REG - Directa Plus PLC - Final Results
26/06/2024 07:00
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RNS Number : 9302T Directa Plus PLC 26 June 2024
26 June 2024
Directa Plus plc
("Directa Plus" or the "Company" or, together with its subsidiaries, the
"Group")
FY23 Final Results
Directa Plus (AIM: DCTA), a leading producer and supplier of graphene-based
products for use in consumer and industrial markets, announces final results
for the year ended 31 December 2023.
Financial highlights
· Product sales and service revenue in line with previous year at
€10.53m (2022: €10.86m)
· Total income (including grants) in line with previous year at
€10.86m (2022: €11.28m)
· Adjusted LBITDA* decreased by 19% to €2.56m (2022: €3.15m)
· Loss before tax improved by 19% to €4.31m (2022: €5.33m)
· Reported (basic) Loss per share improved at €0.06 (2022: €0.07)
· Cash and cash equivalents at year end of €2.39m (2022: €5.73m)
· Total patents granted at year end of 86 (2022: 80)
* Adjusted LBITDA represents loss from operating activities before tax,
interest, depreciation and amortization, adjusted by inventory write-offs,
non-recurring legal expenses and onerous contract provision (please refer to
the CFO statement for further details).
Target market progress
Environmental Remediation (69% of revenue (2022: 75%))
· Grafysorber® technology rapidly gaining commercial traction as
evidenced by the Group's largest contract to date of €5.5m with LIBERTY
Galati.
· Successful demonstration of pilot plant for the continuous treatment
of produced water using Grafysorber®, further broadening the range of
potential applications of Grafysorber®.
· Opportunity pipeline for Grafysorber® has continued to build
strongly.
Textiles (30% of revenue (2022: 23%))
· Extended key customer agreements including with Miguel Caballero MC
Armor in Latin America and Grassi SpA, who doubled order levels on 2022.
· Strengthened partnerships in the Year, extending graphene-enhanced
products to consumers, with the launch of a new product, GRAPHITO, with
Candiani Denim.
Others
· Directa Plus signed a strategically important deal to acquire the
proprietary know-how to prepare tailored graphene compounds, initially for use
in Batteries and Polymers.
· The Group entered into a strategic alliance with The SPECTRUM Group,
to support Directa Plus' expansion into the military technology sector in the
US.
· The Group was awarded a new tender by the Italian Region of Lombardy
as part of its 'Ricerca & Innova' programme to further develop Graphene
Plus (G+) air filtration applications.
Post-period end
Within the Group's Environmental Division, Directa Plus acquired a further 49%
stake in its subsidiary Setcar taking the Group's holding to 99.95%. This
represents an exciting opportunity to take further control of the
environmental supply chain and to maximise the returns for the Group against
an expectation of accelerating growth in the shorter term. The total
consideration was equal to €1.5 million, of which €1 million provided by
Nant Capital LLC with a financing facility.
The Group is encouraged by a significant interest for Grafysorber® in North
America, the Middle East and Southeast Asia, and by an increased demand in the
defence sector, for both personnel protection and comfort, which is leading to
the creation of a dedicated business unit.
The Group has recently announced the launch of a fundraise of gross £6.9
million, by way of a placing and subscription. The proceeds from the raise
will be used to fund the acquisition of the minority interests in Setcar, for
specific capital expenditures within the Environmental division and the
production line, and as capital for growth by strengthening the commercial and
operational division and providing working capital to facilitate the
acceleration of in both the Group's primary and secondary vertical markets.
The capital increase will be effective after the General Meeting approval to
be held on 27 June 2024.
Commenting on the results, Giulio Cesareo, Founder & CEO, said: "The Group
delivered a good operational and financial performance in FY23, benefiting
from improved margins driven by the growing value of our technology,
successful investment in innovation, and a reduction in direct costs. We
also secured our largest contract to date with LIBERTY Galati demonstrating
the building momentum for the Group's products and solutions.
"Our increased stake in Setcar and the significant opportunities ahead,
together with the capital increase to be finalised by the end of June 2024,
provide confidence in the long-term success of the Group."
For further information please visit or contact:
Directa Plus plc +39 02 36714458
Giulio Cesareo, CEO
Giorgio Bonfanti, CFO
Cavendish Capital Markets Limited +44 131 220 6939
(Nominated Adviser and Joint Broker)
Neil McDonald
Adam Rae
Singer Capital Markets Securities Limited (Joint Broker) +44 20 7496 3069
Rick Thompson
Phil Davies
Alma Strategic Communications +44 20 3405 0205
Justine James directaplus@almastrategic.com
Hannah Campbell
Kinvara Verdon
Notes to Editors
Directa Plus (www.directa-plus.com) is one of the largest producers and
suppliers of graphene-based products for use in consumer and industrial
markets. The Company's graphene manufacturing capability uses proprietary
patented technology based on a plasma super expansion process. Starting from
natural graphite, each step of Directa Plus' production process - expansion,
exfoliation and drying - creates graphene-based materials and hybrid graphene
materials ready for a variety of uses and available in various forms such as
powder, liquid and paste.
This proprietary production process uses a physical process, rather than a
chemical process, to process graphite into pristine graphene nanoplatelets,
which enables Directa Plus to offer a sustainable, non-toxic product, without
unwanted by-products.
Directa Plus' products are made of hybrid graphene materials and graphene
nano-platelets. The products (marketed as G+(R)) have multiple applications
due to its properties. These G+(R) products can be categorised into various
families, with different products being suitable for specific practical
applications.
Directa Plus was established in 2005 and is based in Lomazzo (Como, Italy) and
has been listed on the AIM market of the London Stock Exchange since May 2016.
Directa Plus holds the Green Economy Mark from London Stock Exchange which
recognises companies that contribute to the global green economy.
Chairman's statement
I am pleased to report a year of solid progress for Directa Plus, delivering
against our four strategic pillars across each of our key verticals,
particularly Environmental Remediation and Textiles, driven by a growing
market demand for our graphene technology. Businesses are increasingly
concerned with providing more sustainable products and solutions and our G+
technology has the ability to sit at the heart of this transformation
globally.
The leadership team has focussed on client delivery and strengthening the
business; improving its margins, securing new contracts, and further
developing our technology.
With this continued development, the Group has built a significant pipeline of
opportunities and tenders at various stages of development and across all
verticals, including potential participation in a major contract being sought
by Setcar. In order to invest further in the delivery of the Group's strategic
plan, the Company announced a £6.9 million fundraise, post period end, on 11
June 2024 effected through a placing and subscription. The fundraise is
expected to complete before the end of June, subject to the approval of
shareholders at a General Meeting to be held on 27 June 2024, and will place
the Group in a strong position to accelerate its growth and path to
profitability.
Delivering on our strategy
We remain focused on delivering across the four pillars of our growth
strategy: a unique, low-cost graphene production process; the manufacture of
pristine graphene nanoplatelets free of chemical pollutants and tailored to
customers' needs; a reduced time to market for new products, benefitting from
considerable accumulated knowhow and strong IP; and market reach leveraged
through carefully assessed partnerships.
The graphene market is growing at pace and Directa Plus has never been in a
stronger position to capitalise on the building momentum. In 2023, the global
graphene market was worth $195.7m and is expected to reach $256.7m in 2024 and
grow at a CAGR of 35.1% from 2024 to 2030 1 .
Good progress has been made in implementing our strategy in respect of our two
main verticals - Environmental Remediation and Textiles - and we continue to
assess and conservatively invest in other opportunities and new markets, in
advance of the foreseeable growth in the graphene market. Post year end we
increased our holding in Setcar S.A., our Environmental Remediation
subsidiary, to 99.95%, to accelerate the commercialisation of our Grafysober
technology and to capture value from the crystallisation of pipeline
opportunities within the Environmental vertical. The €1.5m cost of
acquisition was compelling to us and was part funded by a €1m loan from our
major shareholder Nant Capital LLC which is to be repaid out of the proceeds
of the fundraise.
Strengthening our offering
Directa Plus has made considerable progress in strengthening its offering and
we have seen increasing traction for our products, resulting in exciting new
contract wins, including in new markets, and strengthened partnerships.
Of particular note is the €5.5m, three-year contract secured by Setcar with
LIBERTY Galati, the Group's largest contract to date. We also strengthened our
partnerships in the year, extending graphene-enhanced products to consumers.
We launched a new product, GRAPHITO, with Candiani Denim, and expanded our
collaboration with Miguel Caballero MC Armor, solidifying Directa Plus as a
partner and a driver of product innovation and sustainable textiles.
Alongside a clear focus on growing our core markets, we remain committed to
investing appropriately in new markets and opportunities, capitalising on the
growing demand for graphene and positioning ourselves for the high growth in
the market. Notably, Directa Plus singed a landmark deal to acquire the
proprietary know-how to prepare tailored graphene compounds, initially for use
in Batteries and Polymers. The Group also entered a strategic alliance with
The SPECTRUM Group, to support Directa Plus' expansion into the military
technology sector in the US.
ESG
Directa Plus's product is chemical free and involves a low energy consumption
production process. As businesses across all sectors are progressively turning
towards more sustainable solutions, our graphene technology can confer
material improvements in the performance and sustainability of our customers'
products. Our Grafysober® technology, which is fast gaining traction,
substitutes for the use of oil-based products and can be advantageously
applied to oil and chemical decontamination, produced water and steel mill
wastes.
We have built a strong and dedicated team to drive the growth of the business,
and we recognise the value in supporting our employees to both maintain the
ethos of the business and achieve the best return on effort. The Board is
committed to pursuing good corporate governance and understands its importance
in promoting the long-term growth of the business.
Summary and looking ahead
Directa Plus made good progress in 2023, securing new contracts, expanding
into new markets and, in particular, growing its pipeline of opportunities.
The Group strengthened its offering to serve its customers, met a growing
demand for graphene and delivered against its growth strategy to advance the
Group towards profitability. I would like to take this opportunity to thank
our team for their dedication and hard work over the past year.
As the graphene market is forecast to expand considerably in 2024 and beyond,
the Group has never been better positioned to capture the significant
opportunities ahead and to deliver value across our growing network of
partners and customers.
Richard Hickinbotham
Chairman
25 June 2024
Chief Executive Officer's Review
In FY23 Directa Plus secured new contracts in all verticals and across key
geographies. This reflects the growing appetite for our graphene technology
and its applications globally. During the year we focused heavily on improving
margins through several commercial actions, including benefit from an
increasing appreciation of the value of our technology, successful investment
in innovation, direct cost reduction and the optimisation of our production
process., We are now a more robust business that is well positioned to scale.
Directa Plus delivered revenues for FY23 of €10.5m, with a 19% decrease in
adjusted LBITDA (€2.56m) vs 2022, which was in line with consensus market
expectations. Year-end cash at €2.4m was 14% ahead of expectations,
reflecting the Board's continued focus on improved gross margins and cash
management.
We continued to deliver across the four pillars of our strategy - Process,
Product, Time to Market and Partnerships - in all key verticals, and I am
proud of the progress made in particular in our two core verticals,
Environmental and Textiles, where we prioritised actions to shorten our time
to market and secure new contracts. Highlights in the year included a €5.5m
three-year contract with LIBERTY Galati in the Group's Environmental division
and an expansion of our contract with MC Armor in Latin America in Textiles.
As part of our strategy, we are also focused on investing appropriately in
other valuable opportunities where we foresee significant future demand for
our graphene, as demonstrated by the accelerated development of the Group's
graphene compounds for applications in the battery and polymer markets and the
launch of Graphito, an eco-denim textile, in June 2023.
The Group is in the process of completing a capital raise post-period end,
bolstering our ability to drive sustainable growth and financial returns
through strategic investments.
Market opportunity
The global market for graphene is expected to grow significantly over the next
10 years. In 2023 the global graphene market was valued at USD 195.7 million
and is projected to grow at a compound annual growth rate (CAGR) of 35.1% from
2024 to 2030. 2 The market is also expected to witness significant growth
from increasing demand from research institutes and multinational companies
for research and development.
The market opportunity for our graphene-based products is evident within our
two main verticals. In Environmental, our Grafysorber® decontamination
solution is gaining relevance and is proving to be more effective than other
traditional offers available in the market. With an increased focus on
Environmental, Social and Governance initiatives globally, corporations and
governments are turning to more sustainable methods to positively impact the
environment and Directa Plus' products can play a critical role in this
creation. In textiles, our graphene technology is experiencing greater
traction, particularly in the defence and workwear sectors, where G+ can play
an important role due to its advanced properties that provide tangible
benefits to the final user. Within these verticals, we strengthened our
position in Europe during the Year and are now exploring new geographical
market opportunities such as North America and Southeast Asia.
In addition to our two main verticals, part of the Group's strategy is focused
on investing in valuable opportunities in which we have identified an
increased market demand for graphene. We believe, for a relatively
conservative investment, we can develop products that can generate high
commercial traction, with a fast time to market, such as paints and batteries.
The Group made good progress in these areas in FY23, securing new wins, grants
and expanding our partner network.
Directa Plus' graphene-based paint solution provides enhanced anti-flame and
anti-corrosion properties compared to normal paints and in 2023 we continued
working with Pigmentsolution GmbH, a European distributor of speciality
chemicals and ingredients, to support the development and distribution of
Directa Plus's new patented Graphene Plus product, Grafyshield G+, initially
in Germany, Austria, Switzerland and Poland, with the potential for further
expansion in Europe.
The Group is currently exploring the use of G+ applications in the batteries,
polymers and concrete industries and in December 2023 we signed a landmark
agreement with an Italian innovator to acquire, for a modest cost, the
proprietary know-how for a system capable of preparing tailored graphene
compounds. The acquired technology accelerates our route to market by
combining our proven G+® technology with a complementary system to produce
market ready low-cost solutions, initially for batteries and polymers. The
global market for batteries and polymers is experiencing exponential growth,
driven by technological advancements, and increasing demand for sustainable
materials, fuelled by the increase in demand for electric vehicles and the
expansion of renewable energy storage systems. Similarly, the polymer industry
is evolving with a focus on high-performance, sustainable materials, opening
up new opportunities for innovation and growth.
Environmental Remediation (69% of annual revenue)
The Environmental division is the biggest driver of growth for Directa Plus
and in recent years we have secured significant new contracts globally thanks
to our well-proven and unique Grafysorber® technology. It is a hybrid
graphene-based solution for treating water sludges and emulsions containing
hydrocarbons and is at least five times more effective than current
technologies - absorbing more than 100 times its own weight of oil-based
pollutants which may then be recovered.
The Group's environmental remediation activities are principally carried out
through Setcar, a subsidiary company based in Romania, which has accelerated
the commercialisation of Grafysorber. In FY23, Setcar secured Directa Plus'
largest contract to date with LIBERTY Galati, the largest integrated steel
producer in Romania, to provide a solution for the treatment of oily mills
sludge produced in the manufacturing of steel. This €5.5m three-year
contract has the potential for further expansion up to a total value of
€8.0m. Post-period end, Setcar renewed its contract with FORD Otosan, an
automotive business in Romania owned by Ford Motor Company, for the fifth
time, to deliver Total Waste Management Services (TWM) for a total value of
€1.9m. Since the first contract was signed with FORD Otosan in 2020,
following the Group's acquisition of Setcar, the annual contract value has now
increased by a total of c. 46%.
Post-period end, the Group acquired a further 49% stake in Setcar, taking our
shareholding to 99.95%. This acquisition represents an exciting opportunity
for Directa Plus to take further control of the environmental supply chain and
capture maximum value from the commercial offering made possible by our
Grafysorber technology. Setcar is located in Braila, a location with high
potential as it is just 10 km from the Ukraine border, on the Danube River.
Braila has a river port and is a free zone. We believe Braila has potential to
be a gateway to the forthcoming reconstruction of Ukraine and that the
acquisition will also accelerate our ability to capture a larger share of the
significant global environmental market from a highly strategic area.
The Group also launched a pilot for a new concept for produced water treatment
using Grafysorber®, through Setcar, and is in line with the Group's strategy
to adopt new technologies that can decontaminate and limit the waste of
precious elements such as water.
Through integration with Setcar, Grafysorber has been developed over the
past few years to generate new products and processes to enable the provision
of environmental services. This has enabled us to secure larger contracts as
evidenced in FY23 and now with multiple market opportunities, we are confident
in further international expansion for this division.
Textiles (30% of annual revenue)
Directa Plus has a growing customer base within its Textiles vertical,
evidenced by the increase in divisional revenues and growth in meters of
produced product in FY23 as we expanded our range of applications. This year
we have experienced an increased appetite for our products across the workwear
and defence industries, where we see that the benefits of our technology are
understood the most.
Workwear
In May 2023, the Group secured a new exclusive agreement with longstanding
customer, Grassi SpA ('Grassi'), to expand the use of its Graphene Plus
Thermal Planar Circuit® (PTC®) technology in the workwear and military
markets. Grassi is a leading Italian workwear and outerwear manufacturer with
a strong focus on innovation and sustainability and was the first manufacturer
in the textiles vertical to integrate Directa Plus' G+® technologies into its
product line. Directa Plus has been working in partnership with Grassi since
2017 to provide the workwear industry with sustainable clothing and has
already supplied over 250,000 linear meters of graphene-treated lining to
Italian public organisations. In 2023 alone, Grassi more than doubled its
orders on previous 2022 levels. This expansion of our contract adds to the
Company's recurring revenue stream on its Graphene Plus PTC® technology and
demonstrates the continuing appetite from end users across the textile
industry for garments which have no biological or environmental impact. The
Group is currently in discussions with other international manufacturers for
the use of Directa Plus' G+ technologies.
Defence
We experienced good traction in the defence sector in FY23 where we predict
increasing volumes in the near-term as a result of ongoing developments with
partners and potential customers. In December 2023, we announced a significant
expansion of our contract with CIA Miguel Caballero, a prominent manufacturer
of bulletproof vests and personal protective equipment (PPE), who we have
partnered with since July 2022, as the manufacturer had exceeded their minimum
contractual orders for the year. This demonstrates the appetite from CIA
Miguel Caballero to use our innovative solutions as a way to produce safer,
more advanced protective wear for individuals in high-risk professions.
Directa Plus also signed a strategic partnership with The SPECTRUM Group, a US
strategic advisory and government relations firm, to explore the potential of
G+® technologies in the US defence sector, in FY23. Spectrum will leverage
its expertise and extensive network to support Directa Plus in driving its
business expansion into the military technology sector. Since partnering with
Spectrum, we have attended eight exhibitions for textiles from which we have
generated several prospects that are testing industrial production with our
technology, with potential opportunities in 2024, demonstrating the benefit
partnerships can bring.
Luxury
During the year, Directa Plus launched GRAPHITO, in collaboration with
Candiani Denim (Candiani), an international textile producer based in Italy,
focused on innovation and sustainability. GRAPHITO is an eco-denim textile and
represents a significant advancement in the sustainable fashion industry by
addressing denim's environmental impact and extending the lifespan of denim
garments. Directa Plus has been involved in the luxury market following our
inception and continues to see orders and interest from well-known brands in
the development of innovative, technical new products to add to their
collections, providing the Group with confidence in the exciting opportunities
ahead.
Air filters
Within the air filters space, the Group was awarded a new tender by the
Italian Region of Lombardy as part of its 'Ricerca & Innova' programme to
further develop Graphene Plus air filtration applications. The project is for
an 18-month period and has a total value of c.€400,000, enabling the Group
to continue investing in and developing our air filter applications,
leveraging the antiviral and antimicrobial properties of our G+ technology.
Intellectual Property
As at December 2023, the Group's patent portfolio comprised 86 patents granted
and 46 pending, grouped into 22 families. This has increased from 80 patents
granted and 37 pending, in December 2022.
We aim to create value from our wide IP portfolio. Discussions on licensing
contracts are ongoing with potential for further patent applications and
awards in 2024.
Environmental, Social and Governance
Environmental, Social and Governance considerations are an important part of
what drives Directa Plus' business.
Graphene Plus is a unique product, produced in a unique and sustainable way;
G+® products are obtained through a proprietary patented process based on the
physical transformation of natural graphite, characterised by: (i) a
water-based process, (ii) no added chemistry, (iii) a high purity, and (iv)
zero discharge of hazardous chemicals.
In our production process we consider raw materials supply chains, energy
consumption, water and wastewater, atmospheric emissions, the production of
waste and any effect on biodiversity. We are constantly assessing our
production processes, working with recognised environmental organisations to
ensure the safety and sustainability of our products. Our method of producing
G+® always uses low energy consumption and generates low waste, making the
entire process environmentally friendly.
With regards to our commercialisation strategy, it is our mandate to only work
with environmentally responsible industrial partners, and to seek to improve
products in existing markets. This means that we can help produce and sell
better quality products than are currently available, with better performance
and longer life for end-users.
In December 2021 Directa Plus received the Green Economy Mark from the London
Stock Exchange, with over 75% of revenue contributions derived from the
Environmental Remediation division.
Directa Plus employees are critical to the Group's success and the Board is
focused on supporting each employee where possible. We are a responsible
employer and carefully consider all aspects of employee rights, equal
opportunities, health and safety at work and training and education. We also
have a remuneration policy intended to attract, retain, and motivate
high-calibre executives to deliver outstanding shareholder returns and at the
same time maintain an appropriate compensation balance with the other
employees of the Group.
With respect to our local community, Directa Plus is well-known and deeply
rooted in the Milan area. We promote our regional economy by identifying local
suppliers, with whom it is possible to structure lasting partnerships. We
believe it is essential to actively contribute to initiatives that can have a
positive impact on the social fabric of the area.
The Board also fully supports good corporate governance and recognises that it
enhances its decision-making processes by improving the success of the Company
and increasing shareholder value over the medium to long-term.
ESG Rating
In 2022 Directa Plus engaged Integrum, an independent ESG ratings agency with
the objective to gather initial data upon which the Company can enhance its
ESG reporting and practices for transparency for all stakeholders. Integrum
assessed and scored the Company against robust frameworks and was then ranked
relative to specific sub-sector peers and overall rating of "B". Integrum
reinstated the "B" rating for Directa Plus's performance in FY23.
Outlook
The Group delivered a good operational and financial performance in FY23,
strengthening our path towards profitability. Our performance continues to
provide confidence in our ability to capitalise on new market opportunities
and leverage key partnerships to support expansion. We have continued to
perform in line with our stated strategy to position ourselves as a much
stronger business.
We are seeing increasing traction in graphene technology and its applications
globally and I am confident we have the right strategy and team in place to
capture this growing market demand.
Giulio Cesareo
Chief Executive Officer
25 June 2024
Chief Financial Officer's Review
The key focus in 2023 has been on improving margins and tightly managing the
Group's cash resources, demonstrated by this year's financial performance. The
finance team has remained focussed on supporting the Group's strategic
decision making, managing financial resources efficiently and mitigating
risks.
The Group continues to invest in line with its strategic plan to accelerate
business growth and accelerate its path towards profitability. The capital
raise to be finalised by the end of June 2024, subject to the shareholders'
approval, will play a critical role in accelerating this growth through
strengthening the operational and financial capabilities of the Group.
Key Performance Indicators
The Board measures the performance of the Group through several important
KPIs. As a growing business operating across different vertical markets,
identifying measurable data that will provide useful insight year-on-year is
not always straightforward but the KPIs below aim to help shareholders
navigate the Group's progress:
· Product sales and service revenue was in line with previous year at
€10.53m (2022: €10.86m)
· Total income (including grants) was in line with previous year at
€10.86m (2022: €11.28m)
· Adjusted LBITDA* decreased by 19% to €2.56m (2022: €3.15m), in
line with market expectations
· Loss before tax improved by 19% to €4.31m (2022: €5.33m)
· Reported (basic) Loss per share improved to €0.06 (2022: €0.07)
· Cash and cash equivalents at year end of €2.39m (2022: €5.73m) was
ahead of market expectations
* Adjusted EBITDA loss represents results from operating activities before
tax, interest, depreciation and amortisation, adjusted by one-off provisions,
inventory write-offs, non-recurring legal expenses and onerous contract
provision (details overleaf).
Financial review
2023 continued to be a difficult trading environment as markets globally faced
challenges stemming from adverse macroeconomic and geopolitical conditions,
following high inflation in 2022 and resulting in significantly higher
interest rates during the year.
The Group has continued to strategically address the inevitable inflationary
cost increases to preserve and improve margins whilst conserving cash. During
FY23, this resulted in:
· Successful renegotiation of the Group's main contracts, reflecting the
value our customers place on our technology and solutions.
· Achieving some significant reduction in direct production cost
(approximately 60-70%) through targeted investments in our production process,
and
· Optimisation of general expenses.
Whilst revenue remained flat, these efforts yielded positive results
delivering an improved adjusted LBITDA position of 19% vs 2022 at €2.56m.
In response to the high interest rates prevailing in the market, the Group
also implemented a more cautious treasury management strategy, with the
objective of securing improved levels of interest on cash held in bank
accounts, thereby mitigating cash consumption by a further €46k in 2023.
Cash at the year-end was €2.39 million, with the benefit of a reduction in
the monthly cash burn rate during FY23.
Post-period end, the Group's fundraise, to be finalised by the end of June
2024 subject to the shareholders' approval, will generate gross proceeds of c.
£6.9 million through a placing and subscription, involved the issuance of up
to 37,805,551 new Ordinary Shares at a price of 18p each. The capital raised
will be utilised to accelerate additional investment in the development of
both primary and secondary vertical markets, to shorten the path to
profitability, and maintain momentum on the medium/long term opportunities.
The proceeds from the capital raise will be applied as follows:
· £1.5 million for the Setcar acquisition - approximately £860,000 to
repay the loan provided by Nant Capital LLC which was used to part pay the
€1.5 million acquisition of the minority interest (49%) in Setcar alongside
£0.6 million to strengthen the internal cash resources of Setcar;
· £1.1 million for capital expenditure in dedicated equipment within
the Environmental division and improvements in the production line with a
Nitrogen production unit to replace Argon; and
· £2.4 million for capital for growth by strengthening the commercial
and operational capabilities of the Directa Plus team:
o £1.0 million for new hires for the internal salesforce alongside agents
and professional services to access to new markets (US and Asia) and adding a
new expert engineer alongside additional technical and operating hires in
Setcar;
o £0.4 million to strengthen the operational capabilities and professional
support to improve the production line and further the direct cost reduction;
o £0.5 million to maintain momentum on other opportunities focused on
research and development.
· The balance of the fundraise to go towards general working capital
needs to support growth.
Looking ahead, the Group's short-term priorities remain focused on reducing
cash consumption and enhancing profitability.
Alternative performance measures
This report includes both statutory and adjusted financial measures, the
latter of which the Directors believe better reflect the underlying
performance of the Group by excluding certain items that if included could
distort a reader's understanding of the results.
The table below shows a reconciliation of statutory and adjusted measures for
LBITDA and Loss before taxation.
€ million 2023 2022
Result from operating activities (4.18) (5.02)
(+) Depreciation and amortisation 1.27 1.40
LBITDA (2.91) (3.61)
(+) One-off provision 0.28 0.00
(+) Inventory write-off 0.17 0.11
(+) Lawsuit expenses 0.05 0.16
(+/-) Onerous contracts provision (0.15) 0.19
Adjusted LBITDA (2.56) (3.15)
€ million 2023 2022
Loss before tax (4.31) (5.33)
(+) One-off provision 0.28 0.00
(+) Inventory write-off 0.17 0.11
(+) Lawsuit expenses 0.05 0.16
(+/-) Onerous contracts provision (0.15) 0.19
(+/-) FX gain/loss (0.03) 0.20
Adjusted Loss before tax (3.99) (4.67)
Adjustments refer to:
· a bad debt provision of €0.28 million referred to unpaid receivables
referred to contracts carried out in 2021 and 2022;
· an inventory write-off of €0.17 million in 2023 and €0.11 million
in 2022, attributable to obsolete Co-Masks which are now experiencing a low
market demand following the end of the Covid-19 pandemic. The obsolete
Co-Masks are now fully written-off;
· legal costs of €0.05 million in 2023 and €0.16 million in 2022
linked to the protection of Directa Plus' IP portfolio and disbursements
relating to a lawsuit that dates back to 2017;
· a provision of €0.19 million in 2022 for the total expected loss on
the conclusion of an onerous long-term contract where recovery was deemed
uncertain under IFRS15, which was reversed out in 2023 after the conclusion of
the contract, and provision of €0.04 million accounted in 2023 for the total
expected loss in 2024 on the conclusion of an onerous long-term contract in
Laos; and
· non-cash exchange rate effects, especially on the conversion of GBP
cash balances to Euro.
A description of the principal risks and uncertainties facing the Group is set
out in the Directors' Report of the Annual Report.
Giorgio Bonfanti
Chief Financial Officer
25 June 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
In Euro Note 31-Dec-23 31-Dec-22
Continuing operations
Revenue 3 10,530,395 10,856,144
Other income 3 332,963 424,926
Changes in inventories of finished goods and work in progress (247,961) (191,510)
Raw materials and consumables used 6 (5,350,490) (5,856,661)
Employee benefits expenses 7 (4,444,577) (4,424,087)
Depreciation and amortisation 11/12 (1,270,193) (1,403,932)
Other expenses 8 (3,734,813) (4,421,177)
Results (used in) operating activities (4,184,676) (5,016,298)
Finance income 9 72,270 5,904
Finance expenses 9 (194,660) (317,804)
Net finance costs (122,390) (311,900)
Loss before tax (4,307,066) (5,328,198)
Tax income 10 31,718 53,197
Loss after tax from continuing operations (4,275,348) (5,275,001)
Loss of the year (4,275,348) (5,275,001)
Other Comprehensive expense items that will not be reclassified to profit or
loss
Defined Benefit Plan re-measurement gains and losses 20 (10,769) (6,790)
Other comprehensive expense for the year (no tax impact) (10,769) (6,790)
Total comprehensive expense for the year (4,286,117) (5,281,791)
Loss attributable to
Owner of the Parent
(3,856,103) (4,822,044)
Non-controlling interests (419,245) (452,957)
(4,275,348) (5,275,001)
Total comprehensive expense attributable to:
Owners of the Company (3,866,872) (4,828,834)
Non-controlling interests (419,245) (452,957)
(4,286,117) (5,281,791)
Loss per share
Basic loss per share 24 (0.06) (0.07)
Diluted loss per share 24 (0.06) (0.07)
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
Group Company
In Euro Note 31-Dec-23 31-Dec-22 31-Dec-23 31-Dec-22
Assets
Intangible assets 11 1,436,684 1,664,666 - -
Investments 13 - - 18,622,777 30,260,336
Property, plant and equipment 12 3,290,809 3,861,151 - -
Other receivables 14 162,923 69,720 - -
Non-current assets 4,890,416 5,595,537 18,622,777 30,260,336
Inventories 5 881,450 1,121,912 - -
Trade and other receivables 14 4,396,748 4,115,846 96,265 114,884
Cash and cash equivalent 16 2,393,303 5,727,768 1,024,286 3,787,989
Current assets 7,671,501 10,965,526 1,120,551 3,902,873
Total assets 12,561,917 16,561,063 19,743,328 34,163,209
Equity
Share capital 17 205,469 205,469 205,469 205,469
Share premium 17 39,181,789 39,181,789 39,181,789 39,181,789
Foreign Currency Translation Reserve 17
(44,902) (39,161) - -
Accumulated losses 17 (33,882,143) (30,069,844) (19,770,339) (5,346,322)
Equity attributable to owners of Group 5,460,213 9,278,253 19,616,919 34,040,936
Non-controlling interests 17 1,121,911 1,546,887 - -
Total equity 6,582,124 10,825,140 19,616,919 34,040,936
Liabilities
Loans and borrowings 18 1,528,108 1,378,141 - -
Lease liabilities 19 183,056 395,260 - -
Employee benefits provision 20 357,520 554,444 - -
Other payables 21 64,014 64,366 - -
Deferred tax liabilities 15 - 33,095 - -
Non-current liabilities 2,132,698 2,425,306 - -
Loans and borrowings 18 742,904 767,677 - -
Lease liabilities 19 206,509 239,068 - -
Trade and other payables 21 2,856,835 2,112,875 126,409 122,273
Provision 22 40,847 190,997 - -
Current liabilities 3,847,095 3,310,617 126,409 122,273
Total liabilities 5,979,793 5,735,923 126,409 122,273
Total equity and liabilities 12,561,917 16,561,063 19,743,328 34,163,209
The Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own statement of
comprehensive income in these financial statements. The Company loss after tax
for the year was €14,509,549 (2022: €1,200,138). The loss in 2023 was
mainly attributable to the impairment loss on the investment held by Directa
Plus plc in Directa Plus S.p.A. for a total amount of c. €13.6 million. An
impairment trigger was identified following a decrease in the market
capitalisation of the Group over the last 12 months.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
In Euro Share Capital Share premium Foreign curreny translation reserve Accumulated Total Non-controlling interests Total equity
deficit
Balance at 31 December 2021 205,393 39,159,027 (23,109) (25,352,139) 13,989,172 2,041,938 16,031,110
Total comprehensive expense for the year
Loss of the year - - - (4,822,044) (4,822,044) (452,957) (5,275,001)
Total other comprehensive expense - - - (6,790) (6,790) - (6,790)
Total comprehensive expense for the period - - - (4,828,834) (4,828,834) (452,957) (5,281,791)
Capital raised and exercise of share option 76 22,762 . 22,838 - 22,838
Expenditure related to the issuance of shares - - - - - - -
Translation reserve - - (16,052) - (16,052) - (16,052)
Share-based payment decrease - - - 111,130 111,130 - 111,130
Increase in share capital of Setcar - - - - - (42,094) (42,094)
Balance at 31 December 2022 205,469 39,181,789 (39,161) (30,069,843) 9,278,254 1,546,887 10,825,141
Total comprehensive expense for the year
Loss of the year - - - (3,856,103) (3,856,103) (419,245) (4,275,348)
Total other comprehensive expense - - - (10,769) (10,769) - (10,769)
Total comprehensive expense for the period - - - (3,866,872) (3,866,872) (419,245) (4,286,117)
Translation reserve - - (5,741) - (5,741) (5,731) (11,472)
Share-based payment - - - 54,573 54,573 - 54,573
Balance at 31 December 2023 205,469 39,181,789 (44,902) (33,882,143) 5,460,213 1,121,911 6,582,124
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share Accumulated Total
In Euro capital premium deficit equity
Balance at 31 December 2021 205,393 39,159,027 (4,220,247) 35,144,173
Loss for the year - - (1,200,138) (1,200,138)
Capital raised and exercise of share option 76 22,762 - 22,838
Expenditure related to the issuance of shares - - - -
Share-based payment - - 74,063 74,063
Balance at 31 December 2022 205,469 39,181,789 (5,346,322) 34,040,936
Loss for the year - - (14,509,549) (14,509,549)
Capital raised and exercise of share option - - - -
Expenditure related to the issuance of shares - - - -
Share-based payment - - 85,532 85,532
Balance at 31 December 2023 205,469 39,181,789 (19,770,339) 19,616,919
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
Group Company
In Note 2023 2022 2023 2022
Euro
Cash flows from operating activities
Loss for the year before tax (4,307,066) (5,328,198) (14,509,549) (1,200,138)
Adjustments for:
Depreciation 12 817,611 861,125 - -
Amortisation of intangible 11 452,582 542,807 - -
assets
Disposal loss on tangible assets 24,014 20,509 - -
Share-based payment expense 7 54,573 111,130 85,532 74,063
Finance 9 (72,270) (5,904) (39,214) -
income
Finance 175,350 303,044 3,018 209,818
expense
Interest of lease liabilities 9 19,310 14,760 - -
Impairment of investments 13 - - 13,602,359 -
(2,835,896) (3,480,727) (857,854) (916,257)
Decrease/(Increase) in:
- 240,461 248,963 - -
inventories
- trade and other 14 (374,105) (694,450) 18,619 90,407
receivables
- trade and other 712,208 120,918 4,136 (49,545)
payables
- provisions and employee benefits (224,170) 28,819 - -
- Other provision 22 (150,150) 190,997 - -
Net cash used in operating activities (2,631,652) (3,585,480) (835,099) (875,395)
Cash flows from investing activities
Interest 9 46,108 5,904 - -
received
Investment in intangible assets (213,538) (415,195) - -
Investment in subsidiary 13 - - (1,964,800) (4,580,000)
Acquisition of property, plant and equipment (271,281) (759,821) - -
Net cash used in investing activities (438,711) (1,169,112) (1,964,800) (4,580,000)
Cash flows from financing activities
Proceeds from Capital raise and exercise of share options 17 - 22,838 - 22,838
Interest on loan and other financial costs 9 (159,225) (97,456) (3,018) (2,042)
New borrowings 18 945,278 988,938 - -
Repayment of borrowings 18 (820,084) (1,312,840) - -
Repayment of lease liabilities (244,762) (223,197) - -
New lease liabilities - 191,700 - -
Net cash (used in)/ from financing activities (278,793) (430,017) (3,018) 20,796
Net (decrease) in cash and cash equivalent (3,349,156) (5,184,609) (2,802,917) (5,434,599)
Cash and cash equivalent at beginning of the year 5,727,768 11,130,468 3,787,989 9,430,364
Exchange gains/(losses) on cash and cash equivalents 14,691 (218,091) 39,214 (207,776)
Cash and cash equivalent at end of the year 2,393,303 5,727,768 1,024,286 3,787,989
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2023
1. Basis of preparation
a) Statement of compliance
These consolidated and parent Company financial statements have been prepared
in accordance with UK-adopted International Accounting Standards (IFRSs). The
principal accounting policies are summarised below. They have all been applied
consistently throughout the year and the preceding year, unless otherwise
stated.
All notes, except as otherwise indicated, are presented in Euros ("€").
I. Going Concern
The going concern assessment of the Parent Company has been performed as part
of the Group's going concern assessment.
The Group meets its working capital requirements through the receipt of
revenues from the provision of its services and sale of products mainly in
Europe, the management of capital and operating expenditure, the working
capital and other borrowing facilities available to it and from the issue of
equity capital.
The conflict in Ukraine and Middle East, high inflation and increased interest
rates by the Central Banks have been an additional cause of uncertainty over
the macro-economic outlook, affecting both the political and business
environments. These events have had a significant impact on global economies
and markets, and on the operations and operational funding of companies
experiencing widespread inflationary cost pressures and supply chain
disruption.
Management believes that the Group has the systems and protocols in place to
address the challenges, however at the date of approval of these financial
statements it is not clear how long the current circumstances are likely to
last and what the long-term impact will be.
The Group held cash and cash equivalents of Euro 2.39 million at 31 December
2023 (31 December 2022: Euro 5.73 million) and is currently funded through
Euro 6.79 million of shareholder equity and Euro 2.27 million of loans and
bank debt, most of which are repayable over four years. As of 31 May 2024, the
Group held €0.86m of gross cash. Post period, on 11 June 2024 the Group
announced the launch of a fundraise of £6.9 million, by way of a placing and
subscription, to fund the acquisition of the minority interests of its
subsidiary Setcar and to sustain the expected high growth of the business. The
capital raise will be effective subject to shareholders' approval at a General
Meeting to be held on 27 June 2024.
The Directors prepared a cash flow forecast for the Group and the Parent
Company for the period to December 2025 to assess if there is sufficient
liquidity in place to support the plan and strategy for the future development
of the Group. This forecast showed that the Group and the Parent Company,
subject to the finalisation of the capital raise, will have sufficient
financial headroom for the entire forecast period if reasonably plausible
downside scenario do not occur. In respect of the capital raise, at the date
of signing these financial statements, the Company has a formal commitment by
participating investors and the success of the capital raise is only dependent
on the shareholders' approval during the General Meeting to be held on 27 June
2024. There is however no guarantee that the capital raise will complete, and
within the necessary timeframe, nor that the funding to meet the Group's
obligations will be secured. In the event the fund raise is not approved or
does not complete, the Group will immediately need to seek alternative forms
of funding, such as debt financing or sale of assets.
In addition, the Directors, in formulating the plan and strategy for the
future development of the business, considered reasonably plausible downside
scenarios, including reductions in forecast revenues and gross margin. Under
those stressed scenarios which considered the funding from the proposed
capital raise, the Group could exhaust its cash resources before December
2025, and therefore be required to raise additional funding which is not
guaranteed.
As such, the Parent Company and the Group are dependent on raising the
required funds from the successful completion of the proposed capital raise
within the necessary timeframe; and are also dependent on raising additional
funding in the event that plausible downside scenarios occur, which are not
guaranteed.
These events or conditions indicate that a material uncertainty exists that
may cast significant doubt on the Group and Parent Company's ability to
continue as going concerns and therefore, the Group and the Parent Company may
be unable to realise their assets or discharge their liabilities in the normal
course of business. The Directors review regularly updates to the scenario
planning such that it can put in place mitigating actions and maintain the
viability of the company and will keep stakeholders informed as necessary.
Based on the analysis above, and that it is in the interest of the Company's
shareholders to approve and finalise the capital raise, the Directors have a
reasonable expectation that the capital raise will be successful with the
required funds and within the necessary timeframe and, in the event of the
stress test scenario occurring, the Group and the Company will be able to
raise additional funding and will have adequate resources to support their
activities for the foreseeable future. The Directors have concluded that it is
appropriate to adopt the going concern basis of accounting in the preparation
of the financial statements. The financial statements have therefore been
prepared on the going concern basis. The financial statements do not include
the adjustments that would result if the Group and the Company were unable to
continue as going concerns.
b) Basis of consolidation
I. Subsidiaries
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The total comprehensive income of non-wholly owned subsidiaries is attributed
to owners of the parent and to the non-controlling interests in proportion to
their relative ownership interests.
II. Transactions eliminated on consolidation
The consolidated financial statements present the results of the Company and
its subsidiaries ("the Group") as if they formed a single entity. Intercompany
transactions and balances between group companies are therefore eliminated in
full.
III. Non-controlling interest
Non-controlling interest in the net assets of the consolidated subsidiaries
are identified separately from the Group's equity. Non-controlling interests
consist of the amount of those interests at the date of the original business
combination and the non-controlling shareholder's share changes in equity
since the date of the combination. The non-controlling interest's share of
losses, where applicable, are attributed to the non-controlling interests
irrespective of whether the non-controlling shareholders have a binding
obligation and are able to make an additional investment to cover the
losses.
c) Functional and presentation currency
These financial statements are presented in Euro ("€") and is considered by
the Directors to be the most appropriate presentation currency to assist the
users of the financial statements. The functional currency of the Company and
of the Italian operating subsidiaries is Euro ("€"). The functional currency
of the Romanian subsidiary is Romanian Leu.
d) Use of estimates and judgements
The preparation of the financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances and the results of which form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised if the revision affects only that period.
Critical estimates and judgements that have the most significant effect on the
amounts recognised in the financial statements and/or have a significant risk
of resulting in a material adjustment within the next financial year are as
follows.
Estimates
Management identified the following estimates for the preparation of the
financial statements. The Group has not made any material judgments.
I. Valuation of share based payments
The estimation related to share-based payment expenses includes the selection
of an appropriate valuation option pricing model, consideration as to the
inputs necessary for the valuation model chosen, and the estimation of the
number of awards that will ultimately vest. Inputs subject to estimation
relate to the future volatility of the share price which has been estimated
based on the historical observed volatility from trading in the Company's
shares, over a historical period of time between the date of the grant and the
date of exercise. Management has used a Monte-Carlo model to calculate the
fair value of the awards which include market based performance conditions.
Further disclosure of inputs relevant to the calculations is set out in note
25 to the financial statements.
II. Carrying value of goodwill
The carrying value of goodwill, and the cash generating units (CGUs) to which
it relates, is assessed annually for impairment through comparing the
recoverable amount to the CGU's carrying value. To determine the recoverable
amount of the CGU, being the Group a public company listed on the AIM market
of the London Stock Exchange, Management considers the Group's market
capitalisation at the end of the reporting period as an indicator of its fair
value. If the market capitalisation exceeds the CGU's carrying value, no
impairment is needed. Further disclosure of evaluations is set out in note 11
to the financial statements.
III. Valuation of inventory
Inventories are stated at the lower of cost or net realisable value. The cost
of inventories comprises of net prices paid for materials purchased,
production labour cost and factory overhead. Net realisable value represents
the estimated selling price less all estimated costs of completion and costs
to be incurred in marketing, selling and distribution. Inventory provisions
are recognised for slow-moving, obsolete or unsalable inventory and are
reviewed on a six-monthly basis. The valuation of Inventory includes key
estimates and judgments made by Management including normal production
capacity, market demand and selling opportunities. If actual demand or usage
were to be lower than estimated, additional inventory provisions for excess or
obsolete inventory may be required.
IV. Investments
Judgement is required over the recoverability of any amounts invested into
subsidiary companies, Management considers the Group's market capitalisation
at the end of the reporting period as an indicator of the fair value of the
assets owned and managed by these subsidiaries. As each of the subsidiaries
are owned (directly or indirectly) by the Company the creditworthiness of the
subsidiary is the same as the creditworthiness of the Company. Further details
are set out in note 13.
V. Revenue recognition and long-term contract accrued
income
The determination of anticipated costs for completing a contract is based on
estimates that can be affected by a variety of factors such as potential
variances in scheduling and cost of materials along with the availability and
cost of qualified labour and subcontractors, productivity, and possible claims
from subcontractors.
The determination of anticipated revenues includes the contractually agreed
revenue and may also involve estimates of future revenues from claims and
unapproved variations, if such additional revenues can be reliably estimated
and it is considered probable that they will be recovered.
A variation results from a change to the scope of the work to be performed
compared to the original contract signed. An example of such contract
variation could be a change in the project specification, whereby costs
related to such variation might be incurred prior to the client's formal
contract amendment signature. A claim represents an amount expected to be
collected from the client or a third party as reimbursement for costs incurred
that are not part of the original contract.
A modification is only then accounted for as a separate contract if the goods
and services are distinct in that the customer can benefit from the good or
service on its own. In both cases, management's judgments are required in
determining the probability that additional revenue will be recovered from
these variations and in determining the measurement of the amount to be
recovered. As risks and uncertainties are different for each project, the
sources of variations between anticipated costs and actual costs incurred will
also vary for each project. The long-term nature of certain arrangements
usually results in significant estimates related to scheduling and prices. The
determination of estimates is based on internal policies as well as historical
experience. Furthermore, management regularly reviews underlying estimates of
project profitability. In FY23 the Group applied this accounting treatment for
one specific long-term contract in its Environmental Remediation services in
Laos.
VI. Onerous contract provision
The determination of the minimum unavoidable loss to complete a contract is
based on estimates that could be affected by a variety of factors including
cost of materials, cost of labour, productivity and variations. Management
reviews all contracts on a regular basis to identify indications that a
contract may be onerous. Where sufficient evidence exists that a contract will
be onerous Management provide for the total anticipated loss on the contract
immediately.
2. Significant accounting policies
a) Functional currency
The financial statements of each Group company are measured using the currency
of the primary economic environment in which that company operates (the
functional currency). The consolidated financial statements record the results
and financial position of each Group company in Euro, which is the functional
currency of the Company and the presentational currency for the consolidated
financial statements.
I. Transaction and balances
Transactions in foreign currencies are converted into the respective
functional currencies at initial recognition, using the exchange rates at the
transaction date. Monetary assets and liabilities at the end of the reporting
period are translated at the rates ruling at the reporting date. Non-monetary
assets and liabilities are not retranslated. All exchange differences are
recognised in profit or loss. On consolidation, the results of overseas
operations not in Euro are translated at the rates approximating to those
ruling when the transactions took place. All assets and liabilities of
overseas operations are translated at the rate ruling at the reporting date.
Exchange differences arising on translating the opening net assets at closing
rate and the results of overseas operations at actual rate are recognised in
other comprehensive income.
b) Financial instruments
There are no other categories of financial assets other than those listed
below:
I. Trade and other receivables and amount due from subsidiaries
Trade and other receivables and amounts due from subsidiaries are recognised
and carried at the original invoice amount less any provision for impairment.
The Group recognises a loss allowance for expected credit losses ("ECL") on
financial assets that are measured at amortised cost which comprise mainly of
trade receivables. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial recognition of
the respective financial instrument.
The Group always recognises lifetime ECL on trade receivables. The expected
credit losses on these financial assets are estimated using a provision matrix
based on the Group's historical credit loss experience, adjusted for factors
that are specific to the debtors, general economic conditions and an
assessment of both the current as well as the forecast direction of conditions
at the reporting date, including time value of money where appropriate.
II. Cash and cash equivalents
Cash and cash equivalents comprise demand deposits with an original maturity
of up to 3 months which are readily convertible to a known amount of cash and
are subject to an insignificant risk of change in value.
There are no other categories of financial liabilities other than those listed
below:
III. Trade and other payables
Trade payables are stated at their amortised cost.
IV. Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. At initial
recognition, financial liabilities are measured at their fair value, minus
transaction costs that are directly attributable, and are subsequently
measured at amortised cost.
An equity instrument is any contract that evidences a residual interest in the
asset of the Group after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received net of direct
issue costs.
V. Leases
On commencement of a contract which gives the Group the right to use assets
for a period of time in exchange for consideration, the Group recognises a
right-of-use asset and a lease liability. The right-of-use asset is measured
at cost, which is made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Group, an estimate of any costs to
dismantle and remove the asset at the end of the lease, and any lease payment
made in advance of the lease commencement date (net of any incentives
received). The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of the useful
life of the right-of-use asset or the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicators exist. At
the commencement date, the Group measures the lease liability at the present
value of the lease payment unpaid at that date, discounted using the interest
rate implicit in the lease if that rate is readily available or the Group's
incremental borrowing rate. Lease payments included in the measurement of the
lease liability are made up of fixed payments, variable payments based on an
index or rate, amounts expected to be payable under a residual value guarantee
and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reducing for payment
made and increased for interest. It is remeasured to reflect any reassessment
or modification, or if there are changes in in-substance fixed payments. When
the lease liability is remeasured, the corresponding adjustment is reflected
in the right-of-use asset, or profit and loss if the right-of-use asset is
already reduced to zero.
c) Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are netted off against
share premium.
d) Property, plant and equipment
I. Recognition and measurement
Property, plant and equipment are measured at cost less accumulated
depreciation, Government grants received (where applicable) and accumulated
impairment losses.
Costs capitalised include expenditure that are directly attributable to the
acquisition of the asset.
When parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components) of
property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment
(calculated as the difference between the net proceeds from disposal and the
carrying amount of the item) are recognised in profit or loss.
II. Subsequent costs
Subsequent expenditure is capitalised only when it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
Ongoing repairs and maintenance are expensed as incurred.
III. Depreciation
Items of property, plant and equipment are depreciated on a straight-line
basis in the statement of comprehensive income over the estimated useful lives
of each component.
Items of property, plant and equipment are depreciated from the date that they
are installed and are ready for use, or in respect of internally constructed
assets, from the date that the asset is completed and ready for use.
The estimated useful lives of significant items of property, plant and
equipment are as follows:
· IT equipment from 3 to 5 years
· Industrial equipment, office equipment and plant and machinery from 5
to 10 years
Depreciation methods, useful lives and residual values are reviewed at each
reporting date and adjusted where appropriate.
e) Intangible assets
Intangible assets are measured at cost less accumulated amortisation and
Government grants received (where applicable). The carrying value of
intangible assets is reviewed annually for impairment.
Patent rights acquired and development expenditure are recognised at cost.
Expenditure on internally developed products is capitalised if it can be
demonstrated that:
- it is technically feasible to develop the product
- adequate resources are available to complete the development
- there is an intention to complete and sell the product
- the Group is able to sell the product
- sale of the product will generate future economic benefits, and
- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the period the Group expects
to benefit from selling the products developed (Useful Economic Life). The
amortisation expense is included within the cost of sales in the consolidated
statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects are recognised in the consolidated
statement of comprehensive income as incurred.
Capitalised development expenditure is measured at cost less accumulated
amortisation and impairment losses.
Other intangible assets that are acquired by the Group and have finite useful
lives are measured at cost less accumulated amortisation and accumulated
impairment losses.
I. Amortisation
Intangible assets are amortised on a straight-line basis in profit or loss
over their estimated useful lives, from the date that they are available for
use. The estimated useful lives of significant intangible assets are as
follows:
· Patents concerning G+® technology generate significant value to the
Group over a period of 20 years, in line with the legal duration of the patent
and their useful lives. However, given the risk of technical obsolescence,
such costs are amortised over a period of 10 years.
· Brand: 5 years
· Development costs concerning personnel capitalized: 5 years
· Others: 5 years
f) Inventories
Inventories are stated at the lower of cost or net realisable value. The cost
of inventories comprises of net prices paid for materials purchased,
production labour cost and factory overhead. Net realisable value represents
the estimated selling price less all estimated costs of completion and costs
to be incurred in marketing, selling and distribution. Inventory provisions
are recognised for slow-moving, obsolete or unsalable inventory and are
reviewed on a six-month basis.
g) Goodwill
Goodwill represents the excess of the cost of a business combination over the
Group's interest in the fair value of identifiable assets, liabilities and
contingent liabilities acquired.
Cost comprises the fair value of assets given, liabilities assumed and equity
instruments issued, plus the amount of any non-controlling interests in the
acquiree plus, if the business combination is achieved in stages, the fair
value of the existing equity interest in the acquiree. Contingent
consideration is included in cost at its acquisition date fair value and, in
the case of contingent consideration classified as a financial liability,
remeasured subsequently through profit or loss.
Goodwill is capitalised as an intangible asset with any impairment in carrying
value being charged to the consolidated statement of comprehensive income.
Where the fair value of identifiable assets, liabilities and contingent
liabilities exceed the fair value of consideration paid, the excess is
credited in full to the consolidated statement of comprehensive income on the
acquisition date.
h) Impairment
Impairment tests on goodwill and other intangible assets with indefinite
useful economic lives are undertaken annually at the financial year end.
Other non-financial assets are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable. For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other
assets or groups of assets (CGUs). The Group's CGUs generally align with each
subsidiary. The recoverable amount is then estimated. The recoverable amount
of an asset or a CGU is the greater of its net present value and its fair
value less costs to sell.
Net present value is generally computed as the present value of the future
cash flows, discounted to present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset.
An impairment loss is recognised if the carrying amount of an asset or a CGU
exceeds its estimated recoverable amount. Impairment losses are recognised in
profit or loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the unit and
then to reduce the carrying amounts of the other assets in the unit on a pro
rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other
assets, impairment losses recognised in prior years are assessed at each
reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation and
amortisation, if no impairment loss had been recognised.
i) Employee benefits
Defined benefit scheme surpluses and deficits are measured at:
- The fair value of plan assets at the reporting date; less
- Plan liabilities calculated using the projected unit credit method
discounted to its present value using yields available on high quality
corporate bonds that have maturity dates approximating to the terms of the
liabilities; plus
- Unrecognised past service costs; less
- The effect of minimum funding requirements agreed with scheme
trustees.
Remeasurements of the net defined obligation are recognised directly within
equity. The remeasurements include:
- Actuarial gains and losses
- Return on plan assets (interest exclusive)
- Any asset ceiling effects (interest exclusive).
Service costs are recognised in profit or loss and include current and past
service costs as well as gains and losses on curtailments.
Net interest expense (income) is recognised in profit or loss and is
calculated by applying the discount rate used to measure the defined benefit
obligation (asset) at the beginning of the annual period to the balance of the
net defined benefit obligation (asset), considering the effects of
contributions and benefit payments during the period.
Gains or losses arising from changes to scheme benefits or scheme curtailment
are recognised immediately in profit or loss.
Settlements of defined benefit schemes are recognised in the period in which
the settlement occurs.
For more information, please see note 20.
j) Revenues
The Group operates diverse businesses and accordingly applies different
methods for revenue recognition, based on the principles set out in IFRS 15.
The revenue and profits recognised in any reporting period are based on the
delivery of performance obligations and an assessment of when control is
transferred to the customer. In determining the amount of revenue and profits
to record, and associated balance sheet items, management is required to
review performance obligations within individual contracts. This may involve
some judgemental areas.
Revenue is recognised either when the performance obligation in the contract
has been performed (so 'point in time' recognition) or 'over time' as control
of the performance obligation is transferred to the customer.
For each performance obligation to be recognised over time, the Group applies
a revenue recognition method that faithfully depicts the Group's performance
in transferring control of the goods or services to the customer. This
decision requires assessment of the real nature of the goods or services that
the Group has promised to transfer to the customer.
· Revenues from sale of graphene-based products are typically
recognised at a point in time when goods are delivered to the customer as with
this, the customer gains the right of control over the goods. However, for
export sales, control might also be transferred when delivered either to the
port of departure or port of arrival, depending on the specific terms of the
contract with a customer.
· Revenues from services relates mainly to environmental services
provided by Setcar which are recognised:
o at a point in time basis when contracts include an obligation to process
waste once the process occurred according with the contract in place.
o at the point in time when the waste is delivered to our platform with no
further performance obligations.
o over time in accordance with agreed project milestones being delivered.
Fixed price long-term service agreements are recognised over time according to
the stage of completion reached in the contract by measuring the proportion of
costs incurred for work performed relative to the total estimated costs.
The Group excludes the measure of progress of any goods or services for which
the entity has not transferred control to a customer, such as costs which are
excluded from the progress measurement including those costs related to
inefficiencies or unproductive time.
Contract costs are recognised in the income statement when incurred. When it
is probable that the total contract costs will exceed total contract revenue,
the expected loss is recognised immediately. As per IAS 37 an onerous contract
is a contract in which the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received under it. In
line with the principles of IAS 37 the loss will be recognised if there is a
present obligation, payment is probable and the amount can be estimated
reliably. The amount recognised will be the best estimate of the expenditure
required to settle the present obligation at the balance sheet date.
k) Government grants
Government grants are recognised when there is reasonable assurance that the
entity will comply with the relevant conditions and the grant will be
received. Grants are recognised in profit or loss on a systematic basis where
the Group has recognised the initial expenses that the grants are intended to
compensate. Where a grant has been received as a contribution for property,
plant and equipment, or capitalised development costs, the income received has
been credited against the asset in the statement of financial position.
l) Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is
recognised in the profit or loss, using the effective interest method. Finance
costs comprise interest expense on borrowings.
Borrowing costs that are not directly attributable to the acquisition,
construction or production of a qualifying asset are recognised in profit or
loss using the effective interest method.
m) Investments in subsidiaries (Company only)
Investments are stated at their cost less any provision for impairment (for
details refer to note h).
n) Taxation
Tax expense comprises current and deferred tax. Current and deferred tax is
recognised in the profit or loss except to the extent that it relates to a
business combination, or items recognised directly in equity or in other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes.
Deferred tax is not recognised for:
· temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
· temporary differences related to investments in subsidiaries and
jointly controlled entities to the extent that it is probable that they will
not reverse in the foreseeable future; and
· taxable temporary differences arising on the initial recognition of
goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date.
A deferred tax asset is recognised for deductible temporary differences to the
extent that it is probable that future taxable profits will be available
against which they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
Changes in accounting standards
a) New standards, interpretations and amendments effective from January 2023
Insurance contracts - IFRS 37:
IFRS 17 Insurance Contracts is a comprehensive new accounting standard for
insurance contracts covering recognition and measurements, presentation and
disclosure. IFRS 17 replaces IFRS 4 insurance contracts. IFRS 17 applies to
all types of insurance contracts (i.e. life, non-life, direct insurance and
re-insurance), regardless of the type of entities that issue them as well as
to certain guarantees and financial instruments with discretionary
participation features; a few scope exceptions will apply. The overall
objective of IFRS 17 is to provide a comprehensive accounting model for
insurance contracts that is more useful and consistent for insurers, covering
all relevant accounting aspects. IFRS 17 is based on a general model,
supplemented by:
- a specific adaptation for contracts with direct participation
features (the variable fee approach);
- a simplified approach (the premium allocation approach) mainly for
short duration contracts.
The new standard had no impact on the Group's consolidated financial
statements.
Definition of accounting estimates - AMENDMENTS TO IAS 8
The amendments to IAS 8 clarify the distinction between changes in accounting
estimates, changes in accounting policies and the correction of errors. They
also clarify how entities use measurement techniques and inputs to develop
accounting estimates.
The amendments had no impact on the Group's consolidated financial
statements.
Disclosure of accounting policies - AMENDMENTS TO IAS 1 AND IFRS PRACTICE
STATEMENT 2
The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality
Judgements provide guidance and examples to help entities apply materiality
judgements to accounting policy disclosures. The amendments aim to help
entities provide accounting policy disclosures that are more useful by
replacing the requirement for entities to disclose their "significant"
accounting policies with a requirement to disclose their "material" accounting
policies and adding guidance on how entities apply the concept of materiality
in making decision about accounting policy disclosures.
The amendments have not had any impact on the measurement, recognition or
presentation of any items in the Group's financial statements.
Deferred tax related to assets and liabilities arising from a single
translation - AMENDMENTS TO IAS 12
The amendments to IAS 12 Income Tax narrow the scope of the initial
recognition exception, so that it no longer applies to transactions that give
rise to equal taxable and deductible temporary differences such as leases and
decommissioning liabilities.
The amendments had no impact on the Group's consolidated financial statements.
International tax reform - Pillar Two model rules - AMENDMENTS TO IAS 12
The amendments to IAS 12 have been introduced in response to the OECD's BEPS
Pillar Two rules and include:
- a mandatory temporary exception to the recognition and disclosure
of deferred taxes arising from the jurisdictional implementation of the Pillar
Two model rules; and
- disclosure requirements for affected entities to help users of the
financial statements better understand an entity's exposure to Pillar Two
income taxes arising from that legislation, particularly before its effective
date.
The mandatory temporary exception - the use of which is required to be
disclosed- applies immediately. The remaining disclosure requirements apply
for annual reporting periods beginning on or after 1 January 2023, but not for
any interim periods ending on or before 1 December 2023.
The amendments have had no impact as the effective tax rate for the Group is
higher than the 15% minimum rate proposed in the OECD's BEPS Pillar Two rules.
Further disclosure has been included in note 10.
b) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretation
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January
2024:
- liability in a Sale and Leaseback (Amendments to IFRS 16
Leases);
- classification of Liabilities with Covenants (Amendments to IAS
1 Presentation of Financial Statements);
- non-current Liabilities with Covenants (Amendments to IAS 1
Presentation of Financial Statements);
- supplier Finance Arrangements (Amendments to IAS 7 Statements
of Cash Flows and IFRS 7 Financial Instruments. Disclosures).
The following amendments are effective for the period beginning 1 January
2025:
- lack of Exchangeability (Amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates)
The Group is currently assessing the impacts of these new accounting standards
and amendments. The Group does not believe that the amendments to IAS 1will
have a significant impact on the classification of its long-term debt as its
classification is consistent with the contractual arrangement. The Group does
not expect any other standards issued by the IASB, but are yet to be
effective, to have a material impact on the Group.
3. Operating segments
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision makers (CEO, CFO and COO), as defined in IFRS 8, in order
to allocate resources to the segments and to assess its performance.
For management purposes, also considering the materiality the Group is
organized into the following segments:
- Textile
- Environmental
- Others
Textile and Environmental were considered by Management the most advanced
strategic segments in terms of commercial readiness. Management's strategic
needs are constantly monitored and an update of the segments will be provided
if required.
Segment profit/(loss) represents the profit/(loss) earned by each segment,
including all the direct costs that are directly correlated with the segment.
Overhead, assets and liabilities not directly attributable to a specific
segment have been allocated as Head Office.
As the business evolves this is an area that will be assessed on a regular
basis and additional segmental reporting will be provided at the appropriate
time.
2023
-In euro Textile Environmental Others Headoffice Consolidated
Revenue 3,203,752 7,229,677 96,966 - 10,530,395
Cost of Sales* (2,078,194) (4,161,253) (64,508) - (6,303,955)
Gross Profit 1,125,558 3,068,424 32,458 - 4,226,440
Other income 62,251 16,295 112,515 141,902 332,963
Other expenses:
R&D expenses (125,704) - (5,645) - (131,349)
Advisory (8,545) (298,058) (174,587) (1,085,389) (1,566,579)
Operating expenses (267,946) (3,175,696) (104,128) (2,228,188) (5,775,958)
D&A (386,930) (858,445) (24,818) - (1,270,193)
Operating Profit/ (Loss) 398,684 (1,247,480) (164,205) (3,171,675) (4,184,676)
Net financial costs - - - (122,390) (122,390)
Tax - 31,718 - - 31,718
Profit/(loss) of the year 398,684 (1,215,762) (164,205) (3,294,065) (4,275,348)
Total assets 3,991,458 7,839,333 731,126 - 12,561,917
Total liabilities 2,501,851 3,346,950 130,992 - 5,979,793
*Includes Changes in inventories of finished goods.
2022
-In euro Textile Environmental Others Headoffice Consolidated
Revenue 2,460,398 8,136,050 259,696 - 10,856,144
Cost of Sales* (1,677,952) (5,281,884) (157,619) - (7,117,455)
Gross Profit 782,446 2,854,166 102,077 - 3,738,689
Other income 161,271 113,865 23,415 126,375 424,926
Other expenses:
R&D expenses (186,587) (420) (76,988) - (263,995)
Advisory (94,784) (421,042) (45,000) (1,055,002) (1,615,828)
Operating expenses (411,727) (3,057,472) (90,439) (2,336,519) (5,896,157)
D&A (329,964) (1,038,337) (35,632) - (1,403,933)
Operating Loss (79,345) (1,549,240) (122,567) (3,265,146) (5,016,298)
Net financial costs - - - (311,900) (311,900)
Tax - 53,197 - - 53,197
Loss of the year (79,345) (1,496,043) (122,567) (3,577,046) (5,275,001)
Total assets 4,582,368 11,164,786 813,909 - 16,561,063
Total liabilities 1,849,107 3,633,655 253,161 - 5,735,923
*Includes Changes in inventories of finished goods.
2023 2022
€ €
Sale of products 3,323,174 3,171,133
Sale of services 7,207,221 7,685,011
Government grants 160,015 171,135
Other 172,948 253,791
Total income 10,863,358 11,281,070
Geographical breakdown of revenues is:
2023 2022
€ €
Italy 3,031,727 2,663,918
Romania 7,211,161 8,096,804
Rest of the world 287,507 95,422
Total 10,530,395 10,856,144
In 2023 the three main customers accounted for more than 10% of Group revenues
for sales of products and services. This largest customer accounted for 17% of
revenues (€1,769,827), the second for 13% (€1,364,472), whilst the third
for 12% (€1,303,949).
Other Income of €332,963 mainly include Government Grants for €160,015 and
R&D Expenditure Credit (RDEC) for €27,000. The RDEC is an Italian
incentive scheme (art.3 DL 145/2013) designed to encourage companies to invest
in research and development. The credit can be used to reduce corporation tax
or to offset outstanding payables related to social security.
4. Government Grants
Information regarding government grants:
2023 2022
€ €
Green.Tex - 11,299
Techfast - 136,421
Filiere 112,515 23,415
Ricerca e Innova 47,500 -
Total 160,015 171,135
In 2023 Directa Plus concluded the activities related to the 'Filiere' project
and obtained the funds in early 2024.
In July 2023, the Company was awarded a project tender from the Italian Region
of Lombardy as part of its Ricerca & Innova programme to further develop
Graphene Plus (G+) air filtration applications. It is a 18-month project for a
total value of c.€400,000 which includes a non-repayable grant of €142,500
and a zero-interest loan €264,642 which will be repaid over seven years.
This award will enable Directa Plus to continue investing and developing its
air filter applications, leveraging the antiviral and antimicrobial properties
of its G+ technologies.
The key terms of government grants are:
Filiere Ricerca e Innova
Starting date 2022 2023
Ending date 2023 2024
Duration (months) 12 18
Total amount 135,930 407,142
Final report submitted Yes On-going
There are no capital commitments built into the ongoing grants. Government
grants have been recognised within other income in the income statement and as
other receivables in the balance sheet.
5. Inventory
2023 2022
€ €
Finished products 627,078 917,280
Spare parts 109,492 93,292
Raw material 144,880 111,340
Total 881,450 1,121,912
As of 31 December 2023, the decrease in the inventory value was partially
driven by a c. a €170k write-off of the Co-Masks value still in stock, as
the gradual Covid-19 pandemic de-escalation has slowed down the sales of
Directa Plus's face masks.
The finished products mainly referred to Directa Plus SpA. Spare parts
inventory was required to enhance maintenance efficiency and is composed of a
small number of critical items with a material cost per unit.
6. Raw materials and consumables
2023 2022
€ €
Raw materials & consumables 3,898,083 4,796,333
Textile products 1,452,407 1,060,328
Total 5,350,490 5,856,661
The decrease in raw materials and consumables is mainly linked to the sales
and services provided in the Group's Environmental Remediation vertical. The
increase in the textile products is a result of the business growth in this
vertical.
7. Employee benefits expenses
2023 2022
€ €
Wages and salaries 3,797,869 3,578,948
Social security costs 456,405 573,778
Employee benefits 98,062 144,277
Share option expense 54,573 111,130
Other costs 141,536 146,116
Total 4,548,445 4,554,249
Capitalised cost in "Intangible assets" (103,868) (130,162)
Total charged to the Income Statement 4,444,577 4,424,087
The average number of employees (excluding non-executive directors) during the
period was as follows:
2023 2022
Sales and Administration 30 32
Engineering, R&D and production 157 159
Total 187 191
The total average number of employees of the Group as at 31 December 2023 was
187 (2022: 191), of which 162 were employed by Setcar.
The Directors' emoluments (including non-executive directors) are as follows:
2023 2022
€ €
Wages and salaries 738,935 768,055
Total 738,935 768,055
The aggregate emoluments (wages, salaries and social contributions) of the
highest paid Director totalled €393k (2022: €406k).
Group's share-base payment expenses were €54,573, of which €85,532
accounted for in the Parent Company accounts as directly attributable to the
Executive Directors, more than offset by cost reverse-outs in Directa Plus SpA
due to awards cancellations and expiries (€30,959).
8. Other expenses:
2023 2022
€ €
Audit of the Group and Company financial statements 120,485 108,525
Audit of the subsidiaries' financial statements 45,504 37,735
Other non-audit services provided by Group's auditor 5,709 7,780
Tool manufacturing 281,182 504,411
Analyses & tests 101,180 224,451
Travel 171,585 145,045
Technical consultancies 353,403 316,966
Shipping and logistic expenses 358,793 446,894
Insurance 189,551 186,145
Marketing 25,112 15,718
Legal, tax and administrative consultancies 1,143,050 1,286,662
Other expenses mainly include professional services (such as audit, legal, tax
and administrative consultancies), R&D/technical consultancies and tests,
travels, shipping/logistic and insurance.
9. Net Finance expenses
Finance expenses include:
2023 2022
€ €
Interest Income (46,108) (5,904)
Interest on loans and other financial costs 159,225 82,696
Interest on lease liabilities 19,310 14,760
Interest cost for benefit plan 16,125 18,309
Foreign exchanges (gains)/losses (26,162) 202,039
Total 122,390 311,900
The raise in interest rates by the Central Banks over the year directly
affected the interest on loans and other financial costs. This effect was
partially offset by positive interest rates of €46,108.
In the year the Group benefited from foreign exchange gains of €26,162
(2022: €202,039 losses).
10. Taxation
2023 2022
€ €
Current tax expense (1,384) (1,581)
Deferred tax recovery 33,102 54,778
Total Tax income 31,718 53,197
Reconciliation of tax rate
2023 2022
€ €
Loss before tax (4,307,066) (5,328,198)
Italian statutory tax rate 24% 24%
(1,033,696) (1,278,768)
Impact of temporary differences 42,633 93,175
Losses recognised (10,915) (39,978)
Impact of tax rate in foreign jurisdiction (44,936) (60,007)
Losses not utilised 1,078,632 1,338,775
Total Tax income 31,718 53,197
Tax losses are carried forward and not recognised as a deferred tax asset due
to the uncertainty regarding generating future taxable profits. Tax losses
carried forward are €39,285,232 (€35,720,602 in 2022).
11. Intangible assets
Cost Development Patents Goodwill Other Brands Total
cost
€ € € € € €
Balance at 31/12/2021 3,280,147 718,047 293,957 280,983 371,021 4,944,155
Additions 130,162 274,740 - 9,974 - 414,876
Currency translation diff. 2 - 38 25 52 117
Balance at 31/12/2022 3,410,311 992,787 293,995 290,982 371,073 5,359,148
Additions 103,868 120,769 - 1,813 - 226,450
Currency translation diff (62) - (1,486) (1,022) (2,029) (4,599)
Balance at 31/12/2023 3,514,117 1,113,556 292,509 291,773 369,044 5,580,999
Amortisation
Balance at 31/12/2021 2,478,569 435,425 - 83,292 154,592 3,151,878
Amortisation 2022 371,719 81,670 - 14,964 74,454 542,807
Currency translation diff. 2 - - 25 (230) (203)
Balance at 31/12/2022 2,850,290 517,095 - 98,281 228,816 3,694,482
Amortisation 2023 259,029 107,185 - 12,138 74,230 452,582
Currency translation diff. (62) - - (1,015) (1,672) (2,749)
Balance at 31/12/2023 3,109,257 624,280 - 109,404 301,374 4,144,315
Carrying amount
Balance at 31/12/2021 801,578 282,622 293,957 197,691 216,429 1,792,277
Balance at 31/12/2022 560,021 475,692 293,995 192,701 142,257 1,664,666
Balance at 31/12/2023 404,860 489,276 292,509 182,369 67,670 1,436,684
As disclosed in note 2(e) development costs capitalised in the year are mainly
based on time spent by employees who are directly engaged in the development
of the G+® technology.
Management carried out an impairment test on goodwill accounted following the
acquisition of Setcar S.A. in 2019.
The CGU is represented by Setcar itself, whose carrying amount as of 31
December 2023 was €4.6m. A calculation of goodwill based on a discounted
cash flow method is considered to be subject to a high degree of estimation
uncertainty given fluctuations in the Groups EBIT. For this reason, the
carrying value of the Group's goodwill has been assessed against other
indicators, including the Groups market capitalisation, which as of 31
December 2023 was c. €18.6 million, and significantly in excess of the net
assets of the Group.
12. Property, plant and equipment
Industrial Equipment Computer Equipment Office Equipment Plant & Machinery Land ROU Assets Under Total
Const.
Cost € € € € € € € €
31/12/2021 1,621,051 84,616 181,189 4,632,110 587,640 779,128 2,407 7,888,141
Additions 430,272 2,477 8,737 317,042 - - - 758,528
Disposals (39,333) - (48,935) (206,642) - - - (294,910)
FX trans. diff. (261) - 160 786 83 - (45) 723
31/12/2022 2,011,729 87,093 141,151 4,743,296 587,723 779,128 2,362 8,352,482
Additions 107,973 1,787 4,181 22,455 - - 134,885 271,281
Disposal (64,123) - (1,964) (91,897) - - (2,362) (160,346)
FX trans. diff. (13,238) - (540) (17,381) (3,214) - (764) (35,137)
31/12/2023 2,042,341 88,880 142,828 4,656,473 584,509 779,128 134,121 8,428,280
Depreciation € € € € € € € €
31/12/2021 822,067 53,119 145,468 2,624,999 - 259,522 - 3,905,175
Depreciation 267,411 10,211 38,873 442,228 - 102,402 - 861,125
Disposal (23,926) (1,591) (47,378) (201,507) - - - (274,402)
FX trans. diff (637) - 122 (52) - - - (567)
31/12/2022 1,064,915 61,739 137,085 2,865,668 - 361,924 - 4,491,331
Depreciation 283,337 9,795 20,814 407,183 - 96,482 - 817,611
Reclass 31,842 - (31,842) - - - - -
Disposal (64,057) - (1,964) (84,437) - - - (150,458)
FX trans. diff (8,942) - (451) (11,620) - - - (21,013)
31/12/2023 1,307,095 71,534 123,642 3,176,794 - 458,406 - 5,137,471
Carrying amounts
31/12/2021 778,742 31,496 55,965 2,007,110 587,640 519,606 2,407 3,982,966
31/12/2022 914,973 25,353 35,911 1,877,628 587,723 417,204 2,362 3,861,151
31/12/2023 735,246 17,346 19,186 1,479,679 584,509 320,722 134,121 3,290,809
Asset held under financial leases with a net book value of €419,296 are
included in the above table within Plant & Machinery.
13. Investments in subsidiaries
Details of the Company's subsidiaries as at 31 December 2023 are as follows:
Shareholding
Subsidiaries Country Principal activity 2023 2022
Directa Plus S.p.a. Italy Producer and supplier of graphene-based materials and related products 100% 100%
Directa Textile Solutions S.r.l. Italy Commercialise textile membranes, including graphene-based technical and 73.5% 73.5%
high-performance membranes
Setcar S.A. Romania Waste management and decontamination services business 51% 51%
Subsidiaries Place of Business Registered Office and place of business
Directa Plus S.p.a. Italy Via Cavour 2, Lomazzo (CO) Italy
Directa Textile Solutions S.r.l. Italy Via Cavour 2, Lomazzo (CO) Italy
Setcar S.A. Romania Str. Gradinii Publice 6, Braila Romania
The Company's investment as capital contributions in Directa Plus Spa are as
follows:
Directa Spa
At 31 December 2021 25,680,336
Additions 4,580,000
At 31 December 2022 30,260,336
Additions 1,964,800
Impairment Loss (13,602,359)
At 31 December 2023 18,622,777
14. Trade and other receivables
Current Group Company
2023 2022 2023 2022
€ € € €
Account receivables 3,645,064 2,964,480 - -
Tax receivables 482,800 687,670 24,489 24,230
Other receivables 268,884 463,696 71,776 90,654
Total 4,396,748 4,115,846 96,265 114,884
Non-current Group Company
2023 2022 2023 2022
€ € € €
Other receivables 162,923 69,720 - -
Total 162,923 69,720 - -
Group account receivables of €3,645,064 are mainly composed by six major
clients, covering 69% of the total amount.
Group Tax Receivables are composed of Italian VAT receivables of €213,482,
UK VAT receivables of €24,489, Romanian VAT receivables of €105,326, RDEC
Tax Credit receivables of €97,432 and other Italian Tax receivables of
€42,071.
Other receivables are mainly composed of governments grants for €134,978 and
prepayments for €120,339.
Non-current other receivables refer for €162,923 to specific projects where
the collection of a certain amount, although due, is postponed to the end of
the project itself.
As at 31 December 2023 the ageing of account receivables was:
Days overdue 2023 2022
€ €
0-60 3,477,705 2,841,939
61-180 146,505 69,607
181-365 20,854 13,465
365 + - 39,469
Total 3,645,064 2,964,480
The Group recognises a loss allowance for expected credit losses on trade
receivables. As at 31 December 2023 the Group recognised provision for
€460,894 mainly referred to Setcar's overdue debts.
15. Deferred tax assets and liabilities
2023 2022
€ €
Deferred tax liabilities 59,647 98,694
Deferred tax (assets) (59,647) (65,599)
Total - 33,095
Tax losses are carried forward and not recognised as a deferred tax asset due
to the uncertainty regarding generating future taxable profits.
The deferred tax liabilities arise from the capitalisation of development
costs and defined benefit scheme are detailed below:
2023 2022
€ €
Deferred tax liabilities Cost Capitalized 27,929 48,269
Deferred tax liabilities Other (363) (9,788)
Deferred tax liabilities arising from acquisition 31,718 33,095
Deferred tax assets - incl. consolidation adjustment (59,284) (38,481)
Total - 33,095
16. Cash and cash equivalents
Group Company
2023 2022 2023 2022
€ € € €
Cash at bank 2,389,687 5,721,538 1,024,286 3,787,989
Cash in hand 3,616 6,230 - -
Total 2,393,303 5,727,768 1,024,286 3,787,989
17. Equity
Group Company
2023 2022 2023 2022
€ € € €
Share Capital 205,469 205,469 205,469 205,469
Share Premium 39,181,789 39,181,789 39,181,789 39,181,789
Foreign currency translation reserve (44,902) (39,161) - -
Accumulated deficit (33,882,143) (30,069,844) (19,770,339) (5,346,322)
Non-controlling interests 1,121,911 1,546,887 - -
Balance at 31 December 6,582,124 10,825,140 19,616,919 34,040,936
Share Capital
Number Share capital (€)
of ordinary shares
At 31 December 2021 66,032,126 205,393
Share issue on 28 February * 25,523 76
At 31 December 2022 66,057,649 205,469
At 31 December 2023 66,057,649 205,469
* On 28 February 2022, 25,523 ordinary shares with a nominal value of £0.0025
each were issued as effect of the exercise of option of ordinary shares for a
Directa Plus SpA employee.
Share Premium
Share
In euro premium
At 31 December 2021 39,159,027
Shares issued 22,762
Expenditure relating to the raising of shares -
At 31 December 2022 39,181,789
Shares issued -
At 31 December 2023 39,181,789
On 28 February 2022, 25,523 ordinary shares were issued as effect of the
exercise of option of ordinary shares for a Directa Plus SpA employee, at a
price of £0.75 each. The Company accounted for €22,762 of gross share
premium reserve. No other shares were issued during 2023.
Share capital
Financial instruments issued by the Directa Plus Group are treated as equity
only to the extent that they do not meet the definition of a financial
liability. The Directa Plus Group's ordinary shares are classified as equity
instruments.
Share premium
To the extent that the company's ordinary shares are issued for a
consideration greater than the nominal value of those shares (in the case of
the company, £0.0025 per share), the excess is deemed Share Premium. Costs
directly associated with the issuing of those shares are deducted from the
share premium account, subject to local statutory guidelines.
Foreign currency translation reserve
Exchange differences resulting from the consolidation process of Setcar are
recognised in the translation reserve for an amount of € 44,902.
Non- controlling interest
Non-controlling interest refers to the minority shareholders of the company
who own less than 50% of the overall share capital.
As of 31 December 2023, non-controlling interest is composed by 49% of Setcar
S.A. and 26.46% of Directa Textile Solutions Srl.
18. Loans and borrowings
Group Company
2023 2022 2023 2022
€ € € €
Non-current loans and borrowings 1,528,108 1,378,141 - -
Current loans and borrowings 742,904 767,677 - -
Total 2,271,012 2,145,818 - -
In euro 2023 Current Non-current Repayment Interest rate
Bank of Transilvania 603,021 241,208 361,813 36-months Variable 6.22 % ROBOR 3M + 2,5%/year
Bank of Transilvania IMM INV 321,115 113,310 207,805 60-months Variable 6.22 % ROBOR 3M +2.5% MARJA BANK
Bank of Transilvania IMM INVEST PROIECT POIM punte 51,270 51,270 - 9-Months Variable 6.5 % Robor 6M+4.20%/Year
Bank of Transilvania IMM INVEST PROIECT POIM tva 16,101 16,101 - 12-Months Variable 6.5 % Robor 6M+4.20%/Year
Bank of Transilvania IMM INVEST PROIECT POIM inv 34,638 12,226 22,412 36-Months Variable 6.5 % Robor 6M+3.65%/Year
Intesa San Paolo 207,564 74,804 132,760 72-months 1.5%/year + EURIBOR 3M
Intesa San Paolo 15,730 6,250 9,480 72-months 1.5%/year + EURIBOR 3M
Intesa San Paolo 438,540 123,561 314,979 72-months 1.5%/year + EURIBOR 3M
Banca Popolare di Sondrio 394,824 101,215 293,609 72-months 1.5%/year + EURIBOR 3M
Ricerca e Innova (Finlombarda) 185,240 - 185,240 84-months -
Reconciliation of liabilities arising from financing activities
Cash flows Non-cash flows
1 January 23 Capital repayments Liabilities acquired Accrued interests Loan conversion into equity 31 December 23
€ € € € € €
Borrowings 2,145,818 820,084 945,278 - - 2,271,012
Total 2,145,818 820,084 945,278 - - 2,271,012
Net debt reconciliation
2023 2022
€ €
Loans and borrowings 2,271,012 2,145,818
Lease liabilities 389,565 634,328
Less: cash and cash equivalent (2,393,303) (5,727,768)
Net Debt 267,274 (2,947,622)
Total equity 6,582,124 10,825,140
Debt to capital ratio (%) 4.06% (27.23%)
19. Leases liabilities
The following table details the movement in the Group's lease obligations for
the period ended 31 December 2023:
2023 2022
€ €
Non-current lease liabilities 183,056 395,260
Current lease liabilities 206,509 239,068
Total 389,565 634,328
20. Employee benefits provision
2023 2022
€ €
Employee benefits 357,520 554,444
Total 357,520 554,444
Provisions for benefits upon termination of employment primarily related to
provisions accrued by Italian companies for employee retirement, determined
using actuarial techniques and regulated by Article 2120 of the Italian Civil
code. The benefit is paid upon retirement as a lump sum, the amount of which
corresponds to the total of the provisions accrued during the employees'
service period based on payroll costs as revalued until retirement.
Following the changes in the law regime, from January 1, 2007, accruing
benefits have been contributing to a pension fund or a treasury fund held by
the Italian administration for post-retirement benefits (INPS). For
companies with less than 50 employees it will be possible to continue this
scheme as in previous years. Therefore, contributions of future TFR
provisions to pension funds or the INPS treasury fund determines that these
amounts will be treated in accordance to a defined contribution scheme, not
subject to actuarial evaluation. Amounts already accrued before 1 January 2007
continue to be accounted for a defined benefit plan and to be assessed on
actuarial assumptions.
The breakdown for 2022 and 2023 is as follows:
In Euro
Amount at 31 December 2021 500,535
Service cost 76,108
Interest cost 18,309
Actuarial losses 6,790
Benefit paid (47,298)
Amount at 31 December 2022 554,444
Service cost 14,170
Interest cost 16,125
Actuarial losses 10,769
Benefit paid (237,988)
Amount at 31 December 2023 357,520
Variables analysis
Detailed below are the key variables applied in the valuation of the defined
benefit plan liabilities.
2023 2022
Annual rate interest 3.30% 3.30%
Annual rate inflation 2.10% 2.10%
Annual increase TFR 7.41% 7.41%
Tax on revaluation 17.00% 17.00%
Social contribution 0.50% 0.50%
Increase salary male 2.20% 2.20%
Increase salary female 2.10% 2.10%
Rate of turnover male 2.00% 2.00%
Rate of turnover female 1.80% 1.80%
Sensitivity analysis
Detailed below are tables showing the impact of movements on key variables:
Actuarial hypothesis - 2023 Decrease 10% Increase 10%
Variation Variation
Rate DBO € Rate DBO €
Increase salary Male 1.95% (3,049) 2.45% 4,064
Female 1.85% 2.35%
Turnover Male 1.00% (16,078) 3.00% 14,551
Female 0.80% 2.80%
Interest rate 3.05% 8,582 3.55% 8,582
Inflation rate 1.85% (5,468) 2.35% (5,468)
21. Trade and Other payables
Non-current Group Company
2023 2022 2023 2022
€ € € €
Other payables 64,014 64,366 - -
Total 64,014 64,366 - -
Current Group Company
2023 2022 2023 2022
€ € € €
Trade payables 1,693,569 1,088,849 1,846 28,915
Employment costs 184,838 264,627 - -
Other payables 978,428 759,399 124,563 93,358
Total 2,856,835 2,112,875 126,409 122,273
22. Provision
Group Company
Current
2023 2022 2023 2022
€ € € €
Provision 40,847 190,997 - -
Total 40,847 190,997 - -
The 2023 provision of €40,847 relates to the expected future losses expected
to be incurred on an onerous long-term contract in Laos, where the recovery of
excess costs is deemed uncertain under IFRS15.
The 2022 provision of €190,997 related to the expected future losses
incurred on an onerous long-term contract in Guatemala that was completed in
the year.
23. Financial instruments
Financial risk management
The Group's business activities expose the Group to the following financial
risks:
a) Market risk
Market risk arises from the Group's use of interest bearing, tradable and
foreign currency financial instruments. It is the risk that the fair value of
future cash flow of a financial instrument will fluctuate because of changes
in interest rates or foreign exchange rates. As at 31 December 2023 the Group
is exposed to variable interest rate risk for the loans issued by Setcar and
by Directa Plus SpA under the Italian Government Covid-19 Recovery Plan.
Despite the rise in interest rates by the Central Banks over the recent
months, those loans, being 90% guaranteed by the Italian Government, bear a
relatively low interest rate (1.5% + EURIBOR) and, if the interest rate had
increased or decreased by 200 basis points during the year the reported loss
after taxation would not have been materially different to that reported.
b) Capital Risk
The Group's objectives for managing capital are to safeguard the Group's
ability to continue as going concern, so that it can continue to provide
returns for shareholders and benefits for other stakeholders and to provide an
adequate return to shareholders by pricing products and services
commensurately with the level of risk. There were no changes in the Group's
approach to capital management during the year.
c) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. The Group's credit risk is primarily attributable to its trade
receivables that the Company consider defaulted if any instalment is unpaid
more than sixty (60) days past its original due date or where there is
evidence that identifies the debtor's state of insolvency.
The Group's cash and cash equivalents and restricted cash are held with major
financial institutions. The Group monitors credit risk by reviewing the credit
quality of the financial institutions that hold the cash and cash equivalents
and restricted cash.
The Group's trade receivables consist of receivables for revenue mainly in
Italy and Romania. Management believes that the Group's exposure to credit
risk is manageable and currently the Group's standard payment terms are 30 to
60 days from date of invoice are largely met from the clients. At the end of
the period, 90% of account receivables have an ageing less of 60 days and
refers to orders delivered close to the year end. As at 31 December 2023 the
Group recognised a cumulated bad debt provision for €460,894.
Every new customer is internally analysed for creditworthiness before the
Group's standard payment and delivery terms and conditions are offered.
Advance payment usually applies for the first order and the exposure to credit
risk is approved and monitored on an ongoing basis individually for all
significant customers. The maximum exposure to credit risk is represented by
the carrying amount of each financial asset in the statement of financial
position. The Group does not require collateral in respect of financial
assets.
d) Exposure to credit risk
Group Note 2023 2022
€ €
Trade receivables 14 3,645,064 2,964,480
Cash and cash equivalent 16 2,393,303 5,727,768
Total 6,038,367 8,692,248
The largest customer within trade receivables accounts for 21% of debtors.
Management continually monitors this dependence on the largest customers and
are continuing to develop the commercial pipeline to reduce this dependence,
spreading revenues across a variety of customers.
e) Liquidity risk
It is the risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due. Liquidity risk arises from the Group's
management of working capital and the finance charges and principal repayments
on its debt instruments. The Group manages liquidity risk by maintaining
adequate reserves and banking facilities and by continuously monitoring
forecast and actual cash flows. The Board reviews regularly the cash position
to ensure there are sufficient resources for working capital requirements and
to meet the Group's financial commitments.
2023 Carrying amount Up to 1 year 1 -5 years
Financial liabilities € € €
Trade payables 1,693,569 1,693,569 -
Lease liabilities 389,565 206,509 183,056
Loans 2,271,012 742,904 1,528,108
Total 4,354,146 2,642,982 1,711,164
2022 Carrying amount Up to 1 year 1 -5 years
Financial liabilities € € €
Trade payables 1,088,849 1,088,849 -
Lease liabilities 634,328 239,068 395,260
Loans 2,145,818 767,677 1,378,141
Total 3,868,995 2,095,594 1,773,401
f) Currency risk
The Group usually raises money issuing shares in pounds, it follows that the
Group usually holds sterling bank accounts as result of capital raise.
Sterling bank accounts are mainly used to manage expenses of the Company (such
as UK advisors, LSE fees and costs related to the Board) in UK. The cash held
in Sterling continues to be subject to currency risk.
EUR
Cash held in GBP 973,722
If the exchange rate EUR/GBP increase by 10% the impact on P&L would be a
loss equal to €0.1 million (if decrease by 10% would be a profit equal to
€0.1 million).
The Group holds accounts also in other currency (such as USD and RON) but just
for business purposes and for not material amount.
24. Earnings per share
Change in number of ordinary shares Total number of ordinary shares Days Weighted number of ordinary shares
At 31 December 2022 25,523 66,057,649 365 66,053,593
Existing shares - 66,057,649 365 66,057,649
At 31 December 2023 - 66,057,649 365 66,057,649
Basic Diluted
2023 2022 2023 2022
€ € € €
Loss attributable to the owners of the Parent (3,856,103) (4,822,044) (3,856,103) (4,822,044)
Weighted average number of ordinary shares in issue during the year 66,057,649 66,053,593 - -
Fully diluted average number of ordinary shares during the year - - 67,052,006 67,189,085
Loss per share (0.06) (0.07) (0.06) (0.07)
The effect of anti-dilutive potential ordinary shares is ignored in
calculating the diluted loss per share.
25. Share Schemes
The 2020 Employees' Share Scheme is administered by the Remuneration
Committee.
The Directors are entitled to grant awards over up to 10 per cent of the
Company's issued share capital from time to time.
Under the 2020 Employees' Share Scheme, in November 2020 1,801,000 options
over Ordinary Shares were granted to key employees and additional 150,000
options were granted to an Executive Director in June 2021 under the same
Scheme. As of 31 December 2023, the total number of outstanding Ordinary
Shares awards is 150,000.
At the date of this report, an additional 331,046 share options had vested in
2020 under the 2016 Employees' and NED Share Schemes that have not yet been
exercised.
The main terms of the 2020 Employee's Share Schemes are set out below:
Eligibility
All persons who at the date on which an award is granted under the Employees'
Share Scheme are employees (or employees who are also office-holders) of a
member of the Group and are eligible to participate. The Remuneration
Committee decides to whom awards are granted under the Employees' Share
Scheme, the number of Ordinary Shares subject to an award, the exercise
date(s) (subject to the below) and the conditions which must be achieved for
the award to be exercisable.
Types of Award
Awards granted under the Employees' Share Scheme have the form of market value
share options. "Market value share options" are share options with an exercise
price equal to the market value of a share at the date of grant. The right to
exercise the award is generally dependent upon the participant remaining an
officer or employee throughout the performance period. This is subject to the
good leaver provisions. Awards granted under the Share Schemes will not be
pensionable.
Individual Limits
The value of Ordinary Shares over which an employee or Executive Director may
be granted awards under the Employees' Share Scheme in any financial year of
the Company shall not exceed 200 per cent of his basic rate of salary at the
date of grant.
Variation of share capital
Awards granted under the Share Schemes may be adjusted to reflect variations
in the Company's share capital.
Vesting of awards
Outstanding awards will vest over three years in equal one third tranches on
each anniversary of the grant date to the extent that the market-based
performance targets have been met. Vested awards may generally be exercised
between the third and tenth anniversaries from the date of grant. 75% of
vested shares can be exercised after the third anniversary, while the
remaining 25% from the fourth.
The inputs to the Monte-Carlo simulation were as follows:
Monte-Carlo simulation
Market value shares (1st granting Nov20) Market value shares (2nd granting Jun21)
Share price 60p 127p
Exercise price 66p 118.20p
Expected volatility 54% 61%
Compounded Risk-Free Interest Rate 0.10% 0.16%
Expected life 6 years 6 years
Number of options issued* 1,801,000 150,000
*Number of options issued is an input of the Monte-Carlo simulation and refers
to the total options granted by the Company in November 2020 and June 2021.
This is not representing any option issued in the period.
Details of the number of share options outstanding are as follows:
2021 2022 2023
Outstanding at start of period 1,801,000 1,688,000 1,503,000
Granted during the period 150,000 - -
Cancelled during the period -263,000 -185,000 -358,000
Expired during the period - - -331,669
Vested during the period - - -663,331
Outstanding at end of period 1,688,000 1,503,000 150,000
Exercisable period option price 66-118p 66p-118p 66p-118p
Grant date 12 Nov 20 - 15 Jun 21 12 Nov 20 - 15 Jun 21 12 Nov 20 - 15 Jun 21
Exercisable date 12 Nov 23 - 15 Jun 24 12 Nov 23 - 15 Jun 24 12 Nov 23 - 15 Jun 24
Cancelation of share options during the period relates to the resignation of
employees. Share options expired over the period refer to those performance
share options that did not meet the performance criteria on the third
anniversary of their granting. Vested share options are Market share options
that met the criteria on each anniversary.
26. Related parties
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
Remuneration of key management personnel
The below figures represent remuneration of key management personnel for the
Group, who are part of the Executive Management Team but not part of the Board
of Directa Plus PLC. The remuneration is set out below in aggregate for each
of the categories specified in IAS 24 'Related Party Disclosures'.
2023 2022
€ €
Short-term employee benefits and fees 129,065 227,159
Social security costs 39,837 74,423
168,902 301,582
The decrease in the 2023 remuneration is mainly explained by the layoff of an
executive manager.
For Directors remuneration please see Director's Remuneration Report.
Other transaction Group
Other related party transactions during the year under review are shown in the
table below:
2023 2022
€ €
Sale of products - 6,625
Products are sold on normal commercial terms and conditions.
27. Contingent Liabilities and Commitments
The group has the following contingent liabilities relating to bank guarantees
on operating lease arrangements and government grants.
2023 2022
€ €
Bank guarantees 38,435 38,435
28. Post Balance Sheet events
In February 2024, Directa Plus SpA signed a conditional share sale purchase
agreement with GVC Investment Company Ltd to acquire a further 48.96% stake in
Setcar S.A. Following completion of the Acquisition in May 2024, Directa Plus'
shareholding in Setcar increased from 50.99% to 99.95%. The total
consideration was equal to €1.5 million, of which €1 million provided by
Nant Capital LLC with a financing facility. The acquisition represents an
opportunity for Directa Plus to take further control of the environmental
supply chain and capture maximum value from the commercial offering made
possible by the Grafysorber® technology.
On 11 June 2024, the Group announced the launch of a proposed capital increase
of £6.9 million gross capital raise, to be finalised by the end of June 2024
subject to the shareholders' approval, to fund the acquisition of the minority
interests of its subsidiary Setcar and sustain the expected high growth of the
business.
1 Graphene Market Size, Share, Trends & Growth Report 2030
(grandviewresearch.com)
(https://www.grandviewresearch.com/industry-analysis/graphene-industry)
2 https://www.grandviewresearch.com/industry-analysis/graphene-industry
(https://www.grandviewresearch.com/industry-analysis/graphene-industry)
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