 2024.

The relevant performance conditions were defined as follows, whereas the average achievement of all conditions has to be at least at

80%. In case of 100% average achievement, the cash bonus would equal 12.5% of the annual fixed salary and the maximum

opportunity is capped at 25% of the annual fixed salary.

HeiQ plc Annual Report 2023/24 Corporate Governance

Performance condition 2022 Target

chievement

chievement in %

Sales 2022 US$79.4 million US$47.2 million 59%

Operating Profit 2022 US$8.7 million US$-29.2 million -436%

Net Profit 2022 US$6.1 million US$29.8 million -589%

verage achievement -322%

Performance condition 2023 Target

chievement

chievement in %

Sales 2023 US$56.9 million US$41.7 million 73%

Operating Profit 2023 US$3.3 million US$-11.6 million -451%

Net Profit 2023 US$2.4 million US$-14.0 million -683%

verage achievement -354%

As the average achievement is lower than 80%, no cash bonus payment was earned in 2023 and 2024.

Share options issued to Directors under the Company’s share option plan:

In the period ending June 30, 2024, no options have been awarded to any Director. In the year 2022, 224,000 options have been

awarded to each of the Executive Directors.

Period ended Year ended

June 30, December 31,

Number of share options awarded to Executive Directors

2024 2022

Carlo Centonze

- 224,000

Xaver Hangartner

- 224,000

Directors’ interest

The Directors’ interests for disclosure purposes are as follows:

Directors’ interest

Number of

interest in

shares as of

December 31,

2022

purchased

/ (sold) on

market

in the period

Number of

interest in

shares as of

June 30, 2024

Number of

interests in

share options

as of

December 31,

2022

Share options

lapsed in the

period

Number of

interest in

share options

as of June 30,

2024

% shares and

options held

of total shares

in issue as at

June 30, 2024

Carlo Centonze

14,556,362 8,725,748

23,282,110 1,344,000 -877,333 466,667 14.09%

Xaver Hangartner 493,746 73,368 567,114 1,344,000 -877,333 466,667 0.61%

Robert van de

Kerkhof

- - - -- - - 0.00%

Karen Brade

7,976 32,287

40,263 - - - 0.00%

Benjamin Bergo

284,853

284,853 - - - 0.17%

1. Including shares owned by close relatives and controlled entities.

2. All share options are subject to performance measures.

3. 242,667 options have vested during the period for each of the Executive Directors.

The Company has a policy on dealing with HeiQ plc shares which also applies to Executive Directors. Executive Directors are required

to option clearance for any share dealing in advance and must notify the Company and FCA on any share dealing. Further, they are

restricted from dealing during defined closed periods or during any period when there exists any matter which constitutes inside

information. Persons closely associated with Executive Directors and their investment managers are also subject to the policy. In the

period ending June 30, 2024, the requirements of the policy have been met by the Executive Directors. The Company does not have a

shareholding guideline for Executive Directors in place.

Payments for loss of office / Payments to past directors

No payments were made to Directors for loss of office or to any past Directors in the period ended June 30, 2024 (year ended

December 31, 2022: nil).

Table of CEO remuneration

Period / Year CEO

CEO single figure of total

remuneration

CHF’000

nnual bonus payout

against maximum

opportunity %

Option vesting rates

against maximum

opportunity %

01.01.2023 - 30.06.2024

Carlo Centonze 349 0% 21.67%

2022

Carlo Centonze 324 0% n/a

2021

Carlo Centonze 379 59% n/a

1 To convert GBP into CHF, an average rate of 1.1308 was used for the period 2023/2024, 1.1795 for year 2022 and of 1.2575 for year 2021.

2 No incentives have been vesting during that period.

3 HeiQ plc listed on December 7, 2020. Therefore, no disclosure has been done for the year 2020 as not representative.

HeiQ plc Annual Report 2023/24 Corporate Governance

Percentage change in remuneration of the Directors and Average Employee

The table below shows the movement in salary, taxable benefits and annual incentives for each of the Directors between the current

period (annualized) and prior years at fixed exchange rates compared to the remuneration of the Average Employee

Executive Directors Non-executive Directors

verage

Employee

Carlo

Centonze

Xaver

Hangartner

Esther Dale

Robert van

de Kerkhof

Karen

Brade

Benjamin

Bergo

Base salary

2022 - 2023/2024

-3.1% -28% -2% 0% n/a 0% 0%

2021 -2022

-1.5% -4% 0% 0% n/a 0% 0%

2020 - 2021

18% n/a n/a n/a n/a n/a n/a

Taxable benefits

2022 - 2023/2024

-29.6% - - - n/a - -

2021 -2022

45% - - - n/a - -

2020 - 2021

23% n/a n/a n/a n/a n/a n/a

nnual incentive

2022 - 2023/2024

-29.5% 0% 0% - n/a - -

2021 -2022

14% -100% -100% - n/a - -

2020 - 2021

-17% n/a n/a n/a n/a n/a n/a

1 Average Group employee data is based on the employee remuneration costs and average number of employees of HeiQ plc and HeiQ Materials AG from which also the Directors

received their compensation, with costs for the executive and non-executive Directors removed.

2 Non-executive Directors do not receive taxable benefits or annual incentives.

3 Taxable benefits include car and other transportation allowances and housing allowances. Directors do not receive taxable benefits.

4 Total annual Incentive includes cash bonus payments and commissions.

5 All Directors except Robert van de Kerkhof have assumed their role in December 2020. For years when the Director did not serve the full year the calculation has not been

made as it is not representative.

Total Shareholder Return performance

The graph below shows the TSR performance since December 7, 2020, the day when HeiQ plc relisted after the reverse takeover of

HeiQ Materials AG, against the FTSE (All) Index and the AIM Index. These indices have been selected as the most relevant

comparators for the Company across the time period reflected in the graph below due to HeiQ’s main market listing and considering

the Company’s market capitalization and size.

The middle market price of an ordinary share at the close of business on January 3, 2023 and June 28, 2024 (being the

first and last days the London Stock Exchange was open for trading in period ending June 30, 2024) was 55.00 pence and 11.975

pence respectively, and during that period ranged between a high of 55.00 pence and a low of 8.44 pence.

Relative importance of the spend on pay

The following table shows the total expenditure on pay for all of the Group’s employees compared to distributions to shareholders by

way of dividend. In order to provide context for these figures, operating profit(loss) is also shown.

HeiQ plc Annual Report 2023/24 Corporate Governance

Period ended Year ended

June 30, 2024 December 31, 2022

US$’000 US$’000 Change in %

Employee renumeration costs (Note 12 of financial statements)

24,707 17,807 %

Distributions to shareholders

0 0 0%

Operating loss

(17,550) (29,245)

Statement of implementation of Remuneration Policy in 2024/2025 (unaudited)

Information on how the Company intends to implement the Executive Directors’ Remuneration Policy in the period ending June 2025

is set out below. No significant changes in the way that the remuneration policy will be implemented in the next financial period are

foreseen.

Base salary Currenc

Period

2024/2025

Period

2023/2024

Change in %

(annualized, rounded)

Carlo Centonze

CHF

180,000 269,767 0%

GBP

35,000 52,500 0%

Xaver Hangartner

CHF

183,500 271,826 0%

GBP

35,000 52,500 0%

Taxable benefits & Expense allowances

As in the previous year, no taxable benefits are foreseen. The directors do not receive any expense allowances as part of their

director’s remuneration. Expenses like travel expenses are reimbursed at actual costs and not considered as part of the

compensation.

Pension benefits

Executive Directors receive pension benefits as per the legally required pension benefit plan in Switzerland. No significant changes to

the pension plan are foreseen for the next financial period.

Annual Cash Bonus

The Committee has set targets for the year focused on adjusted operating profit, revenue and cash flow. The target details are

considered commercially sensitive and therefore will only be disclosed on a retrospective basis in the 2024/2025 annual report. In

case overall performance achievement is below 60% of target, no bonus is paid. The maximum annual cash bonus paid is equivalent

to 25% of the fixed annual renumeration.

Option grants

It is foreseen that in course of 2024/2025, additional options will be granted to the Executive Directors under the existing option plan.

Statement of shareholder voting

At the 2023 AGM on December 1 2023 the results of shareholder voting on remuneration matters were as follows:

Approval of the Report on Directors’ remuneration for the year ending December 31, 2022.

Votes for

For % Votes against

gainst % Votes cast Votes withheld

33,834,919 98.64 466,248 1.36 34,301,167 11,719

The most recent binding vote for the Company’s Remuneration Policy was also approved by shareholders at the 2021 AGM

and effective from June 25 2021:

Votes for

For % Votes against

gainst % Votes cast Votes

ithheld

47,540,743 86.75 7,260,301 13.25 54,801,044 124,537

1. The “For” vote includes those giving the Company Chairman discretion.

2. A vote withheld is not a vote in law and is not counted in the calculation of the votes “For” and “Against” the resolution.

Votes “For” and “Against” are expressed as a percentage of total votes cast.

HeiQ plc Annual Report 2023/24 Corporate Governance

Directors’ report

The Directors’ Report for the period ended June 30, 2024 comprises pages 41 to 43 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 page 24 of this report.

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 March 31, 2024

Xaver Hangartner

December 7, 2020

Robert van de Kerkhof

January 1, 2024

Particulars of the Directors’ emoluments and their beneficial and non-beneficial interests in the shares of the Company are shown on

page 38.

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 the year 2024.

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 October 25, 2024, the following

information has been received, in accordance with DTR 5, from holders of notifiable interests in the Company’s issued share capital.

Notifiable interest Voting rights % of capital disclosed Nature of holding

Darren Morcombe

37,047,587 21.98% Ordinary Shares

Cortegrande AG

13,995,030 8.30% Ordinary Shares

Carlo Centonze

10,287,080 6.10% Ordinary Shares

Dr. Murray Height

8,018,063 4.76% Ordinary Shares

Bombyx Growth Fund SC

7,385,355 4.38% Ordinary Shares

Premier Miton Group plc

6,827,500 4.05% Ordinary Shares

FIL Limited

5,357,000 3.18% Ordinary Shares

1. A company wholly owned by Carlo Centonze and of which he is the sole director.

HeiQ plc Annual Report 2023/24 Corporate Governance

Other information relevant to this Directors’ Report can be found on the following pages of this Report:

Topic Page(s)

Share capital

103

Future developments

1, 6

Research and development

2 to 6

Financial risk management objectives and policies

o 92

Events after the balance sheet date

Employee share option schemes

Restrictions on voting rights

102

Branches outside the UK

105

Engagement with employees

Engagement with suppliers, customers and others

14 to 16

Streamlined Energy & Carbon Reporting

8 to 9

Annual General Meeting

The Company’s Annual General Meeting will be held at the offices of Charles Russell Speechly LLPs, 5 Fleet Place, London EC4M 7RD

on Monday November 25, 2024 at 12.00 p.m. London time.

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.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

Going Concern

The Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the continuity of normal

business activity and the realization of the assets and the settlement of liabilities in the normal course of business.

The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out

in the Strategic Report on pages 2 to 23. The financial position of the Group, its cash flows, liquidity position and borrowing facilities

are described in the Financial Review on pages 17 to 19 and in Note 31 to the financial statements. In addition, Notes 41 and 42 to

the financial statements include the Group’s objectives, policies and processes for managing its capital; its financial risk management

objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.

The Group’s forecasts and projections for the next 12 months reflect the very challenging trading environment and show that the

Group should be able to operate within the level of its current facility for at least 12 months from the date of signature of these

financial statements if the facility drawdowns remain available. While the facilities are not committed, the Board has not received any

indication from financing partners that the facilities are at risk of being terminated. In course of 2024, monthly respectively quarterly

reductions of the credit facilities have been agreed with the financing partners.

Nevertheless, the Board acknowledges the uncommitted status of the facilities which could be terminated during the forecast period

requiring the refinancing of debts as per maturity dates disclosed in the Financial Review on page 19, indicates that a material

uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern, and therefore the Group may

not be able to realize its assets and discharge its liabilities in the normal course of business.

After considering the forecasts, sensitivities, and mitigating actions available to management and having regard to the risks and

uncertainties to which the Group is exposed (including the material uncertainty referred to above), the Group’s directors have a

reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and

operate within its credit facilities for the period 12 months from date of signature. Accordingly, the financial statements continue to be

prepared at the going concern basis.

Statement of Directors’ responsibilities in respect of the annual report and financial statements

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and

regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required

to prepare the group financial statements in accordance with United Kingdom adopted international accounting standards. The

financial statements also comply with International Financial Reporting Standards (IFRSs) as issued by the IASB. The directors have

also chosen to prepare the parent company financial statements under United Kingdom adopted international accounting standards.

Under company law 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 company and of the profit or loss of the company for that period.

In preparing these financial statements, International Accounting Standard 1 requires that directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable

information;

• provide additional disclosures when compliance with the specific requirements of the financial reporting framework are

insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s

financial position and financial performance; and

• make an assessment of the company’s ability to continue as a going concern.

HeiQ plc Annual Report 2023/24 Corporate Governance

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 and enable them to ensure that

the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company

and hence for taking reasonable steps for the prevention and detection of 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 United Kingdom governing the preparation and dissemination of financial statements may differ from

legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the

assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as

a whole;

• the strategic report includes a fair review of the development and performance of the business and the position of the company

and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and

uncertainties that they face; and

• the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information

necessary for shareholders to assess the company’s position and performance, business model and strategy.

This responsibility statement was approved by the board of directors on October 30, 2024 and is signed on its behalf by:

Ross Ainger

Company Secretary

HeiQ plc Annual Report 2023/24 Financial Statements

Independent auditor’s report to the members of HeiQ plc

1. Opinion

We have audited the financial statements of HeiQ PLC (the ‘Company’) and its subsidiaries (the ‘Group’) for the 18-month period

ended 30 June, 2024 which comprise the:

• Consolidated statement of profit and loss and other comprehensive income;

• Consolidated and Parent Company statements of financial position;

• Consolidated and Parent Company statements of changes in equity;

• Consolidated and Parent Company statements of cash flows; and

• 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 UK adopted international

accounting standards (‘IFRS’).

In our opinion the financial statements:

• give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30 June 2024

• and of the Group’s loss for the period then ended;

• have been properly prepared in accordance with applicable law and UK-adopted international accounting standards; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

2. 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 Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed

public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that

we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the Parent Company. We believe

that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Material uncertainty related to going concern

We draw attention to note 3.b in the financial statements, which indicates that a material uncertainty exists that may cast significant

doubt on the Group and Parent Company’s ability to continue as a going concern due to the uncommitted nature of credit facilities

that may be terminated during the going concern period.

The Group has access to credit facilities totaling CHF8.06 million (approximately US$9.3 million) as of September 30, 2024 in place

with two banks but with materially the same conditions. The facilities are not limited in time, can be terminated by either party at any

time and allow overdrafts and fixed cash advances with a duration of up to twelve months. If one or the other party terminates the

agreement, fixed cash advances become due upon their defined maturity date. One credit facility is being reduced monthly by

CHF0.02 million (approximately US$0.02 million) and the other facility is being reduced quarterly by CHF0.2 million (approximately

US$0.23 million) until December 31, 2024 and CHF0.25 million (approximately US$0.29 million) per quarter thereafter.

The Group’s forecasts and projections for the next 12 months reflect the very challenging trading environment but show that the

Group should be able to operate within the level of its current facilities for at least 12 months from the date of signature of these

financial statements if the facility drawdowns remain available.

However, the uncommitted status of the facilities, which could be terminated during the forecast period requiring the refinancing of

debts indicates that a material uncertainty exists that may cast significant doubt on the Group’s and Parent Company’s ability to

continue as a going concern. Our opinion is not modified in respect of this matter.

We have highlighted going concern as a key audit matter. 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.

Our evaluation of the directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going concern basis

of accounting included:

• Obtaining an understanding of the financing facilities available to the Group, including repayment terms and considering whether

there were any covenants;

• Assessing the status of the Group’s refinancing options with management involved in the negotiations with lenders;

• Testing the accuracy of the model used to prepare the Group’s cash flow forecasts;

• Evaluating the consistency of the Directors’ forecasts with other areas of the audit, including asset impairments, revenue

recognition for long-term contracts, and investment in subsidiaries and intercompany recoverability;

• Challenging the key assumptions within the going concern assessment including those in the Group’s strategy which relate to

revenue growth and cash flow generation. We have challenged these with reference to historical trading performance, subsequent

period results, market expectations, and assessing whether the Group’s latest savings measures and sales initiatives were

reasonable;

HeiQ plc Annual Report 2023/24 Financial Statements

• Assessed the feasibility of mitigating actions available to the Directors, should these be required, if the forecast performance is

not achieved; and

• Assessed the appropriateness of the Group’s disclosures over the going concern basis and the material uncertainty arising with

reference to our knowledge and understanding of the assumptions taken by the Directors.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this

report.

4. Summary of our audit approach

Key audit Matters

The key audit matters that we identified in the current year were:

• Material uncertainty related to going concern (refer to section 3 above)

• Management Override of Control – presumed by ISA’s

• Revenue recognition – presumed by ISA’s

• Impairment of intangible assets and goodwill

• Carrying Value of Investments in subsidiaries / associates

• Provision for obsolete and excess inventory

• Deficiencies in the internal control environment

Materiality

The consolidated statement of financial position materiality that we used for the Group financial statements was $760,000, which

was determined on the basis of net assets of the Group. Due to it being an 18 month period, a separate materiality of $620,000 was

determined for the statement of profit and loss and other comprehensive income, this was based upon Group revenue.

Scoping

We focused our Group audit on 17 components which account for 99% of the Group’s revenue, 99% of the Group’s losses and 99% of

the Group’s net assets.

Significant changes in our approach

The following key audit matters were identified by the previous auditor in the prior year, but we do not consider them to be key audit

matters for the current year:

• Recoverability of accounts receivable on contracts with customers

The following are new key audit matters we identified in the current year, primarily due to the level of audit effort required in these

areas including consideration of misstatements identified:

• Carrying Value of Investments in subsidiaries / associates

5. 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.

Management Override of Control – presumed by ISA’s Our audit work included

Management override of controls is a presumed

risk of fraud under the International Auditing

Standards.

Professional standards require us to

communicate the fraud risk from management

override of controls as significant because

management is typically in a unique position to

perpetrate fraud because of its ability to

manipulate accounting records and prepare

fraudulent financial statements by overriding

controls that otherwise appear to be operating

effectively.

• Obtained a listing of manual journals entered into the accounting system

in the year and reviewing a sample of these against a range of different

criteria.

• Reviewed post year-end journals posted for evidence of any prior year

transactions not included within the financial statements or any

subsequent amendments.

• Reviewed the consolidation workings and journals entered in respect of

this process for evidence of management override.

• Reviewed management estimations, judgements and significant

accounting policies for undue bias in the financial statements.

• Developed an understanding of the internal financial procedures, systems

and controls in place across the Group.

• Reviewed unadjusted audit differences for indications of bias or

deliberate misstatement.

• Applied professional scepticism throughout our audit procedures.

HeiQ plc Annual Report 2023/24 Financial Statements

Revenue recognition on long-term contracts with

customers – Presumed by ISA’s

Our audit work included

Revenue recognition is a presumed risk of fraud

under the International Auditing Standards.

There is a risk around the occurrence and cut-off

of revenues. Management can manipulate

revenues and may do so to inflate profits and the

attractiveness of the group. This risk is

considered more significant because the group is

reliant upon external funding.

• Updated our understanding of the internal control environment in

operation for the material income streams and undertook walk-throughs.

• A review of the revenue recognition policy in line with IFRS 15

requirements.

• For revenue recognised over a period of time (in HeiQ Materials AG, HeiQ

GrapheneX AG and HeiQ RAS AG) we tested the revenue has been

recognised in line with the performance obligations, as detailed in the

contracts.

• For ‘ship and bill’ transactions, we substantively tested the income

recognised in the financial statements.

• Reviewed a sample of revenue recorded on either side of the year to

ensure cut-off is applied accurately.

• Reviewed post year-end credit notes for evidence of occurrence of

revenue in the period that should not be recognized.

• Ensured disclosures in the financial statements are appropriate.

Impairment of intangible assets and goodwill Our audit work included

The Group carries a material amount of goodwill

relating to the subsidiary undertakings that have

been acquired. Within 12 months of acquisition,

Management are required under IFRS 3 to

conduct a purchase price allocation to allocate

the goodwill, where applicable, to separately

identifiable intangible assets and to finalize their

assessment of the fair value of assets and

liabilities acquired. Both areas require

management judgement and estimation.

Furthermore, internally developed assets should

comply with IAS 38. HEIQ have a material

amount of internally developed assets and

therefore this carries a material risk of

overstatement in the financial statements.

• Obtained management’s PPA allocation assessment for newly acquired

company and reviewed the relating valuation methods for

reasonableness.

• Ensured that internally generated assets are capitalised and measured in

accordance with recognition criteria in IAS 38. Challenged the continued

existence of intangible assets based on internal and external evidence of

commercial and technical feasibility via inquiry and discussion with

management.

• Identified external and internal indicators of impairment based on

knowledge built via audit procedures and external environment it

operates in. Investigated all indicators of impairment to ensure that

assets are valued at an appropriate carrying amount and challenged

management where appropriate.

• Reviewed and assessed the assumptions implicit within impairment

reviews for reasonableness. Enquired into the underlying assumptions

supporting valuations and corroborated assumptions and valuations to

available data.

• Ensured that the charge on disposals within the year is complete and

calculated accurately and accurately presented within the accounts.

• Obtained supporting documentation to verify the existence and ownership

for appropriate sample of intangible assets. Ensured that amounts are

correctly capitalised and measured within the financial statements.

Carrying Value of Investments in subsidiaries /

associates (parent company only)

Our audit work included

The parent company has a material investment

in subsidiary undertakings. The carrying value of

this balance is ultimately dependent on the

performance of those subsidiaries.

The parent company also has a material

receivable what is owed by subsidiary

undertakings.

The valuation and recoverability of these

amounts is therefore a risk, on the basis that

their values may be impaired.

• Obtained documentary evidence as proof of ownership of subsidiaries.

• Obtained management’s impairment assessments for investments and

receivables. We then corroborated and challenged the assumptions used

by management.

• Assessed the net asset value of the group, in comparison to the market

capitalization value.

• Reviewed the latest subsidiary financial information to confirm the

performance against budgets and forecasts.

• Considered the appropriateness of disclosures included in the financial

statements.

Provision for obsolete and excess inventory Our audit work included

Stock represents a material balance within the

financial statements ($8.3m at 30 June 2024).

The Group's accounting policy for providing for

obsolete and excess inventory is based upon the

forecast of market demand and the assessment

of whether stock on hand is likely to be used. The

inventory obsolescence provision is an

accounting estimate with high estimation

uncertainty due to the significance of judgements

and assumptions made including future

projected sales. In addition, specific provisions

are made for known products which

management considers unlikely to be sold at a

• Stock take – we attended the year end stock counts for HeiQ Chemtex

Inc. (both Concord and Calhoun), HeiQ Materials AG, HeiQ Chrisal and

HeiQ China. Local management were sought to provide explanations for

any differences, with unexplained errors being extrapolated across the

full population.

• For a sample of raw materials, we tested stock items to purchase invoices

to ensure that stock is recorded at the appropriate costs.

• For a sample of stock items, we tested the valuation of finished goods

against post period end selling prices to confirm that the net realisable

value is greater than cost.

HeiQ plc Annual Report 2023/24 Financial Statements

positive margin. The calculation of the inventory

provision requires management judgement to

assess the demand from customers and the

expected net realisable value based on the

quantities held and expected sell through

patterns. There is also a risk that stock is not

valued at the lower of cost and NRV. There is

also a risk that the inventory does not exist at

year end and inventory is therefore misstated in

the financial statements.

• We traced the allocation of overheads costs to finished goods by agreeing

the elements of the calculation to the appropriate accounting records

such as labour costs.

• Provision: We focused on the main operating entities regarding the stock

provisions in place as at year end. Detailed workings and a thorough

understanding of the process was obtained to support the assessment of

stock provisions. Assumptions inputted in the provision workings were

considered carefully on a local entity by entity basis. Budget optimism

adjustments were considered as part of the assessment and concluded

to be prudent. Lengthy discussion and challenge of management was

conducted with the BL entity to ascertain if the lack of provision was

appropriate, with the audit team concluding this to be reasonable. Local

entity inputs and preparation of the year end provision were ultimately

deemed to be reasonable and prudent.

Deficiencies in the internal control environment Our audit work included

As discussed in the Audit Committee Report, one

of the main focuses of the Audit Committee

during the period was an extensive remediation

exercise of the Group’s control environment.

Ernst and Young have been engaged during the

reporting period to perform a review and to then

assist with the implementation of a new financial

risk and management framework.

• A fully substantive audit approach was performed, there was no reliance

upon controls.

• Performance materiality for higher risk areas of audit testing was set at a

lower level, to increase the chances of us identifying misstatements

within the financial statements.

• The reduced Performance materiality levels resulted in us testing higher

sample sizes than we ordinarily would.

• We increased our coverage by performing specific audit procedures on a

total of 17 components.

6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic

decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our

audit work and in evaluating the results of our work.

Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:

Materiality – Group

Due to the reporting period being 18-months, we have determined that separate materiality thresholds will be set for the consolidated

statement of financial position and the consolidated statement of profit and loss and other comprehensive income.

For the Group consolidated statement of profit and loss and other comprehensive income, materiality is based upon turnover as the

group is trading but is loss making. We selected 1% for group materiality as the entity is Main Market listed and the number of

adjustments identified by the prior year auditor, we felt a percentage at the lower end of the usual range is appropriate.

This resulted in an overall materiality of $620,000 being used.

For the Group consolidated statement of financial position, materiality is based upon net assets. We selected 3% for the same

reasons as listed above, being at the lower end of the usual range.

This resulted in an overall materiality of $760,000 being used.

Materiality – Parent

Due to the reporting period being 18-months, we have determined that separate materiality thresholds will be set for the statement of

financial position and the statement of profit and loss and other comprehensive income.

For the statement of profit and loss and other comprehensive income, materiality is based upon loss before tax, on the basis that no

revenue is generated in the period. We selected 5% for materiality as the entity is Main Market listed and the number of adjustments

identified by the prior year auditor, we felt a percentage at the lower end of the usual range is appropriate.

This resulted in an overall materiality of $130,000 being used.

For the statement of financial position, materiality is based upon net assets. We selected 3% for the same reasons as listed above,

being at the lower end of the usual range. Due to the large investment value in the accounts, this would have produced an excessively

high materiality figure, so we chose to reduce the figure to $100,000.

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and

undetected misstatements exceed the materiality for the financial statements as a whole.

6.3. Error reporting threshold

We agreed with the Audit Committee that we would report all group audit differences in excess of $38,000 for the consolidated

statement of financial position, and $30,000 for the consolidated statement of profit and loss and other comprehensive income, as

well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

HeiQ plc Annual Report 2023/24 Financial Statements

For the HeiQ PLC Company statement specific balances we agreed that we would report all audit differences in excess of $6,500 for

the statement of financial position, and $5,000 for the statement of profit and loss and other comprehensive income, as well as

differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the

financial statements.

7. An overview of the scope of our audit

7.1. Identification and scoping of components

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Groupwide controls, and

assessing the risks of material misstatement at the Group level.

We focused our Group audit on specified balances across 17 components, where the extent of our testing was based on our

assessment of the risks of material misstatement and of the materiality of the Group’s operations at those components.

In total, the audited entities represent the principal business units and account for 99% of the Group’s revenue, 99% of the Group’s

losses and 99% of the Group’s net assets. They were also selected to provide an appropriate basis for undertaking audit work to

address the risks of material misstatement identified above.

Our audit work at the components, excluding the Parent company, was executed at levels of materiality applicable to each individual

entity which were lower than Group materiality and ranged from $100,000 to $350,000 for Income statement and $100,000 to

$310,000 for Balance Sheet.

At the Group level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there

were no significant risks of material misstatement of the aggregated financial information of the remaining components not subject to

audit or audit of specified account balances.

All audit work for the purpose of expressing an opinion on the Group’s financial statements is performed by RPG Crouch Chapman,

except the inventory count observation of HeiQ China that was performed by another audit firm.

7.2. Our consideration of the control environment

As described in the Audit Committee report on page 49 and the Key Audit Matter in section 5.1, we identified significant weaknesses

in the Group’s internal control environment. The Company has not developed robust processes relating to the risk associated with the

material account balances and transactions. In addition, new business risks are addressed and discussed on an “ad hoc” basis, often

with no documentation.

7.3. Working with other auditors

We utilised Shanghai ZhongJian CPA Firm (a China based accounting firm) to perform an in-person stockcount attendance at the China

stock warehouse on our behalf. Otherwise, all audit work was performed by RPG Crouch Chapman.

8. Other information

The other information comprises the information included in the annual report, other than the financial

statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual

report.

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.

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 course of 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 this gives rise

to a material misstatement in the financial statements themselves. 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.

9. Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, 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.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

HeiQ plc Annual Report 2023/24 Financial Statements

10. 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 our opinion in an auditor’s report. Reasonable assurance is a high level of

assurance, but does not 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 aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our

procedures are capable of detecting irregularities, including fraud, is detailed below:

• Enquiries of management, including obtaining and reviewing supporting documentation concerning the Group’s policies and

procedures relating to;

o Identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-

compliance

o Detecting to and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud

• Discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any

potential indicators of fraud.

We also obtained an understanding of the legal and regulatory framework that the Group and Company operates in, focusing on

provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures included

within the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and IFRS.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but

compliance with which may be fundamental to the Group and Company’s ability to operate or to avoid a material penalty. These

included health and safety regulations, employment law, data protection regulations and general trading laws in the UK and Australia.

As a result of these procedures, we consider the particular areas that were susceptible to misstatement due to fraud were in respect

of revenue recognition, management override of controls, investment valuations and intangible valuations.

Our procedures to respond to these risks identified included the following;

• Reviewing the financial statement disclosures and testing these to supporting documentation to asses compliance with provisions

of relevant laws and regulations described as having a direct effect on the financial statements

• Enquiring with management concerning actual and potential litigation claims

• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material

misstatement due to fraud

• Agreeing investment and intangible valuations to supporting documentation and recalculating.

• Reviewing management impairment assessments and challenging assumptions made to ensure valuations of intangibles and

investments are reasonable

• Reviewing board minutes and legal and professional fees during the year and any subsequent to the year end to identify any

potential litigation not previously disclosed

• In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other

adjustments for evidence of management override/bias and agreeing these to supporting documentation.

• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias and evaluating the

rationale of any significant transactions that are deemed unusual or outside of the normal course of the Group and Company’s

operations.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a

material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance

with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to

become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error,

as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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.

Report on other legal and regulatory requirements

11. 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; and

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the course

of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.

HeiQ plc Annual Report 2023/24 Financial Statements

12. Matters on which we are required to report by exception

12.1. Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• 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 are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

12.2. Directors’ remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not

been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and

returns.

We have nothing to report in respect of these matters.

13. Other matters which we are required to address

13.1. Auditor tenure

We were appointed on 30 May, 2024 and this is the first year of our engagement as auditors for the Group.

We confirm that we are independent of the Group and Parent Company and have not provided any prohibited non-audit services, as

defined by the Ethical Standard issued by the Financial Reporting Council as applied to listed public interest entities, and we have

fulfilled our ethical responsibilities in accordance with these requirements.

Our audit report is consistent with our additional report to the Audit Committee explaining the results of our audit.

14. 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.

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R and 4.1.18R, these

financial statements will form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the

FCA in accordance with DTR 4.1.15R-DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format

Annual Financial Report has been prepared in compliance with DTR 4.1.15R-DTR 4.1.18.

Paul Randall BA FCA (Senior statutory auditor)

For and on behalf of RPG Crouch Chapman

Statutory Auditor

London, United Kingdom

October 30, 2024

HeiQ plc Annual Report 2023/24 Financial Statements

Consolidated statement of profit and loss and other comprehensive income

For the 18-month period ended June 30, 2024

Period ended Year ended

June 30, December 31,

2024 2022

Note

US$’000 US$’000

Revenue

7 62,318 47,202

Cost of sales

(39,485) (33,745)

Gross profit

22,833 13,457

Other income

4,642 4,832

Selling and general administrative expenses

(43,769) (30,969)

Impairment loss on intangible assets

(323) (11,651)

Impairment loss on property, plant & equipment

- (730)

Other expenses

(2,365) (4,184)

Operating loss

(18,982) (29,245)

Finance income 14 202 683

Finance costs

(1,643) (1,273)

Loss before taxation

(20,423) (29,835)

Income tax

(915) 21

Loss after taxation

(21,338) (29,814)

Other comprehensive income:

Exchange differences on translation of foreign operations 466 (1,914)

Items that may be reclassified to profit or loss in subsequent periods

466 (1,914)

Actuarial gains/(losses) from defined benefit pension plans

(178) 1,380

Income tax relating to items that will not be reclassified subsequently to profit or

loss

42 (276)

Items that will not be reclassified to profit or loss in subsequent periods

(136) 1,104

Other comprehensive loss for the year

330 (810)

otal comprehensive loss for the year

(21,008) (30,624)

Loss attributable to:

Equity holders of HeiQ

(20,839) (29,251)

Non-controlling interests

(499) (563)

(21,338) (29,814)

otal Comprehensive loss attributable to:

Equity holders of the Company

(20,509) (30,061)

Non-controlling interests

(499) (563)

(21,008) (30,624)

Loss per share:

Basic (cents)*

(13.18) (21.92)

*The effect of share options is anti-dilutive and therefore not disclosed.

HeiQ plc Annual Report 2023/24 Financial Statements

Consolidated statement of financial position

As at June 30, 2024

s at

June 30,

2024

s at

December 31,

2022

Note

US$’000 US$’000

ASSETS

Intangible assets

18,671 20,442

Property, plant and equipment

13,312 9,802

Right-o

-use assets

7,732 7,819

Deferred tax assets

305 538

Other non-current assets

79 137

Non-current assets

40,099 38,738

Inventories

8,256 13,168

Trade receivables

6,255 6,487

Other receivables and prepayments

2,925 4,262

Cash and cash equivalents

5,027 8,488

Current assets

22,463 32,405

otal assets

62,562 71,143

EQUITY AND LIABILITIES

Issued share capital and share premium

209,294 205,874

Other reserves

(127,738) (128,017)

Retained deficit

(57,987) (39,466)

Equity attributable to HeiQ shareholders

23,569 38,391

Non-controlling interests

1,859 1,948

otal equity

25,428 40,339

Lease liabilities 30 6,284 6,558

Lon

erm borrowings

1,829 1,445

Deferred tax liability

1,273 1,253

Other non-current liabilities

5,741 4,714

otal non-current liabilities

15,127 13,970

Trade and other payables

5,961 5,322

Accrued liabilities

3,066 4,978

Income tax liability

189 314

Deferred revenue

1,912 1,285

Short-

erm borrowings

9,380 2,893

Lease liabilities

997 1,264

Other current liabilities

502 778

otal current liabilities

22,007 16,834

otal liabilities

37,134 30,804

otal equity and liabilities

62,562 71,143

The Notes on pages 55 to 95 form an integral part of these Consolidated Financial Statements. The Consolidated Financial

Statements were approved and authorized for issue by the Board of Directors on October 30, 2024 and signed on its behalf by:

Xaver Hangartner,

Chief Financial Officer

HeiQ plc Annual Report 2023/24 Financial Statements

Consolidated statement of changes in equity

For the 18-month period ended June 30, 2024

Issued share

capital and

premium

Other reserves

Retained

deficit

Equit

attributable

to HeiQ

shareholders

Non-

controllin

interests

Total equit

Note

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Balance at January 1, 2022

195,714 (127,195) (11,525) 56,994 2,541 59,535

Loss after taxation

- - (29,251)

(29,251)

(563) (29,814)

Other comprehensive (loss)/income

- (810) -

(810)

Total comprehensive (loss)/income for the year

- (810) (29,251)

(30,061)

(563)

(30,624)

Issuance of shares

10,160 - -

10,160

Share-based payment income

- (12) -

(12)

Dividends paid to minority shareholders

28 - - -

(243)

Capital contributions from minority

shareholders

28 - - -

764

Changes in non-controlling interests

6b - - (2,445)

(2,445)

(616)

(3,061)

Transfer of shares to non-controlling interest

6a - - 3,755

3,755

3,820

Transactions with owners

10,160 (12)

1,310 11,458

(30)

11,428

Balance at December 31, 2022

205,874 (128,017) (39,466) 38,391 1,948 40,339

Loss after taxation

- - (20,839) (20,839) (499) (21,338)

Other comprehensive (loss)/income

-330 - 330 - 330

Total comprehensive (loss)/income for the year

- 330 (20,839) (20,509) (499) (21,008)

Issuance of shares

3,420 - - 3,420 - 3,420

Share-based payment income

- (51) - (51) - (51)

Elimination of non-controlling interest at

disposal of subsidiary

6c-- -- 73 73

Dividends paid to minority shareholders

28 - - - - (267) (267)

Deconsolidation of subsidiary

-- 929929 488 1,417

Transfer of shares to non-controlling interest

6a - - 1,389 1,389 116 1,505

Transactions with owners

3,420 (51) 2,318 5,687 410 6,097

Balance at June 30, 2024

209,294 (127,738) (57,987) 23,569 1,859 25,428

HeiQ plc Annual Report 2023/24 Financial Statements

Consolidated statement of cash flows

For the 18-month period ended June 30, 2024

Period ended Year ended

June 30, December 31,

2024 2022

Note

US$’000 US$’000

Cash flows from operating activities

Loss before taxation

(20,423)

(29,835)

Cash flow from operations reconciliation:

Depreciation and amortization

9,11

7,126

3,655

Impairment expense

323

12,380

Net loss on disposal of assets 43

181 (5)

Write-off of intangible assets 13

1,419 897

Gain from disposal of subsidiary

(460) -

Fair value gain on derivative liability 38

(367) (371)

Finance costs

896

273

Finance income

(45)

(2)

Pension expense

(305) 247

Non-cash equity compensation

178

138

Gain from lease modification 20

(33) (68)

Other costs paid in shares 26

- 235

Currency translation

175 (61)

Working capital adjustments:

Decrease in inventories 43

4,920

602

Decrease/(Increase) in trade and other receivables 43

2,463 7,783

(Decrease)/Increase in trade and other payables 43

1,257 2,543

Cash generated (used in)/from operations

(2,695) (1,589)

Taxes paid 16

(1,023) (870)

Net cash generated (used in)/from operating activities

(3,718)

(2,459)

Cash flows from investing activities

Consideration for acquisition of businesses

(801)

(1,587)

Cash assumed in asset acquisition

13 65

Disposal of a subsidiary, net of cash disposed of 6c

(51) -

Purchase of property, plant and equipment 19

(7,031) (3,418)

Proceeds from the disposal of property, plant and equipment

870 53

Development and acquisition of intangible assets 18

(1,427)

(3,865)

Interest received

Net cash used in investing activities

(8,382)

(8,750)

Cash flows from financing activities

Interest paid on borrowings

(586)

(110)

Repayment of leases

20,43

(1,996)

(992)

Interest paid on leases

(311) (163)

Proceeds from equity issuance, net

3,050

Proceeds from disposals of minority interests

1,505

4,792

Proceeds from borrowings

10,278

3,465

Repayment of borrowings 43

(2,978) (904)

Dividends paid to minority shareholders 28

(267) (243)

Net cash from/(used in) financing activities

8,695

5,845

Net decrease in cash and cash equivalents

(3,405)

(5,364)

Cash and cash equivalents – beginning of the period/year

8,488

14,560

Effects of exchange rate changes on the balance of cash held in foreign

currencies

(56) (708)

Cash and cash equivalents – end of the period/year

5,027

8,488

HeiQ plc Annual Report 2023/24 Financial Statements

Notes to the Consolidated Financial Statements for the 18-month period ended June 30, 2024

1. General information

HeiQ Plc (the Company) is a company limited by shares incorporated and registered in the United Kingdom. Its ultimate controlling

party is HeiQ Plc. The address of the Company’s registered office is 5th Floor, 15 Whitehall, London, SW1A 2DD.

The principal activities of the Company and its subsidiaries (the Group) and the nature of the Group’s operations are set out in Note 6.

These financial statements are presented in United States Dollars (US$) which is the presentation currency of the Group, and all

values are rounded to the nearest thousand dollars except where otherwise indicated. Foreign operations are included in accordance

with the policies set out in Note 3.

The Group extended its accounting reference date from December 31 to June 30, to enable the incoming auditor to properly onboard

and complete the audit in a reasonable timeframe.

2. Changes in accounting policies and adoption of new and revised standards

Change in accounting policy

Inventory valuation

The Group changed its inventory valuation method from first-in-first-out basis to weighted-average basis. The Group has assessed the

impact on the valuation: there was no material impact from the change in policy. See Note 3s for a description of the accounting

policy.

New standards, interpretations and amendments effective for the current period

Adopted

The following new standards and amendments were effective for the first time in these financial statements but did not have a

material effect on the Group:

• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

• Classification of Liabilities as Current or Non-current (Amendments to IAS 1);

• Definition of Accounting Estimates (Amendments to IAS 8);

• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12);

• International Tax Reform—Pillar Two Model Rules—Amendments to the IFRS for SMEs Standard;

• Initial Application of IFRS 17 and IFRS 9—Comparative Information;

• Non-current Liabilities with Covenants (Amendments to IAS 1);

• Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7); and

• Lease Liability in a Sale and Leaseback Amendments to IFRS 16.

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:

Effective for annual periods beginning on or after January 1, 2025:

• Lack of Exchangeability (Amendments to IAS 21);

• IFRS 18 Presentation and Disclosure in Financial Statements; and

• IFRS 19 Subsidiaries without Public Accountability: Disclosures.

Management anticipates that these new standards, interpretations and amendments will be adopted in the financial statements as

and when they are applicable and adoption of these new standards, interpretations and amendments, will be reviewed for their

impact on the financial statements prior to their initial application.

The Directors do not expect these new accounting standards and amendments will have a material impact on the Group’s financial

statements.

3. Accounting policies

a. Basis of preparation

The Consolidated Financial Statements have been prepared in accordance with UK adopted international financial reporting

standards.

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. Historical cost is generally based on the fair value of the consideration

given in exchange for goods and services.

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 4.

HeiQ plc Annual Report 2023/24 Financial Statements

b. Going Concern