REG - Directa Plus PLC - Half-year Report
27/09/2023 07:00
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RNS Number : 7504N Directa Plus PLC 27 September 2023
27 September 2023
Directa Plus plc
("Directa Plus" or the "Company" or, together with its subsidiaries, the
"Group")
Half year Report for the Period Ended 30 June 2023
Improving margins with significant new contracts secured across key verticals
Directa Plus (AIM: DCTA), a leading producer and supplier of graphene-based
products for use in consumer and industrial markets, announces its half year
results for the six months ended 30 June 2023, a period in which the Group has
executed well against its growth strategy, securing significant contracts and
further developing its strong pipeline of opportunities.
During the period, the Group has delivered improved margins with selling price
increases and a material reduction in production costs alongside a further
optimisation of overheads. Gross margins improved by 4% to 46% resulting in a
reduced EBITDA loss in the first half, notwithstanding a reduction in revenue
due to the timing of the commencement of new contracts. Accordingly, the Board
remains confident in delivering a record second half performance and expects
full year revenue to be at least €12m with an EBITDA loss of c€2.5m,
representing significant progress year-on-year (FY22: EBITDA loss of €3.6
million).
Financial highlights
· Revenue €4.59m (H1 2022: €5.51m)
· Total income €4.73m (H1 2022: €5.61m)
· Gross margins improved to 46% (H1 2022 42%), with further improvement targeted
· EBITDA loss* €1.25m (H1 2022: €1.40m)
· Loss before tax €1.91m (H1 2022: €2.21m)
· Cash at period end €4.24m (FY22: €5.73m), in-line with management
expectations
* EBITDA loss represents results from operating activities before tax,
interest, depreciation and amortisation.
Target markets progress
Environmental remediation: 71% of period revenue (H1 2022: 76%)
· Grafysorber® technology rapidly gaining commercial traction for water and oil
decontamination, evidenced by new contract wins and recurring customer
business
· Successful demonstration of pilot plant for the continuous treatment of
produced water using Grafysorber®, further broadening the range of potential
applications of Grafysorber®
· Post period-end, a €5.5m three-year contract signed with LIBERTY Galati for
oily mill scale produced in steel making, the largest single contract won to
date with potential to expand to €8m
Textiles: 29% of period revenue (H1 2022: 22%)
· Signed an exclusive agreement in May 2023 with Grassi SpA, to expand the use
of Graphene Plus Planar Thermal Circuit® (PTC®) technology in the workwear
and military markets
· Launch of GRAPHITO, an eco-denim, in June 2023 with Candiani Denim, an
international textile producer that marks a significant advancement in the
sustainable fashion industry
· Further orders received under an exclusive supply agreement with MC Armour,
based in Latin America, for printed PTC® textile linings
Other
· Growing market interest and commercial traction for GiPave®, a supermodifier
incorporating G+ graphene technology, for sustainable, high performant asphalt
made with waste plastic
· Positive initial discussions with major paint producers for Grafyshield G+
with the support of partner, Pigmentsolution GmBH, a European distributor of
speciality chemicals and ingredients
· Post period-end, signed a strategic collaboration with The SPECTRUM Group, a
US strategic advisory and government relations firm, to explore the potential
of G+ technologies in the US defence sector
Giulio Cesareo, Founder & CEO of Directa Plus, said: "Directa Plus has
entered the second half in a strong position, with improved margins and a
growing business pipeline, providing confidence in our future growth. We
secured several meaningful wins in the first half and, notably, our largest
single contract win to date with LIBERTY Galati post-period end, demonstrating
the increasing value of our technology.
"We are seeing increasing traction in graphene technology and its
applications, and as the market grows globally, we are confident in our
ability to capitalise on this growth with Directa Plus well positioned to
scale its activities. We are relentless in our attention to delivering the
best quality graphene at the best possible price, and in the first half we
achieved a further significant reduction in our production costs.
"Our principal focus remains on developing sales in the Group's core vertical
markets, Environmental Remediation and Textiles, and I am pleased with the
initial progress we are making under our new collaboration with The SPECTRUM
Group to introduce our cutting-edge G+ graphene-based products to the US
defence sector. We remain highly selective in addressing other opportunities
in new markets and in new geographical locations where prospects are
encouraging, that enable the business to build commercial momentum and broader
opportunities for growth."
For further information please visit http://www.directa-plus.com/
(http://www.directa-plus.com/) or contact:
Directa Plus plc +39 02 36714458
Giulio Cesareo, CEO
Giorgio Bonfanti, CFO
Cavendish Securities plc (Nominated Adviser and Joint Broker) +44 131 220 6939
Neil McDonald
Adam Rae
Singer Capital Markets (Joint Broker) +44 20 7496 3069
Rick Thompson
Phil Davies
Alma PR (Financial PR and Adviser) +44 20 3405 0205
Justin James directaplus@almapr.co.uk
Hannah Campbell
Kinvara Verdon
About Directa Plus
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+®) have
multiple applications due to its properties. These G+® 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. The Company holds the Green Economy Mark from London Stock Exchange
which recognises companies that contribute to the global green economy.
Chief Executive Officer's statement
Directa Plus made solid progress in the first half of the year, successfully
improving its margins and securing new contract wins in our core verticals,
Environmental Remediation and Textiles, whilst also investing in technology
and customer and partner networks to advance the Group on its path to
profitability.
We continue to deliver across all four pillars of our strategy - Process,
Product, Time to Market and Partnerships - in all key verticals, with
highlights including the Group's largest single contract to date, post-period
end, for a total of €5.5m with LIBERTY Galati, with the potential for
further expansion, underpinning the Group's confidence to deliver in line with
market expectations for the full year. The success of our strategy is also
evident in our growing contract pipeline, setting the Group on a growth
trajectory.
Whilst revenue in the period is €4.59m vs €5.51m for the prior comparable
period, EBITDA loss has improved to €1.25m (vs €1.40m in H1 2022). We have
continued to improve the Group's margins and the success of these efforts is
reflected in the EBITDA increase and reduced net loss. This has been achieved
through constructive contract renegotiations and price readjustments, and
various cost mitigation actions taken since FY22, in particular to allay the
impact of rising costs to help improve margins in response to higher energy
and raw material costs. The cost reduction plan initiated in FY22 also
included investment in new milling equipment to reduce direct production costs
for the pre-exfoliation phase of production, and in certain cases we have seen
direct costs fall by up to 70%. We continue to assess pricing for both
products and long-term contracts to position the business to withstand future
headwinds by taking full advantage of the technology platform we have
developed.
Our mission remains to deliver the best quality graphene at the best possible
price in the most sustainable way, whilst supporting the industrialisation of
existing and new vertical applications. Alongside this, we continuously
monitor potential markets where we believe that for a relatively small
investment, we can develop products that can generate high commercial
traction, and which have a fast time to market such as with paints and
filtration. The Group made good progress in these areas, securing new wins,
grants and expanding our partner network.
The new wins in the period highlight the increasing interest in graphene
technology and its applications from our partners to support a more
sustainable future. As the market grows globally, we are confident in our
ability to capitalise on this growth, through our unique technology that
supplies G+ graphene material into several applications and products, created
in close collaboration with our partners and customers. Whilst our focus
remains on developing the Group's core verticals, Environmental remediation
and Textiles, the opportunities to expand into new markets in new geographic
locations are encouraging, enabling the business to build strong commercial
momentum.
Among others, the strategic partnership with The SPECTRUM Group, a US
strategic advisory and government relations firm, will be key to exploring the
potential of G+® technologies in the US defence sector. Spectrum will
leverage its expertise and extensive network to support Directa Plus in
driving its business expansion into the military technology sector in the US.
The progress we made in the first half has laid the foundations for a strong
H2, where we expect to deliver even higher margins, to build a highly scalable
and profitable business.
Financials
These results show a solid performance, adeptly navigating the cost pressures
experienced in 2022. Amidst this backdrop, the Group concentrated its
attention on regaining and increasing its margins, the success of which is
showing through in H1 2023. Notwithstanding the lower revenue in the period
compared to H1 2022, as a result of timings of contracts commencing, the Group
successfully reduced its EBITDA loss by 11% (€1.25m) and its Net Loss by 14%
(€1.90m), improving the financial sustainability of the Company with
adequate cash position of €4.24m in line with management expectations.
Our improved margins have been achieved via three main channels: strong
commercial activity supporting contract renegotiations and price adjustments;
specific investments in our production line in order to reduce production
costs, which has seen our costs fall by 70% in the last 12 months; and a
general expenses mitigation plan, formulated without detriment to the Group's
specific investment strategy.
We are pleased to report that the Group has a significant and growing pipeline
expected to commence in the second half of the year. The €5.5m contract
signed with LIBERTY Galati, the Group's largest single contract to date, will
commence in October. This important milestone for the Group enriches our order
portfolio and signals our growth trajectory. Furthermore, the contract is
testament to the value placed in Directa Plus' technology.
Review of Operations
Environmental (71% of annual revenue)
Environmental remediation activities are principally carried out through
Setcar, a subsidiary company based in Romania, which delivered promising
results in the period, in line with management's expectations.
Grafysorber® technology is a hybrid graphene-based solution for treating
water sludges and emulsions containing hydrocarbons. It is at least five times
more effective than current technologies - absorbing more than 100 times its
own weight of oil-based pollutants. Grafysorber® technology is rapidly
gaining commercial traction for water and soil decontamination, evidenced by
the new business wins and repeat business from existing customers secured,
both locally and internationally.
Significantly, post-period end, Setcar secured Directa Plus' largest contract
to date. A €5.5m, three-year contract, with the potential for further
expansion up to a total value of €8.0m, 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. I am incredibly
proud of the team on this achievement which not only demonstrates the
increasing demand for Directa Plus' products and solutions, but also our
ability to support some of the largest businesses in the world.
The Group also launched a pilot for a new concept for produced water treatment
using Grafysorber®, through Setcar, which was showcased at the Setcar
Environmental division 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. Directa Plus is now working with an existing major customer in
Romania to utilise this new solution for treating produced water in one of
their oil production areas, with operations commencing as soon as possible,
before rolling out the solution to customers globally.
Post period, the Group announced 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. Spectrum will
leverage its expertise and extensive network to support Directa Plus in
driving its business expansion into the military technology sector. The
collaboration involves joint efforts in the development of cutting-edge
products, including G+® textile technologies (i.e thermal management,
antistatic, antimicrobial and thermal camouflage solutions), and Grafysorber
technology, with the aim to minimise the time to market for the Group's G+
technologies in the US defence sector.
Textiles (29% of annual revenue)
The Group delivered good growth within the Textiles vertical in H1, as it
expands its range of applications. Our growing customer base spans a variety
of markets benefitting from the advantages of G+® technology which is now
incorporated into fabrics through four different technologies:
· G+® PLANAR THERMAL CIRCUIT®: a functional print that can be applied to any
type of fabrics, creating a circuit.
· G+® MEMBRANES: G+® is incorporated into the polyurethane membrane that can
be laminated self-standing or combined with a PTFE membrane directly to a
fabric.
· G+® DYEING: The fabric is immersed in a water-based bath containing G+®
yielding a completely antimicrobial fabric.
· G+® COATINGS: a special coating process, based on water, able to obtain
high-performance polyurethane, enhanced with G+®.
Workwear
In May 2023, the Group signed an 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. This new contract will add 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.
Grassi, following the allotment of a new public contract, will supply an
Italian institution with PTC® technology.
Luxury
Directa Plus has been involved in the luxury market since near inception and
continues to see interest from brands in the development of innovative,
technical new products to add to their collections. A key highlight in the
Period includes the launch of 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.
There is growing interest from well-known brands across the luxury industry
for future collaborations with Directa Plus which continues to provide the
Group with confidence in the exciting opportunities ahead.
Air filters
Post-period end, 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. The project is for an 18-month
period and has 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 enables the Group to continue investing in and
developing our air filter applications, leveraging the antiviral and
antimicrobial properties of its G+ technologies.
Further textile applications
The Group secured its first exclusive supply agreement for printed graphene
textile Planar Thermal Circuit® (PTC®) in Latin America with a Columbian
based manufacturer of ballistic protection clothing, CIA Miguel Caballero SAS
in October 2022, which continues to progress well. Within the military sector,
the Board is assessing the opportunities for Directa Plus with potential new
customers worldwide, with a particular focus on the US market.
Directa Plus continues to collaborate with the soft goods division of a major
international developer and manufacturer of consumer electronics and related
services. The agreement covers the potential application of G+® as a
protective covering for consumer devices, exploiting its
antiviral-antibacterial properties as well as its thermal and electrical
conductivity. The partnership has delivered exceptional results to date. This
collaboration continues to demonstrate the potential for significant volumes
in the coming years.
Additional industrial verticals
Composites
The asphalt applications of Directa Plus's G+ graphene technology have great
potential and the product developed with Iterchimica, GiPave® provides
exceptional results in terms of increased durability and a reduced carbon
footprint. Directa Plus is now seeing growing market interest internationally
for the product, with current discussions in Italy, Brazil, US and Romania,
and it is gaining commercial traction. The product uses waste plastics that
would not normally be recycled and the asphalt containing GiPave® can itself
be entirely recycled - promoting the 'circular economy,' which reduces waste
and the need for new materials.
Paints
Directa Plus' graphene-based paint solution provides enhanced anti-flame and
anti-corrosion properties compared to normal paints which we have identified
as another area with high-return potential. We have hired a team of
experienced people in the field and initiated positive discussions with major
international players in Europe and Asia to accelerate commercialisation.
In H1 2023 the Group has been 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 (G+)
product, Grafyshield G+, initially in Germany, Austria, Switzerland and
Poland, with the potential for further expansion in Europe.
Intellectual Property
As at September 2023, the Group's patent portfolio comprises 85 patents
granted and 37 patents pending. The patents are grouped into 22 families, 4
covering G+® production and 18 covering G+® products and applications.
· June 2023 - two new Italian patents, the EP patent, which relate to the
'apparatus for treating materials with plasma', and the ET patent, which
relates to the 'composition comprising graphene for the treatment of textile
articles'.
· March 2023 - an Italian patent for its G+® graphene technology for
air-filtering applications.
We are focused on creating value from our wide IP portfolio. Discussions on
potential licensing contracts are ongoing with potential for further patent
applications and awards in H2 2023.
Outlook
I am proud of what the team has achieved in the first half of the year to
position the business for scale. We secured several high-level wins in H1,
bolstered in August with the award of our largest single contract to date with
LIBERTY, demonstrating that our technology is not only valid, but valued by
our customers. We continue to grow our new business pipeline across Europe,
with expanding potential opportunities in the US and Asia, and the investments
we have made to date in our technology and partner and customer networks,
confirm we have the right strategy in place to capture this growing
opportunity as we progress on a path towards profitability.
The Company has entered H2 in a strong position, where we will continue to
focus on growing the business and improving margins over time.
Giulio Cesareo
Chief Executive Officer
26 September 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 20223
Unaudited Unaudited Audited
In Euro 30-Jun-23 30-Jun-22 31-Dec-22
Continuing operations
Revenue 4,591,757 5,508,706 10,856,144
Other income 134,188 100,667 424,926
Changes in inventories of finished goods and WIP 80,604 174,084 (191,510)
Raw materials and consumables used (2,247,739) (2,984,979) (5,856,661)
Employee benefits expenses (2,236,100) (2,259,310) (4,424,087)
Depreciation and amortisation (624,757) (646,657) (1,403,933)
Other expenses (1,572,167) (1,943,883) (4,421,177)
Results from operating activities (1,874,214) (2,051,372) (5,016,298)
Finance income 52,901 1,009 5,904
Finance expenses (86,860) (161,513) (317,804)
Net finance costs (33,959) (160,504) (311,900)
Loss before tax (1,908,173) (2,211,876) (5,328,198)
Tax (expense)/income 4,969 (6,149) 53,197
Loss after tax from continuing operations (1,903,204) (2,218,025) (5,275,001)
Loss of the year (1,903,204) (2,218,025) (5,275,001)
Other Comprehensive income items that will not be reclassified to profit or
loss
Defined Benefit Plan re-measurement gains and losses (834) 1,350 (6,790)
Other comprehensive expense for the year (no tax impact) (834) 1,350 (6,790)
Total comprehensive expense for the year (1,904,038) (2,216,675) (5,281,791)
Loss attributable to
Owner of the Parent (1,851,444)
(2,230,996) (4,822,044)
Non-controlling interests 51,760) 12,971 (452,957)
(1,903,204) (2,218,025) (5,275,001)
Total comprehensive expense attributable to:
Owners of the Company (1,852,278) (2,229,646) (4,828,834)
Non-controlling interests (51,760) 12,971 (452,957)
(1,904,038) (2,216,675) (5,281,791)
Loss per share
Basic loss per share 2 (0.03) (0.03) (0.07)
Diluted loss per share 2 (0.03) (0.03) (0.07)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
Unaudited Unaudited Audited
In Euro Note 30-Jun-23 30-Jun-22 31-Dec-22
Assets
Intangible assets 1,556,023 1,829,204 1,664,666
Investments - - -
Property, plant and equipment 3,445,149 3,769,629 3,861,151
Other receivables 69,352 553,904 69,720
Non-current assets 5,070,524 6,152,737 5,595,537
Inventories 1,437,610 1,597,476 1,121,912
Trade and other receivables 3,438,591 3,052,595 4,115,846
Cash and cash equivalent 4,241,161 7,776,689 5,727,768
Current assets 9,117,362 12,426,760 10,965,526
Total assets 14,187,886 18,579,497 16,561,063
Equity
Share capital 205,469 205,469 205,469
Share premium 39,181,789 39,181,789 39,181,789
Foreign Currency Translation Reserve
(45,151) (45,100) (39,161)
Retained Earnings (31,893,194) (27,569,021) (30,069,844)
Equity attributable to owners of Group 7,448,913 11,773,137 9,278,253
Non-controlling interests 1,490,674 1,880,198 1,546,887
Total equity 8,939,587 13,653,335 10,825,140
Liabilities
Loans and borrowings 1,894,125 1,687,953 1,378,141
Lease liabilities 237,240 363,877 395,260
Employee benefits provision 389,702 519,055 554,444
Other payables 64,158 64,392 64,366
Deferred tax liabilities 28,050 73,332 33,095
Non-current liabilities 2,613,275 2,708,609 2,425,306
Loans and borrowings 418,875 137,434 767,677
Lease liabilities 265,506 204,868 239,068
Trade and other payables 1,950,643 1,875,251 2,112,875
Provision - - 190,997
Current liabilities 2,635,024 2,217,553 3,310,617
Total liabilities 5,248,299 4,926,162 5,735,923
Total equity and liabilities 14,187,886 18,579,497 16,561,063
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
In Euro Share Capital Share Premium Foreign currency translation reserve Retained earnings Total Non-controlling interests Total Equity
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)/income for the period
Loss of the Period - - - (2,230,996) (2,230,996) 12,971 (2,218,025)
Total other comprehensive (loss)/income - - - 1,350 1,350 - 1,350
Total comprehensive (expense)/income for the period - - - (2,229,646) (2,229,646) 12,971 (2,216,675)
Capital raised 76 22,762 - - 22,838 - 22,838
Translation reserve - - (21,991) (21,991) - (21,991)
Increase in share capital of Setcar - - - - - (174,711) (174,711)
Share-based payment - - - 12,765 12,765 - 12,765
Balance at 30 June 2022 205,469 39,181,789 (45,100) (27,569,021) 11,773,137 1,880,198 13,653,335
Total comprehensive (expense)/income for the period
Loss of the Period - - - (2,591,048) (2,591,048) (465,928) (3,056,976)
Total other comprehensive (expense)/income - - - (8,140) (8,140) - (8,140)
Total comprehensive (expense)/income for the period - - - (2,599,188) (2,599,188) (465,928) (3,065,116)
Capital raised - - - - - - -
Translation reserve - - 5,939 - 5,939 - 5,939
Increase in share capital of Setcar - - - - - 132,617 132,617
Share-based payment - - - 98,365 98,365 - 98,365
Balance at 31 December 2022 205,469 31,181,789 (39,161) (30,069,844) 9,278,253 1,546,887 10,825,140
Total comprehensive (expense)/income for the period
Loss of the Period - - - (1,851,444) (1,851,444) (51,760) (1,903,204)
Total other comprehensive (loss)/income - - - (834) (834) - (834)
Total comprehensive (expense)/income for the period - - - (1,852,278) (1,852,278) (51,760) (1,904,038)
Capital raised - - -
Translation reserve - - (5,990) - (5,990) (4,453) (10,443)
Change of Setcar non-controlling interests - - - - - - -
Share-based payment - - - 28,928 28,928 - 28,928
Balance at 30 June 2023 205,469 31,181,789 (45,151) (31,893,194) 7,448,913 1,490,674 8,939,587
CONSOLIDATED STATEMENT OF CASH FLOW
For the six months ended 30 June 2023
(Unaudited) (Unaudited) Audited
In Euro 30 Jun 2023 30 Jun 2022 31 Dec 2022
Cash flows from operating activities
Loss for the year before tax (1,908,173) (2,211,876) (5,328,198)
Adjustments for:
Depreciation 407,484 391,732 861,127
Amortisation of intangible assets 217,273 254,925 542,806
Disposal loss on tangible assets 27,889 - 20,508
Share-based payment expense 28,928 12,765 111,130
Finance income (52,901) (1,009) (5,904)
Finance expense 81,273 153,812 303,044
Interest of lease liabilities 5,587 7,702 14,760
Other provision (190,997) - 190,997
(1,383,637) (1,391,949) (3,289,730)
(Increase)/decrease in:
- inventories (315,698) (226,600) 248,963
- trade and other receivables, prepayments 677,623 (115,384) (694,450)
- trade and other payables (178,957) (261,375) 120,918
- provisions and employee benefits (175,170) 11,360 28,819
Net cash used in operating activities (1,375,839) (1,983,948) (3,585,480)
Cash flows from investing activities
Interest received 10,698 1,009 5,904
Investment in intangible assets (97,569) (291,853) (415,195)
Acquisition of property, plant and equipment (19,370) (178,395) (759,821)
Net cash used in investing activities (106,241) (469,239) (1,169,112)
Cash flows from financing activities
Proceeds from Capital raise and exercise of share options - 22,838 22,838
Interest paid (71,886) (33,603) (97,456)
New borrowings 670,155 285,680 988,938
Repayment of borrowings (502,973) (930,013) (1,312,840)
Repayment of lease liabilities (131,582) (111,840) (223,197)
New lease liabilities - - 191,700
Net cash from (used in)/ financing activities (36,286) (766,938) (430,017)
Net (decrease)/increase in cash and cash equivalent (1,518,366) (3,220,125) (5,184,609)
Exchange (losses)/gains on cash and cash equivalent 31,759 (133,654) (218,091)
Cash and cash equivalents at beginning of the period 5,727,768 11,130,468 11,130,468
Cash and cash equivalents at end of the period 4,241,161 7,776,689 5,727,768
New lease liabilities
-
-
191,700
Net cash from (used in)/ financing activities
(36,286)
(766,938)
(430,017)
Net (decrease)/increase in cash and cash equivalent
(1,518,366)
(3,220,125)
(5,184,609)
Exchange (losses)/gains on cash and cash equivalent
31,759
(133,654)
(218,091)
Cash and cash equivalents at beginning of the period
5,727,768
11,130,468
11,130,468
Cash and cash equivalents at end of the period
4,241,161
7,776,689
5,727,768
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the 6 months ended 30 June 2023
1. Basis of preparation
(a) Statement of compliance
The financial information contained in this announcement does not constitute
statutory financial statements within the meaning of Section 435 of the
Companies Act 2006.
The financial information for the six months ended 30 June 2023 is
unaudited. In the opinion of the Directors, the financial information for
the period fairly represents the financial position of the Group. Results of
operations and cash flows for the period are in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006. The accounting policies, estimates and judgements applied are consistent
with those disclosed in the Group's statutory financial statements for the
year ended 31 December 2022. The interim condensed consolidated financial
statements do not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with the full
annual report for the year ended 31 December 2022.
All financial information is presented in Euro, unless otherwise disclosed.
The Directors of the Company approved the financial information included in
these Interim condensed consolidated financial statements on 26 September
2023.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis
unless otherwise stated.
(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
Italian operating subsidiary is Euro ('€'). The functional currency of the
Romanian subsidiary is RON.
(d) Going concern
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, from the working
capital and other borrowing facilities available to it and from the issue of
equity capital.
As of 30 June 2023, the Group had net assets of €8.94m (31/12/2022:
€10.83m) and cash and cash equivalent of €4.24m (31/12/2022: €5.73m).
The Directors are aware that there is an ongoing need to monitor closely the
cash flow requirements of the Company and Group, particularly in light of the
recent developments in the markets due to the COVID-19 pandemic, the war in
Ukraine, inflation trends and raises in interest rates, which have had a
significant impact on global economies and could affect the business. In
this regard, the Group prepares annual budgets and forecasts in order to
ensure that there is sufficient liquidity to meet liabilities and commitments
as they fall due. The Directors regularly review updates to the scenario
planning such that the Board can put in place appropriate mitigating actions
that are within their control.
The Directors prepare annual budgets and forecasts in order to ensure that
they have sufficient liquidity in place in the business.
The forecasts prepared by the Directors show that the Group has sufficient
liquidity in place to support the plan and strategy for the future
developments of the business over the next 12 months.
The Directors also modelled reasonably plausible downside scenarios. These
include scenarios which reflect the loss of major contracts, reduction in
margin and delays contracts being executed. Each of these scenarios could
adversely impact the Group. Management also modelled the impact of mitigating
factors within their control, including delaying capital expenditure and
additional reductions in costs in order to maintain sufficient liquidity.
Under these reasonably plausible downsides, the Group would utilise its cash
resources before December 2024 and require additional funding. While the Group
successfully raised £7m in 2021 that was fully subscribed by existing and new
investors, there is no certainty that the Group will be able to raise further
funds through the issue of equity in the future. As a consequence, this
represents a material uncertainty that may cast significant doubt on the Group
and Parent Company's ability to continue as a going concern and therefore the
Group may be unable to realise its assets and discharge its liabilities in the
normal course of business.
Based on the analysis above, the Directors have a reasonable expectation that
the Group has adequate resources to support the Group's activities for the
foreseeable future and have concluded it is appropriate to adopt the going
concern basis of accounting in the preparation of the financial statements.
2. Earnings Per Share
The earnings per share have been calculated using the weighted average of
ordinary shares. The Company was loss making for all periods presented.
Therefore, the dilutive effect of share options has not been taken account of
in the calculation of diluted earnings per share, since this would decrease
the loss per share for each of the period reported.
Change in number of ordinary shares Total number of ordinary shares Days Weighted number of ordinary shares
At 31 December 2020 63,624 61,174,587 365 61,087,158
-At 31 December 2021 4,857,539 66,032,126 365 61,380,599
-At 31 December 2022 25,523 66,057,649 365 66,053,593
At 30 June 2023 - 66,057,649 181 66,057,649
Earnings per share
30 Jun 2023 30 Jun 2022 31 Dec 2022
Loss for the year (1,851,444) (2,230,996) (4,822,044)
Weighted average number of shares:
- Basic 66,057,649 66,049,470 66,053,593
- Diluted 67,473,141 67,044,295 67,189,085
Loss per share
- Basic (0.03) (0.03) (0.07)
- Diluted (0.03) (0.03) (0.07)
-ends-
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