Directa Plus Plc
3rd Floor
11-12 St. James’s Square
London
SW1Y 4LB
United Kingdom
www.directa-plus.com
Graphene is the
material of the future
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Annual Report & Accounts 2019
Directa Plus
Annual Report & Accounts 2019
Directa Plus
Annual Report & Accounts 2019
Directa Plus in 2019
Discover how we are using graphene to help customers’
revolutionize the performance of their products.
Directa Plus is one of the largest producers and suppliers
worldwide of graphene nanoplatelets-based products for use
in consumer and industrial markets.
Our graphene nanoplatelets-based products are natural, chemical-free and
sustainably produced. Our production process is designed to meet large
supply chains' requirements for volume, cost and quality control.
By incorporating Directa Plus’s unique graphene blends, identified by
the G+ brand, our customers can revolutionize the performances
of their own end products in commercial applications such as
textiles, tyres, composite materials and environmental
solutions. We partner with our customers to enable
them to offer the high-performance benefits of
G+ in their own products.
Our company has a unique and patented
technology process and a scalable and portable
manufacturing model. We produce graphene
nanoplatelets-based products at our own
factory near Milan, Italy, and can set up
additional production at customer locations to
reduce transport costs, waste and time-to-
utilisation. We are strongly committed to
environmental sustainability and abided by a strong
Code of Ethics in all aspects of our business practice.
Contents
01 Highlights
02 Target market progress
03 At a glance
04 Chairman’s statement
06 Our strategy and business model
08 Chief Executive Officer’s review
14 Market review
16 Chief Financial Officer’s review
18 Directors’ biographies
20 Section 172
21 Directors’ report
24 Corporate governance report
28 Directors’ remuneration report
30 Audit Committee report
31 Remuneration Committee report
32 Independent auditor’s report
36 Consolidated statement of comprehensive income
37 Consolidated and company statement of financial position
38 Consolidated statement of changes in equity
38 Company statement of changes in equity
39 Consolidated and company statement of cash flows
40 Notes to the consolidated financial statements
IBC Directors, secretary and advisers
Directors, secretary and advisers
Directors
Sir Peter Middleton – Non-Executive Chairman
Giulio Cesareo – CEO and Founder
Marco Ferrari – Chief Financial Officer
David Gann – Non-Executive Director
Neil Warner – Non-Executive Director
Richard Hickinbotham – Non-Executive Director
Company Secretary
Marco Ferrari
Registration number
04679109
Registered office
3rd Floor
11-12 St James’s Square
London SW1Y 4LB
United Kingdom
Principal place of business
Directa Plus Plc
ComoNExT Science Park
Via Cavour 2
22074 Lomazzo (Co)
Italy
Nominated adviser and broker
Cantor Fitzgerald Europe
5 Churchill Place
Canary Wharf
London E14 5HU
United Kingdom
Joint broker
N+1 Singer
1 Bartholomew Lane
London EC2N 2AX
United Kingdom
Auditors
BDO LLP
55 Baker Street
London W1U 7EU
United Kingdom
Legal advisers
Fox Williams LLP
10 Finsbury Square
London EC2A 1AF
United Kingdom
Registrar
Link Market Services Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Financial PR adviser
Tavistock
1 Cornhill
London EC3V 3NR
United Kingdom
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Printed sustainably in the UK
by Pureprint, a CarbonNeutral®
company with FSC® chain
of custody and an ISO 14001-
certified environmental
management system recycling
over 99% of all dry waste.
Overview
Strategic Report
Governance
Financial statements
Additional information
Highlights
Directa Plus
Annual Report & Accounts 2019
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Proven, successful strategy maintained
• Target existing products and markets that can be significantly improved with the
addition of Directa Plus products
• Working with established manufacturers and vendors worldwide, we are able to gain
market insight and access, further develop our technologies, bring products to market
faster, and capture maximum value from the supply chain by providing expertise,
know-how and services as well as materials
• Focus on those vertical markets in which the Company can gain strong traction –
textiles, environmental remediation, elastomers and composites
COVID-19
• The Company has been concerned first and foremost with the health and well-being
of our employees as well as those of our industrial partners and the wider community
• We have been able to maintain production and remain effective as a business
through remote working
• A new Emergency COVID-19 project, using G+® graphene, could offer the right
balance of filtration and breathability in masks whilst providing similar anti-bacterial
performance to gowns and gloves. We are currently undertaking studies to
investigate the potential of a new anti-viral molecule coupled with G+® graphene
Financial highlights
Product sales and service revenue
increased to €2.63 million (2018:
€2.25 million).
Total income (including grants) increased
to €2.81m (2018: €2.50 million).
Loss after tax €3.40 million (2018: €3.96
million), in line with market expectations.
€2.63 million
€2.81 million
(€3.4 million)
Successful placing to raise €8.52m
(£7.41 million) in October.
Acquisition of a 51 per cent majority holding
in Setcar S.A. completed in November and
has been earnings accretive.
€8.52 million
51%
Cash and cash equivalents at year end of
€10.91 million (2018: €5.50 million),
providing the Group with the financial
capacity to support our growth ambitions
and to withstand at least until the end of
2021 the uncertainties and challenges
created by the COVID-19 pandemic.
€10.91 million
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Directa Plus
Annual Report & Accounts 2019
Target market progress
Textiles
• New agreement signed with partner and customer Alfredo Grassi covering workwear and military
outerwear in Europe and North Africa
• Potential new alliances for the workwear and transportation markets on a worldwide basis under
evaluation, with a specific focus on the UK and the US
• Exclusive agreement with Loro Piana for the commercialisation of Loro Piana fabrics and garments
enriched by G+® technology, with an initial duration of three years and a minimum value of €800,000
Environmental Remediation
• Award of first Grafysorber® full service contract in July to treat sludges and by-products for an
international oil and gas company operating European onshore wells
• Transformational acquisition of a 51 per cent majority holding in Setcar S.A. completed in November
has been earnings accretive
– a further 47 per cent was acquired by the parent company of our industrial partner GSP Group, a leading
provider of offshore integrated services for the oil and gas industry with rigs operating in Romania,
Turkey, Greece and Mexico
– a well regarded business, established in 1994, that fulfils our key strategic objective of fully integrating
into the value chain in one of our most important verticals
• Under the new partners’ ownership, Setcar gained its first contract in December to provide a suite
of environmental decontamination services on the Trinity – 1X gas project in Block 30 offshore
Romania for approximately US$1 million
• In February 2020, Setcar gained a contract to supply environmental services to GSP Offshore,
part of GSP, with a value of approximately €700,000 per annum over seven years
• Grant of European patent in April 2020 covering the use of Grafysorber® to decontaminate water
containing hydrocarbons resulting from the production of oil
Asphalt
• Successful real world trials of G+® enhanced asphalt supermodifier, Gipave, developed with
partner Iterchimica, on public roads in Rome and Oxfordshire in the UK
• Post year end, in January 2020, six-month trial began on a high traffic taxiway used for
intercontinental aircraft at Rome's Fiumicino airport
• Agreement signed in April 2020 covering the exclusive supply of G+® graphene to Iterchimica
in the asphalt and bitumen sector worldwide for an initial duration of three years
Corporate
Current patent portfolio increased to
30 patents granted, seven of which were
granted post year-end, with important
grants and filings in both the US and
China in 2019.
EU grant received in January 2020 to
develop an environmentally sustainable
technology to digitally print G+® graphene
on fabrics.
>30 Patents
OEKO-TEX® independent non-toxic
certification (an Eco Passport) received in
February 2020 for our G+® printing paste
technology.
Frost and Sullivan Technology Innovation
Award granted to the Company in May 2020
for unique Grafysorber® performances in
environmental remediation industry.
Grafysorber®
Overview
Strategic Report
Governance
Financial statements
Additional information
At a glance
Directa Plus
Annual Report & Accounts 2019
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Our graphene nanoplatelets-based products are natural, chemical-free
and sustainably produced. Our production process is designed to meet
large supply chains' requirements for volume, cost and quality control.
Our vision is to produce nanoplatelets-based products that are
natural, chemical-free and sustainable.
G+® Technology
Under our G+® brand, we offer a range of graphene nanoplatelets-based products – either
ready-to-use or custom-blended to meet customers' specific technical requirements.
Benefits of our products
• Chemical-free • Certified as non-toxic • High purity • Consistent quality
• Taylor-made particles shape • Abundant, safe and non-toxic raw material
4 target vertical markets
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Environmental Remediation
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Textiles
Using our Grafysorber® technology to help the oil
& gas industry to tackle environmental issues from
hydrocarbon pollution.
Printing our nanoplatelets on fabrics, and enhanced
membranes for the sports, luxury, fashion, workwear
and military markets.
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Elastomers
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Composites
Improving the efficiency and longevity of tyres for all
road transport.
Introducing the next generation of graphene-
enhanced asphalts for a lower carbon world.
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Directa Plus
Annual Report & Accounts 2019
Chairman’s statement
Sir Peter Middleton
Chairman
I am pleased to report that 2019 was a
transformational year for Directa Plus.
Towards the end of the year, we completed
the purchase of a 51.0% interest in the
environmental services company Setcar and
further strengthened the Group’s balance
sheet through an oversubscribed Placing and
Open Offer. Despite the added demands of
our acquisition of Setcar, strong commercial
momentum was sustained across the
business, re-enforcing our position as a
leading producer and supplier of differentiated
graphene-based products under our G+® brand.
Our full year revenue of €2.81m was up 17%
over the prior year including a €0.88m
contribution from Setcar since its acquisition
in November 2019. We have a robust balance
sheet with year-end net cash of €10.9m that
provides us with the financial capacity to
support our growth ambitions and to
withstand the uncertainties and challenges
created by the COVID-19 pandemic.
The Group’s graphene manufacturing
operations and headquarters are located in
Lomazzo in the Lombardy region of Northern
Italy, which has been one of Europe’s worst
affected areas for COVID-19. As such the Board
has been concerned first and foremost with
the health and well-being of our employees
as well as those of our industrial partners and
the wider community in which we operate.
It is a testament to our executive team that
the decision was taken early to reduce the
headcount at our factory to a minimum and
to move all remaining staff to work remotely.
“We now have a strong confirmed forward order book for
2020 and a growing number of differentiated products
across large, diverse end markets. In environmental
services, we expect to continue to make progress this
year. In textiles, new product launches, as well as
geographical expansion, place the Group in a good position
to support textile producers in meeting the needs
triggered by COVID-19.”
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
05
As a result, our manufacturing operations are
continuing with the production of G+® products
and our development activities continue apace.
On behalf of the Board I would like particularly
to thank our leadership team and our
employees for their dedication and hard work
in a difficult and very challenging environment.
The benefits of our G+® graphene are becoming
increasingly well recognised by our existing and
potential partners with whom we are closely
engaged. Our low cost, scalable manufacturing
plant uses a proprietary and patented
chemical-free process to produce pristine
graphene-based materials and hybrid
graphene materials for a variety of uses. Our
G+® product is proven to be non-toxic and is
available in various forms such as powder,
liquid and paste and can be tailored to
optimise the performance and characteristics
of our partners end products. We are creating
a generation of new products with exceptional
properties and the progress we are making
in our targeted business verticals is detailed
within the Chief Executive’s Review.
The acquisition of Setcar was an important
milestone for the Group in our
commercialisation strategy for our patented
Grafysorber® oil decontamination and
remediation product. Our partner GSP has
extensive operations with an established
infrastructure, including strong third party
customer relationships, to promote the
unparalleled benefits of Grafysorber ®. The
acquisition of Setcar has enabled the Group
to capture additional value for shareholders
through the provision of added value upstream
services and by moving away from the
provision of Grafysorber® alone. We are
delighted to welcome the Setcar team to
Directa Plus and look forward to delivering
on our ambitions in this key market vertical
alongside further progress in textiles, our
other key vertical.
Our reputation is of course fundamental to
our future success and set alongside our
growing knowledge pool and technical ability,
our forward-thinking approach continues to
create new opportunities. Post year-end we
signed a worldwide agreement with asphalt
additive company Iterchimica following four
years of investment in R&D and extensive
trials of Gipave, the asphalt additive based on
G+® graphene. The Board believes there is a
significant opportunity for Gipave to capture a
material share of the asphalt and bitumen
paving market based on its proven real-world
performance. Extensive work is currently
being undertaken also to assess the potential
for G+® to be incorporated into medical
devices such as masks, gowns and gloves. We
have long known of the strong anti-bacterial
and thermal properties of our graphene but
there may be a similar anti-viral effect also
and we hope that G+® may be able to assist in
the fight against COVID-19.
In closing, I should like to thank our
shareholders, new and old, for their continued
loyalty and support. Directa Plus continues to
position itself for a strong future and our
ability to grow which reflects our stakeholders’
confidence in the business and strategy. 2020
brings with it greater challenges and
uncertainties than usual as a result of
COVID-19. We shall not escape its impact,
particularly in fashion related textiles, but
there are also reasons to be optimistic.
We now have a strong confirmed forward
order book for 2020 and a growing number of
differentiated products across large, diverse
end markets. In environmental services, we
expect to continue to make progress this year
through Setcar providing growing revenues
and profits that will enable us to invest further
in the business. In textiles, new product
launches, potentially including bacteria
and virus inhibiting materials, as well as
geographical expansion, place the Group in a
good position to support textile producers in
meeting the needs triggered by COVID-19. The
Board remains confident that 2020 will see
further positive progress and developments.
Sir Peter Middleton
Chairman
20 May 2020
The acquisition of Setcar was an important
milestone for the Group in our
commercialisation strategy for our patented
Grafysorber® oil decontamination and
remediation product.
Grafysorber®
Strong commercial momentum was sustained
across the business, re-enforcing our position
as a leading producer and supplier of graphene-
based products under our G+® brand. Full year
revenue of €2.81m was up 17%.
€2.81million
06
Directa Plus
Annual Report & Accounts 2019
Our strategy
Welcome to the Graphene Age.
G+® graphene is not just a material. It's a vision. Our vision.
It's the way we are changing everything in the world.
Our vision is for a world that is cleaner and healthier by producing graphene
products that not only are natural and chemical free but help achieve
this and enhance clients own products.
Directa Plus has developed a proprietary scalable, modular manufacturing
process to produce and supply high quality engineered graphene materials –
marketed under its ‘Graphene Plus’ (G+®) brand – which can be used by third
parties in a wide variety of industrial and commercial applications.
Our Core Values
1. DIVERSITY Directa Plus has always invested in diversity. The desire to differentiate
ourselves has been reflected over the years in our product: G+® – Graphene Plus, a unique
and inimitable creation whose main features are its purity and sustainability. The uniqueness
of this material, in all its forms, comes directly from the production method: at Directa Plus
we transform every single gram of graphite into a gram of graphene, through a process
based entirely on the principles of physics, without any chemical processing.
2. QUALITY Graphene Plus is a different material, unique and absolutely pure. In order to
guarantee the highest quality of our products and of the services we provide, Directa Plus has
developed innovative working methods, and we have organised the Advanced Development
Area, a lab specialised in the applications of G+® graphene.
3. SAFETY For Directa Plus, safety has always been a core value. Over the years we have invested
effort and resources in the creation of a material that is able to ensure maximum safety, both for
those who use it and for those who work on it. The safety of our G+® graphene is proven by the
independent certifications of non-toxicity and non-cytotoxicity of all G+® products.
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Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
07
We seek to embed our products first with Italian
(and regional) companies with large international
footprints to provide reference customers, before
rolling out globally. The success of this strategy
can be seen in our progress in the textiles and
environmental remediation markets.
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Brand
strength and
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Operational
efficiency
®
Focused
and clear
direction
Flexible
approach
International
development
Financial
stability
+ Integrating our intellectual property into
new products allows our customers to gain
significant competitive advantage.
+ The commercialisation model we
follow is based on capturing for our
shareholders a proportion of customers’
additional revenues and profits.
+ This could be royalty payments, upfront
enabling licence payments, joint-ventures
to get closer to end-users or a combination
of all three.
+ As a company, we are committed to sharing
in the proceeds of customers’ growth from
new products, rather than merely supplying
an essential ingredient.
08
Directa Plus
Annual Report & Accounts 2019
Chief Executive Officer’s review
Giulio Cesareo
CEO
Introduction
2019 saw great progress for Directa Plus not
only in our key verticals of environmental
remediation solutions and textiles, but also in
the other industrial sectors where we have
developed graphene enhanced products and
services where we see material opportunities.
Strategy and Business model
We continue to believe that successful
innovations are collaborative, starting from
existing ideas, resources and contacts and
facilitated through the introduction of
competencies and assets from partners.
These are then combined together in a new
market context, resulting in new next
generation products or significant
improvements to existing products.
We believe that our commercial strategy has
been validated as the best path for Directa Plus.
By working with established manufacturers
and vendors, we are able to gain market insight
and access, further develop our technologies,
bring products to market faster, and capture
maximum value from the supply chain.
We always seek to develop the right business
model to suit the product and partnership.
This ethos means that we retain and actively
promote flexibility and optionality throughout
our Company.
“2018 has seen accelerating commercial traction with
agreements and collaborations signed, and orders
received, for products to be delivered over the next
twelve months. We are gaining real, measurable
commercial traction and maintaining our technological
and commercial lead over our competitors,
demonstrated by the number of products launched.”
Overview
Strategic Report
Governance
Financial statements
Additional information
Annual Report & Accounts 2019 09
Directa Plus
Our R&D efforts throughout 2019 supported
our strategy and we have generated
significant new intellectual property assets,
across our industrial landscape. We continue
to find new ways to improve and optimise
products and services for end users with
the use and development of our graphene
based technology.
Directa Plus’s stature as a differentiated
producer and supplier of graphene continues
to build strongly and during the year this was
additionally recognised through an invitation
to join the Industry Council of the US National
Graphene Association (NGA), the main body
in the US advocating and promoting the
commercialisation of graphene. Membership
of the NGA’s Industry Council is available to
a select group of influential graphene
companies that are positioned to assume a
leading role in the development of the global
graphene market. Directa Plus is very proud
to be part of the organisation.
Potential for G+®
to protect against the
spread of COVID-19
As you will know, Northern Italy, where our
graphene manufacturing facility and
corporate offices are situated has been badly
impacted by COVID-19 and the measures
necessary to prevent its spread. Despite this,
I am pleased to report that the Group have
been able to maintain production and remain
effective as a business through remote
working. Keeping all our employees safe and
ensuring their well-being is of the utmost
importance to us.
Against this backdrop, Directa Plus has been
dedicating R&D efforts to find ways to help
alleviate the spread of COVID-19. Whilst
we have known of graphene’s strong
bacteriostatic properties for some time, there
are indications that there may similarly be
an anti-viral effect that can be utilised by
applying graphene to fabric. As such, we have
been working on a new project, Emergency
COVID, which uses graphene in the
production of medical devices such as masks,
gloves and gowns to provide enhanced
prevention properties that could make an
important contribution in the easing of
restrictions in the second phase response
to the pandemic.
We believe that Personal Protective
Equipment, enhanced appropriately by G+®
graphene, could offer the right balance of
filtration and breathability in masks whilst
providing anti-bacterial and potentially
anti-viral performance that would also be
effective in clothing such as gowns and
gloves. This could result in a safer “go to work”
and “go to sport” environment for all citizens
and I hope to be able to report this time next
year that Directa Plus has been able to play
its part in turning the tide against COVID-19.
Textiles
The intelligent use of graphene in modifying
fabrics can provide a variety of performance
benefits to the wearer of garments made
using these enhanced fabrics. Improved
thermal regulation delivers much higher
levels of comfort and, for example, more
efficient output for sportspeople, manual
or physical workers, and can expand the
range of fabrics suitable to different
climactic conditions. Graphene is applied to
garments through our proprietary fabric
printing technology and through laminated
graphene membranes. We are also working
on novel ways to introduce graphene to the
weave of fabrics themselves.
Directa Plus’s progress in the period was
extremely pleasing, in particular the
partnership with Alfredo Grassi and our
exclusive agreement with Loro Piana,
as further detailed below.
Alfredo Grassi
Our long-standing industrial partnership with
Alfredo Grassi S.p.A (Grassi), was deepened in
May 2019 with an agreement to collaborate in
the further development of graphene
enhanced workwear and to expand into
military outerwear.
Our R&D efforts throughout 2019 supported
our strategy and we have generated
significant new intellectual property assets,
across our industrial landscape. We continue
to find new ways to improve and optimise
products and services for end users.
We have been working on a new project,
‘Emergency COVID’, which uses graphene
in the production of medical devices such
as masks, gloves and gowns to provide
enhanced prevention properties. This could
result in a safer “go to work” and “go to
sport” environment for all citizens.
ABOVE LEFT / ABOVE: Samples of our new G+®
COVID prevention masks and a weekly filter pack.
RIGHT: Giulio Cesareo with Riccardo Comerio CEO
of rubber machinery manufacturer, Comerio Ercole,
agreeing an R&D tie-up to co-develop tire mixing
techniques and technologies for processing
formulations containing graphene.
10 10
Directa Plus
Annual Report & Accounts 2019
Chief Executive Officer’s review continued
The agreement between Directa Plus and
Grassi provides for exclusive co-operation in
these key sectors, leveraging on the
established advantages of our Planar
Thermal CircuitTM. The main objectives are:
+ To promote the uptake of graphene
enhanced, advanced workwear and
military outerwear in Italy, most of
Europe and North Africa;
+ To develop new products suitable for
end users in relevant industrial verticals;
+ To build a greater joint understanding
of market trends and drivers affecting
demand for such products; and
+ To offer end users the maximum level of
sustainability along the entire supply chain.
We are also evaluating potential new alliances
for the workwear vertical on a global basis
with a specific focus on the UK and the US
and will update shareholders at the
appropriate time.
Loro Piana
In March 2019 we announced an exclusive
agreement with Loro Piana for the
commercialisation of Loro Piana fabrics
and garments enriched by Directa Plus’s G+®
technology, with an initial duration of three
years and a minimum value of €800,000.
Loro Piana is renowned for the quality of its
fabrics and garments, even amongst the global
luxury fashion industry, and for its extreme
sensitivity to the environment along its entire
value chain. These principles align perfectly
with Directa Plus’s own culture and we look
forward to jointly developing and achieving
significant innovations in high quality fabrics.
Environmental remediation
Environmental remediation solutions are
amongst Directa Plus’s most commercially
advanced activities. The Group is successfully
gaining and fulfilling contracts using our
proprietary Grafysorber® technology.
Grafysorber® is used to treat water
contaminated by hydrocarbons and is at
least five times more effective than current
technologies, adsorbing more than 100 times
its own weight of oil-based pollutants.
Furthermore, Grafysorber® is sustainably
produced in common with all our products,
and it is non-flammable and reusable, with
the adsorbed hydrocarbons recoverable.
Oil & Gas supply and service contract
In July, Directa was awarded an
environmental remediation contract worth
approximately €150,000 to treat several
thousand cubic meters of sludges and
by-products for an international oil and
gas company, operating European onshore
wells. Directa Plus is providing a full service
to the customer through the supply of a
mobile treatment unit and operating the
recovery process.
Setcar S.A.
The key development in the year was the
announcement of our acquisition of a 51 per
cent majority holding in Setcar S.A. in
September 2019, with completion finalised in
November 2019. Setcar was established in
1994 and is a highly regarded environmental
remediation services business based in Braila,
Romania, and operating in the Black Sea
region. Setcar has been a commercial partner
of Directa Plus since 2014 and previously has
contributed to the industrial development of
our Grafysorber® mobile decontamination
units, so we are familiar with their capabilities
and clear sighted on the potential
opportunities.
The acquisition fulfils our key strategic
objective of fully integrating into the value
chain in one of our most important verticals.
We are working with established industrial
partners to provide a service solution to take
advantage of their expertise and existing
commercial relationships, whilst also capturing
maximum value from the supply chain.
RIGHT: Giulio Cesareo (second left) and COO
Razvan Popescu (left) at Setcar.
The agreement between Directa Plus and
Alfredo Grassi provides for exclusive
co-operation in key sectors, leveraging on
the established advantages of our Planar
Thermal CircuitTM.
In February 2020 we signed an exclusive
agreement with Loro Piana for the
commercialisation of Loro Piana fabrics
and garments enriched by Directa Plus’s G+®
technology, with an initial duration of three
years and a minimum value of €800,000.
The key development in the year was the
announcement of our acquisition of a 51%
majority holding in Setcar S.A., a commercial
partner of Directa Plus and contributor to the
industrial development of our Grafysorber®
mobile decontamination units.
€800,000
51% holding
Overview
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Directa Plus
Directa Plus
Annual Report & Accounts 2018
Annual Report & Accounts 2019 11 11
Directa Plus acquired 51 per cent of Setcar
with a further 47.03 per cent acquired by
the parent company of our industrial partner
GSP Group, a leading provider of offshore
integrated services for the oil and gas industry
with rigs operating in Romania, Turkey,
Greece and Mexico, for a combined total
consideration of €4.1 million and we expect
the acquisition has been earnings accretive.
The acquisition was funded out of the
proceeds of a £7.4 million capital raise that is
detailed in our Chief Financial Officers report.
Following its acquisition, Setcar gained its first
contract to provide a suite of environmental
decontamination services on the Trinity – 1X
gas project in Block 30 offshore Romania.
The value of the Contract is estimated to be
approximately US$1 million invoiced between
2019 and first quarter 2020 and evidences the
first step in what we envisage to be a highly
successful relationship for Setcar, Directa, and
our partner GSP. Post year-end, in February
2020, Setcar also signed a contract to supply
environmental services to GSP Offshore, part
of GSP, to the value of approximately €700,000
per annum over a period of seven years.
We are pleased with the integration of Setcar
into the Group and look forward to achieving
further progress.
Other applications for G+®
The Group has made significant strides
elsewhere in our deployment of our
graphene technology in other industrial
verticals, particularly in elastomers and
composite materials.
Iterchimica
Last year we reported that as part of our
partnership with Iterchimica we had jointly
undertaken the first real world trials of a road
surface enhanced with a supermodifier
containing G+® graphene, on a section of
Rome’s Strada Provinciale Ardeatina. This
and subsequent trials have been highly
successful and the product has now been
branded as Gipave. Gipave works by
increasing a road surface’s resistance to
deformation through its ability to manage
temperature fluctuations, leading to less
cracking and warping. The useful life of
a Gipave road surface is extended and there
is a material reduction in the maintenance
requirement, ultimately saving money for
public highways agencies, road users, and
taxpayers. Once laid, Gipave can be 100 per
cent recycled which can reduce the
extraction of new materials from quarries
and first-use bitumen.
In April 2019 we able to report on the Rome
trial, comparing asphalt concrete with the
super modifier to a traditional asphalt
surfacing, noting impressive results:
+ Enhanced service life – fatigue resistance
improvement was measured at over
250 per cent;
+ Improved resistance to the passage of
vehicles – mechanical tests showed an
Indirect Tensile Strength increase of
35 per cent;
+ Greater resistance to deformation at
the same load – Stiffness Modulus was
measured at different temperatures,
showing an improvement of 46 per cent
at 40°C; and
+ Lower permanent plastic deformation –
rutting values (track left by tyres) was
35 per cent lower at 60°C.
Following the success of the Italian trial,
Gipave was deployed in November 2019
on a busy section of road in Curbridge,
Oxfordshire in the UK and is helping to prove
the benefits of the product in different
climactic conditions.
After the year end, in January 2020, a
six-month trial also began at Rome’s
Fiumicino airport on taxiway Alpha Alpha,
Setcar gained its first contract In December
2019 to provide a suite of environmental
decontamination services on the Trinity – 1X
gas project in Block 30 offshore Romania.
The value of the Contract is estimated to be
approximately US$1 million.
US$1 million
First real world trials of a road surface
enhanced with a supermodifier containing
G+® graphene, on a section of Rome’s Strada
Provinciale Ardeatina. This and subsequent
trials have been highly successful and the
product has now been branded as Gipave.
ABOVE: Federica Giannattasio, Iterchimica’s CEO
with Giulio Cesareo, launching the joint
Cooperation Agreement. Directa Plus signed
a worldwide cooperation agreement with
Iterchimica, covering. the exclusive supply of
G+® graphene to Iterchimica.
World 1st
12
Directa Plus
Annual Report & Accounts 2019
Chief Executive Officer’s review continued
a high traffic taxiway used for intercontinental
aircraft such as Boeing 777s and Airbus
A380s. In view of COVID-19 restrictions we will
be working with the airport to assess and
evaluate the on-going parameters of the trial.
In April 2020, Directa Plus signed a worldwide
cooperation agreement with Iterchimica,
covering the exclusive supply of G+® graphene
to Iterchimica in the asphalt and bitumen
sector worldwide for an initial duration of
three years.
Intellectual Property
Our culture of R&D and our vision to bring
the benefits of graphene to industrial
sectors where we see the greatest
opportunity ensures that Directa Plus is
constantly growing its suite of intellectual
property assets. Our patent portfolio is
currently composed of 30 patents (seven
of which were granted post year-end) and
24 pending patents. In 2019 we were
granted five patents.
Achievements in 2019:
+ An Italian patent covering the use of G+®
graphene in the manufacture of golf balls
was granted in May 2019;
+ A Chinese patent, covering Directa Plus’s
unique process for manufacturing pristine
graphene nanoplatelets, was granted in
April 2019;
+ Directa Plus’s unique exfoliation technology
is chemical free, has an extremely high
yield, and can be varied to produce
graphene nanoplatelets with specific
morphologies, with high production volume
capability. This technology and process is
protected under granted patents in Europe.
In October 2019 we successfully gained a
United States patent and continue to look
to expand IP protection worldwide;
+ A further US patent was awarded in July
2019 covering the technology that allows
Directa Plus to create an ink based on its
G+® graphene product. In addition to its
thermal properties, the G+® ink can be
used in textile applications to provide
flame retardant properties or electrical
conductivity, as well as for coating
applications in, for example, the
production of battery electrodes; and
+ In September 2019, we were granted an
Italian patent for polyurethane film
containing G+® graphene nanoplatelets,
developed with the Company’s membrane
partner, Novaresin. We are currently in the
process of extending this patent protection
internationally. The new membrane will be
marketed under the brands GrafythermTM
and GrafyshieldTM and provides water
protection as well as breathability
alongside G+® performance in respect of
thermal and electrical conductivity,
infrared absorption and bacteriostaticity.
The membrane will be deployed initially
in the apparel industry.
Post year-end
+ In January 2020, Directa Plus signed an
agreement with Comerio Ercole S.p.A.
(Comerio) to pursue joint research and
development projects using the
Company’s G+ ®technology to develop
products in the rubber and tyres, plastic
and non-woven materials industries;
+ Also in January 2020, the Company
received an EU grant to develop an
environmentally sustainable technology to
digitally print its G+ ®graphene on fabrics;
+ The Group secured an OEKO-TEX®
certification in February 2020 for Directa
Plus’s proprietary G+® graphene printing
paste technology. An Eco Passport by
OEKO-TEX® is an independent non-toxic
certification system for chemicals,
colourants and auxiliaries used in the
textile and leather industry; and
+ In April 2020, we were granted a European
patent covering Grafysorber’s use to
decontaminate water containing
hydrocarbons resulting from the
production of oil. This significantly
increases our potential addressable market
in Europe in our environmental vertical.
Our culture of R&D and our vision ensures
that Directa Plus is constantly growing
its suite of intellectual property assets.
Our patent portfolio is currently composed
of 30 patents.
RIGHT: Oil adsorption device made with
Grafysorber® and produced by Directa Plus.
30 patents
OEKO-TEX® independent non-toxic
certification (an Eco Passport) received
in February 2020 fG+or our G+® printing
paste technology.
In April 2020, we were granted a European
patent covering Grafysorber’s use to
decontaminate water containing
hydrocarbons resulting from the
production of oil.
Eco Passport
Overview
Strategic Report
Governance
Financial statements
Additional information
Annual Report & Accounts 2019 13
Directa Plus
Directa Plus seeks to be a
farsighted company, helping to
build a better future and our
ambition as a Group remains
undimmed. We do not intend
to let COVID-19 prevent us from
capturing new opportunities
across all of our key markets.
Giulio Cesareo
Chief Executive Officer
20 May 2020
Outlook
Without question, 2019 was a landmark year
for Directa Plus with the Group making
great strides, in particular in our key textile
and environmental remediation verticals.
The acquisition of Setcar has bedded in
well into the Group and is proving to be as
transformative as we expected. We continue
to make strong progress in other sectors,
such as asphalts, where our G+® technology
and partnerships also bring material
opportunities.
It is extremely sad therefore that 2020 has
started with such uncertainty for the global
economy and the global community due
to the spread of COVID-19. We have
nevertheless responded quickly to the crisis
to ensure the absolute safety and wellbeing
of our employees and to protect our
business. Whilst we are well positioned in our
key verticals with a growing recognition for
Directa Plus and for the outstanding benefits
of our G+® technology, we do not expect to
be entirely immune from the effects of
COVID-19 and as a result of heightened
uncertainties have withdrawn forward
guidance to stakeholders at this time until
volatility in related markets reduces.
Nevertheless, I am pleased to report that
our April year to date revenues of €1.8m are
almost treble those of the same period last
year and we have a strong order book.
Under our COVID-19 scenario planning, our
base case scenario shows a notable near
trebling of revenue for the year, albeit a
reduction against initial expectations. In
addition to this we hope to benefit from a
number of attractive prospects, not least in
COVID-19 related applications. We have a
robust balance sheet with year-end net cash
of €10.9m that additionally provides us with
the financial capacity to support our
growth ambitions and to withstand the
uncertainties and challenges created by the
COVID-19 pandemic.
The concept of “lean into the future” is
key to us and we shall continue to look to
understand new market needs and to
leverage on the incredible enabling
properties of our G+® graphene in order
to satisfy them. In this respect, we hope to
be able to play a meaningful role in the
provision of Personal Protection
Equipment, taking advantage of the
bacteriostatic and potential antiviral
properties of our G+® graphene. We will of
course keep stakeholders appraised of the
new opportunities we will target and on
the likely impacts of COVID-19 as the
situation becomes clearer.
Without question 2019 was a landmark year
for Directa Plus in so many respects with
the Group making great strides, in particular
in our key textile and environmental
remediation verticals.
Landmark year
The concept of “lean into the future”
is key to us and we shall continue to look
to understand new market needs and to
leverage on the incredible enabling
properties of our G+® graphene in order
to satisfy them.
14
Directa Plus
Annual Report & Accounts 2019
Market review
Our graphene nanoplatelets-based products are natural, chemical-free
and sustainably produced. Our production process is designed to meet
large supply chains’ requirements for volume, cost and quality control.
Our vision is to produce nanoplatelets-based products that are natural,
chemical-free and sustainable.
By incorporating Directa Plus’s unique graphene blends, identified by the G+®
brand, our customers can revolutionise the performances of their own end
products in commercial applications such as textiles, tyres, asphalts and
environmental solutions. We partner with our customers to enable them
to offer the high-performance benefits of G+® in their own products.
Our company has a unique and patented technology process and a scalable
and portable manufacturing model. We produce graphene nanoplatelets-
based products at our own factory near Milan, Italy, and can set up
additional production at customer locations to reduce transport costs,
waste and time-to-utilisation.
We are strongly committed to environmental sustainability and abided
by a strong Code of Ethics in all aspects of our business practice.
H
o
w
w
e
d
o
i
t
By incorporating Directa Plus’s unique
graphene blends, identified by the G+®
brand, our customers can revolutionise the
performances of their own end products
in commercial applications.
Our company has a unique and patented
technology process and a scalable and
portable manufacturing model. We produce
graphene nanoplatelets-based products at
our own factory near Milan, Italy.
Unique process
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
15
G+® Technology
Patented, modular process
We offer a range of graphene nanoplatelets-based
products – either ready-to-use or custom-blended to
meet customers’ specific technical requirements.
Benefits of our products:
+ Chemical-free
+ Certified as non-toxic
+ High purity
+ Consistent quality
+ Taylor-made particles shape
+ Abundant, safe and non-toxic raw material
Our production process uses a unique technique we
call Plasma Super Expansion. Starting from natural
graphite, each step of the process – expansion,
exfoliation and drying – creates graphene
nanoplatelets-based materials ready for a variety
of uses and available in different forms such as
powder, liquid and paste.
Our production process produces a highly consistent
graphene nanoplatelets product – an important
factor for commercial customers – and does not
need any chemical or solvent additives.
Tailor-made for customer needs
Scalable, portable production
When used in consumer and industrial applications,
G+® enables end-products to perform better while
remaining affordable.
We partner with customers to develop bespoke
graphene blends that have just the right morphology
for their particular application. We produce the
precise ingredient to make our customer’s product
stand out from the competition.
Our factory near Milan can produce industrial
quantities of graphene nanoplatelets-based
products each year to supply large supply chains.
In addition, we can set up production directly at
customer locations, thus adding scalable
capacity and reducing transport costs, waste
and time-to-utilisation.
1
6
9
e
m
p
o
y
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e
s
l
We partner with customers to develop
bespoke graphene blends that have
just the right morphology for their
particular application.
Tailor-made
Right: CTO Laura Giorgia Rizzi and Sales Director
Alessandra Bambini in the Directa Plus booth
at ‘Première Vision Paris’, the global event for
fashion professionals. Particular focus at
Première Vision has been on sustainability
and technology in fashion.
Above: Our production process produces
a highly consistent graphene nanoplatelets
product – an important factor for commercial
customers – and does not need any chemical
or solvent additives.
16
Directa Plus
Annual Report & Accounts 2019
Chief Financial Officer’s review
Key Performance Indicators
The Board measures the performance of the
Group through a number of important financial
and non-financial KPIs. In a young business with a
number of sector verticals, identifying
measurable data that will provide useful insight
year-on-year is not always straightforward but the
KPIs below should help shareholders understand
the Group’s progress. Our financial KPIs show
significant improvement compared to 2018.
The table below summarises the KPIs with further
details contained later in my report:
Financial review
Revenue from product and service sales grew
by 17 per cent to €2.63 million (2018: €2.25
million) with the increase driven from higher
revenue in our environmental remediation
segment, occurred following the acquisition of
Setcar, of €0.88 million (2018: €0.22 million).
Revenues in our textile segment were flat at €1.65
million (2018: €1.66 million) consolidating on the
significant progress that was made in 2018.
Other income, which mainly includes grants and
R&D Expenditure Credit (RDEC) received by the
Group, was €0.16 million (2018: €0.13 million).
RDEC is an Italian government incentive scheme
designed to encourage companies to invest in
R&D by providing a tax credit and this accounted
for €0.10 million (2018: € 0.10 million). Income
from Government grants was driven by grants
that are directly supporting key development
Revenue from product and
service sales €2.63 million.
€2.63million
Marco Ferrari
Chief Financial Officer
“I am pleased to present the results of what has been
another busy and important year for the Group.
We have continued to shape and improve the finance
team, focusing our activities on accuracy, timing and
efficiency of the internal reporting to support our
commercial and strategic decision-making. In addition,
I can report that the managing the acquisition of
Setcar S.A. and the post-acquisition finance and
accounting activities went smoothly.”
Overview
Strategic Report
Governance
Financial statements
Additional information
Annual Report & Accounts 2019 17
Directa Plus
activities, namely the GRATA textiles project
and the Gipave asphalts project and
accounted for €0.06 million in total. As a
result, Directa Plus’s total income increased
by 12% to €2.81 million (2018: €2.50 million).
The EBITDA loss for the period was in line
with management expectation at €2.71
million compared with a €3.24 million loss for
2018 and reflects both the increase in revenue
and higher expenditure on raw materials,
and also changes in inventories and other
expenses. The loss after tax reduced to €3.40
million compared with €3.96 million for 2018.
provider of offshore integrated services for
the oil and gas industry with rigs in operation
in Romania, Turkey, Greece and Mexico,
who acquired 47.03 per cent holding. The total
consideration is €4.1 million of which the
consideration payable by the Company is
€2.1 million.
Of the total consideration of €4.1 million,
€2.1 million is to be paid in cash to the owners
of Setcar as follows:
+ €0.6 million upon Completion
+ €0.4 million on 30 April 2020
As at 31 December 2019, inventories totalled
€1.10 million (2018: €0.86 million), a level that
ensures that the Group can meet growing
demand from key clients in a timely manner.
+ €0.85 million on the first anniversary
of Completion
+ €0.25 million on the second anniversary
of Completion
In the short term the Group’s priorities
continue to be focused on a reduction in
cash consumption and an improvement in
profitability. Cash and cash equivalents at
31 December 2019 were €10.91 million
(2018: €5.5 million).
A description of the principal risks and
uncertainties facing the Group is included
within the Directors’ Report.
Acquisition of Setcar S.A.
On 25 November 2019 Directa Plus S.p.A.
acquired 51 per cent of Setcar S.A., Setcar has
been jointly acquired with GVC, a company
ultimately owned by the GSP group, a leading
Immediately following Completion, Directa
Plus and GVC provided a loan to Setcar, in
proportion to their respective shareholdings,
in order to facilitate the payment of a
€2 million dividend to the vendors of Setcar.
The total consideration for the acquisition of
Setcar is allocated to the identifiable assets
acquired and liabilities assumed at fair value
(Purchase Price Allocation or PPA). The
identifiable finite-lived assets are then
depreciated/amortised over their remaining
useful lives. The Company used an
independent specialist to provide the fair
value on a per asset basis. The revaluation
amounted to the fair value uplift of assets is
€1.6 million (excluding deferred tax liabilities)
with total assets after the revaluation to
€5.6 million (excluding deferred tax liabilities)
and Net Assets to €3.8 million.
Capital raise
During the financial year the Group benefited
from the proceeds of two separate capital
raises for total gross proceeds of £8.73 million:
+ £1.32 million (approximately €1.47 million)
in respect of a conditional placing and
open offer (disclosed in the 2018 Annual
Report) which settled on 9 January 2019;
and
+ £7.41 million (approximately €8.61 million)
in respect of a placing and open offer of
9,882,547 ordinary shares in aggregate
(comprising 9,648,000 Placing Shares and
234,547 Open Offer Shares) with a nominal
value of £0.0025 each and a price of 75p
that settled on 21 October 2019.
Proceeds from the placing and open offer and
conditional placing and open offer will be
applied as follows:
+ €2.1 million in respect of the completion of
the acquisition of the Group’s 51 per cent.
interest in Setcar S.A.; and
+ €7.9 million to sustain the Group to cash
flow break-even, and specifically to:
– exploit commercial opportunities
across a developing pipeline, including
the fast-growing environmental
remediation market;
– build the Group’s sales and marketing
KEY PERFORMANCE INDICATORS & FINANCIAL SUMMARY 2019 2018
reach;
Revenue from product and service sales (€’m) 2.63 2.25
Total income* (€’m) 2.81 2.50
LBITDA** (€’m) (2.71) (3.24)
Loss after tax*** (€’m) (3.40) (3.96)
Reported basic loss per share (€) (0.07) (0.09)p
Cash and cash equivalents (€’m) 10.91 5.50
Total number of patents granted**** 23 18
* Total Income comprises revenue from product and service sales (€2.63 million), and other income including
government grants (€ 0.06 million) and RDEC – Research and Development Expenditure Credit (€0.10 million).
** LBITDA represents results from operating activities before depreciation and amortisation of €0.84 million
(2018: €0.67 million). Management believes that EBITDA provides a better reflection of operational performance
by removing interest, tax, depreciation and amortisation. EBITDA is a non-GAAP measure.
*** The loss for the year of €3.40 million is split between a €3.58 million loss owned by the Company and a €0.18
million profit in respect of non-controlling interests.
**** Number of grants in portfolio at the end of the period.
– develop Directa Plus’s next generation
of higher performing products;
– improve graphene production layout
to drive margin growth; and
– maintain competitive advantage; and
barriers to entry.
Marco Ferrari
Chief Financial Officer
20 May 2020
18
Directa Plus
Annual Report & Accounts 2019
Directors’ biographies
Sir Peter Middleton
Non-Executive Chairman
Relevant strengths
•
Track record and credentials in
financial markets
•
•
Deep financial expertise
Corporate governance and
investors relations
Giulio Cesareo
CEO and Founder
Marco Ferrari
Chief Financial Officer
Relevant strengths
•
Industry knowledge and credentials
Relevant strengths
•
Financial reporting and accounting
•
•
Strategic and business expertise
Engineering expertise
•
•
Growing businesses and funding
M&A and business planning
Prior to joining Directa Plus, Marco was a
financial advisor at EY, involved in several
M&A transactions, with a focus on energy,
renewable energy and oil & gas industries.
Other experience includes Deutsche Bank,
Deloitte and Dezan Shira & Associates in
China. Marco holds a degree in Business
Administration and Master of Science in
Accounting, Finance and Control from
Università Commerciale ‘Luigi Bocconi’.
Marco is member of the Corporate
Finance Committee of the ANDAF – Italian
national association of accounting and
finance directors.
Sir Peter Middleton GCB is Chairman of Burford
Capital. He was Chairman of Marsh Ltd
between 2005 and 2013, UK Chairman of
Marsh & McLennan Companies between 2007
and 2014 and Chairman of Mercer Ltd between
2009 and 2014. He was also previously
Chairman of Camelot Group plc and Chairman
of the Centre for Effective Dispute Resolution.
He was a Director, Chairman and Deputy
Chairman of United Utilities from 1994-2007,
a Board member of OJSC Mobile Telesystems
from 2005-2007 and a Board member of Bass
plc from 1992-2001 and General Accident (later
CGU) from 1992-1995. Sir Peter spent nearly
30 years at HM Treasury, working closely with
nine Chancellors, and was Permanent
Secretary from 1983 to 1991. Sir Peter became
Group Chairman of Barclays Bank plc in April
1999 and retired in August 2004. He joined
Barclays in 1991 as Group Deputy Chairman
and Executive Chairman of BZW, became
Chairman of Barclays Capital following the
reorganisation of BZW in October 1997 and
was Group Chief Executive from November
1998 until October 1999. He was also President
of the British Bankers Association from 2004-
2006 and a member of the National Institute
for Economic Research from 1996-2007.
Giulio Cesareo is one of the founders of
Directa Plus. He began his professional career
in 1982 in Italy working for Falck and Techint.
From 1986 to 2004, he worked in the carbon
and graphite business for Union Carbide,
UCAR and Graftech, reaching the positions of
the President and CEO of the Italian company
and Vice President and General Manager of
the worldwide Advanced Carbon and Graphite
business unit. In his role at Union Carbide,
Giulio managed business units in USA, France
and Italy. Giulio is Advisory Board member
and member of the Industry Council of the
US National Graphene Association. Giulio
Cesareo was awarded a degree in Mechanical
Engineering from the Polytechnic University
of Milan, an MBA and an Executive MBA from
Bocconi University of Milan and attended
Strategic and Financial Management
Programs at Stanford University (USA). He
serves as a board member of Fondazione
Quarta, a non-profit organisation focused on
scientific research in areas of social activity
and was also Board Member of Centro di
cultura scientifica “Alessandro Volta”, an
organisation aimed at promoting the practical
applications of a scientific culture.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
19
David Gann
Non-Executive Director
Relevant strengths
•
Innovation management
•
•
Business strategy
Engineering expertise
Neil Warner
Non-Executive Director
Richard Hickinbotham
Non-Executive Director
Relevant strengths
•
Financial reporting and accounting
Relevant strengths
•
Deep understanding of AIM markets
•
•
Growing businesses and M&A
Corporate governance
•
Investor relations and financial
communication
•
Growing businesses and funding
Richard Hickinbotham is an experienced city
professional and Head of Equity Research at
N+1 Singer, having served previously as
Head of Equity Research at Cantor Fitzgerald
Europe and Charles Stanley. He has also held
a number of senior positions at Investec,
including Global Head of Research and Co-
Head of UK Investment Banking and as Head
of Pan-European Small and Midcap Research
at S.G. Warburg & Co. (acquired by UBS).
Richard is a Non-Executive Director of AB
Dynamics Plc where is Chairman of the
nomination committee and a member of
the Audit and Remuneration committees.
Richard holds a BSc. in Mechanical
Engineering from Imperial College and is
a qualified Chartered Accountant.
Neil Warner has strong financial and
managerial experience in multinational
businesses. He is the Senior Independent
Director and Chairman of the Audit Committee
at Trifast plc and he is also a Non-Executive
Director of Vectura Group plc where he is
Chairman of the Audit Committee. Formerly
he served as Non-Executive Chairman of
Enteq Upstream plc and as Finance Director at
Chloride Group plc, a position he held for
14 years until its acquisition by Emerson
Electric. Prior to this, Neil spent six years at
Exel plc (formerly Ocean Group plc and now
part of DHL following its acquisition by
Deutsche Post in December 2005) where he
held a number of senior posts in financial
planning, treasury and control. He has also
held senior positions in Balfour Beatty plc
(formerly BICC Group plc), Alcoa and
PricewaterhouseCoopers and was Non-
Executive Director of Dechra Pharmaceuticals
plc where he was the senior independent
director and Chair of the Audit Committee.
David Gann CBE CEng FICE FCGI is a
renowned expert on technological innovation
and an accomplished business and academic
leader. He is Chairman, UK Atomic Energy
Authority. He is Professor of Innovation &
Technology Management, Imperial College
London and was Vice-President (Innovation)
and member of the College’s Executive Board.
He has deep experience mentoring start-ups,
supporting fast growth technology businesses
and developing long-term strategic
partnerships with multinational technology
corporations. He has a PhD in Industrial
Economics and is a Chartered Civil Engineer,
a Fellow of the Institution of Civil Engineers,
an Honorary Fellow of the Royal College of Art
and Fellow, City & Guilds Institute. He was
appointed Commander of the Order of the
British Empire (CBE) in the 2010 Queen’s
Birthday Honours for services to engineering,
and received the 2014 Tjalling C. Koopmans
Asset Award for extraordinary contributions
to the economic sciences. David is a senior
government advisor. His industrial experience
includes serving as Laing O’Rourke plc’s Group
Executive for research and innovation
between 2007 and 2011. He advises executives
and boards on innovation and technology
management, including Citigroup, IBM,
McLaren, NEC and Tata Group.
®
20
Directa Plus
Annual Report & Accounts 2019
Section 172
Section 172(1)(a) to (f) of the Companies Act 2006 requires Directors to
take into consideration the interests of stakeholders in their decision
making, to this effect the Board of Directors of Directa Plus Plc consider
that they have acted in such a way that would be most likely to
promote the success of the company in the long term, taking into
consideration the interests of all the stakeholders (investors,
employees, customers, suppliers and local communities).
a) The likely consequences of any decision in the long-term. Annually
the company reviews its medium to long term plan, which focuses on
the strategic direction of the Group as well as looking at the threats,
and opportunities it is facing. This plan is designed to ensure the long-
term optimal direction of the company, ensuring, in the same time,
the consideration of long-term requirements of the stakeholders.
b) The interests of the Company’s employees. The Board considers
the employees as one of the key stakeholders within the Group and
as such welcomes any feedback to ensure the alignment of both
party’s interests and given the nature of the business their greatest
asset. The interests of the employees are always considered when
determining the strategic direction and vision of the Group.
Details of the Company’s process to obtain feedback from
employees are listed in the section “Stakeholder and social
responsibilities” of the Corporate Governance Report on page 24.
c) The need to foster the Company’s business relationships with
suppliers, customers and others. The Board recognises that the
success of the Company is reliant on the stakeholders of the
business and, to this effect, the Company engages with these
stakeholder groups on a regular basis. Details of the Company’s
process to obtain feedback from customers and supplier are listed
in the section “Stakeholder and social responsibilities” of the
Corporate Governance Report on page 24.
d) The impact of the Company’s operations on the community and
environment. The Board has always considered the health and
safety of people and environmental protection as top priorities. In
order to seek to manage its environmental responsibilities in a
systematic and proactive manner both Directa Plus S.p.A. and Setcar
implemented the ISO 14001 certification that helps the Group to
achieve the intended outcomes of its environmental management
system which provide value for the environment, the organization
and the interested parties. The Board recognises its responsibilities
with regards the environment and wider community and takes
actions to reduce the risk of any potential negative impact the
provision of its services and products could have in this area.
e) The desirability of the Company maintaining a reputation for high
standards of business conduct. In order to ensure that the business
maintains its reputation and integrity, the Board promotes a
corporate culture based on sound ethical values and behaviours,
which are essential to maximise shareholder value. Those core
values serve as a common language that allows all members of staff
to work together as an effective team and it is these values and our
shared long-term business vision and strategy that we believe will
drive growth in shareholder value over the long-term. Ethical code
and whistleblowing process are in place and reviewed regularly.
Further details of the Company’s Ethical value and behaviours are
listed in the section “Ethical values and behaviors” of the Corporate
Governance Report on page 24.
f) The need to act fairly as between members of the Company.
The Group’s Board currently consists of four Non-Executive
Directors, and two Executive Directors. The Board considers it
collectively has an appropriate balance of skills and experience,
as well as an appropriate balance of personal qualities and
capabilities to ensure that all decisions are made such that the
impact toward the stakeholders is fairly and equal, so they too
may benefit from the successful delivery of our plan.
We define principal decisions as both those that have long-term
strategic impact and are material to the Group, but also those that are
significant to our key stakeholder groups. In making the following
principal decisions, the Board considered the outcome from its
stakeholder engagement, the need to maintain a reputation for high
standards of business conduct and the need to act fairly between the
members of the Company: Acquisition of Setcar.
The Company agreed to acquire 51 per cent of Setcar. Setcar is being
jointly acquired with GVC, a company owned by the ultimate beneficial
owner of the GSP group, a leading provider of offshore integrated
services for the oil and gas industry with rigs in operation in Romania,
Turkey, Greece and Mexico, who have conditionally agreed to acquire
47.03% of Setcar. The total consideration payable by the Company and
GVC, in proportion to their shareholdings in Setcar, is €4.1 million. An
existing shareholder in Setcar will remain a minority shareholder and
immediately following Completion will hold 1.97%. The Company
signed the Sale and Purchase agreement in September 2019 and
finalized the acquisition in November 2019.
The Board believes that the acquisition is aligned with the Company’s
strategy and it will:
•
•
•
•
create a business case in a European country with a real need for
environmental clean-up, which could be replicated in other countries;
provide a significant business opportunity within captive off-shore
applications generated through partnership with GVC. The combined
company is entitled to participate in international tenders;
present the opportunity to control a direct commercial channel
capable of significantly improving the Grafysorber® commercial ramp-
up on the market and to fulfil the market expectations in one of the
main company verticals; and
further the development of technologies and equipment that use
Grafysorber® as a base material, combined with the opportunity to
deal directly with the end-user will give Directa Plus the possibility to
increase revenues and margins, protecting the know-how).
In making the above principal decisions, the Directors believe that
they have considered all relevant stakeholders, potential impact and
conflicts, the Company’s business model and its long-term strategic
objectives, and have acted accordingly to promote the success of the
Company for the benefit of its members as a whole.
The Strategic report is approved by the Board and it is signed on its
behalf by:
Giulio Cesareo
Chief Executive Officer
20 May 2020
Overview
Strategic Report
Governance
Financial statements
Additional information
Directors’ report
Directa Plus
Annual Report & Accounts 2019
21
Principal activities
Directa Plus is a technological Group pursuing the development of
innovative manufacturing processes to produce and supply high
quality engineered graphene-based products which can be used by
third parties in a wide variety of industrial and commercial applications.
With the acquisition of the majority stake in Setcar S.A., completed in
November 2019, Directa Plus enters the environmental service market
with the aim to supply a complete range of services, from chemical
analyses for waste identification to water and soil treatment, leveraging
on the unique properties of the graphene based products in portfolio.
The Group’s strategy is to partner with potential customers at an early
stage and work with them to develop tailor-made graphene forms that
have the desired morphology for each potential customer’s specific
applications to enable them to capitalise on the high-performance
benefits of graphene.
The Group’s main country of operation and place of business is Italy
and its registered office address is 11-12 St. James’s Square, London,
SW1Y 4LB, UK.
Business and strategic review
The information that fulfils the requirements of the strategic report
and business review, including details of the results for the year ended
31 December 2019, principal risks and uncertainties, research and
development, KPIs and the outlook for future years, are set out in the
Chairman’s Statement, Chief Executive Officer’s Review and Chief
Financial Officer’s Review on pages 4 to 17 (The Strategic Report), and in
this Directors’ Report. Going concern assessment is set out in the
Corporate Governance report and is reported on page 27. Post balance
sheet events are reported in note 29.
Dividends
The Directors’ current intention is that for the foreseeable future, all future
earnings at the Group level will be reinvested in the business in order to
fund the ongoing growth strategy. In the future, if it is commercially
prudent to do so, the Board may consider the payment of a dividend.
Directors’ indemnity
The Company has arranged appropriate Directors’ and Officers’
insurance to indemnify the Directors against liability in respect of
proceedings brought by third parties. Such provisions remain in
force at the date of this report.
Directors
The following Directors held office as indicated below for the year
ended 31 December 2019 and up to the date of signing this report:
•
•
•
•
•
•
Giulio Giuseppe Cesareo
Sir Peter Middleton
Marco Ferrari
David Michael Gann
Neil William Warner
Richard Hickinbotham
Directors’ remuneration and interests
The Directors’ Remuneration Report is set out on pages 28 to 29. It
includes details of Directors’ remuneration, interests in the ordinary
shares of the Company and share options.
Corporate governance
The Chairman’s Corporate Governance Statement is set out on
pages 24 to 27.
Share capital and substantial shareholdings
Details of the share capital of the Company as at 31 December 2019
are set out in note 19 to the consolidated financial statements.
At 20 April 2020, a total of 60,998,983 ordinary shares were
outstanding. The following shareholders own 3% or more of the
ordinary shares:
Percentage of
Number of issued ordinary
Shareholder ordinary shares share capital
Nant Capital/ Patrick Soon-Shiong 17,603,440 28.86
Dompè Group 7,519,999 12.33
Unicorn Asset Management 5,333,333 8.74
Dr. Jean Marc Droulers /
Finanziaria Le Perray S.p.A.* 4,093,794 6.71
Galbiga Immobiliare S.r.l.** 3,804,791 6.24
Ruffer 2,866,500 4.70
Schroder Investment Management 2,377,334 3.90
* Finanziaria Le Perry S.p.A. is a company owned and controlled by Dr. Jean Marc Droulers.
** Galbiga Immobiliare S.r.l. is a company owned and controlled by Giulio Cesareo,
the CEO of Directa Plus.
Risk management
The Group’s financial risk management is discussed in note 24 to the
financial statements. The Directors continually consider how to
identify and mitigate the key business risks. Directors ensure that the
management of the Company provides leadership and direction to
employees so that our overall risk-taking activity is kept within the
desired risk appetite. The Group’s tolerance for risk in the area of
Health Safety and Environmental Protection (“HSEP”) is low. Directa
Plus dedicates significant resources to managing and monitoring these
risks on a daily basis. The following list considers those could have
a serious adverse impact on Group’s performance.
The Group’s policies, procedures and practices used to identify,
monitor and control a variety of risks may, in some cases, not be
effective. The Group’s risk management methods rely on a combination
of internally developed technical controls, standard practices,
observation of market behaviour and human supervision.
®
22
Directa Plus
Annual Report & Accounts 2019
Directors’ report
continued
Risk
Mitigation and management strategy
Likelihood*
Impact (on
the Group)**
Change***
COVID-19
COVID-19 pandemic is materially affecting the
worldwide market, causing a general deterioration
of the economic outlook as discussed in the
Chairman’s review and in the Chief Executive
Officer’s review.
The Board and the Management are constantly
monitoring the fast-evolving situation.
Management has undertaken scenario based
analysis on future financial projections and
adopted a strategy to reduce overheads. Moreover,
in order to try to mitigate the impact of the COVID-
19 on the revenues, the Management decided to
target the personal protective equipment market,
leveraging on graphene G+® properties. Moreover,
with Setcar, the Management is assessing the
opportunity to provide sanitizing services in
Romania with the aim of diversifying the top line.
Certain
Moderate
New
Changes in government policy and
legal and regulatory compliance
The Group operates in highly regulated industry
(Environmental services and waste disposal)
through its controlled subsidiaries Setcar S.A..
Any changes to government policy, standards or
regulatory requirements could affect the Group’s
operations and results.
Regulatory framework is constantly monitored
by Management, trying to have prompt
understanding of proposed changes.
Possible
Major
New
M&A strategy and delivery
Directa Plus, after the recent acquisition, considers
that integration risks and issues could arise
impacting the delivery of the expected benefit.
An integration plan is in place and skilled resources
have been deployed to manage the post-
acquisition integration. The Board of Directors is
kept promptly up to date.
Possible
Moderate
New
Brexit
Directa Plus holds Sterling bank accounts.
The “hard Brexit” or “no deal” could have a
potential impact on currency risk, triggering sharp
movement on Sterling value with an effect on
Directa Plus’s P&L.
Technological risk
Directa Plus operates in an industry where
competitive advantage has a certain dependency
on the technology adopted. It is possible that
future technological development or potential
substitute materials may affect the acceptance of,
and the attribution of value, to the Group’s
graphene production technology and Group’s
graphene based products.
News flow about Brexit is constantly monitored as
well as the movement of the EUR-GBP exchange
rate. On average more than 50% of cash and cash
equivalent are held in Euro to be used on Euro
denominated costs and expenses. Cash and cash
equivalent in Sterling are held to be used on
Sterling denominated costs and expenses.
Directa Plus continually monitors the market and
its competition and has resources to invest in
technological development and product
development as appropriate.
Likely
Minor
Possible
Critical
Intellectual property protection risks
Failure to protect the Group’s IP may result in
another party copying, using or taking advantage
from Group’s proprietary content and technology
without authorisation. There may not be adequate
protection for IP in every country in which the
Group’s products are or will be made available.
The Group monitors scientific papers, news flow
and graphene products brought to the market as
far as reasonably possible and will take cost-
effective legal action if required. The Group is
advised by suitably qualified and experienced
patent agents and meetings with the patent
agents are scheduled regularly.
Possible
Moderate
Key employees risks
The Group depends upon the continued service
and performance of the Executive Officers and key
employees. The loss of the services of any of the
Executive Officers or other key employees could
have an adverse impact on the Group’s operations,
reputation and business activities.
Risks is mitigated by providing share options to key
employees, building a motivated Management
team, together with significant opportunities for
carrier development.
Possible
Major
* Unlikely, Possible, Likely, Certain
** None, Minor, Moderate, Major, Critical
*** Defines the direction on the change in the risk: new risk (New), risk increased (↑), risk decreased (↓), no change (→)
↓
→
→
→
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
23
Risk
Mitigation and management strategy
Likelihood*
Impact (on
the Group)**
Change***
Risk is mitigated by maintaining good
relationships with the Group’s main shareholders.
The Company successfully concluded a capital
raise in October 2019.
Possible
Major
→
Funding risk
The Group’s growth requires access to funding.
It is possible that the Group will need to raise extra
capital in the future to continue to develop the
Group’s business or to take advantage of future
acquisition opportunities. No assurance can be
given that any such additional financing will be
available or that, if available, it will be available
on terms favourable to the Group or to the
Group’s shareholders.
* Unlikely, Possible, Likely, Certain
** None, Minor, Moderate, Major, Critical
*** Defines the direction on the change in the risk: new risk (New), risk increased (↑), risk decreased (↓), no change (→)
Annual general meeting
The notice for the convening of the AGM 2020 together with the
proposed resolutions will be contained in a Notice of AGM sent to all
shareholders and available via the Company’s website.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to prepare
Company financial statements in accordance with International
Financial Reporting Standards (“IFRSs”) as adopted by the European
Union. Under Company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and Company and of the profit or loss
of the Group for that period. The Directors are also required to prepare
financial statements in accordance with the rules of the London Stock
Exchange for companies trading securities on the AIM.
In preparing these financial statements, the Directors are required to:
Website publication
The Directors are responsible for ensuring the annual report and the
financial statements are made available on the corporate website.
Financial statements are published on the Company’s website in
accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The Directors are responsible
for the maintenance and integrity of the corporate and financial
information included on the Company’s website.
Auditors
Each of the persons who is a Director at the date of approval of this
annual report confirms that:
•
•
so far as the Director is aware, there is no relevant audit information
of which the Company’s auditors are unaware; and
the Director has taken all the steps that he ought to have taken as a
Director in order to make himself aware of any relevant audit
information and to establish that the Company’s auditors are aware
of that information.
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
This confirmation is given and should be interpreted in accordance
with the provisions of Section 418 of the Companies Act 2006.
state whether they have been prepared in accordance with IFRSs as
adopted by the European Union, subject to any material departures
disclosed and explained in the financial statements; and
BDO LLP have expressed their willingness to continue in office as
auditors and a resolution to reappoint them will be proposed at the
forthcoming Annual General Meeting.
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
For and on behalf of the Board of Directors
20 May 2020
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
®
24
Directa Plus
Annual Report & Accounts 2019
Corporate governance report
Chairman’s Corporate Governance Statement
The Board of Directa Plus Plc (the “Company”) 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. The Quoted Companies Alliance corporate governance code (the “QCA Code”) sets out a minimum
best practice standard for small and mid-sized quoted companies, particularly AIM companies. The Company complies
with the QCA Code and the Directors propose that the Company should continue to do so having regard to the Company’s
size, board structure, stage of development and resources. There have been no significant changes in governance
arrangements during the 2019 financial year.
A review of the Company’s culture, how it is consistent with the company’s objectives, strategy and business model
will be reviewed during the 2020 financial year. Compliance with each of the principles set out in the QCA code is
summarised in this section.
Role of the Chairman
The Board as a whole is responsible for effective corporate governance.
As Chairman of the Board, I have overall responsibility for the
corporate governance arrangements of the Company in addition to
ensuring that corporate governance arrangements are fully adopted
within the Company.
In addition, my role as Chairman is to lead the Board, ensuring its
smooth running and the effective contribution of all Board members.
Strategy and business model
The Company’s business model, strategy and key markets are set out
in the Strategic Report on pages 4 to 17.
Relations with shareholders
The Chief Executive Officer and Chief Financial Officer are responsible
for shareholder liaison and have regular dialogue with institutional
investors in order to develop an understanding of their views.
Meetings with analysts and institutional shareholders of the Company
take place following the interim and annual results announcements as
well as on an ad hoc basis. These presentations are given by the Chief
Executive Officer and the Chief Financial Officer, updating on relevant
matters and in particular, on the progress of the Company in terms of
its operational performance, financial and strategic direction.
The Annual Report and accounts are published on the Company’s
website, www.directa-plus.com, and can be accessed by shareholders
and non-shareholders. Shareholders have the opportunity to meet
members of the Board at the Annual General Meeting of the Company
where Board members will be happy to respond to questions.
The Board believes that its current approach to shareholder
engagement is successful, based on the feedback received and the
Proactive Investor interviews publicly available. In addition, as
Chairman, I remain available to talk to shareholders whenever required.
Stakeholder and social responsibilities
The Board considers its key stakeholder groups to include:
•
•
•
•
workforce – we are a responsible employer, compliant with relevant
human resources legislation and recommended practices, as well as
Health, Safety and Environmental Protection regulations;
customers – deep and wide relationships with our customers are
crucial for the success of our business in developing novel solutions
with our customers and in developing their next generation of products;
suppliers – we aim to develop strong relationships with our suppliers
based on trust, understanding and respect;
partners – we engage with commercial and scientific partners and we
work with them to develop new applications, building strong and
long-lasting relationships.
The Company obtains feedback from stakeholder groups by way of:
•
•
•
•
informal meetings and consultation with employees’ representatives,
and reports received through the Group’s Whistleblowing policy;
regular meetings with main suppliers and undertaking a formal
assessment at least once a year;
formal survey sent at least once a year to the main customers to
assess our level of service; and
maintaining a social media presence in order to understand the
sentiment of and obtain feedback from the our stakeholders.
The Company has always considered the health and safety of people
and environmental protection as top priorities. We take a proactive
approach to health, safety and environmental protection by monitoring
our production process and products and continuously reviewing our
policies, so they are in line with the latest research on nanomaterials.
Further information about the Company’s approach to sustainability is
set out in the Health, Safety and Environmental Protection section of
the Company’s website.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
25
Risk management
The Directors are responsible for establishing and maintaining the
Company’s system of internal control and reviewing its effectiveness.
Page 22 and 23 set out the Company’s approach to risk management
and lists those risks which are considered to have a serious adverse
impact on the Company’s performance.
Page 23 includes additional information about the Company’s internal
control system.
The Board
The primary function of the Board is to provide effective leadership
and direction to enhance the long-term value of the Company to its
shareholders and other stakeholders. The Board has overall
responsibility for reviewing the strategic plans and performance
objectives, financial plans and annual budget, key operational
initiatives, major funding and investment proposals, financial
performance reviews, and corporate governance practices.
The Chief Executive ensures that the Directors’ knowledge is kept up to
date on key issues and developments pertaining to the Group, its
operational environment and to the Directors’ responsibilities as
members of the Board. During the course of the year, Directors received
updates from the Company Secretary and, if required, from external
advisers on a number of corporate governance matters.
The Board consists of two Executive Directors and four Non-Executive
Directors. The Board considers all the Non-Executive Directors to be
independent.
The number of meetings attended by the Board are disclosed on
page 26.
Directors
The Directors continue to remain satisfied that the Board is well
balanced and that the Directors possess the sufficient breadth of skills,
relevant experience, variety of backgrounds and knowledge to ensure
the Board functions appropriately, without being dominated by any
one Director. Details of qualities and capabilities that each Director
brings to the Board are added in the Director biography section. The
Board acknowledges that there are currently no appointed female
Directors, however, it will continue to review this moving forwards.
Moreover, diversity will be strongly considered in further recruiting
process ensuring the appropriate balance of the Board is developed.
Full biographies of each Director can be found on pages 18 and 19.
The Board keeps under review the skills required to effectively pursue the
Company’s strategy and discharge its duties. The Chief Financial Officer
is also Company Secretary; the Board does not feel that a full time
Company Secretary is currently required but will keep this under review.
Board performance
The Board continually reflects on its performance to identify potential
areas for improvement. The Board undertook a formal performance
review through a questionnaire distributed to the Board members.
Ethical values and behaviours
The Board is committed to ensuring the highest legal and ethical
standards and acknowledges its responsibilities in relation to
corporate governance.
The Board has produced an Ethical Code which aims to ensure that the
Company’s employees conduct themselves respectfully and honestly
in all their dealings with other employees as well as third parties
including clients, suppliers, public institutions, the media, competitors
and legal authorities.
Governance structure and processes
Delivering growth and long-term shareholder value with effective and
efficient decision-making is of high importance to the Board.
There is a clear division of responsibilities between the Chairman, who
is responsible for the effective leadership and smooth running of the
Board, and the Chief Executive Officer who, with the other Executive
Director, is responsible for the running of the Company.
The Company has established an Audit Committee and a
Remuneration Committee. Both committees meet at least twice a year.
Details of both committees and a report of the activities undertaken
during the 2019 financial year can be found on pages 30 and 31.
Board
The Board consists of two executive Directors and four Non-Executive
Directors. The Board considers all the Non-Executive Directors to be
independent. The current members of the Board and their
membership on the Board committees of the Company are as follows:
®
26
Directa Plus
Annual Report & Accounts 2019
Corporate governance report
continued
Board committees as
Board appointments Chairman or member
Non- Non-
Executive executive Independent independent Audit Remuneration
Name of Director Director Director Director Director Committee Committee
Sir Peter Middleton 3 3 – –
Giulio Giuseppe Cesareo 3 – –
Marco Ferrari 3 – –
David Michael Gann 3 3 Member Member
Neil William Warner 3 3 Chairman Member
Richard Hickinbotham 3 3 Member Chairman
The Board recognises the importance of ensuring the flow of complete,
adequate and timely information on an ongoing basis to enable decisions
to be made on an informed basis and to enable the Board to effectively
discharge their duties and responsibilities. To allow Directors sufficient
time to prepare for the meetings, all Board and board committee papers
are distributed to Directors a week in advance of the meetings, with any
additional material or information provided on request. Directors have
unrestricted access to management and receive briefings from them,
which enable the Directors to keep abreast of the latest developments.
Furthermore, the Company has implemented the appropriate procedures
to support Directors in obtaining independent professional advice at the
expense of the Company as and when required. Directors receive regular
updates in relation to changes in accounting standard and regulation.
committees have the authority to examine particular issues and will
report back to the Board with their decisions and/or recommendations,
the ultimate responsibility on all matters lies with the Board. The
functions typically refer to the Nomination Committee currently remain
with the Board.
Time commitments
The Directors devote a sufficient amount of time in order to discharge
their duties to the Company both at and outside of Board meetings.
In order to ensure continue this commitment the Board meet at least
six times a year. In addition to the formal Board meetings the Board will
meet throughout the year as and when required for specific matters.
Committees
The Board has delegated certain functions to its two committees, the
Audit Committee and the Remuneration Committee. These committees
have their own written terms of reference and their actions are reported
to and monitored by the Board. The Board accepts that while these
The time commitments of the Non-Executive Directors are carefully
reviewed by the Board and it is noted that Peter Middleton, David Gann,
Neil Warner and Richard Hickinbotham devote at least two days a
month to the Company. Details of the Directors’ attendance at each of
the scheduled Board and Committee Meetings for the 2018 financial
year are listed below:
Board meetings Audit Committee meetings Remuneration Committee meetings
Name of Director No. held No. attended No. held No. attended No. held No. attended
Sir Peter Middleton 9 5 – – – –
Giulio Cesareo 9 9 – – – –
Marco Ferrari 9 9 – – – –
David Michael Gann 9 7 4 2 2 2
Neil William Warner 9 7 4 4 2 2
Richard Hickinbotham 9 9 4 4 2 2
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
27
Internal control
The Directors are responsible for establishing and maintaining the
Company’s system of internal control and reviewing its effectiveness.
Management believes that the Group has the systems and protocols in
place to address these challenges. 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 system of internal control is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and can
only provide reasonable but not absolute assurance against material
misstatement or loss.
The main features of the internal control system are as follows:
•
•
•
close management of the business by the Executive Directors.
There are clearly delineated approval limits throughout the Company
and a well-defined organisational structure. Controls are monitored
at the appropriate level;
monthly management accounts are prepared and reviewed by the
Board, including reviewing variances against prior months and
against budgets;
clear segregation of duties within the Company’s finance function
help ensure the Company’s assets are safeguarded and that proper
financial records are maintained; and
•
a list of matters is reserved for the approval of the Board.
The Company has adopted a share dealing code for the Directors and
certain applicable employees, which is appropriate for a company
whose shares are admitted to trading on AIM (particularly relating to
dealing during close periods in accordance with Rule 21 of the AIM
Rules for Companies) and the Company takes all reasonable steps to
ensure compliance by the Directors and any relevant employees.
As at 31 December 2019, the Group had net assets of €15.17m (2018:
€8.2m) and cash and cash equivalent of €10.91m (2018: €5.50m).
The Directors prepare annual budgets and forecasts in order to ensure
that they have sufficient liquidity in place in the business. In addition, in
response to the rapidly evolving COVID-19 situation, the Directors, in
formulating the plan and strategy for the future development of the
business, considered a base case scenario involving c.25% reduction in
forecast revenues. The Directors have also stress tested the base case
scenario by applying a further material reduction in forecast revenues,
and mitigation or deferral of capital and operational expenditure. In both
these scenarios, the Group is projected to have the financial capacity to
support its viability, following the uncertainties and challenges created
by the COVID-19 pandemic, until at least the end of 2021.
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.
The Directors have taken steps to utilise the various support
mechanisms, such us redundancy funds or equivalent and soft loan
specifically foreseen by governments to support companies during the
general global economy slowdown due to COVID-19. Moreover, the
Directors consider several options in terms of regional and European
grants able to provide funding in the following months to sustain the
R&D activities. Operational and financial KPIs are strictly monitored.
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.
Having regard to the above, and based on their latest assessment of the
budgets and forecasts for the business of the company, the Directors
consider that there are sufficient funds available to the Group to enable
it to meet its liabilities as they fall due for a period of not less than
12 months from the date of approval of the financial statements. The
Directors therefore consider it appropriate to adopt the going concern
basis of accounting in preparing the financial statements.
The COVID-19 pandemic has had a significant, immediate impact on
the global economies and on the operations and operational funding
of participants in international supply chains.
The COVID-19 pandemic has not, to date, had a significant adverse
impact on the Group’s operations but the Directors are aware that if the
current situation becomes prolonged then this may change. Further
details of the current assessment of the impact on the business are set
out in the strategic report. Based on very recent projections, the
Directors believe that:
a) the demand for graphene products will be volatile, although the
positive outlook and general market appetite is confirmed; and
b) the demand of environmental services will impacted in the next few
months mainly in relation to the oil & gas segment due to the fact of
the depressed oil price with the combined impact of COVID-19.
Sir Peter Middleton
Non-Executive Chairman
20 May 2020
®
28
Directa Plus
Annual Report & Accounts 2019
Directors’ remuneration report
The Company is not required to prepare a Directors’ remuneration
report for each financial year and so the Company makes the following
disclosure voluntarily.
The Remuneration Committee is responsible for recommending the
remuneration and other terms of employment for the Executive
Directors of Directa Plus Plc.
In determining remuneration for the year, the committee has given
consideration to the requirements of the QCA code.
Remuneration policy
The objective of the remuneration policy is 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.
Directors’ remuneration
The normal remuneration arrangements for Executive Directors
consists of base salary, performance bonuses and other benefits as
determined by the Board. Each of the Executive Directors has a service
agreement that can be terminated at any time by either party giving
notice, the length of such notice period being determined pursuant to
the applicable National Collective Bargaining Agreement (“NCBA”),
governed by Italian law, depending upon accrued length of service.
Non-Executive Directors are remunerated solely in the form of Director
fees determined by the Board and are not entitled to pensions, annual
bonuses or employee benefits. Each of the Non-Executive Directors’
appointment may be terminated by either party giving three months’
prior written notice.
Directors are not involved in specific discussions on their own
remuneration.
The remuneration of the Directors, in Euros, for the year ended
31 December 2019 was as follows and is audited:
National Total
Insurance Pension emoluments
Salary/Fees Bonus contributions contributions 2019
2019 €’000 €’000 €’000 €’000 €’000
Non-Executive Chairman
Sir Peter Middleton 57 – – – 57
Executive
Giulio Cesareo 270 62 10 92 434
Marco Ferrari 131 15 8 28 182
Non-Executive
David Gann 34 – – – 34
Neil Warner 34 – – – 34
Richard Hickinbotham 34 – – – 34
Total 560 77 18 120 775
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
29
National Total
Insurance Pension emoluments Share based
Salary/Fees Bonus contributions contributions 2017 payment**
2018 €’000 €’000 €’000 €’000 €’000 €’000
Non-Executive Chairman
Sir Peter Middleton 56 – – – 56 17
Executive
Giulio Cesareo 267 98 9 91 466 51
Marco Ferrari 130 27 9 28 193 25
Non-Executive
David Gann 34 – – – 34 10
Neil Warner 34 – – – 34 10
Luca Lodi-Rizzini* 11 – – – 11 –
Richard Hickinbotham 34 – – – 34 9
Total 566 125 18 119 828 122
* Luca Lodi-Rizzini retired as a Director of 26 April 2018.
** Non monetary cost refers to the share option scheme in place and not exercised yet.
At 20 April 2019 Directors’ interests were the following:
Directors’ interests
Number of Percentage
Number of ordinary shares of issued
Director ordinary shares under option share capital
Sir Peter Middleton 38,000 100,000 0.06
Giulio Cesareo* 3,804,791 181,707 6.24
Marco Ferrari 29,799 88,471 0.05
David Gann 101,311 60,000 0.17
Neil Warner 26,730 60,000 0.04
Richard Hickinbotham 84,000 60,000 0.14
* Giulio Cesareo and his family are the sole beneficiaries of the 3,804,791 ordinary shares held by Galbiga Immobiliare S.r.l.
®
30
Directa Plus
Annual Report & Accounts 2019
Audit Committee report
Membership
The Board has established an Audit Committee with the appropriate
Terms of Reference, which is comprised of Neil Warner (Chairman),
David Gann and Richard Hickinbotham. The Committee reports to the
Board in respect of its responsibilities.
Responsibilities
The Committee met four times in 2019 to discuss its ongoing
responsibilities, including such matters as the existing risk
management and internal control systems in place, its financial
reporting obligations and external audit findings.
An outline of the key responsibilities undertaken by the Committee
in the year are set out below:
•
•
•
•
•
•
Review of the Annual and Interim Accounts.
Review of the Auditor’s Report and meeting with the Auditor.
Review of the going concern assumption in line with Management’s
cash flow forecasts.
Performance of sensitivity analysis on the assumptions included
within the forecast.
Matching results against management forecasts for the year ended
31st December 2019.
Meeting with Management to discuss the Directors’ plans for future
actions in relation to its going concern assessment, taking into
account any relevant events subsequent to the balance sheet date.
Internal controls
The Committee continues to monitor and review the Company’s
financial reporting and internal control procedures. It has been
concluded that a separate internal audit function is not justified at
this time because of the size and scope of the Company’s business
activities. However, as the company continues to grow the need for
this function will be regularly assessed.
External audit
The Board understands the importance of engaging with the external
auditors and in order to support this relationship the external auditor is
invited to attend at least one meeting of the Audit Committee each year.
The Committee maintains the responsibility of making recommendations
to the Board in respect of the appointment, reappointment and removal
of the external auditors. In the reappointment of the Committee the Board
carefully considers their performance in discharging the audit, the terms
of engagement, and their independence.
Neil Warner
Chairman of the Audit Committee
Overview
Strategic Report
Governance
Financial statements
Additional information
Remuneration Committee report
Directa Plus
Annual Report & Accounts 2019
31
Membership
The Board has established a Remuneration Committee with the
appropriate Terms of Reference, which is comprised of Richard
Hickinbotham (chairman), Neil Warner, and David Gann. The
Committee reports to the Board in respect of its responsibilities.
Responsibilities
The Committee met twice in 2019 to discuss its ongoing
responsibilities, including such matters as recommendations to the
Board on all aspects and policies relating to the remuneration of
executive Directors and executive officers of the Company.
An outline of the key responsibilities undertaken by the Committee
in the year are set out below:
•
An annual review of remuneration for all Executive Directors and
Senior Managers of the Company.
Richard Hickinbotham
Chairman of the Remuneration Committee
®
32
Directa Plus
Annual Report & Accounts 2019
Independent auditor’s report
to the members of Directa Plus Plc
Opinion
We have audited the financial statements of Directa Plus Plc (the
“Parent Company”) and its subsidiaries (the “Group”) for the year ended
31 December 2019 which comprise the Consolidated Statement of
Comprehensive Income, Consolidated and Company Statements of
Financial Position, Consolidated and Company Statements of Changes
in Equity, Consolidated and Company Statements of Cash flows and
notes to the financial statements, including a summary of significant
accounting policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
International Financial Reporting Standards (“IFRSs”) as adopted by
the European Union and as regards the Parent Company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the
Group’s and of the Parent Company’s affairs as at 31 December 2019
and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
the Parent Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the provisions of the
Companies Act 2006; and
•
the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (“ISAs” (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are
independent of the Group and the Parent Company in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you where:
•
•
the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is not appropriate; or
the Directors have not disclosed in the financial statements any
identified material uncertainties that may cast significant doubt
about the Group or the Parent Company’s ability to continue to
adopt the going concern basis of accounting for a period of at least
twelve months from the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
33
Key audit matter identified
Revenue recognition
The Group earned revenue of €2.6m (2018: €2.3m) in the year ended
31 December 2019.
A significant portion of the revenue raised related to two components,
Directa Plus S.p.A and Setcar S.A., as detailed in note 3. The applicable
accounting policies are detailed in note 1 (j).
In accordance with applicable auditing standards, revenue recognition
was presumed to be a significant risk. This consideration was further
heightened by the fact that there are various revenue streams that exist
within the Group as well as the wide geographic dispersion of sales
and product range offered.
Due to the fact that there are multiple revenue streams and the fact
that revenue is recognised both at a point in time and over time,
revenue recognition represented a significant audit risk and a key
focus area for our audit.
How our audit responded to the risk
•
•
•
•
•
•
Tested the operating effectiveness of relevant internal control over
the completeness, accuracy and timing of revenue recognised within
Directa Plus S.p.A.
In respect of Directa Plus S.p.A., agreed a sample of sales in the year
to sales invoices issued to customers and goods delivery notes to
check that revenue was recognised appropriately.
In respect of Setcar S.A., inspected the key revenue contracts to
check that the underlying performance obligations had been
appropriately reflected in the Group’s revenue recognition policy and
confirmation of the services performed had been received from the
customer for the revenue recognised.
Selected a sample of recorded sales from either side of the year-end
for purposes of cut-off testing and agreed these to sales invoices,
delivery documents and customer confirmation to check that sales
were recognised in the correct period.
Inspected a sample of credit notes issued during the year and post
year end to check that these had been issued appropriately.
We reviewed the disclosures pertaining to revenue in note 1 (j) and
note 3 to the financial statements with reference to the requirements
of applicable accounting standards.
Key observations
There were no material issues identified by our testing of revenue recognition in the year.
Valuation and accounting treatment of Setcar acquisition
On the 25 of November 2019, the Group acquired 51% of the ordinary
share capital of Setcar S.A., as detailed in note 4 to the financial
statements. The applicable accounting policies are detailed in note 1.
There were a number of key estimates and judgements applied by
Management when accounting for the acquisition of Setcar S.A..
These included:
•
•
an assessment that the Group has the ability to control the Company;
the completeness, existence and accuracy of the opening balance
sheet and the valuation of the underlying assets and liabilities
acquired in the business as part of the purchase price allocation
undertaken by managements independent expert; and
•
the assessment of the consideration paid.
Given the significance of these transactions to the Group in the year, this
represented a significant audit risk and a key focus area for our audit.
•
•
•
•
•
•
Reviewed Management’s assessment of control and assessed this
against legal documents such as the company’s articles of
association, shareholder agreement and underlying Share Purchase
agreement (“SPA”).
For the Purchase Price Allocation undertaken by Management’s expert,
we compared the valuation techniques applied to industry benchmarks
and agreed key estimates such as discount rates, royalty rates, property
plant and land valuations and underlying cash flow forecasts to both
empirical data and historical performance of the business. We engaged
our own internal expert to assist with these procedures.
Assessed the independence and competency of Management’s expert;
Agreed the consideration included in the acquisition accounting to
the terms of the SPA;
Visited the underlying operations in Romania to understand the
business, physically inspect the key assets on site and agree this to
Management’s assessment of intangible assets (brand, order
backlog) and tangible assets accounted for as part of the transaction;
Challenged Management over the completeness of the acquisition
balance sheet through substantive testing procedures and review of legal
and tax due diligence performed as part of the acquisition process; and
•
Reviewed the adequacy and accuracy of the disclosures in the
financial statements.
Key observation
From our testing performed, there were no material issues identified in the valuation and accounting treatment of the acquisition of Setcar S.A..
®
34
Directa Plus
Annual Report & Accounts 2019
Independent auditor’s report
continued
Key audit matter identified
Going concern
The financial statements explain how the Board has formed a
judgement that it is appropriate to adopt the going concern basis
of preparation for the Group and Parent Company. The Board’s
consideration of going concern, including the potential impacts
of COVID-19, are disclosed in note 1.
That judgement is based on an evaluation of the inherent risks to the
Group’s and Parent Company’s business model and how those risks
might affect the Group’s and Parent Company’s financial resources and
ability to continue operations over a period of at least 12 months from
the date of approval of the financial statements.
The risk for our audit was whether or not those risks were such that
they amounted to a material uncertainty that may have cast significant
doubt about the ability to continue as a going concern. Had they been
such, then that fact would have been required to have been disclosed.
How our audit responded to the risk
Agreed the current cash position of the group to support the opening
cash position applied by the Directors and Management in their cash
flow forecast.
Critically assessed the Directors and Management’s going concern
assessment, including the reasonableness of assumptions applied
and downside stress case sensitivities applied using both our
underlying knowledge of the business and with regard to COVID-19
scenarios being applied across the market.
Considered the key sensitivities applied in the cash flow model
pertaining to revenue and cost base giving regarding to current
trading since March 2020, the overall contract pipeline in place and
management of the Group’s and Parent Company’s cost base.
Assessed the completeness and accuracy of the matters covered in
the going concern disclosure with reference to the Director’s and
Management’s going concern assessment.
Our application of materiality
We apply the concept of materiality both in planning and performing
our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements. Importantly,
misstatements below these levels will not necessarily be evaluated as
immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
We determined materiality for the financial statements as a whole to be
€300,000 based on a 2% of net assets.
We determined that for the income statement and those working
capital items on the balance sheet that would impact the profit or loss,
a misstatement of less than materiality for the financial statements as a
whole, specific materiality, could influence the economic decisions of
users. This was determined to be €175,000 based on 5% of loss before
tax (2018: No specific materiality applied).
In the prior year, a basis of 3% net assets was applied to both the
statement of financial position and to the income statement (€300k).
The shift to utilising specific materiality for this financial year reflects the
changes to the Group, in particular the acquisition of Setcar S.A. at the
end of the financial year. The impact of the acquisition has materially
increased the Group’s overall net assets but only one month of trading
has been included in the Income statement. Alongside this, the
reduction in the materiality applied to the Income statement and those
working capital items on the balance sheet that would impact the profit
or loss also highlights the development of the Group and the focus of
the users of the financial statements on the key trading KPIs rather than
the underlying balance sheet. In line with the auditing standards we
continue to reassess this each year. Parent Company materiality has
been applied €200,000 (2018: €225,000) and all other components have
been audited using a range of €80,000 – €140,000 in relation to specific
materiality for the profit or loss and €150,000-€250,000 in relation to
the component financial statements as a whole.
Performance materiality is the application of materiality at the individual
account or balance level set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial
statements as a whole. Performance materiality was determined based
on 75% of materiality being €230,000 (financial statement) and €130,000
(specific) (2018: €230,000) on the basis that we have not identified high
volumes or values of misstatements in the prior year audits.
We agreed with the audit committee that we would report to the
committee all individual audit differences identified during the course
of our audit in excess of €6,000 (€6,000). We also agreed to report
differences below these thresholds that, in our view, warranted
reporting on qualitative grounds.
There were no uncorrected misstatements identified during the course of
our audit that were individually, or in aggregate, considered to be material
in terms of their absolute monetary value or on qualitative grounds.
An overview of the scope of our audit
Our Group audit scope focused on the Group’s principal operating
entities, Directa Plus Plc, Directa Plus S.p.A. and Setcar S.A.. We have
identified these entities as significant components for the purposes of
our financial statement audit, based on their relative share of total net
assets and contribution to the statement of comprehensive income.
All audit work (full scope or review work) was conducted by the Group
audit team and other BDO member firms. The audit of Directa Plus Plc
was performed by the Group audit team, whilst the audit of Directa Plus
S.p.A. was performed in Italy by the component auditors, BDO Italia
S.p.A and the audit of Setcar S.A., was performed in Romania by
component auditors, BDO Romania. This resulted in substantive
procedures being performed over 99% of net assets and loss before tax.
The remaining components of the Group were considered non-
significant and these components were principally subject to analytical
review procedures, together with additional substantive testing over
the risk areas detailed above where applicable to that component.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
35
As part of our audit strategy members of the Group audit team issued
detailed group reporting instructions, directed and supervised both the
Italian and Romanian audit teams and conducted onsite visits during the
planning stage. The Group team also attended the remote completion
meetings with both component teams. The Group audit team had full
access to all audit working papers of the significant components and
undertook remote reviews of the underlying audit work performed.
Other information
The Directors are responsible for the other information. The other
information comprises the information included in the annual report,
other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in
the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
•
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding of the Group and the
Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic
report or the Directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to you
if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
the Parent Company financial statements are not in agreement with
the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are
not made; or
we have not received all the information and explanations we
require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities,
within the Directors’ report, set out on page 21, the Directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group’s and the Parent Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at :
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the
Parent Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Matt Crane (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
20 May 2020
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
®
36
Directa Plus
Annual Report & Accounts 2019
Consolidated statement of comprehensive income
for the year ended 31 December 2019
31 Dec 2019 31 Dec 2018
Note € €
Continuing operations
Revenue 3 2,631,819 2,253,293
Other income 3/5 183,033 248,695
Changes in inventories of finished goods and work in progress 6 87,537 (133,382)
Raw materials and consumables used 7 (1,185,360) (1,299,078)
Employee benefits expenses 8 (2,148,923) (2,112,650)
Depreciation and amortisation 13/14 (837,055) (674,919)
Other expenses 9 (2,286,054) (2,197,670)
Results from operating activities (3,555,002) (3,915,711)
Finance income 11 164,536 4,440
Finance expenses 11 (35,972) (45,143)
Net finance costs 128,563 (40,703)
Loss before tax (3,426,439) (3,956,414)
Tax expense 12 25,225 (414)
Loss after tax from continuing operations (3,401,214) (3,956,828)
Loss of the year (3,401,214) (3,956,828)
Other comprehensive income items that will not be reclassified to profit or loss
Defined Benefit Plan re-measurement gains and losses 22 (12,802) 1,219
Other comprehensive (expense)/income for the year (net of tax) (12,802) 1,219
Total comprehensive (expense)/income for the year (3,414,016) (3,955,609)
Loss attributable to
Owner of the Parent (3,585,215) (3,961,259)
Non-controlling interests 184,001 4,431
(3,401,214) (3,956,828)
Total comprehensive (expense)/income attributable to:
Owners of the Company (3,598,017) (3,960,040)
Non-controlling interests 184,001 4,431
(3,414,016) (3,955,609)
Loss per share
Basic loss per share 25 (0.07) (0.09)
Diluted loss per share 25 (0.07) (0.09)
The notes on pages 40 to 68 form part of these financial statements.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
37
Consolidated and company statement of financial position
for the year ended 31 December 2019
Group Company
31 Dec 19 31 Dec 18 31 Dec 19 31 Dec 18
Note € € € €
Assets
Intangible assets 13 2,202,452 1,467,478 – –
Investments 15 – – 21,180,336 16,180,336
Property, plant and equipment 14 4,730,752 1,062,435 – –
Trade and other receivables 16 109,698 – – –
Non-current assets 7,042,902 2,529,913 21,180,336 16,180,336
Inventories 6 1,095,936 862,284 – –
Trade and other receivables 16 2,943,286 2,059,217 203,404 158,594
Cash and cash equivalent 18 10,906,076 5,503,884 7,669,360 3,968,016
Current assets 14,945,298 8,425,385 7,872,765 4,126,610
Total assets 21,988,200 10,955,298 29,053,101 20,306,946
Equity
Share capital 19 190,512 154,465 190,512 154,465
Share premium 19 31,395,612 22,104,240 31,395,612 22,104,240
Foreign currency translation reserve 4,147 – – –
Retained earnings 19 (17,656,325) (14,044,656) (2,616,723) (2,055,143)
Equity attributable to owners of Group 13,933,946 8,214,049 28,969,401 20,203,562
Non-controlling interests 19 1,240,194 27,361 – –
Total equity 15,174,140 8,241,410 28,969,401 20,203,562
Liabilities
Lease liabilities 21 439,690 57,011 – –
Employee benefits provision 24 416,095 335,132 – –
Other payables 24 196,690 – – –
Deferred tax liabilities 17 135,059 – – –
Non-current liabilities 1,187,534 392,143 – –
Loans and borrowing 20 484,701 168,701 – –
Lease liabilities 21 184,900 58,121 – –
Trade and other payables 24 4,956,926 2,094,922 83,699 103,385
Current liabilities 5,626,527 2,321,745 83,699 103,385
Total liabilities 6,814,061 2,713,888 83,699 103,385
Total equity and liabilities 21,988,200 10,955,298 29,053,101 20,306,947
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 €558,846 (2018: €779,197).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
Giulio Cesareo Marco Ferrari
Chief Executive Officer Chief Financial Officer
20 May 2020
The notes on pages 40 to 68 form part of these financial statements.
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Annual Report & Accounts 2019
Consolidated statement of changes in equity
for the year ended 31 December 2019
Foreign
currency Non-
Share Share translation Retained controlling Total
capital premium reserve earnings Total interests equity
€ € € € € € €
Balance at 31 December 2017 142,628 19,973,996 – (10,250,224) 9,866,400 22,930 9,889,329
Total comprehensive (expense)/income for the year
Loss of the year – – – (3,961,259) (3,961,259) 4,431 (3,956,828)
Total other comprehensive (expense)/income – – – 1,219 1,219 – 1,219
Total comprehensive (expense)/income for the period – – – (3,960,040) (3,960,040) 4,431 (3,955,609)
Capital raised 11,837 2,355,548 – – 2,367,385 – 2,367,385
Expenditure related to the issuance of shares – (225,304) – – (225,304) – (225,304)
Share-based payment – – – 165,610 165,610 – 165,610
Balance at 31 December 2018 154,465 22,104,240 – (14,044,656) 8,214,049 27,361 8,241,410
Total comprehensive (expense)/income for the year
Loss of the year – – – (3,585,215) (3,585,215) 184,001 (3,401,214)
Total other comprehensive (expense)/income – – – (12,802) (12,802) – (12,802)
Total comprehensive (expense)/income for the period – – – (3,598,017) (3,598,017)) 184,001 (3,414,016)
Capital raised 36,047 10,043,120 – – 10,079,167 – 10,079,167
Expenditure related to the issuance of shares – (751,748) – – (751,748) – (751,748)
Translation reserve – – 4,147 – 4,147 – 4,147
Share-based payment – – – (13,652) (13,652) – (13,652)
Setcar non-controlling interest of acquisition – – – – – 1,028,831 1,028,831
Balance at 31 December 2019 190,512 31,395,612 4,147 (17,656,325) 13,933,946 1,240,194 15,174,140
Company statement of changes in equity
for the year ended 31 December 2019
Share Share Retained Total
capital premium earnings equity
€ € € €
Balance at 31 December 2017 142,628 19,973,996 (1,380,478) 18,736,146
Loss for the year – – (779,197) (779,197)
Capital raised 11,837 2,355,548 – 2,367,385
Expenditure related to the issuance of shares – (225,304) – (225,304)
Share-based payment – – 104,532 104,532
Balance at 31 December 2018 154,465 22,104,240 (2,055,143) 20,203,562
Loss for the year – – (558,846) (558,846)
Capital raised 36,047 10,043,120 – 10,079,167
Expenditure related to the issuance of shares – (751,748) – (751,748)
Share-based payment – – (2,733) (2,733)
Balance at 31 December 2019 190,512 31,395,612 (2,616,722) 28,969,402
The notes on pages 40 to 68 form part of these financial statements.
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Consolidated and company statement of cash flows
for the year ended 31 December 2019
Group Company
31 Dec 19 31 Dec 18 31 Dec 19 31 Dec 18
Note € € € €
Cash flows from operating activities
Loss for the year before tax (3,426,439) (3,956,414) (558,846) (779,197)
Adjustments for:
Depreciation 14 452,309 357,014 – –
Amortisation of intangible assets 13 384,746 317,905 – –
Share-based payment expense (13,652) 165,610 (2,733) 104,532
Finance income 11 (164,535) (4,440) (164,529) (3,194)
Finance expense 35,829 45,143 2,081 22,610
(2,731,742) (3,075,182) (724,028) (655,249)
Increase/decrease in:
– inventories 6 (79,451) 133,382 – –
– trade and other receivables 16 240,963 (897,506) (44,811) (49,354)
– trade and other payables 24 (714,799) 758,397 (19,685) 56,949
– provisions and employee benefits 22 59,342 47,175 – –
Net cash from operating activities (3,225,687) (3,033,734) (788,524) (647,654)
Cash flows from investing activities
Interest received 11 2,874 4,440 3,982 3,194
Investment in intangible assets 13 (232,546) (207,158) – –
Investment in subsidiary 15 – – (5,000,000) (2,000,000)
Net cash arisen from business acquisition (137,345) – – –
Acquisition of property, plant and equipment 14 (161,589) (120,456) – –
Net cash used in investing activities (528,606) (323,174) (4,996,018) (1,996,806)
Cash flows from financing activities
Proceeds from Capital raise 10,079,167 2,367,385 10,079,167 2,367,385
Expenditure related to the issuance of shares (751,747) (225,304) (751,747) (225,304)
Interest paid (9,773) (16,329) – (941)
New borrowings 20 – 66,607 – –
Repayment of borrowings (190,193) (239,344) – –
Interest of lease liabilities (16,124) – – –
Repayment of lease liabilities (115,133) – – –
Net cash from/(used in) financing activities 8,996,197 1,953,015 9,327,420 2,141,140
Net increase/(decrease) in cash and cash equivalent 5,241,904 (1,403,893) 3,540,797 (503,320)
Cash and cash equivalent at beginning of the year 5,503,884 6,929,446 3,968,016 4,493,006
Exchange (losses)/gains on cash and cash equivalents 160,548 (21,669) 160,548 (21,669)
Cash and cash equivalent at end of the year 10,906,076 5,503,884 7,669,360 3,968,016
The notes on pages 40 to 68 form part of these financial statements.
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Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
for the year ended 31 December 2019
1. Basis of preparation
a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively “IFRSs”) as adopted for use in the European Union and with those parts of Company Act
2006 to companies preparing their financial statements under the adopted IFRS.
The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year,
unless otherwise stated.
The financial statements have been prepared on a going concern basis as since the Directors believe that the Group has adequate resources to
remain in operation for the foreseeable future.
All notes, except as otherwise indicated, are presented in Euros (“€”).
I. Going concern
The COVID-19 pandemic has had a significant, immediate impact on the global economies and on the operations and operational funding of
participants in international supply chains.
The COVID-19 pandemic has not, to date, had a significant adverse impact on the Group’s operations but the Directors are aware that if the current
situation becomes prolonged then this may change. Further details of the current assessment of the impact on the business are set out in the
strategic report. Based on very recent projections, the Directors believe that:
a) the demand for graphene products will be volatile, although the positive outlook and general market appetite is confirmed; and
b) the demand for environmental services will be impacted in the next few months mainly in relation to the oil & gas segment due to the fact of
the depressed oil price with the combined impact of COVID-19.
Management believes that the Group has the systems and protocols in place to address these challenges. 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.
As at 31 December 2019, the Group had net assets of €15.17m (2018: €8.2m) and cash and cash equivalent of €10.91m (2018: €5.50m).The Directors
prepare annual budgets and forecasts in order to ensure that they have sufficient liquidity in place in the business. In addition, in response to the
rapidly evolving COVID-19 situation, the Directors, in formulating the plan and strategy for the future development of the business, considered a
base case scenario involving c.25% reduction in forecast revenues. The Directors have also stress tested the base case scenario by applying a
further material reduction in forecast revenues, and mitigation or deferral of capital and operational expenditure. In both these scenarios, the
Group is projected to have the financial capacity to support its viability, following the uncertainties and challenges created by the COVID-19
pandemic, until at least the end of 2021.
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.
The Directors have taken steps to utilise the various support mechanisms, such us redundancy funds or equivalent and soft loan specifically
foreseen by governments to support companies during the general global economy slowdown due to COVID-19. Moreover, the Directors consider
several options in terms of regional and European grants able to provide funding in the following months to sustain the R&D activities. Operational
and financial KPI are strictly monitored.
Having regard to the above, and based on their latest assessment of the budgets and forecasts for the business of the company, the Directors
consider that there are sufficient funds available to the Group to enable it to meet its liabilities as they fall due for a period of not less than twelve
months from the date of approval of the financial statements. The Directors therefore consider it appropriate to adopt the going concern basis of
accounting in preparing the financial statements.
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1. Basis of preparation continued
b) Basis of consolidation
I. Business combination
The Group accounts for business combination using the acquisition method of accounting. The cost of the business combination is measured
as the aggregate of the fair value of the assets acquired, liabilities incurred or assumed and equity instruments issued. Costs attributable to the
business combination are expensed as incurred.
The acquiree’s identifiable assets and liabilities which meet the recognition conditions are recognised at the fair values at the acquisition date.
Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is a present obligation at acquisition
date that arises from past events and its fair value can be measured reliably.
Any difference arising between the fair value and the tax base of the acquiree’s assets and liabilities that give rise to a taxable or deductible
difference result in the recognition of a deferred tax liability or asset.
Non-controlling interest arising from a business combination is measured either at their share of the fair value of the assets and liabilities of
the acquiree.
Goodwill is not amortised but it is tested on an annual basis for impairment.
II. 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.
III. Transaction 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.
IV. 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 subsidiary is Euro (“€”). The functional
currency of the Romanian subsidiary is RON.
d) Use of estimates and judgements
The preparation of the financial statements in conformity with IFRS, as adopted by the EU, 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,
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 assumptions 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:
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Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
1. Basis of preparation continued
I. Carrying value of capitalised development costs
The carrying value of capitalised development costs is reviewed whenever events or changes in circumstances indicate that the carrying value of
an asset may not be recoverable and at a minimum at each reporting date. The Group capitalises development costs provided the recognition
conditions meet the criteria set out in IAS 38. During the year costs have been capitalised in relation to projects to enhance and develop the
production process and the industrial application for G+® Graphene. The majority of the capitalised costs relate to internal employee costs and
Management are able to separately identify time spent on these projects through the group’s internal time card management program. Management
and the Directors continually assess the commercial potential of the technology and products in development. The costs capitalised in period have
resulted in the development of new IP and Management has assessed that there is sufficient evidence to support that economic benefit will flow.
II. Defined benefit scheme
Provision for benefits upon termination of employment related to amounts accrued by Italian companies for employment retirement. In
determining this provision Management employs actuarial techniques, including the involvement of an external experts. All key estimates applied
have been included in note 22.
III. Revenues recognition
Following the acquisition of Setcar during the year, Management has reviewed the key contracts pertaining to the environmental services provided
and determined that revenue is recognised over time rather than at a point in time as this is the best representation of when the performance
obligations under the contracts is provided. This is considered a key judgement for this financial period as these revenue streams differ from those
earned by the Group in the past.
IV. Business combination
Control assessments are performed by the management, per the requirements of IFRS 10, to establish control in the business combination.
Management believe that Directa Plus S.p.A. has control of Setcar S.A. under IFRS 10 provisions based on the followings:
•
•
Directa Plus S.p.A. owns directly 51% of the share capital issued by Setcar S.A..
Based on the Articles of Association (“AoA”) in place, Directa Plus S.p.A. can control the General Meeting of Setcar S.A.. From the control of the
general meeting derives the control of the BoD.
•
The operations of the Company are supervised and managed by Razvan Popescu, appointed as Director by Directa Plus.
Based on the control provided in the measures above:
•
•
Directa Plus is exposed to variable returns from its involvement with the investee.
Directa Plus has the ability to use its power over the investee to affect the amount of the investor’s returns.
Business combinations are accounted for using the acquisition method of accounting. The determination of fair value of acquired assets and
liabilities often requires Management to make estimates and assumptions. The excess of the purchase price over the estimated fair value of the net
assets acquired is then assigned to goodwill. Goodwill is assigned to individual CGUs based on the relative fair value and/or the CGUs that are
expected to benefit from the synergies of the business combination. Refer to note 4 for further details in acquisitions.
Sales order backlog has been recognised as an intangible. Whilst there are long term framework agreements in place with customers, Management have
considered a short useful economic life to reflect that purchase orders can vary annually and there are no guaranteed orders for longer than one year.
e) New standards adopted for the period
I. IFRS 16 – Leases
In January 2016, the IASB issued IFRS 16 “Leases” (“IFRS 16”), which requires entities to recognise right-of use (“ROU”) assets and lease obligations
on the statement of financial position. The Group adopted IFRS 16 on 1 January 2019 using the modified retrospective approach. The modified
retrospective approach does not require restatement of prior period financial information, instead recognising the cumulative effect as an
adjustment to the opening retained earnings and the Group applied the standard prospectively.
The Group has applied the standard while using the following optional expedients permitted under the standard:
•
•
Short-term leases – those with terms of 12 months or less at date of adoption.
Low-value leases.
On 1 January 2019, the Group recognised a cumulative increase to ROU assets of €0.57 million for leases previously classified as operating leases,
directly offset to the lease obligations. The weighted average borrowing rate used to determine the lease obligation at adoption was approximately
2.5%. The assets and lease obligations related to the adoption of IFRS 16, relate to the production facility.
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1. Basis of preparation continued
The Company depreciates the ROU assets on a straight-line basis over the length of the lease unless management determines this is not
representative of the useful life, in which case, management will estimate the useful life of the asset to be used.
€
Minimum operating lease commitments as at 31 December 2018 59,083
Less: short-term leases not recognised under IFRS 16 (5,083)
Plus: effect of extension options reasonably certain to be exercised 438,000
Undiscounted lease payments 492,000
Less: effect of discounting using the incremental borrowing rate as at the date of initial application (35,181)
Lease liabilities for leases classified as operating type under IAS 17 456,819
Plus: leases previously classified as finance type under IAS 17 115,132
Lease liability as at 1 January 2019 571,951
II. IFRIC 23
IFRIC 23 interpretation addresses the accounting for income taxes when there is uncertainty over tax treatments. It clarifies that an entity must
consider the probability that the tax authorities will accept a treatment retained in its income tax filings, assuming that they have full knowledge of
all relevant information when making their examination. In such a case, the income taxes shall be determined in line with the income tax filings.
The adoption of this standard has had no effect on the financial results of the Group.
2. Significant accounting policies
a) Functional and foreign 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 in to 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 amounts 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 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.
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Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
II. Cash and cash equivalents
Cash and cash equivalents comprise demand deposits with an original maturity up to 3 months 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. 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.
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.
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2. Significant accounting policies continued
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 and research and development costs concerning G+® technology, are amortised over the lower of the legal duration of the patent
(typically 20 years) and the economic useful life. These are currently amortised over 10 years.
Brand: 25 years.
Orderbook: 1 year.
Others: 1 year.
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 unsaleable inventory
and are reviewed on a six months basis.
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Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
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.
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).
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2. Significant accounting policies continued
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 22.
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 sale of equipment (such as Mobile Production Units) are typically recognised at point in time when goods are delivered to the
customers and site acceptance test is successfully performed.
•
Revenues from services relates mainly to environmental services provided by Setcar which are recognised:
– on an over time basis when contracts include an obligation to process waste once the process occurred according with the contract in place.
– at the point in time when the waste is delivered to our platform with no further performance obligations.
Where cost has been incurred to undertake a performance obligation but this has not been realised at the year end the attributable costs are carried
forward as work in progress.
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.
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Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
m) Investments in subsidiaries (Company only)
Investments are stated at their cost less any provision for impairment (then refer to h) Impairment).
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.
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, COO and CTO), as defined in IFRS 8, in order to allocate resources to the segments and to
assess its performance.
For management purposes, considering also the materiality the Group is organised into the following segments:
•
•
•
Textile.
Environmental.
Others.
For 2019 the Environmental segment was introduced to reflect the nature of the underlying business of Setcar. Textile and Environmental were
considered by the Management the strategic segments able to sustain the growth. Management’s strategic needs are constantly monitored and an
update of the segments will be provided if required. Any further update of the segment analysis will be reflected in this section.
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.
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3. Operating segments continued
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.
Textile Environmental Others Head office Consolidated
2019 € € € € €
Revenue 1,650,534 876,398 104,888 – 2,631,819
Cost of sales* (1,138,022) (329,651) 10,450 – (1,457,223)
Gross profit 512,512 546,747 115,337 – 1,174,596
Other income 116,062 9,180 57,792 – 183,033
Other expenses:
– R&D expense (240,592) (149,165) (110,960) – (500,718)
– Advisory (58,504) (1,696) – (1,018,924) (1,079,124)
– Operating expenses (945,743) (682,113) (556) (867,322) (2,495,734)
– Depreciation and amortisation (525,334) (263,345) (48,376) – (837,055)
Operating loss (1,141,599) (540,393) 13,237 (1,886,246) (3,555,002)
Financial costs – – – 128,563 128,563
Tax – 25,225 – – 25,225
Loss of the year (1,141,599) (515,168) 13,237 (1,757,683) (3,401,214)
Total asset 13,655,846 7,029,252 1,316,061 – 22,001,159
Total liabilities (2,502,635) (4,125,358) (198,283) – (6,826,276)
Textile Environmental Others Head office Consolidated
2018 € € € € €
Revenue 1,664,847 382,931 205,515 – 2,253,293
Cost of sales* (1,426,378) (84,137) (145,066) – (1,655,581)
Gross profit 238,469 298,793 60,449 – 597,712
Other income 57,899 71,334 – 119,462 248,695
Other expenses:
– R&D expense (226,744) (101,400) (119,540) – (447,684)
– Advisory (187,362) (46,674) (15,412) (656,597) (906,045)
– Operating expenses (798,009) (184,027) (83,256) (1,626,254) (2,729,886)
– Depreciation and amortisation (490,609) (129,367) (58,527) – (678,503)
Operating loss (1,406,357) (91,341) (216,286) (2,163,388) (3,915,711)
Financial costs – – – (40,703) (40,703)
Tax (414) – – – (414)
Loss of the year (1,406,771) (91,341) (216,286) (2,204,091) (3,956,828)
Total asset 7,969,050 278,190 2,708,058 – 10,955,298
Total liabilities (2,234,212) (11,604) (468,072) – (2,713,888)
*Includes Changes in inventories of finished goods
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Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
3. Operating segments continued
2019 2018
€ €
Sale of products 1,732,074 2,066,876
Sale of services 899,746 186,417
Government grants 58,762 129,232
Other 124,271 119,463
Total income 2,814,853 2,501,988
Geographical breakdown of revenues are:
2019 2018
€ €
Italy 1,642,122 1,840,139
Romania 850,738 192,840
Rest of the world 138,959 220,314
Total 2,631,819 2,253,293
The group has transacted with two main customers in 2019, which account for more than 10% of Group revenues for sales of products and
services. This largest customer’s revenues amount to €947,828 (33%), whilst the next highest revenue earning customer provided €413,851 (15%).
23% of the Group’s revenues for sales of products and services were recognised on an over time basis.
Other Income of €183,033 includes Government Grants for €58,762 and R&D Expenditure Credit (RDEC) for €100,706. 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. Business combination
On 25 November 2019 Directa Plus S.p.A. (“DP”) acquired 51% of the issued share capital of Setcar S.A. (“Setcar”) in order to integrate the control
over the environmental services value chain becoming able to provide directly, as Group, waters treatment and soil treatment services.
DP management has performed a control assessment as required under IFRS10 – Consolidated Financial Statement and concluded that DP directs
the relevant activities of Setcar and, by virtue of this, has control over Setcar (details covered in the “Key Judgement” section).
Book value Adjustment Fair value
Setcar’s Balance sheet €’000 €’000 €’000
Non-current assets
Setcar brand 68 317 385
Order backlog – 181 181
Other intangible assets – 17 17
PPE 2,329 1,118 3,447
Non-current receivables 118 – 118
Total non-current assets 2,514 1,633 4,147
Total current assets 1,448 – 1,448
Total assets 3,962 1,633 5,595
Net assets 2,337 1,472 3,810
Non-current liabilities
Loans and Borrowings non-current 90 – 90
Provisions non-current 67 – 67
Deferred tax liabilities – 161 161
Total non-current liabilities 157 161 318
Total current liabilities 1,467 – 1,467
Total liabilities 1,625 161 1,785
Current assets include cash and cash equivalent at the date of acquisition equal to €174,801. On Completion, Directa Plus Plc paid their share
(51%) of €600,000. Total cash paid less cash and cash equivalent acquired is €137,345.
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4. Business combination continued
Measurement of fair value
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
Asset Valuation technique
Property – Office buildings Income approach – rent capitalisation
Property – Industrial platform and land Market approach
Plant and equipment Cost approach
Orderback log Income approach – MEEM (Multiperiod excess earnings method)
Brand Royalties method
The Company used an independent specialist to assist the Management with the calculation of the fair value on a per asset basis. The revaluation
amounted to the fair value uplift of assets is €1.6 million (excluding deferred tax liabilities) with fair value of net assets acquired of €3.8 million and
goodwill of €0.3 million.
Consideration transferred
The Setcar’s assets and liabilities were acquired for a consideration price of €2.1 million paid in cash to the Sellers as follows:
•
•
•
€0.6 million upon Completion.
€0.4 million on 30 April 2020 – Payment of the Second Instalment will be subject to maintaining the Net Asset Value of the Company as of
Completion Date at a level at least equal to the Net Asset Value of the Company from the date of the Accounts.
€0.85 million on the first anniversary of Completion – The payment of the Third Instalment will be performed provided that within one year
after the Completion Date it is not proven that any of the Seller's Warranties listed in Annex 2 of this Agreement was incorrect, inaccurate,
incomplete or misleading;
•
€0.25 million on the second anniversary of Completion – representing a security for Warranty Claims that may be raised against the Company
and/or the Sellers.
Following completion, the DP and GVC provide a €2 million loan to Setcar, in proportion to their respective shareholdings in the company, in order
to facilitate the payment of a €2 million dividend to the vendors of Setcar.
The total purchase consideration is therefore equal to a €4.1 million, of which the consideration payable by the Company is €2.1 million.
Based on the financial due diligence undertaken, Management has estimated that the full contingent consideration will be paid as no expectation
of the decline in the Net Asset Value in Setcar or any warranties have arisen.
Detailed calculation as follows:
Indicative fair value
Purchase goodwill calculation €’000
Total purchase consideration 2,107
Consideration paid by NCI 1,985
Book value of assets acquired 3,962
Fair value adjustment on assets acquired 1,633
Fair value of assets acquired 5,595
Book value of liabilities assumed (1,624)
Contingent and unrecorded liabilities assumed -
Indicative net deferred tax adjustment (161)
Fair value of liabilities assumed (1,785)
Fair value of net assets acquired 3,810
Indicative purchase goodwill 282
If the acquisition would have occurred on 1 January 2019:
•
•
increase of consolidated revenue for the eleven months ended 25 November 2019 would have been €3.2 million; and
increase of consolidated loss for the eleven months ended 25 November 2019 would have been €0.3 million.
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Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
5. Government Grants
Information regarding government grants:
2019 2018
€ €
Grata 5,262 57,899
Ecopave 53,500 71,333
Total 58,762 129,232
In relation to government grants (Grata and Ecopave), the operational activities refer to FY19 and related to these projects have been completed.
Company has complied with the relevant conditions of the grants.
The key terms of Government grants are:
Grata Ecopave
Starting date 2017 2017
Ending date 2019 2020
Duration (months) 31 36
Total amount 126,324 214,000
Final report submitted and accepted Yes Project still
on-going
There are no capital commitments built into the ongoing grants. Government grants have been recognised in Other Income.
6. Inventory
2019 2018
€ €
Finished products 825,920 750,853
Spare parts 110,393 102,400
Raw material 19,162 9,031
Working in progress 140,461 –
Total 1,095,936 862,284
As at 31 December 2019 total inventory value is higher than 2018, the movement is mainly driven by Setcar’s working in progress which refers to
cost and services sustained for ongoing projects. 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.
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7. Raw materials and consumables
2019 2018
€ €
Raw material and consumables 236,191 170,007
Textile products 949,169 1,129,071
Total 1,185,360 1,299,078
Total raw materials and consumables are €1,185,360 (2018: €1,299,078) of which €949,169 (2018: €1,129,071) refers to textile products.
8. Employee benefits expenses
2019 2018
€ €
Wages and salaries 1,741,293 1,557,471
Social security costs 442,893 384,998
Employee benefits 94,239 84,779
Share option expense (13,652) 165,611
Other costs 5,998 18,346
Total 2,270,771 2,211,205
Capitalised cost in “Intangible assets” (121,848) (98,555)
Total charged to the Income Statement 2,148,923 2,112,650
The average number of employees (excluding Non-Executive Directors) during the period was as follows:
2019 2018
Sales and administration 12 8
Engineering, R&D and production 26 17
Total 38 25
The total number of employees, employed by the Group on 31 December 2019 was 169 (2018: 27), 143 were Setcar’s employees.
The Directors’ emoluments (including Non-Executive Directors) are as follows:
2019 2018
€ €
Wages and salaries 775,708 828,311
Total 775,708 828,311
A detailed analysis of the remuneration of the Directors is detailed within the Directors’ Remuneration Report on pages 28 and 29.
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Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
9. Results from operating activities:
Results from operating activities includes:
2019 2018
€ €
Audit of the Group and Company financial statements 81,997 41,180
Audit of the subsidiaries’ financial statements 31,500 18,000
Other non-audit services provided by Group’s auditor 4,528 2,292
Tool manufacturing 179,614 282,352
Travel 221,397 193,771
Technical consultancies 427,362 478,879
Marketing 26,804 172,382
Tool manufacturing expenses are referred mainly to fabrics printing service and decreased to €179,614 (2018: €282,352) thanks to the negotiation
of new contracts with the suppliers. Technical consultancies and travel are approximately in line with previous year expenditure, meanwhile
Marketing expenses decreased to €26,804 (2018: €172,382) due to the suspension of the relationship with the existing agency in Italy in 2019 to
remap marketing activities for the 2020 year.
11. Net finance expenses
Finance expenses include:
2019 2018
€ €
Interest Income (3,988) (4,440)
Interest on loans and other financial costs 10,454 8,499
Interest on financial leasing 16,700 7,830
Interest cost for benefit plan 8,819 7,145
Foreign exchanges losses/(gains) (160,548) 21,669
Total (128,563) 40,703
Foreign exchange income of €160,548 (2018: €21,669) are mainly related to Sterling to Euro movement in the Group’s Sterling bank account.
12. Taxation
2019 2018
€ €
Current tax expense 449 414
Deferred tax expense/ (recovery) (25,674) –
Total tax expenses (25,225) 414
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12. Taxation continued
2019 2018
Reconciliation of tax rate € €
Loss before tax (3,426,439) (3,956,414)
Italian statutory tax rate 24% 24%
(822,345) (949,539)
Impact of temporary differences 62,887 42,327
Losses recognised (37,662) (41,913)
Impact of tax rate in foreign jurisdiction 27,942 38,960
Losses not utilised 794,403 910,579
Total tax expenses (25,225) 414
Tax losses carried forward have been recognised as a deferred tax asset up to the point that they are recoverable against taxable temporary
differences. All other 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 €24,040,737 (€20,467,507 in 2018).
13. Intangible assets
Development
cost Patents Goodwill Others Brands Total
Cost € € € € € €
Balance at 31/12/2016 2,426,042 197,250 22,268 29,408 – 2,674,968
Additions 82,064 47,394 – 2,393 – 132,450
Balance at 31/12/2017 2,508,106 244,643 22,268 32,401 – 2,807,418
Additions 123,305 77,269 – 12,500 – 213,074
Balance at 31/12/2018 2,631,411 321,912 22,268 44,901 – 3,020,492
Additions 121,848 116,021 – 14,600 – 252,469
Acquired through acquisition 11,765 – 281,284 190,079 384,124 867,252
Balance at 31/12/2019 2,765,023 437,933 303,552 249,580 384,124 4,140,213
Amortisation
Balance at 31/12/2016 882,901 45,210 – 18,811 – 948,367
Amortisation 2017 257,101 24,464 – 5,177 – 286,742
Balance at 31/12/2017 1,140,002 69,674 – 23,988 – 1,235,109
Amortisation 2018 279,289 32,191 – 6,424 – 317,905
Balance at 31/12/2018 1,419,291 101,865 – 30,412 – 1,553,014
Amortisation 2019 312,504 43,483 – 22,357 6,402 384,746
Balance at 31/12/2019 1,731,795 145,348 – 52,769 6,402 1,937,760
Carrying amounts
Balance 31/12/2017 1,368,104 174,969 22,268 6,969 – 1,572,309
Balance 31/12/2018 1,212,120 220,046 22,268 14,489 – 1,467,478
Balance 31/12/2019 1,033,228 292,584 303,552 196,811 377,722 2,202,452
As disclosed in note 1(d) 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 has assessed the goodwill for impairment as at 31 December 2019. Given the short period between the valuation of acquisition
and the year-end, no impairment has been noted.
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Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
14. Property, plant and equipment
Industrial Computer Office Plant & Asset Under
equipment equipment equipment machinery Land right of use construction Total
Cost € € € € € € € €
Balance at 31/12/2016 138,660 33,646 84,171 1,880,994 – – – 2,137,471
Additions 21,909 2,218 19,549 304,591 – – – 348,267
Balance at 31/12/2017 160,570 35,864 103,720 2,185,585 – – – 2,485,739
Additions 11,822 9,573 3,600 110,041 – – – 135,036
Balance at 31/12/2018 172,392 45,437 107,320 2,295,626 – – – 2,620,775
Additions 32,052 11,117 55,131 123,843 – 456,819 – 678,962
Acquired from acquisition 1,031,249 – 17,018 1,782,559 608,395 – 2,445 3,441,666
Balance at 31/12/2019 1,235,693 56,554 179,469 4,202,028 608,395 456,819 2,445 6,741,402
Depreciation
Balance at 31/12/2016 53,353 21,138 19,018 760,778 – – – 854,287
Depreciation 2017 25,615 4,324 14,092 303,008 – – – 347,039
Balance at 31/12/2017 78,968 25,462 33,110 1,063,786 – – – 1,201,326
Depreciation 2018 26,661 4,857 15,145 310,351 – – – 357,014
Balance at 31/12/2018 105,629 30,319 48,255 1,374,137 – – – 1,558,340
Depreciation 2019 89,702 5,794 19,332 263,345 – 76,136 – 452,309
Balance at 31/12/2019 193,331 36,113 67,587 1,637,482 – 76,136 – 2,010,649
Carrying amounts
Balance 31/12/2017 81,601 10,402 70,610 1,121,799 – – – 1,284,412
Balance 31/12/2018 66,763 15,118 59,065 921,489 – – – 1,062,435
Balance 31/12/2019 1,042,362 20,440 111,882 2,564,546 608,395 380,683 2,445 4,730,753
Asset held under financial leases with a net book value of €533,957 are included in the above table within Plant & Machinery.
15. Investments in subsidiaries
Details of the Company’s subsidiaries as at 31 December 2018 are as follows:
Shareholding
Subsidiaries Country Principal activity 2019 2018
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
high-performance membranes 60% 60%
Setcar S.A. Romania Waste management and decontamination
services business 51%
Subsidiaries Place of Business Registered Office Place of Business
Directa Plus S.p.A. Italy Via Cavour 2, Lomazzo (CO) Italy See registered office
Directa Textile Solutions S.r.l. Italy Via Cavour 2, Lomazzo (CO) Italy See registered office
Setcar S.A. Romania Str. Gradinii Publice 6, Braila Romania See registered office
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15. Investments in subsidiaries continued
The Company’s investment as capital contributions in Directa Plus Spa are as follows:
Directa Spa
At 31 December 2017 14,180,336
Additions 2,000,000
At 31 December 2018 16,180,336
Additions 5,000,000
At 31 December 2019 21,180,336
16. Trade and other receivables
Group Company
2019 2018 2019 2018
Current € € € €
Account receivables 2,169,307 1,367,425 – –
Tax receivables 460,521 374,673 44,117 31,634
Other receivables 313,458 317,119 159,287 129,960
Total 2,943,286 2,059,217 203,404 158,594
Group Company
2019 2018 2019 2018
Non-current € € € €
Other receivables 109,698 – – –
Total 109,698 – – –
Group account receivables of €2,169,308 are mainly composed by three major clients, which cover 77% of the total amount.
Group Tax Receivables are composed of Italian VAT receivables of €177,952, UK VAT receivables of €44,117, Setcar VAT receivables of €137,746
and a RDEC Tax Credit receivable of €100,706.
Other receivables are mainly composed of governments grants €182,715 and prepayments €126,704.
Non-current other receivables of €109,698 refer 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 2019 the ageing of account receivables was:
2019 2018
Days overdue € €
0-60 1,929,268 1,306,070
61-180 154,397 54,418
181-365 + 124,492 26,569
Allowance of impairment (38,849) (19,631)
Total 2,169,308 1,367,425
In 2019, 89% of account receivables have an ageing less of 60 days and refers to an order delivered close to the year end.
As at 31 December 2019 the Group recognised provision for €19,218.
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Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
17. Deferred tax liabilities
2019 2018
€ €
Deferred tax liabilities 294,191 195,504
Deferred tax assets – losses (159,132) (195,504)
Total 135,059 –
Deferred tax assets have been recognised on losses brought forward to the extent that they can be offset against taxable temporary differences
in line with the requirements of IAS 12.
The deferred tax liabilities arise from the capitalisation of development costs, defined benefit scheme and from the acquisition of Setcar.
The deferred tax liabilities are detailed below:
2019 2018
€ €
Deferred tax liabilities – Cost Capitalised 156,695 191,885
Deferred tax liabilities – Other 2,437 3,619
Deferred tax liabilities arising from acquisition 135,059 –
Deferred tax assets – losses exc. Setcar (159,132) (195,504)
Total 135,059 –
18. Cash and cash equivalents
Group Company
2019 2018 2019 2018
€ € € €
Cash at bank 10,890,718 5,503,568 7,669,360 3,968,016
Cash in hand 15,358 316 – –
Total 10,906,076 5,503,884 7,669,360 3,968,016
19. Equity
2019 2018
€ €
Share Capital 190,512 154,465
Share Premium 31,395,612 22,104,240
Foreign currency translation reserve 4,147 –
Retained earnings (17,656,325) (14,044,656)
Non-controlling interests 1,240,194 27,361
Balance at 31 December 15,174,140 8,241,410
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19. Equity continued
Number of Share
Share capital ordinary shares capital (€)
At 31 December 2017 44,212,827 142,628
Share issue on 17 December 2018 – capital raise * 4,256,000 11,837
At 31 December 2018 48,468,827 154,465
Share issue on 09 January 2019 – capital raise ** 2,647,609 7,350
Share issue on 21 October 2019 – capital raise *** 9,882,547 28,697
At 31 December 2019 60,998,983 190,512
* On 17 December 2018, 4,256,000 ordinary shares with a nominal value of £0.0025 each were issued as effect of the Company’s capital raise.
** On 09 January 2019, 2,647,609 ordinary shares with a nominal value of £0.0025 each were issued as effect of the Company’s capital raise.
*** On 21 October 2019, 9,882,547 ordinary shares with a nominal value of £0.0025 each were issued as effect of the Company’s capital raise.
Share premium
Share premium €
At 31 December 2017 19,973,996
Shares issued on 18 December 2018 2,355,548
Expenditure relating to the raising of shares (225,304)
At 31 December 2018 22,104,240
Shares issued on 18 January 2019 1,462,728
Expenditure relating to the raising of shares (140,939)
Shares issued on 21 October 2019 8,580,393
Expenditure relating to the raising of shares (610,808)
At 31 December 2019 31,395,612
On 09 January 2019, 2,647,609 ordinary shares with a share premium value of £0.7475 each were issued as effect of the Company’s capital raise
and the amount of €1,462,728 was credit to Share premium reserve.
Expenditure of €140,939 referred to direct cost related to the raising of shares was deducted from the share premium.
On 21 October 2019, 9,882,547 ordinary shares with a share premium value of £0.7475 each were issued as effect of the Company’s capital raise
and the amount of €8,580,393 was credit to Share premium reserve.
Expenditure of €610,808 referred to direct cost related to the raising of shares was deducted from the share premium.
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 €4,147.
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 at 31 December 2019 it’s composed by 49% of Setcar S.A. and 40% of Directa Textile Solutions S.r.l..
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Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
20. Loans and borrowings
Group Company
2019 2018 2019 2018
€ € € €
Loans and borrowings 484,701 168,701 – –
Total 484,701 168,701 – –
2019 Current Non current
€ € € Repayment Interest rate
Bank of Transilvania 353,506 353,506 – 12-months ROBOR 6M +
6.52%/year
GVC Investment Company LMT 124,537 – – 12-months 6%/year
Reconciliation of liabilities arising from financing activities
Cash flows Non cash flows
1 January Interest Capital Accrued Liabilities 31 December
2019 paid repayment interest acquired 2019
€ € € € € €
Borrowings 168,701 (1,167) (162,043) 1,167 478,043 484,701
Total 168,701 (1,167) (162,043) 1,167 478,043 484,701
21. Leases liabilities
The following table details the movement in the Group’s lease obligations for the period ended 31 December 2019:
2019 2018
€ €
Non-current lease liabilities 439,690 57,011
Current lease liabilities 184,900 58,121
Total 624,590 115,133
In the previous year, the Group only recognised lease assets and lease liabilities in relation to leases that were classified as ‘finance leases’ under
IAS 17, ‘Leases’; according to the new adoption of IFRS 16 in FY2019 the group has also realised additional Right of use assets, liabilities and
depreciation expenses. The assets are presented in property, plant and equipment in note 14.
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Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2019
61
22. Employee benefits provision
2019 2018
€ €
Employee benefits 416,095 335,132
Total 416,095 335,132
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 2018 and 2019 is as follows:
€
Amount at 31 December 2017 282,031
Service cost 52,059
Interest cost 7,145
Actuarial gain/losses (1,219)
Past service cost –
Benefit paid (4,883)
Amount at 31 December 2018 335,132
Service cost 65,788
Interest cost 8,819
Actuarial gain/losses 12,802
Past service cost –
Benefit paid (16,007)
Amount at 31 December 2019 406,534
Variables analysis
Detailed below are the key variables applied in the valuation of the defined benefit plan liabilities.
2019 2018
Annual rate interest 2.30% 2.30%
Annual rate inflation 1.10% 1.10%
Annual increase TFR 7.41% 7.41%
Tax on revaluation 17.00% 17.00%
Social contribution 0.50% 0.50%
Increase salary male 1.20% 1.20%
Increase salary female 1.15% 1.15%
Rate of turnover male 1.70% 1.70%
Rate of turnover female 1.50% 1.50%
®
62
Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
22. Employee benefits provision continued
Sensitivity analysis
Detailed below are tables showing the impact of movements on key variables:
Actuarial hypothesis – 2019
Decrease 10% Increase 10%
Variation Variation
Rate DBO € Rate DBO €
Increase salary Male 1.08% (3,079) 1.32% 3,119
Female 1.04% 1.27%
Turnover Male 1.53% (2,724) 1.87% 2,619
Female 1.35% 1.65%
Interest rate 2.07% 11,201 2.53% (10,631)
Inflation rate 0.99% (3,203) 1.21% 3,219
23. Trade and other payables
Group Company
2019 2018 2019 2018
Non-current € € € €
Other payables 66,629 – – –
Contingent consideration at fair value through P&L 130,061 – – –
Total 196,690 – – –
Group Company
2019 2018 2019 2018
Current € € € €
Trade payables 1,055,856 1,459,732 1,702 15,397
Employment costs 419,331 482,357 – –
Other payables 2,831,436 152,833 81,997 87,988
Contingent consideration at fair value through P&L 650,303 – – –
Total 4,956,926 2,094,922 83,699 103,385
Other payables mainly refer to the remaining portion of debt due to Setcar’s previous shareholders.
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Annual Report & Accounts 2019
63
24. Financial instruments
Financial risk management
The Group’s business activities expose the Group to a number of 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 2019 the
Group is only exposed to variable interest rate risk for a short term revolving loan. If the interest rate had increased or decreased by 100 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.
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, 89% of account receivables have an ageing less of 60 days and refers to orders delivered close to the year-end. As at
31 December 2019 the Group recognised a bad debt provision for €19,218.
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
2019 2018
Group Note € €
Trade receivables 16 2,169,308 1,367,425
Cash and cash equivalent 18 10,906,076 5,503,884
Total 13,075,384 6,871,309
The largest customer within trade receivables account for 18.6% of debtors. Management continually monitor 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.
®
64
Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
24. Financial instruments continued
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.
Carrying amount Up to 1 year 1-5 years
2019 € € €
Financial liabilities
Trade payables 1,055,856 1,055,856 –
Lease liabilities 649,287 193,598 455,689
Loans and bank overdrafts 484,701 484,701 –
Total 2,189,844 1,734,155 455,689
Carrying amount Up to 1 year 1-5 years
2018 € € €
Financial liabilities
Trade payables 1,459,732 1,459,732 –
Debts for financial leasing 118,325 61,735 56,590
Loans 168,701 168,701
Total 1,746,758 1,690,168 56,590
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 the
UK. The cash held in Sterling continues to be subject to currency risk.
EUR
Cash held in GBP 4,483,520
As at 31 December 2019 if the exchange rate EUR/GBP increase by 10% the impact on P&L would be a loss equal to €0.41 million (if decrease by
10% would be a profit equal to €0.50 million).
The Group holds accounts also in other currency (such as USD and RON) but just for business purposes and for not material amount.
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Annual Report & Accounts 2019
65
25. Earnings per share
Change in Weighted
number of Total number number of
ordinary shares of ordinary shares Days ordinary shares
At 01 January 2015 – 503,100 – 20,124,000
Existing shares – 503,100 140 7,697,705
Share sub-division on 19 May 2016 19,620,900 20,124,000 8 439,869
Issued on 27 May 2016 24,088,827 44,212,827 218 26,334,416
At 31 December 2016 43,709,727 44,212,827 366 34,471,990
At 31 December 2017 – 44,212,827 365 44,212,827
Existing shares – 44,212,827 351 42,516,993
Issued on 18 December 2018 4,256,000 48,468,827 14 1,859,078
At 31 December 2018 4,256,000 48,468,827 365 44,376,071
Existing shares – 48,468,827 9 1,195,122
Issued on 9 January 2019 2,647,609 51,116,436 285 39,912,834
Issued on 21 October 2019 9,882,547 60,998,983 71 11,865,556
At 31 December 2019 12,530,156 60,998,983 365 52,973,511
Basic Diluted
2019 2018 2019 2018
€ € € €
Loss attributable to owners of the Parent (3,585,215) (3,961,259) (3,401,214) (3,956,828)
Weighted average number of ordinary shares
in issue during the year 52,973,511 44,376,071 53,054,737 44,376,071
Fully diluted average number of ordinary shares
during the year 52,973,511 44,376,071 53,054,737 44,376,071
Loss per share (0.07) (0.09) (0.07) (0.09)
The effect of anti-dilutive potential ordinary shares are ignored in calculating the diluted loss per share.
®
66
Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
26. Share Schemes
The Company established the Employees’ Share Scheme for employees and Executive Directors and the NED Share Scheme for the Chairman and
Non-Executive Directors on 19 May 2016. The Employees’ Share Scheme is administered by the Remuneration Committee. The NED Share Scheme
is administered by the Executive Directors.
The Directors are entitled to grant awards over up to 10 per cent of the Company’s issued share capital from time to time. Awards over a total of
1,675,609 Ordinary Shares were granted on or around the date of Admission (27 May 2016). No awards have yet been exercised, leaving a total of
1,639,877 outstanding as at the year end, as cancellation occurred for those employees who left the Group in 2018. The main terms of the 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 Board may also grant market value share options to Non-Executive Directors
under the NED Share Scheme. 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 performance conditions (if any) which must
be achieved in order for the award to be exercisable.
Types of award
Awards granted under the Employees’ Share Scheme can take the form of performance shares and/or market value share options. “Performance
shares” are share options with an exercise price equal to the nominal value of a share, while “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 and, except in the case of market value share options granted to the
Chairman or Non-Executive Directors, the satisfaction of performance conditions. This is subject to the good leaver provisions described below.
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. The value of Ordinary Shares over which
a Non-Executive Director may be granted market value share options under the NED Share Scheme in any financial year of the Company shall not
exceed 150 per cent of his annual rate of fees.
Performance targets
The Remuneration Committee will impose objective targets which will determine the extent to which awards will vest. Targets for awards to be
granted to Executive Directors and senior employees on or prior to Admission are based on growth in EBITDA, share price and production capacity
targets in line with the Company’s forecasts prior to Admission.
The Remuneration Committee may modify or amend the performance targets if changes to the Company or its business mean that the targets are
no longer relevant or appropriate. However, any new or amended conditions will not be materially any more or less challenging than the original
conditions were expected to be at the time they were imposed. The vesting of market value share options granted to Non-Executive Directors will
not be subject to performance conditions.
Variation of share capital
Awards granted under the Share Schemes may be adjusted to reflect variations in the Company’s share capital.
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67
26. Share Schemes continued
Vesting of awards
Awards will vest on the third anniversary of the date of grant to the extent that the performance targets have been met. Vested awards may
generally be exercised between the third and tenth anniversaries from the date of grant.
The inputs to the Black-Scholes model were as follows:
31 Dec 2019 31 Dec 2019
Market value Performance
Black Scholes Model shares shares
Share price 69p –
Exercise price 75p –
Expected volatility 36% –
Compounded Risk-Free Interest Rate 4.25% –
Expected life 3 years –
Number of options issued* 60,000 –
*Number of options issued is an input of the Black-Scholes model and refers to the total outstanding options granted by the Company. This is not representing any option
issued in the period.
Details of the number of share options outstanding are as follows:
Granted Cancelled Expired Vested Outstanding Exercisable
Outstanding at during the during the during the during at end of period Exercisable
start of period period period period period period option price Grant date date
31 December 2017 1,675,610 60,000 – – – 1,735,610
– – (95,733) – – (95,733)
31 December 2018 1,735,610 – (95,733) – – 1,639,877
– – (25,523) (733,066) (821,288) –
31 December 2019 1,639,877 – (25,523) (733,066) (821,288) 60,000 75p 12 May 2017 12 May 2020
Cancellation of share options during the period relates to the resignation employees. Share options expired over the period refers to those
performance share option that did not meet the performance criteria on the third anniversary of the granting. Vested share options are Market
share options and Performance share options that met the criteria on the third anniversary. No vested options were exercised in the period.
®
68
Directa Plus
Annual Report & Accounts 2019
Notes to the consolidated financial statements
continued
27. Related parties
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’.
2019 2018
€ €
Short-term employee benefits and fees 251,353 235,646
Social security costs 69,037 64,819
320,390 300,465
For Directors remuneration please see Director’s Remuneration Report.
28. Contingent liabilities and commitments
The group has the following contingent liabilities relating to bank guarantees on operating lease arrangements and government grants.
2019 2018
€ €
Bank guarantees 114,440 105,640
Total 114,440 105,640
29. Post balance sheet events
The COVID-19 pandemic has had a significant, immediate impact on the global economies and on the operations. It is considered a non-adjusting
post balance sheet event as the WHO called the Pandemic on 11 March 2020.
The COVID-19 pandemic has not, to date, had a significant adverse impact on the Group’s operations but the Directors are aware that if the current
situation becomes prolonged then this may change. Management believes that the Group has the systems and protocols in place to address these
challenges. 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.
Directa Plus
Annual Report & Accounts 2019
Directa Plus
Annual Report & Accounts 2019
Directa Plus in 2019
Discover how we are using graphene to help customers’
revolutionize the performance of their products.
Directa Plus is one of the largest producers and suppliers
worldwide of graphene nanoplatelets-based products for use
in consumer and industrial markets.
Our graphene nanoplatelets-based products are natural, chemical-free and
sustainably produced. Our production process is designed to meet large
supply chains' requirements for volume, cost and quality control.
By incorporating Directa Plus’s unique graphene blends, identified by
the G+ brand, our customers can revolutionize the performances
of their own end products in commercial applications such as
textiles, tyres, composite materials and environmental
solutions. We partner with our customers to enable
them to offer the high-performance benefits of
G+ in their own products.
Our company has a unique and patented
technology process and a scalable and portable
manufacturing model. We produce graphene
nanoplatelets-based products at our own
factory near Milan, Italy, and can set up
additional production at customer locations to
reduce transport costs, waste and time-to-
utilisation. We are strongly committed to
environmental sustainability and abided by a strong
Code of Ethics in all aspects of our business practice.
Contents
01 Highlights
02 Target market progress
03 At a glance
04 Chairman’s statement
06 Our strategy and business model
08 Chief Executive Officer’s review
14 Market review
16 Chief Financial Officer’s review
18 Directors’ biographies
20 Section 172
21 Directors’ report
24 Corporate governance report
28 Directors’ remuneration report
30 Audit Committee report
31 Remuneration Committee report
32 Independent auditor’s report
36 Consolidated statement of comprehensive income
37 Consolidated and company statement of financial position
38 Consolidated statement of changes in equity
38 Company statement of changes in equity
39 Consolidated and company statement of cash flows
40 Notes to the consolidated financial statements
IBC Directors, secretary and advisers
Directors, secretary and advisers
Directors
Sir Peter Middleton – Non-Executive Chairman
Giulio Cesareo – CEO and Founder
Marco Ferrari – Chief Financial Officer
David Gann – Non-Executive Director
Neil Warner – Non-Executive Director
Richard Hickinbotham – Non-Executive Director
Company Secretary
Marco Ferrari
Registration number
04679109
Registered office
3rd Floor
11-12 St James’s Square
London SW1Y 4LB
United Kingdom
Principal place of business
Directa Plus Plc
ComoNExT Science Park
Via Cavour 2
22074 Lomazzo (Co)
Italy
Nominated adviser and broker
Cantor Fitzgerald Europe
5 Churchill Place
Canary Wharf
London E14 5HU
United Kingdom
Joint broker
N+1 Singer
1 Bartholomew Lane
London EC2N 2AX
United Kingdom
Auditors
BDO LLP
55 Baker Street
London W1U 7EU
United Kingdom
Legal advisers
Fox Williams LLP
10 Finsbury Square
London EC2A 1AF
United Kingdom
Registrar
Link Market Services Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Financial PR adviser
Tavistock
1 Cornhill
London EC3V 3NR
United Kingdom
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Printed sustainably in the UK
by Pureprint, a CarbonNeutral®
company with FSC® chain
of custody and an ISO 14001-
certified environmental
management system recycling
over 99% of all dry waste.
Directa Plus Plc
3rd Floor
11-12 St. James’s Square
London
SW1Y 4LB
United Kingdom
www.directa-plus.com
Graphene is the
material of the future
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Annual Report & Accounts 2019