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 2020
Directa Plus
Annual Report & Accounts 2020
Directa Plus
Annual Report & Accounts 2020
Directa Plus in 2020
Discover how we are using graphene to help customers’
revolutionise 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 revolutionise the performances
of their own end products in commercial applications such as
textiles, 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 Chairman’s review
03 At a glance
04 Target market progress
06 Our strategy and business model
08 Market review
10 Chief Executive 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
38 Consolidated statement of comprehensive income
39 Consolidated and Company statement of financial position
40 Consolidated statement of changes in equity
40 Company statement of changes in equity
41 Consolidated and Company statement of cash flows
42 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
David Gann – Non-Executive Director
Neil Warner – Non-Executive Director
Richard Hickinbotham – Non-Executive Director
Company Secretary
Paul Cooper
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 joint broker
Cenkos Securities
6.7.8 Tokenhouse Yard
London EC2R 7AS
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 3ND
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
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 markets in which the Company can gain strong traction – textiles,
environmental remediation, composites and other verticals
Financial and operational highlights
• Product sales and service revenue increased by 144% to €6.43m (2019: €2.63m)
• Total income (including grants) increased by 141% to €6.78m (2019: €2.81m)
• LBITDA €2.62m (2019: €2.71m), in line with market expectations*
• Reported (basic) loss per share €0.07 (2019: €0.07)
• Cash and cash equivalents at year end of €7.08m (2019: €10.91m)
• Total patents granted at year end 38 (2019: 23)
• 2,018 metric tonnes of recovered hydrocarbons**
• 82k metres of textile printed, padded and laminated in 2020 (2019: 74k mt)
* LBITDA represents results from operating activities before tax, interest, depreciation and amortisation
** Only with reference to the two main projects with OMV Petrom and Lukoil
Directa Plus
Annual Report & Accounts 2020
01
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Product sales and service revenue
increased by 144% to €6.43m
(2019: €2.63m)
Total income (including grants) increased
by 141% to €6.78m (2019: €2.81m)
LBITDA €2.62m (2019: €2.71m),
in line with market expectations
€6.43 million
€6.78 million
€2.62 million
82k metres of textile printed, padded and
laminated in 2020 (2019: 74k mt)
Cash and cash equivalents at year end
of €7.08m (2019: €10.91m)
Directa Plus has shown a remarkable
growth and delivered a significant
increase in sales compared to 2019
82k metres
€7.08 million
+144% increase
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Directa Plus
Annual Report & Accounts 2020
Chairman’s review
“We have a clear, well-defined strategy and we are well
positioned for further growth and increased traction in all
areas. We are confident about our prospects and our future
growth, as customer references are increasing and our product
capability is proven and well recognised on the market. ”
production process that sets Directa Plus
apart from its competitors in different areas,
such as textiles and batteries, that are
normally compromised by impurities.
We have a clear, well-defined strategy and
we are well positioned for further growth
and increased traction in all areas. We are
confident about our prospects and our future
growth, as customer references are increasing
and our product capability is proven and well
recognised on the market. We have plenty
of opportunities in front of us: we remain
disciplined in the selection of our commercial
partners and focused on continually
enhancing our capacity and capability.
Following the end of the period, in January
2021, Marco Ferrari, our Chief Financial Officer
since October 2014, chose to resign to pursue
another role. On behalf of the Board, I would
like to thank Marco for his work during his
time with Directa Plus and wish him well for
the future.
Looking forward, we are very pleased to
announce that Giorgio Bonfanti will be joining
the Group as our new CFO. He will take up his
role on 31 May 2021 and is a very talented
young man, bringing a welcome range of
experience to Directa.
Despite the disruptions of Covid-19, 2020 was
a hugely positive year in Directa Plus’s
development and the Group’s future prospects
have never looked stronger. The Board of
Directors is confident about the future and
excited for the challenges and growth
opportunities to come.
2020 has been a year of undoubted challenges
with the Covid-19 pandemic, but despite this
Directa Plus has shown a remarkable growth
and delivered a significant increase in sales
(+144% compared to 2019), also thanks to
the full year contribution of Setcar trading.
We are pleased at how the business has
coped and responded to such difficulties and
how the Group has organised itself. Directa
Plus’s graphene manufacturing operations and
headquarters are located in Lomazzo, in the
Lombardy region of Northern Italy, which was
one of the earliest areas affected by Covid-19.
I would like to thank the executives and staff
for their efforts and hard work over the last
year and for their continuing commitment to
the Group’s development.
Against this background the Group has
explored ways that its technology could be
applied to alleviate the effects of the pandemic.
The work the Group undertook to design, test,
produce and market Co-Masks™ within months
of the initial concept, and to prove their
efficacy in fighting Covid-19, is an outstanding
example of how a nimble, innovative company
can bring products to market and, in turn,
provide a deeper understanding about
graphene and its numerous applications.
In our environmental remediation vertical
Directa is also achieving great success.
Revenues from Setcar are growing consistently
as more and more clean-up work is
undertaken. It is really pleasing to see the
Grafysorber® technology developed while
I have been with Directa employed in real
world settings. Directa is, making a meaningful
difference to a cleaner marine environment,
improving customers’ processes, and
generating meaningful revenues for the
Group. With significant near-term growth
opportunities there is every reason to expect
even better results in future years.
We rely on an increasingly valuable
intellectual property portfolio that continues
to build and the benefits of our chemical-free
Sir Peter Middleton
Chairman
14 May 2021
Overview
Strategic Report
Governance
Financial statements
Additional information
At a glance
Directa Plus
Annual Report & Accounts 2020
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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
Target vertical markets
1
Environmental remediation
2
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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Composites
4
Other verticals
Introducing the next generation of graphene-
enhanced asphalts for a lower carbon world.
Exploring and launching a wide range of new
applications for our technology.
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Directa Plus
Annual Report & Accounts 2020
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Environmental remediation (68% of revenue (2019: 33%))
• Frost and Sullivan Technology Innovation Award granted to Directa Plus in May 2020 for remarkable
Grafysorber® performances in sustainable environmental remediation.
• In February 2020, Setcar won a c.€5.0 million contract to supply environmental services to GSP Offshore,
part of the Romanian oil services group GSP, with a value of c.€0.7 million p.a. over seven years.
• New contract to supply total waste management services to Cummins Generator Technologies Romania S.A.,
with Setcar worth c. US$3 million over a period of three years, commencing 1 October 2020.
• Extension of the collaboration between Setcar and OMV Petrom S.A., the largest energy company in Southern
and Eastern Europe, for the treatment of waters and the recovery of crude oil.
• Agreement with Petrotel Lukoil S.A. for the draining, cleaning and washing of a first oil storage unit, completed
in March 2021 for a total amount of c. €0.4 million of services.
• Established pipeline of active contract tenders across Europe, including a number of high value opportunities.
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Textiles (30% of revenue (2019: 63%))
• In a rapid response to the global crisis, Directa Plus launched in June 2020 a G+® graphene enhanced facemask,
branded Co-Mask™, which significantly reduces the measured incidence of SARS-Cov-2, as confirmed by
a team at the Department of Neuroscience, Catholic University of Rome, operating in conjunction with the
Gemelli Hospital in Roma.
• €0.1million grant received from European Union’s Horizon 2020 research and innovation programme to explore
the potential of Co-Mask™ in a clinical setting.
• In August 2020, signed a collaboration agreement with Poltrona Frau S.p.A., for an initial two years, to develop a
sustainable and high-tech leather enhanced by the properties of Directa Plus's proprietary graphene technology
• OEKO-TEX® independent non-toxic certification (an Eco Passport) received in February 2020 for our G+®
printing paste technology.
• Our technology is chemical free and has been fully demonstrated to have significant anti-viral properties
without any issue or potential damage on the human body. We foresee a wide range of potential additional
applications of our technology in the future.
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Left: In a rapid response to the global crisis,
Directa Plus launched in June 2020 a G+®
graphene enhanced facemask, branded
Co-Mask™, which significantly reduces the
measured incidence of SARS-Cov-2.
Co-Mask™
Frost and Sullivan Technology Innovation
Award granted to Directa Plus in May 2020
for remarkable Grafysorber® performances
in sustainable environmental remediation.
Above left: White Grafysorber® barriers used in
environmental remediation.
Right: The G+ Cosmic Collection tech t-shirt
and jacket.
Innovation award
Directa Plus
Annual Report & Accounts 2020
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Overview
Strategic Report
Governance
Financial statements
Additional information
3
Composites
• Asphalt additive Gipave®, developed by Directa Plus and Iterchimica and containing the Company’s
G+® graphene, was installed at Rome's airport in January 2020.
• Signed a 3-year agreement with Iterchimica for the exclusive supply of G+® graphene product in the
asphalt and bitumen sector worldwide.
• New San Giorgio Bridge in Genoa which opened in August 2020, was constructed using Gipave®
asphalt supermodifier.
• The asphalt applications of our G+® graphene technology is proving exceptional results, and the
interest on the market of our product is also growing internationally. We have an enriched pipeline
and we expect further projects and success in the near future.
4
Other verticals
• In November 2020 NexTech Batteries and Directa Plus announced that a prototype Lithium-Sulphur
battery had exceeded 400Wh/kg which compares to Lithium-Ion of typically between 100-265 Wh/kg.
• Post-period end, signed a partnership, 3-year supply agreement and a joint R&D collaboration with
NexTech for the supply and development of new grades of G+® graphene nanoplatelets for the
production of Lithium Sulphur batteries.
• Technical and commercial agreement signed in July 2020 with Italdesign S.p.A. to jointly develop a wide
range of automotive components enhanced by Directa Plus’s graphene technology.
• In December 2020 Directa signed a development agreement with the Soft Goods Division of a major
international developer and manufacturer of consumer electronics, personal computers and related
services for the potential application of G+® graphene on covering materials.
Signed a 3-year joint R&D collaboration with
NexTech for the supply and development of
new grades of G+® graphene nanoplatelets in
the production of Lithium-Sulphur batteries.
NexTech
Above: Laying Gipave® asphalt on the San Giorgio
Bridge in Genoa.
Above right: San Giorgio Bridge in Genoa which
opened in August 2020.
Left: R&D collaboration with NexTech for the
supply and development of new grades of G+®
graphene nanoplatelets for the production
of Lithium-Sulphur batteries.
Signed a 3-year agreement with Iterchimica
for the exclusive supply of G+® graphene
product in the asphalt and bitumen sector
worldwide.
3-year agreement
06
Directa Plus
Annual Report & Accounts 2020
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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Governance
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Additional information
Directa Plus
Annual Report & Accounts 2020
07
Directa Plus has a unique and proven process for the production
of pristine, chemical free graphene nanoplatelets, tailored to our
partners’ and customers’ requirements, which is both flexible
and scalable.
Production is located at our factory near Milan, Italy, but can also
be set up at customer locations to reduce transport costs, waste
and lead times. We are strongly committed to environmental
sustainability and abide by a strong Code of Ethics in all aspects
of our business practice.
We create value through partnering with leading European
industrial entities with large international footprints that
provide significant growth opportunities, but also important
reference customers to support the roll out of graphene
enhanced products and services globally. The success of this
strategy can be seen in our progress in the environmental
remediation and textiles markets, and other areas where
we see great potential.
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strength and
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®
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.
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Directa Plus
Annual Report & Accounts 2020
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.
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The Starship Jacket is the perfect multi-
purpose jacket: from extreme situations to
daily urban use.
The sports Tech-Shirt is made of recycled
nylon, recycled elastane jersey and a technical
mesh. The ergonomic fit is designed to help
and follow the body’s movements.
Starship Jacket
Tech T-shirt
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2020
09
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.
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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.
Nanoplatelets
Above left: Laying Gipave® asphalt on the
San Giorgio Bridge in Genoa.
Right: The new G+® Cosmic Collection combines
the highest quality materials and design standards
with nano-technology and textile engineering.
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Directa Plus
Annual Report & Accounts 2020
Chief Executive Officer’s review
Giulio Cesareo
CEO
Introduction
Despite the economic implications of the
Covid-19 pandemic on the markets, 2020 saw
great progress for Directa Plus. Over the last
12 months we have significantly increased our
revenues by c. +144%, thanks not only to the
full year contribution of Setcar trading, which
clearly played a key role in driving the revenue
increase, but also to our key verticals of
environmental remediation solutions and
textiles, and to the other industrial sectors
where we have developed graphene
enhanced products and services where we see
material opportunities. We are particularly
excited about the possibilities for Lithium-
Sulphur batteries and our partnership with
NexTech is progressing rapidly.
Strategy and business model
Working with established industrial
businesses to collaborate on development
and manufacturing to bring graphene
enhanced products to market, with
sustainability always in mind, remains the
heart of our model. Directa Plus has
developed a proprietary scalable, modular
manufacturing process to produce and
supply high quality engineered modular
graphene materials at low production costs
and 100% chemical free.
We build on the expertise of our partners for
product development and enhancement,
and we leverage on their existing customer
relationships to gain market penetration.
This allows us to explore a greater number
“Despite the impact of Covid-19, 2020 saw great progress
for Directa Plus not only in our key verticals of environmental
remediation and textiles, but also in the other industrial sectors
such as composites, batteries and consumer electronics. We have
an excellent pipeline of opportunities and our proprietary scalable,
modular manufacturing process allows us to produce high quality
engineered graphene materials at an attractive price point.”
Overview
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Additional information
Annual Report & Accounts 2020 11
Directa Plus
of industries, applications, and products
both more quickly and in greater depth.
Indeed, when we have proof of the effectiveness
of graphene in enhancing jointly developed
products our partners are always keen to
open more doors alongside Directa, helping
spread the word about the Group further.
We consider the health and safety of all
stakeholders and environmental protection
as top priorities. Since our company was
established, we implement a proactive
approach to health, safety and environmental
protection by monitoring our production
process and products. In seven years, we have
collected 28 certificates proving the absence
of negative impacts of G+® graphene on
biological systems.
Our key verticals remain environmental
remediation and textile production and we
can point to great success in those areas in
2020. This has not been to the detriment of
our work with other materials and sectors
however as our advances with Lithium-
Sulphur batteries, polymers and elastomers,
and in growing out intellectual property
portfolio show.
Environmental remediation
Now deployed at a range of real world sites
by the Company’s subsidiary Setcar S.A.
(“Setcar”), Directa’s Grafysorber® technology
is rapidly gaining acceptance in the Oil & Gas
industry as a step change improvement from
existing water treatment products and
services. Reusable and sustainably produced
Grafysorber® is five times more effective at
hydrocarbon clean-up than competitors and
allows recovery of financially valuable oils
and sludges. With this range of product
advantages Directa was able to deliver
increasing commercial success in this vertical
in 2020.
The post-acquisition integration of Setcar
continues to progress well. 2020 was the first
year of control of the company and we have
performed and almost completed an
important exercise of coordination and
realignment to the Group. The Group
continues to invest to reshape the Setcar
business to ensure it is better positioned to
capture growth opportunities. In 2020 Setcar
signed 208 new contracts; participated in 115
tenders, of which it won 62; and generated
€4.3 million in sales (€4.0 million in 2019,
including the pre-acquisition period).
Setcar has a healthy and encouraging
pipeline of contract tenders across Europe,
including a number of high value tenders,
with two in the private oil and gas sector and
another in a state infrastructure network.
On 3 February 2020, Directa Plus announced
that Setcar had been awarded a significant
contract win to supply environmental services
to GSP Offshore, part of the Romanian oil
services group, GSP. This marked the second
major contract win for Setcar since the
completion of the acquisition by Directa Plus
and the contract has a value to Setcar of
approximately €0.7 million per annum over
a period of seven years for a total value of
approximately €5 million, commencing in
February 2020.
Directa Plus’s success in developing
Grafysorber® was recognised in May 2020
when the Company received a Technology
Innovation Award 2020 from global
consultants Frost & Sullivan for innovative
product and processing technology for
treating waters and sludges contaminated
by hydrocarbons. In the report, titled
‘Graphene for the Environmental
Remediation Industry’, the authors point
out that, “the technology is a remarkable
step toward attaining sustainable and
cost-effective environmental remediation.”
Setcar signed another significant contract,
announced on 13 July 2020, to supply total
waste management services to Cummins
Generator Technologies Romania S.A.,
part of the Fortune 500 group Cummins Inc.
The value of the contract to Setcar is
estimated to be approximately US$3 million
over a period of three years, commencing
1 October 2020.
In 2020 working with OMV Petrom S.A., one
of the largest energy companies in Southern
and Eastern Europe, Setcar treated c. 2,500
cubic metres of emulsion generated by the
up-stream extraction process. This led to
the recovery of c. 550 metric tonnes of crude
oil, with impurities below 1%, which were
returned to the refinery for processing.
We have been requested to raise to 2,000
metres per month the production capacity
in 2021.
In January 2021 the contract with OMV
Petrom was extended to June 2021, with the
total value rising to up to €0.4 million.
Over the last 12 months revenues increased
by c. +144%, due to Setcar’s trading,and also
to our key verticals of environmental
remediation, textiles and other industrial
sectors where we have developed graphene
enhanced products.
In 2020 Setcar signed 208 new contracts;
participated in 115 tenders, of which it
won 62; and generated €4.3m in sales
(€4.0m in 2019).
c.+144% revenue
€4.3m in sales
Setcar won a significant contract to supply
environmental services to GSP Offshore, part
of the Romanian oil services group, GSP.
The contract has a value of approximately
€5 million over a period of seven years.
c. €0.7m p.a.
Above: Left to right – Alessandra Bambini, Sales
& Marketing Director, Giulio Cesareo, CEO and
Laura Giorgia Rizzi, Chief Technical Officer.
Left: The Directa Plus team wearing the new
Tremezzo masks.
12
Directa Plus
Annual Report & Accounts 2020
Chief Executive Officer’s review continued
Working with Petrotel Lukoil S.A., part of
LUKOIL Company, Setcar is completing the
draining, cleaning and washing of an oil storage
tank, beginning in November 2020. Using
Grafysorber® technology, Setcar is recovering
hydrocarbons by treating the sludge settled on
the tank’s bottom. This process will also restore
the tank to factory nameplate capacity,
optimising ongoing operational use by the
customer. The project has been completed by
the end of March 2021 and Setcar expects to
treat c. 3,200 cubic metres of sludge recovering
more than 2,000 metric tonnes of
hydrocarbons including oil and paraffins that
can be sent back to the refinery.
Environmental remediation solutions are
amongst Directa Plus’s most commercially
advanced activities. The projects the Group is
working on are demonstrating the immense
potential that our proprietary Grafysorber®
technology embeds. The Group is successfully
gaining and fulfilling contracts that clearly
demonstrates the high effectiveness of this
product. Those recent outcomes are
demonstrating that we will expand our
market reach, making great progress with an
improved product and gaining reputation,
which is reflected in an enriched opportunity
pipeline for the upcoming months.
Textiles
Our understanding of the possibilities offered
by our textiles vertical is always improving.
We are looking at a number of ways to apply
G+® graphene to a wide range of materials,
the performance benefits we can derive, and
further potential applications.
In 2020, we operated in a year affected by
Covid-19, thus we have explored all possible
ways that the Group’s technology could be
used to alleviate the effects of the pandemic.
Directa Plus has had to adapt working
patterns, including changes to the use of
office and laboratory space, to help prevent
the further spread of Covid-19. The Group’s
graphene manufacturing operations and
headquarters are located in Lomazzo in the
Lombardy region of Northern Italy, which was
one of the earliest affected areas for Covid-19.
Much of our focus in 2020 was on the
development of the Co-Mask™ and we
believe that work can now have broader
applications. In the meanwhile, we are proud
to have developed a number of key further
applications to other materials, such as
garments and furniture manufacture.
We have launched an own brand line of
performance sportswear for sale online to
demonstrate consumer demand and provide
focus for our product development. Our
partnerships continue to offer promising
outcomes for 2021 and beyond.
As part of a partnership called GREEN.TEX,
Directa Plus received a grant from the EU in
January 2020, to develop an environmentally
sustainable technology to digitally print its
G+® graphene product on fabrics. The project
partners are EFI Reggiani, the Italian
subsidiary of global digital printing group
Electronics For Imaging, Inc. (“EFI”), and IBS
Consulting Group. Due to last for an initial
24 months, the project’s aim of developing
digital printing will offer improved fabric
performance, much greater flexibility in
production and will focus on environmental
sustainability of processes and materials.
On 12 February 2020, the Company
announced that had secured OEKO-TEX®
certification for Directa Plus’s proprietary
G+® graphene printing paste technology. Eco
Passport by OEKO-TEX® is an independent
certification system for chemicals,
colourants and auxiliaries used in the textile
and leather industry. Operating since 1992
OEKO-TEX® offers testing and certification to
companies worldwide.
By 19 June 2020, the Company was able to
announce that the work it had undertaken in
response to Covid-19 had led to the
development of G+® graphene enhanced
facemasks, branded Co-Mask™, and their
availability for retail sale at a new, dedicated
website: https://graphene-plus.com/. This
product has proven very popular, with many
orders received by the publication of this
report, including 25,000 units by a leading
Italian luxury sports car manufacturer.
The Group is proud to have been able to
respond to a global crisis by quickly
developing a product that can help a large
number of people. Therefore it was very
pleasing that the anti-viral properties of the
Co-Mask™ were confirmed in August 2020 by
a team at the Department of Neuroscience,
Catholic University of Rome, operating in
conjunction with the Gemelli Hospital in
Rome. Tests showed that G+® graphene can
improve textile properties and significantly
reduce the measured incidence of
Left: Setcar trucks employed for the
Grafysorber® transportation.
Potential of our proprietary Grafysorber®
technology, the Group is successfully
gaining and fulfilling contracts and is
observing the real effectiveness of this
product, which is proven to be five times
more effective at clean-up than competitors.
x5 more effective
Left: Bellagio Co-Mask™ and G+ Upgraded T-shirt
Working with Petrotel Lukoil S.A., Setcar is
completing the cleaning and washing of an
oil storage tank to treat c.3,200 cubic metres
of sludge recovering more than 2,000 metric
tonnes of hydrocarbons including oil and
paraffins to be sent back to the refinery.
c. 3,200 cubic meters
Overview
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Additional information
Annual Report & Accounts 2020 13
Directa Plus
SARS-CoV-2 when the virus is deposited or
filtered through functionalised cotton or a
non-woven fabric (polyurethane). A scientific
paper containing the full details of the trial
and the results is underway and is expected
to be published shortly.
Sales of the Company’s G+® enhanced face
masks continued to grow in the second half
of the year, contributing meaningfully to top
line revenue, totalling c. €0.6 million in 2020.
The Company is exploring the potential of
Directa’s facemask to be used in clinical
settings with a €0.1 million grant from the
European Union’s Horizon 2020 research
and innovation programme, as part of the
Inno4Cov-19 Project. The research will also
include work to develop biodegradable G+®
enhanced filters and sanitisation process for
the face-mask using household items such
as an iron or a hairdryer.
On 10 August 2020 the Company announced
the signing of a new collaboration agreement
with Poltrona Frau S.p.A., a global leader in
high-end furniture manufacture for
residential, bespoke and commercial use.
The agreement is for an initial two years with
the aim of developing a new sustainable and
high-tech leather enhanced by the properties
of Directa Plus’s proprietary graphene
technology. It is anticipated that G+®
enhanced leather will provide antimicrobial
and antiviral properties, improved thermal
regulation, electrical conductivity, and
mechanical properties such as abrasion
resistance and UV resilience.
In March 2021, Directa Plus was able to
announce another test result relating to the
absence of absorption of its pristine
graphene nanoplatelets powder (Pure G+®)
through human skin. A total of eight in vitro
test results now show that Pure G+® has no
potential negative impact on human health.
We are extremely proud of our great
developments in our textiles products. Our
technology has been fully demonstrated to
have significant anti-viral properties without
any issue or potential damage on the
human body. Our chemical free production
process allows it to be effective and totally
safe for the customers. Our G+® graphene
enhanced facemasks represented our initial
response to the Covid-19 pandemic and
application launched on the market, and we
foresee a wide range of potential additional
applications of our technology in the future.
Composites
The Group has made significant strides
elsewhere in our deployment of our
graphene technology in certain composite
materials, with great achievements in
asphalt applications.
A six-month trial was announced on 8 January
2020 that has seen graphene enhanced
asphalt used for the first time at an airport.
The asphalt additive Gipave®, developed by
Directa Plus and Iterchimica and containing
the Company’s G+® graphene, was installed at
taxiway Alpha at Rome’s Fiumicino airport.
The project is in collaboration with G.ECO
S.r.l., part of Italy’s largest multi-utility
company Gruppo A2A, and the University of
Milan-Bicocca.
January also saw the signing of an agreement
between Directa Plus and Comerio Ercole
S.p.A. 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.
April 2020 saw the announcement of an
agreement with established industrial partner,
Iterchimica, for the supply of a special grade
of the Company’s G+® graphene product,
known as ITC1, the graphene modifier
component of the jointly developed Gipave®
road surface. The Agreement provides for the
exclusive supply of the G+ graphene product
to Iterchimica in the asphalt and bitumen
sector worldwide and is for an initial duration
of three years, with growing interest from
potential customers in Italy, the UK, and the
United States.
Another road trial of Gipave® was announced
on 25 June 2020, in this instance in Kent,
United Kingdom. The results of the trial will
give further confidence to potential purchasers.
On 4 August 2020, the new San Giorgio Bridge
in Genoa was opened by the President of
Italy, Sergio Mattarella. The new bridge,
replacing the old Morandi Bridge structure
that collapsed on 14 August 2018, was
completed just 22 months after the disaster to
designs by Genoa born Renzo Piano. The road
surface on the bridge was constructed using
Sales of the Company’s G+® enhanced face
masks continued to grow in the second
half of the year, contributing to top line
revenue, totalling c.€572 thousand in 2020.
c. €572,000
Response to Covid-19 led to the
development of G+® graphene enhanced
facemasks, branded Co-Mask™, for retail
sale. This has proven very popular, including
25,000 units ordered by a leading Italian
luxury sports car manufacturer.
25,000 order
Above: The Neptune Polo, the Cosmic Collection
introduces a new direction for Graphene Plus and
aims to build an innovative and technological
experience around customers.
Above left: the new City-Life GPlus ‘Cernobbio’ mask.
Left: The Power G+® mask is the perfect device to
keep students and children safe.
14
Directa Plus
Annual Report & Accounts 2020
Chief Executive Officer’s review continued
the Gipave® asphalt supermodifier, jointly
developed by Iterchimica and Directa Plus.
The asphalt applications of our G+® graphene
technology is providing exceptional results,
and the interest in the market for our product
is growing internationally. In the meanwhile,
we are continuing to explore further potential
applications in the composites vertical.
Additional industrial verticals
Lithium-Sulphur batteries
Lithium-Sulphur batteries are considered to
be a superior battery technology to
Lithium-Ion battery technology due to
possessing a superior energy density, a
significant cost advantage, a superior safety
profile, and a less complex manufacturing
process. With applications throughout the
global supply chain, not least in electric
vehicles, the scale of demand for these next
generation batteries is likely to be enormous.
Directa’s G+® pristine graphene nanoplatelets
can be used as a raw material for
manufacturing the cathode of Lithium-
Sulphur batteries, and so there is the
potential for Lithium-Sulphur batteries to
become another key vertical for the Group.
In October 2020, Directa Plus signed a
Memorandum of Understanding with
NexTech Batteries (“NexTech”), a leading
company in the field of Lithium-Sulphur
batteries based in Nevada, USA, to
collaborate on activities aimed at securing
the supply to NexTech of Directa Plus’s G+®
nanoplatelets. This followed significant test
work which validated the suitability of
the Company’s G+® materials for
Lithium-Sulphur battery production.
By November 2020, Directa Plus and NexTech
were able to announce that a prototype
Lithium-Sulphur battery using the Directa’s
G+® pristine graphene nanoplatelets, had
achieved above 400 Wh/kg (watt-hours per
kilogram, the usual measure of energy
density) in a practical system. For
comparison, standard Lithium-Ion batteries
have an energy density of 100-265 Wh/kg.
In February 2021, Directa Plus and NexTech
agreed to form a deeper partnership, with a
three year supply agreement for the provision
of a specific grade of G+® pristine graphene
nanoplatelets and a joint R&D collaboration to
develop new specific grades of nanoplatelets.
Both parties will dedicate selected scientists
from their R&D teams and a joint laboratory
has been established in Lomazzo.
Consumer electronics
In December 2020 Directa Plus signed a
development agreement with the Soft Goods
Division of a major international developer
and manufacturer of consumer electronics,
personal computers and related services.
The agreement covers the potential
application of G+® graphene on covering
materials of consumer devices, exploiting
the antiviral-antibacterial properties of
G+® graphene as well as its thermal and
electrical conductivity.
Automotive
Directa Plus made its first move into
automotive design, in July 2020, signing a
technical and commercial agreement with
Italdesign S.p.A., a global leader in automotive
design and engineering. Part of Volkswagen
AG, Italdesign also specialises in styling,
engineering, prototyping and testing services,
and the manufacture of ULSP (ultra-low
series production) vehicles. The agreement
will allow Directa Plus and Italdesign to
jointly develop a wide range of automotive
components enhanced by Directa Plus’s
graphene expertise.
Other areas
The Company is continuing to work on
additional opportunities in new high
potential verticals including energy storage,
golf balls, and paints. We are also
exploring the developments within the
rubber and tyres, plastic and non-woven
materials industries.
Moreover, in February 2021, research
undertaken by scientists at the Polytechnic
of Turin was published in an article in the
journal Polymers showing that the use of
water-based G+® graphene ink to coat
polymeric foam confers significant
flame-retardant properties versus untreated
polymeric foam. A simple application of G+®
ink to the external faces of the foam provided
good flame-retardant properties, tested in
both horizontal and vertical conditions.
Polymeric foams are used in many
applications from roof insulation to
The new San Giorgio Bridge in Genoa was
opened in August 2020. The road pavement
on the bridge was constructed using the
Gipave® asphalt supermodifier, jointly
developed by Iterchimica and Directa Plus.
Right: Giulio Cesareo CEO and Laura Giorgia Rizzi
Chief Technical Officer at the NexTech Joint Lab,
both wearing the new Starship Jacket.
Below left: The San Giorgio Bridge in Genoa, the
pavement was constructed using Gipave® asphalt.
Gipave® asphalt
In November 2020, Directa and NexTech
announced a prototype Lithium-Sulphur
battery using Directa’s G+® pristine
graphene nanoplatelets, achieved above
400 Wh/kg (watt-hours per kilogram, the
usual measure of energy density).
400Wh/kg
Overview
Strategic Report
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Financial statements
Additional information
Annual Report & Accounts 2020 15
Directa Plus
furniture and are extremely flammable
meaning that the potential market for G+®
fire retardant technology is sizeable.
We are examining ways to realise the value
of patents in the market, exploring potential
license opportunities or royalty models that
could be the most effective models for us
at this stage.
Intellectual property
The Group continues to protect its intellectual
property portfolio, which at the date of this
report comprises 48 patents granted and
21 patents pending. The whole portfolio
represents a significant value for the Group.
On 27 April 2020 Directa Plus was granted an
EU-wide patent covering the use of its
graphene based Grafysorber® technology
for treating waters and sludges contaminated
by hydrocarbons.
On 26 May 2020 the Company was granted an
Italian patent for its Planar Thermal Circuit®
invention. The patent covers the use of the
G+® graphene circuit applied onto fabrics of
any type and which is able to absorb body
heat and move it from the hottest to the
coldest point of the circuit, providing a
significantly increased sense of comfort to the
wearer or user.
On 22 June 2020 Directa Plus announced that
the Company had been granted its sixth
Chinese patent, covering the use of the
Company’s G+® graphene technology for
bicycle, motorcycle and passenger car tyres
as well as truck and bus radial tyres,
specifically the tyre treads.
On 30 July 2020, Directa Plus was granted a
patent by the Italian Patent Office for the
Company’s G+® graphene to improve the
performance of rubber-based shoe outsoles.
The patent covers both the formula containing
G+® and the outsole made with the formula.
Directa Plus published a Scientific paper on
Applied Polymer Science in September 2020,
certifying the G+® nanoplatelets morphology
in compliance with ISO/TS80004-13:2017.
One more paper covering the antiviral
properties of G+® treated fabrics was also
submitted.
In December 2020 Directa Plus was granted a
second patent on the equipment used for the
super-expansion of intercalated natural
graphite in the Group's core plasma
technology. The new machinery has a
production capacity at least five times higher,
and is much more durable, than the Group’s
existing technology, resulting in an increase
in manufacturing capability and lower
maintenance costs. The grant of the new
patent protects the Group’s core production
process for an additional 20 years.
Post-period in January 2021, Directa Plus
received Notices of Allowance in respect
of four patents, ahead of the formal grant:
a US patent for the Group’s Graysorber®
environmental remediation technology;
an EU patent for the Group’s sustainable,
chemical-free G+® production process;
a US patent for the use of G+® graphene
supermodifier to improve the performance
of elastomers, specifically tyres; and an EU
patent covering the same use of G+®
supermodifier in tyres.
Environmental, Social and
Governance policies
Environmental sustainability is at the
heart of Directa Plus’s business, our research,
manufacturing, commercialisation,
and purpose.
From the earliest stages of our research into
graphene applications we were determined
to design manufacturing processes for our
pristine nanoplatelets that would avoid the
need for chemical processes and so avoid
wasteful by-products. We continue this
approach now – always seeking to design
the most efficient manufacturing and
proving the safety and sustainability of our
products working with recognised
environmental organisations.
When deciding our commercialisation
strategy, we made it a priority to work only
with environmentally responsible industrial
partners, and to seek to improve on products
in existing markets. This means that we can
help produce and sell better quality products
than are currently available, with better
performance and longer life for end-users.
Our commitment on this matter emerges also
with our Grafysorber® based technology and
products, which are environmentally friendly
solutions aimed at solving both historical
pollution problems and oil spills.
The Group continues to protect its
intellectual property portfolio, which at the
date of this report comprises 48 patents
granted and 21 patents pending.
48 patents
Above right: The Directa Plus and Cocai Express
Venice Clean Water team.
Right: We started a new project for Venice
Clean Water. With the support of our local partner
Cocai Express we will be using Grafysorber®
to decontaminate Venice Lagoon.
Directa is granted its sixth Chinese patent,
covering the use of the Company's G+®
graphene technology for bicycle, motorcycle
and passenger car tyres as well as truck and
bus radial tyres.
6th China patent
16
Directa Plus
Annual Report & Accounts 2020
Chief Executive Officer’s review continued
Outlook
We are very proud at Directa Plus of the
development that we have undertaken into
real world graphene applications for
consumers, and this is reflected in the
strength of our intellectual property portfolio.
That said, I did not found Directa Plus purely
to undertake research and testing. The Group
is a commercial enterprise and we are
focused on delivering increased value for our
shareholders through selling the products
and services we develop across all of the
markets we work in. Today we are providing
valuable services and products to a growing
list of customers within our verticals and
we believe we have an ever increasing
opportunity to create value for the Group and
to grow both operationally and financially.
Looking at another significant year-on-year
growth in revenues we can now unequivocally
state that the strategy is working. The R&D
work we undertook in environmental
remediation has directly led to the successes
Setcar is enjoying today. With significant
tender decisions concerning multi-million
euro contracts due in the summer of 2021 the
potential for continued rapid growth is clear.
We are advancing the uptake of graphene
composite enhanced asphalt with the
results of year-long real world trials soon to
complete. Our work with top quality
partners in the automotive market is very
exciting as we look at a number of different
elements of cars we can work on.
Lithium-Sulphur batteries also present a
huge opportunity to improve upon nascent
battery technology with a huge range of
applications. The strategic R&D agreement
with NexTech Batteries Inc. will allow us
to initiate an exciting and promising
collaboration in an industry with such
a massive growth potential.
Delivering significant growth in a difficult
year for the global economy is testament
to the hard work of Directa Plus’s employees.
We believe that over the last 12 months
we increased our reputation in the market,
and existing and potential customers are
gradually understanding and perceiving well
the value of our products. We look forward
to further growth and we are extremely
positive on future success.
Financial review
Our ability to repeat that success across our
other verticals is also looking extremely
promising. In Textiles our performance sports
and outwear is gaining significant traction with
consumers; and we have seen very promising
developments in mask tech and expanding
the use case through clinical certification.
At the end of March 2021 our Chief Financial
Officer Marco Ferrari, working with us in
Directa Plus since October 2014, has left the
Group for pursuing another role. On behalf
of the Board, I would like to thank Marco for
his work during his time with Directa Plus
and wish him well for the future.
I am very pleased to announce that Giorgio
Bonfanti will be joining the Group as our new
CFO. Giorgio is a highly competent young
man with the right skills to tackle the
significant opportunities that Directa Plus
will face in the future.
Key Performance Indicators
The Board measures the performance of the
Group through a number of important
financial and non-financial KPIs to help
shareholders understand the Group’s
progress. Our financial KPIs show significant
improvement compared to 2019.
The table on the following page summarises
the KPIs with further details contained later
in this report.
Financial overview
2020 results reflect for the first time a full year
contribution from Setcar S.A. that had a
significant positive impact on our revenue
from product sales and service, which grew
to €6.43 million (€2.63 million in 2019).
Revenue was also positively impacted also
by the sales of our Co-Mask™ product, which
contributed with c.€0.57 million of sales.
We continue to spend on research and
development across our key industrial
verticals as one would expect in a
technology led, growth orientated business
Our patented technology, the Thermal
Planar Circuit®, provides dynamic
temperature control: it moves heat from the
warmest to the coldest spot ensuring body
temperature equalisation.
Heat control
We are very proud at Directa of the
development that we have undertaken into
real world graphene applications for
consumers, and this is reflected in the
strength of our intellectual property portfolio.
Above: Tremezzo G+® Co-Mask™.
Applications
Overview
Strategic Report
Governance
Financial statements
Additional information
Annual Report & Accounts 2020 17
Directa Plus
and we are seeing positive outcomes as a
result, with meaningful revenue growth
in several categories.
LBITDA for the period was €2.62 million,
showing a slight improvement compared
to previous year (€2.71 million in 2019).
Despite being still negative, EBITDA loss from
Directa Plus S.p.A. improved by 17%, while
Setcar showed a positive EBITDA of €0.12
million, compared to the €0.41 million last
year contribution.
The Group loss after tax was in line with
management expectations at €4.53 million.
Adjusted loss after tax, which excludes
depreciation and amortisation from the
revaluation of acquired assets of Setcar and
the cost of exchange rate changes, was
€3.60 million and in line with previous year
(€3.52 million in 2019).
The table below details the adjustments to
loss after tax:
Adjusted loss after tax (€m) 2020 2019
Loss after tax (4.53) (3.40)
Depreciation and
amortisation referred to
revaluation of
acquired assets 0.66 0.04
Exchange rate variances 0.27 (0.16)
Adjusted loss after tax (€m) (3.60) (3.52)
As of 31 December 2020, inventories
increased up to €1.38 million (2019: €1.10
million), in line with the growth of the
business and at a level that ensures that the
Group can meet growing demand from
key clients in a timely manner.
Total assets of the Group totalled €17.71
million (2019: €21.99 million) and the
decrease compared to the previous year was
mainly driven by the drop in cash and cash
equivalents (€7.08 million vs €10.91 million
as of 31 December 2019). The decrease was
mainly driven by still negative cash-flows
from operating activities, also affected by
the partial repayment of the deferred
consideration in connection with the
Setcar acquisition (€0.21 million).
In 2020, the Group raised additional debt
funds guaranteed by the Italian government
for €0.33 million and Setcar increased its
loan facility up to €0.69 million (2019: €0.35
million). Moreover, Setcar obtained an
additional loan from its other main
shareholder (GVC Investment Company)
reaching a total amount of €0.98 million.
Post period, such shareholder’s loan was
entirely converted into equity.
The Group has an ambitious long-term
growth strategy and may in the future
consider raising additional capital through
an equity issue to capture additional
opportunities and to accelerate its growth.
In addition, it looks increasingly likely that
the Group will have access to a €1.5-2 million
loan backed by the Italian government, as
part of the Covid-19 recovery programme,
offered at competitive costs.
It is expected that the receipt of Italian
government funding will help sustain the
Group until it reaches anticipated cash flow
break-even, and to assist the Group as it
seeks to the exploit several significant
commercial opportunities across an
enriched pipeline, including Lithium-Sulphur
batteries, further improvement in graphene
production, the development of higher
performing products and the maintenance
of competitive advantage.
In the short term, the Group’s priorities
continue to be focused on a reduction in
cash consumption and an improvement
in profitability.
A description of the main risks and
uncertainties facing the Group are described
within the Directors’ Report.
Giulio Cesareo
Chief Executive Officer
14 May 2021
KEY PERFORMANCE INDICATORS & FINANCIAL SUMMARY 2020 2019
Revenue from product and service sales (€’m) 6.43 2.63
Total income* (€’m) 6.78 2.81
LBITDA** (€’m) (2.62) (2.71)
Loss after tax*** (€’m) (4.53) (3.40)
Adjusted loss after tax**** (€’m) (3.60) (3.52)
Reported basic loss per share (€) (0.07) (0.07)
Cash and cash equivalents (€’m) 7.08 10.91
Total number of patents granted***** 38 23
* Total income comprises revenue from product and service sales (€6.43m), and other income including government
grants (€ 0.16m) and RDEC – Research and Development Expenditure Credit (€0.10m)
** LBITDA represents results from operating activities before depreciation and amortisation of €1.69m (2019: €0.84m).
Management believes that LBITDA 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 €4.53m is split between a €4.19m loss owned by the Company and a €0.34m loss in respect
of non-controlling interests.
**** Excluding amortisation and depreciation relating to revaluation of acquired assets €0.66m (2019 €0.04m) and cost
of exchange rate changes of €0.27m (2019 gain of €0.16m).
***** Number of grants in portfolio at the end of the period.
18
Directa Plus
Annual Report & Accounts 2020
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
David Gann
Non-Executive Director
Relevant strengths
•
Industry knowledge and credentials
Relevant strengths
•
Innovation management
•
•
Strategic and business expertise
Engineering expertise
•
•
Business strategy
Engineering expertise
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.
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 Pro-Vice-Chancellor,
Development and External Affairs, at Oxford
University. He was 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.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2020
19
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
Neil Warner has strong financial and
managerial experience in multinational
businesses. He recently served as the senior
independent director and chairman of the
audit committee at Trifast plc and as a Non-
Executive Director and audit committee
Chairman of Vectura Group plc. He previously
served as the senior independent director
and audit committee chairman of Dechra
Pharmaceuticals plc, and was Non-Executive
Chairman of Enteq Upstream plc. He was
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) 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.
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.
®
20
Directa Plus
Annual Report & Accounts 2020
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).
f) The need to act fairly as between members of the Company.
The Group’s Board currently consists of four Non-Executive Directors,
and one Executive Director. 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.
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 Statement at 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
Statement at 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 organisation 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. In 2020 the COVID-19 pandemic encouraged the
Board to strengthen its security and health measures towards its
employees and community in general. After a period of mandatory
home working during the first outbreak, the Group implemented an
anti-contamination protocol shared with all its employees, foreseeing
the provision of protection tools, constant disinfection of all areas and
common rooms, safety distancing and body temperature controls.
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 behaviours” of the Corporate
Governance Statement at page 24.
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:
1. Launch of the new Co-Mask™ project
The year 2020 was characterised by the global emergency caused by
the pandemic spread of the Covid-19 virus which required a review of
development strategies, at least in the short term. In this sense Directa
Plus, in March 2020, launched a project for the development of
community masks with the aim of confirming the antiviral properties
of G + graphene fabrics and packaging and marketing community
masks useful for counteracting the virus diffusion using the properties
of G + graphene. With the encouraging results relating to anti-virality
obtained from the joint study between the Catholic University and the
Gemelli Hospital in Rome, Directa Plus proceeded with the marketing
of the face masks called Co-Mask™, noting a very positive response
from the market with revenues generated close to € 0.6 million.
The Board believes that this project is aligned with the Group’s
strategy. The development and marketing initiative linked to face
masks has actually determined the definition of a new market
segment that has made it possible to offset the loss of revenue
deriving from the economic contraction linked to the pandemic,
ensuring Directa Plus growth in revenues during the year 2020.
2. Partnership with NexTech
In the third quarter of 2020 the Company has started a collaboration
with NexTech Batteries, a leading company in the field of Lithium
Sulphur batteries based in Nevada, USA. Initially the parties signed a
Memorandum of Understanding to collaborate on activities aimed at
securing the supply to NexTech of Directa’s G+ nanoplatelets, which
were validated to be suitable for their batteries.
Directa Plus and NexTech were able to announce that a prototype
Lithium-Sulphur battery using the Directa’s G+® pristine graphene
nanoplatelets had achieved above 400 Wh/kg in a practical system,
in comparison to 100-265 Wh/kg for standard Lithium-Ion batteries
on average.
In February 2021, Directa Plus and NexTech agreed to form a deeper
partnership, with a three year supply agreement for the provision of
a specific grade of G+® pristine graphene nanoplatelets and a joint
R&D collaboration to develop new specific grades of nanoplatelets.
The Board believes that this project is aligned with the Group’s
strategy. The Lithium-Sulphur batteries have a great potential to
become deployed in multiple applications and also represent a more
environmentally sustainable choice in keeping with our core values.
The Strategic report is approved by the board and it is signed on its
behalf by:
Giulio Cesareo
Chief Executive Officer
14 May 2021
Overview
Strategic Report
Governance
Financial statements
Additional information
Directors’ report
Directa Plus
Annual Report & Accounts 2020
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 2020, research and development, KPIs and the outlook for
future years, are set out in the Chairman’s Statement, Chief Executive
Officer’s Review and Financial Review on pages 2 to 17 (The Strategic
Report), and in this Directors’ Report, together with the description of
principal risks and uncertainties. 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 27.
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 2020 and up to the date of signing this report
(where not specifically mentioned):
•
•
•
•
•
•
Giulio Giuseppe Cesareo
Sir Peter Middleton
Marco Ferrari (resigned from the BoD on the 19th of March, 2021)
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 2020 are
set out in note 17 to the consolidated financial statements. At 14 May
2021, a total of 61,365,459 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 28.77
Dompè Group 7,519,999 12.29
Unicorn Asset Management 5,333,333 8.72
Dr. Jean Marc Droulers /
Finanziaria Le Perray * 4,093,794 6.78
Galbiga Immobiliare S.r.l.** 3,918,228 6.39
Schroders Investment Management 2,429,965 3.97
Ruffer 2,379,757 3.89
* Finanziaria Le Perray 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 22 to the
financial statements. The Directors continually considers how to
identify and mitigate the key business risks. Directors ensure that the
management of Company prides 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 behavior and human supervision.
®
22
Directa Plus
Annual Report & Accounts 2020
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.
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.
Certain
Moderate
The Board and the Management are constantly
monitoring the fast-evolving situation.
Management has undertaken scenario based
analysis on future financial projections. To mitigate
the adverse effect of Covid-19 on revenues the
Management decided to target the personal
protective equipment market, leveraging on
graphene G+ properties. Thanks to this new
application revenues maintain a positive growth
rate and can mitigate future adverse effect referred
to the global pandemic.
Regulatory framework is constantly monitored
by Management, trying to have prompt
understanding of proposed changes.
Possible
Major
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.
Unlikely
Moderate
Brexit
Directa Plus holds Sterling bank accounts.
The Brexit could have a potential impact on
currency risk, triggering sharp movement on
Sterling value with an effect on Directa Plus’ 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.
Possible
Minor
Directa Plus continually monitors the market and
its competition and has resources to invest in
technological development and product
development as appropriate.
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 authorization. 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
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 2020
23
Risk
Mitigation and management strategy
Likelihood*
Impact (on
the Group)**
Change***
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 favorable to the Group or to the
Group’s shareholders.
Risk is mitigated by maintaining good
relationships with the Group’s main shareholders.
The Company successfully concluded a capital
raise in October 2019.
In addition, the Group has access to potential
additional sources of debt funding with major Italian
banks, which could lessen any further funding risk.
In 2020 the Group raised €0.3m additional debt
funding backed by the Italian Government.
* 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 (→)
Possible
Major
→
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.
responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and
other irregularities.
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 the Group and Company financial statements in accordance
with International Financial Reporting Standards (“IFRSs”) in
accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006. 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:
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, subject to any
material departures disclosed and explained in the financial
statements; and
•
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
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 maintenance and
integrity of the Company’s website is the responsibility of the Directors.
The Director’s responsibility also extends to the ongoing integrity of
the financial statements contained therein.
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.
This confirmation is given and should be interpreted in accordance
with the provisions of Section 418 of the Companies Act 2006.
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.
For and on behalf of the Board of Directors
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
14 May 2021
®
24
Directa Plus
Annual Report & Accounts 2020
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 2020 financial year.
In 2020 we have started a review process of the Company’s culture and how it is consistent with our strategy, objectives
and business model. We have identified some opportunities of improvement in our daily operations, and we are focusing
our efforts on upgrading some operations in the accounting and finance division, which will play a central role in
facilitating the collaboration and alignment among all the Company’s divisions. In the first quarter of 2021 we have
appointed a university professor as a consultant to support us in this process. Compliance with each of the principles
set out in the QCA code is summarized 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 Chief Executive Officer’s review on pages 10 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.
Due to the Covid-19 pandemic all the interactions with shareholders
have been carried out through virtual meetings. However, this appears
not to have interfered with the effectiveness of the discussions.
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. In 2020 the
Covid-19 pandemic encouraged the Board to strengthen its security
and health measures towards its employees and community in
general. After a period of mandatory home working during the first
outbreak, the Group implemented an anti-contamination protocol
shared with all its employees, foreseeing the provision of protection
tools, constant disinfection of all areas and common rooms, safety
distancing and body temperature controls;
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; and
partners – we engage with commercial and scientific partners and we
work with them to develop new applications, building strong and
long-lasting relationships.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2020
25
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.
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.
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.
Full biographies of each Director can be found on pages 18 to 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.
Risk management
The Directors are responsible for establishing and maintaining the
Company’s system of internal control and reviewing its effectiveness.
Pages 21 to 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 27 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 one Executive Director 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.
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 2020 financial year can be found on pages 30 and 31.
®
26
Directa Plus
Annual Report & Accounts 2020
Corporate governance report
continued
Board
The Board consists of one Executive Director 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:
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 6
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 2020 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 10 10 – – – –
Giulio Cesareo 10 10 – – – –
Marco Ferrari 10 10 – – – –
David Michael Gann 10 9 4 3 2 2
Neil William Warner 10 9 4 4 2 2
Richard Hickinbotham 10 10 4 4 2 2
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2020
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 Director.
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.
Going concern
The Group meets its working capital requirements through the receipt
of revenues from the provision of its services and sale of products
mainly in Europe, the management of capital and operating
expenditure, from the working capital and other borrowing facilities
available to it and from the issue of equity capital.
As of 31 December 2020, the Group had net assets of €10.66m (2019:
€15.17m) and cash and cash equivalent of €7.08m (2019: €10.91m).
The Directors prepare the three year plan 2021-2023 in order to ensure
that they have sufficient liquidity in place in the business. In addition,
in response to the Covid-19 situation, the Directors, in formulating
the plan and strategy for the future development of the business,
considered a reduction in forecast revenues from c.10% to 15%.
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 fourth quarter 2022.
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 use 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.
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 and
Company 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.
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.
Sir Peter Middleton
Non-Executive Chairman
14 May 2021
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.
®
28
Directa Plus
Annual Report & Accounts 2020
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 2020 was as follows and is audited:
National Total
Share Insurance Pension emoluments
Salary/Fees Bonus options** contributions contributions 2020
2020 €’000 €’000 €’000 €’000 €’000 €’000
Non-Executive Chairman
Sir Peter Middleton 56 – – – – 56
Executive
Giulio Cesareo 291 111 6 11 82 501
Marco Ferrari* 133 15 3 8 28 187
Non-Executive
David Gann 34 – – – – 34
Neil Warner 34 – – – – 34
Richard Hickinbotham 34 – – – – 34
Total 582 126 9 19 110 846
* Marco Ferrari retired as a Director of 18 March 2021.
** Non monetary cost refers to the share option scheme in place and not exercised yet.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2020
29
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
At 14 May 2021 Directors’ interest 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* 3,863,589 150,161 6.32
Marco Ferrari 52,546 73,111 0.09
David Gann 115,027 60,000 0.19
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 3,863,589 ordinary shares held by Galbiga Immobiliare S.r.l.
®
30
Directa Plus
Annual Report & Accounts 2020
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 2020 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
31 December 2020; and
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 2020
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 2020 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; and
Approval of the grant of awards related to the new option plan for
Executive Directors and employees of the Company.
Richard Hickinbotham
Chairman of the Remuneration Committee
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32
Directa Plus
Annual Report & Accounts 2020
Independent auditor’s report
to the members of Directa Plus Plc
Opinion on the financial statements
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 2020
and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006;
the Parent Company financial statements have been properly prepared
in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 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.
We have audited the financial statements of Directa Plus Plc (the
‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2020 which comprise of the Consolidated Statement of
Comprehensive Income, Consolidated and Company Statement of
Financial Position, Consolidated Statement of Changes in Equity, the
Company Statement of Changes in Equity, the Consolidated and
Company Statement 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 Group financial statements is applicable law and
international accounting standards in conformity with the
requirements of the Companies Act 2006 and, as regards the Parent
Company financial statements, as applied in accordance with the
provisions 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
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remain 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
While the Group is closer to reaching a break-even trading position, it
still relies on equity raised to fund its project development and support
the working capital of the Group. Trading has not been hindered from
FY2020 and start of FY2021 despite the Global Covid-19 pandemic and
resulting lockdowns, but there remains uncertainty in global markets.
Given the reliance on continual funding and the significant judgements
in making the assessment as to whether it is appropriate to prepare the
financial statements on a going concern basis we consider this to be a
key audit matter.
Our evaluation of the Directors’ assessment of the Group and the
Parent Company’s ability to continue to adopt the going concern basis
of accounting and in response to the key audit matter included:
•
•
•
•
•
•
Critically assessing 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.
Discussing the potential impact of Covid-19 with management and
the Audit Committee including the impact on operations to date and
their assessment of continued risks and uncertainties associated with
areas such as the ability to obtain new revenue contracts in the
pipeline, deliver into those contracts to realise the forecast operating
results and maintain margins, meet committed spend and repay loan
interest and principle as and when they fall due. We considered this
against our own assessment of risks and uncertainties developed
through our understanding of the business and the sector.
Agreeing the opening cash position of the Group to support the
opening cash position applied by the Directors’ and management in
their cash flow forecast.
Comparing performance against budget in FY2020 and FY2021 year to
date to assess the quality of management’s budgeting process.
Considering the key sensitivities applied in the cash flow model
pertaining to revenue and cost base in regards to current trading since
January 2021, the overall contract pipeline in place and management
of the Group’s and Parent Company’s cost base.
Assessing the completeness and accuracy of the matters covered in
the going concern disclosure with reference to the Directors’ and
management’s going concern assessment.
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2020
33
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and Parent
Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
Overview
Coverage
Key audit
matters
•
•
•
99% (2019: 99%) of Group profit before tax
100% (2019: 100%) of Group revenue
98% (2019: 99%) of Group total assets
2020 2019
Revenue Recognition X X
Going Concern X X
Valuation and accounting
treatment of Setcar acquisition X
Valuation and accounting treatment of
Setcar acquisition is no longer a KAM as this
risk was only relevant for the year in which
Setcar was acquired.
Materiality
Group financial statements as a whole
€210,000 (2019: €300,000) based on 2%
(2019: 2%) of net assets.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was
evidence of bias by the Directors that may have represented a risk
of material misstatement.
The Group comprises of the UK Parent Company and a number of
subsidiaries, which are incorporated in Italy and Romania. Full scope
audits were performed over the Group’s significant components
comprising Directa Plus PLC, Directa Plus S.p.A. and Setcar S.A. Specific
audit procedures on significant risks were carried out on Directa Textiles
Solutions Srl by BDO Italy under our instructions. The audits of the
Italian and Romanian significant components were performed in Italy
and Romania respectively by local BDO network member firms.
The audits of the Parent Company and Group consolidation were
performed in the United Kingdom by the Group audit team.
The remaining component of the Group was considered non-significant
and was principally subject to analytical review procedures performed
by the Group team.
Our involvement with component auditors
For the work performed by component auditors, we determined the
level of involvement needed in order to be able to conclude whether
sufficient appropriate audit evidence has been obtained as a basis for
our opinion on the Group financial statements as a whole. Our
involvement with component auditors included the following:
•
•
The Group audit team was actively involved in the direction and
supervision of the audits performed by the component auditors
along with the consideration of findings and determination of
conclusions drawn.
As part of our audit strategy, we issued detailed group instructions to
component auditors detailing the audit procedures to be performed,
we held virtual meetings with management and component auditors
during the planning and execution phases of the audit; and
performed a detailed review of the component audit files.
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)
that 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.
®
34
Directa Plus
Annual Report & Accounts 2020
Independent auditor’s report
continued
Key audit matter
Revenue recognition
The Group earned revenue of €6.4m (2019: €2.6m) in the year ended
31 December 2020.
A significant portion of the revenue generated 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 matter giving rise to significant risk of material
misstatement in the financial statements. 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 the scope of our audit addressed the key audit matter
We:
•
•
•
•
•
•
Tested the operating effectiveness of 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., verified 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.
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.
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.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
Overview
Strategic Report
Governance
Financial statements
Additional information
Directa Plus
Annual Report & Accounts 2020
35
Group financial statements
Parent company financial statements
2020
Materiality
€210,000
2019
€300,000
2020
€120,000
2019
€200,000
Basis for determining
materiality
Rationale for the
benchmark applied
Performance
materiality
Basis for determining
performance
materiality
2% of net assets
2% of net assets
Net assets has been selected as we consider it to be the
most relevant benchmark as the Group is still in a
development stage and the net assets benchmark
reflects a key measure of shareholder value.
2% of net assets capped
at 57% of Group
Materiality
2% of net assets capped
at 67% of Group
Materiality
Directa Plus Plc is a holding company with investments
in subsidiaries. We have therefore considered to apply
the same benchmark as the Group as an appropriate
materiality basis but capping materiality to a
percentage of Group materiality.
€160,000
€225,000
€90,000
€150,000
75% of materiality and considering the nature of
activities and historic audit adjustments.
75% of materiality and considering the nature of
activities and historic audit adjustments.
Specific materiality
No specific materiality has been applied in 2020. In 2019, we
determined that for the income statement and those working capital
items on statement of the financial position that would impact the
income statement, a misstatement of less than materiality for the
financial statements as a whole could influence the economic
decisions of users. In 2019, this was determined to be €175,000
based on 5% of loss before tax.
Component materiality
We set materiality for each component of the Group based on a
percentage of between 57% and 90% of Group materiality dependent
on the size and our assessment of the risk of material misstatement of
that component. Component materiality ranged from €120,000 to
€190,000. In the audit of each component, we further applied
performance materiality levels of 75% of the component materiality
to our testing to ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
Reporting threshold
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 €5,000 (2019: €6,000). We also agreed to report
differences below these thresholds that, in our view, warranted
reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other
information comprises the information included in the Consolidated
financial statements 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. Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the
audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
®
36
Directa Plus
Annual Report & Accounts 2020
Independent auditor’s report
continued
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed
during the course of the audit, we are required by the Companies Act
2006 and ISAs (UK) to report on certain opinions and matters as
described below.
Strategic report
and Directors’
report
In our opinion, based on the work undertaken in
the course of the audit:
•
•
the information given in the Strategic report
and the Directors’ report for the financial year
for which the financial statements are prepared
is consistent with the financial statements; and
the Strategic report and the Directors’ report
have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding
of the Group and 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.
Matters on which
we are required
to report by
exception
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 ,
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.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below:
•
•
Holding discussions with management and the audit committee to
consider any known or suspected instances of non-compliance with
laws and regulations or fraud identified by them;
Gaining an understanding of the legal and regulatory framework
applicable to the Group and the industry in which it operates, through
discussion with management and the audit committee and our
knowledge of the industry;
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Annual Report & Accounts 2020
37
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
55 Baker Street
London
W1U 7EU
14 May 2021
BDO LLP is a limited liability partnership registered in England and Wales (with
registered number OC305127).
•
•
•
•
•
•
•
•
Considering the significant laws and regulations of Italy, Romania and
the UK to be those relating to the industry, financial reporting
framework, tax legislation and the listing rules;
Assessing the susceptibility of the Group’s financial statements to
material misstatement, including how fraud might occur;
Testing the appropriateness of journal entries made through the year
by applying specific criteria to detect possible irregularities and fraud;
Performing a detailed review of the Group’s year-end adjusting entries
and investigating any that appear unusual as to nature or amount and
agreeing to supporting documentation;
For significant and unusual transactions, particularly those occurring
at or near year-end, obtaining evidence for the rationale of these
transactions and the sources of financial resources supporting the
transactions;
Assessing whether the judgements made in accounting estimates
were indicative of a potential bias;
Reviewing minutes from board meetings of those charges with
governance to identify any instances of non-compliance with laws
and regulations; and
Directing the auditors of the significant components to ensure an
assessment is performed on the extent of the components
compliance with the relevant local and regulatory framework.
Reviewing this work and holding meetings with relevant internal
management and external third parties to form our own opinion
on the extent of Group wide compliance.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of
not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations
or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with
laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
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Annual Report & Accounts 2020
Consolidated statement of comprehensive income
for the year ended 31 December 2020
31 Dec 2020 31 Dec 2019
Note € €
Continuing operations
Revenue 3 6,434,480 2,631,819
Other income 3/4 345,826 183,033
Changes in inventories of finished goods and work in progress 213,229 87,537
Raw materials and consumables used 6 (2,564,317) (1,185,360)
Employee benefits expenses 7 (3,769,274) (2,148,923)
Depreciation and amortisation 11/12 (1,690,872) (837,055)
Other expenses 8 (3,279,927) (2,286,054)
Results from operating activities (4,310,855) (3,555,002)
Finance income 9 1,175 164,536
Finance expenses 9 (347,707) (35,972)
Net finance costs (346,532) 128,563
Loss before tax (4,657,387) (3,426,439)
Tax expense 10 124,414 25,225
Loss after tax from continuing operations (4,532,973) (3,401,214)
Loss of the year (4,532,973) (3,401,214)
Other comprehensive income items that will not be reclassified to profit or loss
Defined Benefit Plan re-measurement gains and losses 20 7,821 (12,802)
Other comprehensive income/(expense) for the year (net of tax) 7,821 (12,802)
Total comprehensive (expense)/income for the year (4,525,152) (3,414,016)
Loss attributable to
Owner of the Parent (4,195,011) (3,585,215)
Non-controlling interests (337,962) 184,001
(4,532,973) (3,401,214)
Total comprehensive (expense)/income attributable to:
Owners of the Company (4,187,190) (3,598,017)
Non-controlling interests (337,962) 184,001
(4,525,152) (3,414,016)
Loss per share
Basic loss per share 23 (0.07) (0.07)
Diluted loss per share 23 (0.07) (0.07)
The notes on pages 42 to 70 form part of these financial statements.
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Annual Report & Accounts 2020
39
Consolidated and Company statement of financial position
for the year ended 31 December 2020
Group Company
31 Dec 20 31 Dec 19 31 Dec 20 31 Dec 19
Note € € € €
Assets
Intangible assets 11 2,042,767 2,202,452 – –
Investments 13 – – 23,680,336 21,180,336
Property, plant and equipment 12 4,209,267 4,730,752 – –
Other receivables 14 140,649 109,698 – –
Non-current assets 6,392,683 7,042,902 23,680,336 21,180,336
Inventories 5 1,375,947 1,095,936 –
Trade and other receivables 14 2,857,460 2,943,286 166,262 203,404
Cash and cash equivalent 16 7,080,492 10,906,076 4,283,625 7,669,360
Current assets 11,313,899 14,945,298 4,449,887 7,872,765
Total assets 17,706,582 21,988,200 28,130,223 29,053,101
Equity
Share capital 17 190,996 190,512 190,996 190,512
Share premium 17 31,395,612 31,395,612 31,395,612 31,395,612
Foreign currency translation reserve 17 (7,015) 4,147 – –
Retained earnings 17 (21,824,229) (17,656,325) (3,573,130) (2,616,723)
Equity attributable to owners of Group 9,755,364 13,933,946 28,013,478 28,969,401
Non-controlling interests 17 906,885 1,240,194 – –
Total equity 10,662,249 15,174,140 28,013,478 28,969,401
Liabilities
Loans and borrowings 18 1,017,716 – – –
Lease liabilities 19 627,138 439,690 – –
Employee benefits provision 20 444,483 416,095 – –
Other payables 21 65,397 196,690 – –
Deferred tax liabilites 15 8,423 135,059 – –
Non-current liabilities 2,163,157 1,187,534 – –
Loans and borrowings 18 981,065 484,701 – –
Lease liabilities 19 214,935 184,900 – –
Trade and other payables 21 3,685,176 4,956,926 116,745 83,699
Current liabilities 4,881,176 5,626,527 116,745 83,699
Total liabilities 7,044,333 6,814,061 116,745 83,699
Total equity and liabilities 17,706,582 21,988,200 28,130,223 29,053,101
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 € 956,408 (2019: € 558,846).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
Giulio Cesareo
Chief Executive Officer
14 May 2021
The notes on pages 42 to 70 form part of these financial statements.
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40
Directa Plus
Annual Report & Accounts 2020
Consolidated statement of changes in equity
for the year ended 31 December 2020
Foreign
currency Non-
Share Share translation Retained controlling Total
capital premium reserve earnings Total interests equity
€ € € € € € €
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)
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
Total comprehensive (expense)/income for the year
Loss for the year – – – (4,195,011) (4,195,011) (337,962) (4,532,973)
Total other comprehensive (expense)/income – – – 7,821 7,821 – 7,821
Total comprehensive (expense)/income for the period – – – (4,187,190) (4,187,190) – (4,525,152)
Capital raised 484 – – – 484 – 484
Translation reserve – – (11,162) – (11,162) – (11,162)
Share-based payment – – – 19,286 19,286 – 19,286
Increase in share capital of Directa Textile Solutions – – – – – 4,653 4,653
Balance at 31 December 2020 190,996 31,395,612 (7,015) (21,824,229) 9,755,364 906,885 10,662,249
Company statement of changes in equity
for the year ended 31 December 2020
Share Share Retained Total
capital premium earnings equity
€ € € €
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
Loss for the year – – (956,408) (956,408)
Capital raised 484 – – 484
Expenditure related to the issuance of shares – – – –
Share-based payment – – – –
Balance at 31 December 2020 190,996 31,395,612 (3,573,130) 28,013,478
The notes on pages 42 to 70 form part of these financial statements.
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41
Consolidated and Company statement of cash flows
for the year ended 31 December 2020
Group Company
31 Dec 20 31 Dec 19 31 Dec 20 31 Dec 19
Note € € € €
Cash flows from operating activities
Loss for the year before tax (4,657,387) (3,426,439) (956,408) (558,846)
Adjustments for:
Depreciation 12 1,020,387 452,309 – –
Amortisation of intangible assets 11 670,485 384,746 – –
Share-based payment expense 19,286 (13,652) – (2,733)
Finance income 9 (1,175) (164,535) (867) (164,529)
Finance expense 326,118 35,829 227,367 2,081
Interest of lease liabilities 21,589 – – –
(2,600,697) (2,731,742) (729,908) (724,028)
Increase/decrease in:
– inventories 5 (280,011) (79,451) – –
– trade and other receivables 14 179,292 240,963 37,142 (44,811)
– trade and other payables 21 (1,398,380) (714,799) 33,047 (19,685)
– provisions and employee benefits 20 24,844 59,342 – –
Net cash from operating activities (4,074,952) (3,225,687) (659,720) (788,524)
Cash flows from investing activities
Interest received 9 1,175 2,874 867 3,982
Investment in intangible assets (434,898) (232,546) – –
Investment in subsidiary 13 – – (2,500,000) (5,000,000)
Net cash arisen from business acquisition – (137,345) – –
Contingent consideration (208,097) – – –
Acquisition of property, plant and equipment (195,991) (161,589) – –
Net cash used in investing activities (837,811) (528,606) (2,499,133) (4,996,018)
Cash flows from financing activities
Proceeds from Capital raise 484 10,079,167 484 10,079,167
Expenditure related to the issuance of shares – (751,747) – (751,747)
Interest paid (45,647) (9,773) (2,148) –
New borrowings 1,874,243 – – –
Repayment of borrowings 18 (360,164) (190,193) – –
Interest of lease liabilities (21,589) (16,124) – –
Repayment of lease liabilities (78,646) (115,133) – –
Net cash from/(used in) financing activities 1,368,681 8,996,197 (1,664) 9,327,420
Net increase/(decrease) in cash and cash equivalent (3,544,082) 5,241,904 (3,160,516) 3,540,797
Cash and cash equivalent at beginning of the year 10,906,076 5,503,884 7,669,360 3,968,016
Exchange (losses)/gains on cash and cash equivalents (281,502) 160,548 (225,219) 160,548
Cash and cash equivalent at end of the year 7,080,492 10,906,076 4,283,625 7,669,360
The notes on pages 42 to 70 form part of these financial statements.
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
for the year ended 31 December 2020
1. Basis of preparation
a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and International
Accounting Standards as issued by the International Accounting Standards Board (“IASB”) and Interpretations (collectively “IFRS”).
The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year,
unless otherwise stated.
All notes, except as otherwise indicated, are presented in Euros (“€”).
I. Going Concern
As of 31 December 2020, the Group (including the Company) had net assets of €10.66m (2019: €15.17m) and cash and cash equivalent of €7.08m
(2019: €10.91m).
The Directors are aware that there is an ongoing need to monitor the cash flow requirements of the Company and Group for the upcoming
months, particularly in light of the recent developments in the markets due to the Covid-19 pandemic which has had a significant, immediate
impact on global economies. In this regard, the Group prepares annual budgets and forecasts in order to ensure that they have sufficient liquidity
to meet liabilities and commitments as they fall due. The Directors regularly review updates to the scenario planning such that the Board can put
in place the appropriate mitigating actions within their control.
Based on the most recent projections, the Directors believe that the Group will have sufficient funds in place, up until at least the end of 2022, to
meet liabilities as and when they fall due. Despite this, given the current global economic status, the Directors have carried out a downward
sensitivity analysis stressing the base financial projections by applying a further material reduction in forecast revenues, and modelling mitigation
or deferral of capital and operational expenditure within the control of Management and the Board. Based on these downward scenarios, the
Directors believe that the Company will still have the funds to support the Group as a going concern until the end of 2022 and at least the next 16
months from the date this report is authorised. The Directors note however that the markets in which the company is engaged have significant
growth potential and that thus far in 2021 the Company is performing well.
The Directors will continue to closely monitor performance and continue to review the funding necessary to exploit the growth opportunities in its
markets and the Group is progressively improving its working capital funding need. Notwithstanding this, it is likely that in the future further funds
will be needed to support and accelerate its ambitious growth. Based on current forecast, further funding is not required to support the going
concern basis of preparation over the next 12 months from approving this report, however, as part of the continued improvement of the Group’s
funding position Management are currently seeking to raise supplementary subsidised financing for a total amount of €1.5-2m in 2021 that would
further strengthen the cash funds available to the Group.
The Directors therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.
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.
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1. Basis of preparation continued
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 requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the circumstances and the results of which form
the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised if the revision affects only that period.
Critical estimates and judgements that have the most significant effect on the amounts recognised in the financial statements and/or have a
significant risk of resulting in a material adjustment within the next financial year are as follows:
I. Valuation of share based payments
The estimation related to share based payment expenses includes the selection of an appropriate valuation option pricing model, consideration
as to the inputs necessary for the valuation model chosen, and the estimation of the number of awards that will ultimately vest. Inputs subject to
estimation relate to the future volatility of the share price which has been estimated based on the historical observed volatility from trading in the
Company’s shares, over a historical period of time between the date of the grant and the date of exercise. Management has used a Monte-Carlo
model to calculate the fair value of the awards which include market based performance conditions. Further disclosure of inputs relevant to the
calculations is set out in note 24 to the financial statements.
II. Carrying value of goodwill
The carrying value of goodwill, and the cash generating units (“CGUs”) to which it relates, is assessed annually for impairment through comparing
the recoverable amount to the CGUs carrying value. The value in use calculations require estimates in relation to uncertain items, including
management’s expectations of future revenue growth, operating costs, profit margins, operating cash flows and the discount rate applied. Future
cash flows used in the value in use calculations are based on our latest three-year financial plans. Expectations about future growth reflect
expectations of growth in the markets applicable to the Group. The future cash flows are discounted using a pre-tax discount rate that reflects
current market assessments of the time value of money. The discount rate used is adjusted for the specific risk to the Group, including the
countries to which cash flows will be generated. Further disclosure of evaluations is set out in note 11 to the financial statements.
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
1. Basis of preparation continued
III. Valuation and recoverability of inventory
Inventories are stated at the lower of cost or net realisable value. The cost of inventories comprises of net prices paid for materials purchased,
production labour cost and factory overhead. Net realisable value represents the estimated selling price less all estimated costs of completion and
costs to be incurred in marketing, selling and distribution. Inventory provisions are recognised for slow-moving, obsolete or unsalable inventory
and are reviewed on a six-monthly basis. The valuation of Inventory includes key estimates and judgments made by Management including
normal production capacity, market demand and selling opportunities. If actual demand or usage were to be lower than estimated, inventory
provisions for excess or obsolete inventory may be required.
IV. 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 20.
V. Revenue recognition
Following the acquisition of Setcar in 2019, 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.
VI. Business combination
Control assessments are performed by the management, per the requirements of IFRS 10, to establish control in the business combination.
Accordingly, the concept of control is fundamental to consolidation and it exists when the investor concurrently:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to affect those returns through its power over the investee.
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.
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.
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45
2. Significant accounting policies continued
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.
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. At initial
recognition, financial liabilities are measured at their fair value, minus transaction costs that are directly attributable, and are subsequently
measured at amortised cost.
An equity instrument is any contract that evidences a residual interest in the asset of the Group after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
V. Leases
On commencement of a contract which gives the Group the right to use assets for a period of time in exchange for consideration, the Group
recognises a right-of-use asset and a lease liability. The right-of-use asset is measured at cost, which is made up of the initial measurement of the
lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and
any lease payment made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use
assets on a straight line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of
the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group
measures the lease liability at the present value of the lease payment unpaid at that date, discounted using the interest rate implicit in the lease if
that rate is readily available or the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are
made up of fixed payments, variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reducing for payment
made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed
payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the
right-of-use asset is already reduced to zero.
c) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are netted off against share
premium.
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
d) Property, plant and equipment
I. Recognition and measurement
Property, plant and equipment are measured at cost less accumulated depreciation, Government grants received (where applicable) and
accumulated impairment losses.
Costs capitalised include expenditure that are directly attributable to the acquisition of the asset.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components)
of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal
and the carrying amount of the item) are recognised in profit or loss.
II. Subsequent costs
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the
Group. Ongoing repairs and maintenance are expensed as incurred.
III. Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis in the statement of comprehensive income over the estimated
useful lives of each component.
Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally
constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives of significant items of property, plant and equipment are as follows:
•
•
IT equipment from 3 to 5 years.
Industrial equipment, office equipment and plant and machinery from 5 to 10 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted where appropriate.
e) Intangible assets
Intangible assets are measured at cost less accumulated amortisation and Government grants received (where applicable). The carrying value of
intangible assets is reviewed annually for impairment.
Patent rights acquired and development expenditure are recognised at cost.
Expenditure on internally developed products is capitalised if it can be demonstrated that:
•
•
•
•
•
•
it is technically feasible to develop the product;
adequate resources are available to complete the development;
there is an intention to complete and sell the product;
the Group is able to sell the product;
sale of the product will generate future economic benefits; and
expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the period the Group expects to benefit from selling the products developed (Useful Economic
Life). The amortisation expense is included within the cost of sales in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the
consolidated statement of comprehensive income as incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses.
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2. Significant accounting policies continued
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 generate significant value to the Group over a period of 20 years, in line
with the legal duration of the patent and their useful lives. However, on a conservative basis, such costs are amortised over a period of 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 unsalable inventory
and are reviewed on a six months basis.
g) Goodwill
Goodwill represents the excess of the cost of a business combination over the Group’s interest in the fair value of identifiable assets, liabilities and
contingent liabilities acquired.
Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests
in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent
consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability,
remeasured subsequently through profit or loss.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of
comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid,
the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.
h) Impairment
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end.
Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may
not be recoverable. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (“CGUs”). The Group’s CGUs generally
align with each subsidiary. The recoverable amount is then estimated. The recoverable amount of an asset or a CGU is the greater of its net
present value and its fair value less costs to sell.
Net present value is generally computed as the present value of the future cash flows, discounted to present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset or a CGU exceeds its estimated recoverable amount. Impairment losses are
recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior years are assessed at
each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had
been recognised.
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Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
i) Employee benefits
Defined benefit scheme surpluses and deficits are measured at:
•
•
•
•
The fair value of plan assets at the reporting date; less
Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate
bonds that have maturity dates approximating to the terms of the liabilities; plus
Unrecognised past service costs; less
The effect of minimum funding requirements agreed with scheme trustees.
Remeasurements of the net defined obligation are recognised directly within equity. The remeasurements include:
•
•
•
Actuarial gains and losses.
Return on plan assets (interest exclusive).
Any asset ceiling effects (interest exclusive).
Service costs are recognised in profit or loss and include current and past service costs as well as gains and losses on curtailments.
Net interest expense (income) is recognised in profit or loss and is calculated by applying the discount rate used to measure the defined benefit
obligation (asset) at the beginning of the annual period to the balance of the net defined benefit obligation (asset), considering the effects of
contributions and benefit payments during the period.
Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in profit or loss.
Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.
For more information please see note 20.
j) Revenues
The Group operates diverse businesses and accordingly applies different methods for revenue recognition, based on the principles set out in IFRS 15.
The revenue and profits recognised in any reporting period are based on the delivery of performance obligations and an assessment of when
control is transferred to the customer. In determining the amount of revenue and profits to record, and associated balance sheet items,
management is required to review performance obligations within individual contracts. This may involve some judgemental areas.
Revenue is recognised either when the performance obligation in the contract has been performed (so ‘point in time’ recognition) or ‘over time’
as control of the performance obligation is transferred to the customer.
For each performance obligation to be recognised over time, the Group applies a revenue recognition method that faithfully depicts the Group’s
performance in transferring control of the goods or services to the customer. This decision requires assessment of the real nature of the goods or
services that the Group has promised to transfer to the customer.
•
Revenues from sale of graphene based products are typically recognised at a point in time when goods are delivered to the customer as with this,
the customer gains the right of control over the goods. However, for export sales, control might also be transferred when delivered either to the
port of departure or port of arrival, depending on the specific terms of the contract with a customer.
•
Revenues from 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; and
– 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
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2. Significant accounting policies continued
k) Government grants
Government grants are recognised when there is reasonable assurance that the entity will comply with the relevant conditions and the grant will
be received. Grants are recognised in profit or loss on a systematic basis where the Group has recognised the initial expenses that the grants are
intended to compensate. Where a grant has been received as a contribution for property, plant and equipment, or capitalised development costs,
the income received has been credited against the asset in the statement of financial position.
l) Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is recognised in the profit or loss, using the effective interest
method. Finance costs comprise interest expense on borrowings.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or
loss using the effective interest method.
m) Investments in subsidiaries (Company only)
Investments are stated at their cost less any provision for impairment (for details refer to note h).
n) Taxation
Tax expense comprises current and deferred tax. Current and deferred tax is recognised in the profit or loss except to the extent that it relates to a
business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
•
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not
reverse in the foreseeable future; and
•
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date.
A deferred tax asset is recognised for deductible temporary differences to the extent that it is probable that future taxable profits will be available
against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Adoption of new and revised standards
New standards, interpretations and amendments effective from 1 January 2020
The disclosed policies have been applied consistently by the Group for both the current and previous financial year with the exception of the new
standards adopted.
The IFRS financial information has been drawn up on the basis of accounting policies consistent with those applied in the financial statements
for the year to 31 December 2019, except for the following:
a. Definition of Material – Amendments to IAS 1 and IAS 8;
b. Definition of a Business – Amendment to IFRS 3;
c.
Interest Rate Benchmark Reform – Amendment to IFRS 7, IFRS 9 and IAS 39;
d. Revised Conceptual Framework for Financial Reporting; and
e. Covid-19-Related Rent Concession – Amendments to IFRS 16.
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
The application of the above standards has had no impact on the disclosures or the amounts recognised in the Group’s consolidated financial
statements.
New standards, interpretations and amendments not yet effective
Below is a list of new and revised IFRSs that are not yet mandatorily effective (but allow early application) for the year ending 31 December 2020
and have not been early adopted by the Group. These standards are not expected to have a material impact on the Group in the future reporting
periods and on foreseeable future transactions.
Effective for annual periods
beginning on or after
Property, Plant and Equipment: Proceeds before intended use – Amendments to IAS 16 01-Jan-22
Reference to the Conceptual Framework – Amendments to IFRS 3 01-Jan-22
Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37 01-Jan-22
Annual Improvements to IFRS Standards 2018-2020 01-Jan-22
Classification of Liabilities as Current or Non-Current – Amendments to IAS 1 01-Jan-22
IFRS 17, “Insurance contracts” 01-Jan-22
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, also considering the materiality the Group is organised into the following segments:
•
•
•
Textile
Environmental
Others
In 2019 the Environmental segment was introduced to reflect the nature of the underlying business of Setcar. Textile and Environmental were
considered by 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.
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.
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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
2020 € € € € €
Revenue 1,943,924 4,360,864 129,692 – 6,434,480
Cost of sales* (1,221,579) (1,971,859) (74,872) – (3,268,310)
Gross profit 722,345 2,389,005 54,820 – 3,166,170
Other income 85,980 204,450 27,206 28,189 345,826
Other expenses:
– R&D expense (96,915) (25,500) – – (122,415)
– Advisory (50,752) (335,248) – (905,021) (1,291,022)
– Operating expenses (1,332,294) (2,214,108) (138,874) (1,033,266) (4,718,541)
– Depreciation and amortisation (508,331) (1,143,250) (39,291) – (1,690,872)
Operating loss (1,179,967) (1,124,652) (96,138) (1,910,098) (4,310,855)
Financial costs – – – (346,532) (346,532)
Tax – – – 124,414 124,414
Loss of the year (1,179,967) (1,124,652) (96,138) (2,132,216) (4,532,973)
Total asset 5,609,005 11,083,261 1,014.317 – 17,706,582
Total liabilities 2,443,527 2,680,121 1,920,685 – 7,044,333
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)
*Includes changes in inventories of finished goods.
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Notes to the consolidated financial statements
continued
3. Operating segments continued
2020 2019
€ €
Sale of products 2,137,289 1,732,074
Sale of services 4,297,191 899,746
Government grants 159,815 58,762
Other 186,011 124,271
Total income 6,780,306 2,814,853
Geographical breakdown of revenues is:
2020 2019
€ €
Italy 1,555,622 1,642,122
Romania 4,495,661 850,738
Rest of the world 383,197 138,959
Total 6,434,480 2,631,819
The Group has transacted with one main customer in 2020, which account for more than 10% of Group revenues for sales of products and services.
This largest customer’s revenues amount to €1,323,623 (20%), whilst the next highest revenue earning customer provided €608,259 (9%).
Other Income of €345,826 includes Government Grants for €159,815, R&D Expenditure Credit (RDEC) for €102,988 and other income for € 83,022.
The RDEC is an Italian incentive scheme (art.3 DL 145/2013) designed to encourage companies to invest in research and development. The credit
can be used to reduce corporation tax or to offset outstanding payables related to social security.
4. Government grants
Information regarding government grants:
2020 2019
€ €
Grata – 5,262
Ecopave – 53,500
Green.Tex 54,278 –
Covid-19 related government grants 103,536 –
New plants grants 2,001 –
Total 159,815 58,762
The Group benefited from Covid-19 related government grants for a total amount of €103,536, of which €80,407 referred to unemployment grants
in Romania and €23,129 referred to grants from the Italian Government. In this regard, the Group benefited by two assistance programs launched
by the Italian Government to support local companies in the context of the Covid-19 crisis. Those programmes envisaged a 60% of tax credit on
rental costs in case of decrease in monthly revenues higher than 50% (€14,935 of tax credit granted) and non-repayable grants as the 10% of the
decrease in April 2020 revenues compared to the previous year (€8,194 granted).
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4. Government grants continued
The key terms of government grants are:
Green.Tex Ecopave
Starting date 2020 2017
Ending date 2021 2021
Duration (months) 21 37
Total amount 96,192 214,000
Final report submitted and accepted Project still Project still
on-going on-going
There are no capital commitments built into the ongoing grants. Government grants have been recognised in other income. Ecopave government
grant has been extended to 2021, however no grants have been received in 2020.
5. Inventory
2020 2019
€ €
Finished products 1,071,173 825,920
Spare parts 110,808 110,393
Raw material 97,712 19,162
Working in progress 96,254 140,461
Total 1,375,947 1,095,936
As of 31 December 2020, total inventory value is higher than 2019, the movement is mainly driven by the new line of face mask and filters included
within finished products. Spare parts inventory was required to enhance maintenance efficiency and is composed of a small number of critical
items with a material cost per unit.
6. Raw materials and consumables
2020 2019
€ €
Raw material & consumables 1,670,305 236,191
Textile products 894,012 949,169
Total 2,564,317 1,185,360
The increase in raw materials mainly refers to Setcar; the Company was acquired in November 2019 and in the previous year the profit and loss
included only one month.
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Notes to the consolidated financial statements
continued
7. Employee benefits expenses
2020 2019
€ €
Wages and salaries 3,264,227 1,741,293
Social security costs 496,428 442,893
Employee benefits 89,169 94,239
Share option expense 19,286 (13,652)
Other costs 62,099 5,998
Total 3,931,208 2,270,771
Capitalised cost in “Intangible assets” (161,935) (121,848)
Total charged to the Income Statement 3,769,274 2,148,923
The average number of employees (excluding Non-Executive Directors) during the period was as follows:
2020 2019
Sales and administration 27 12
Engineering, R&D and production 166 26
Total 193 38
The total number of employees, employed by the Group on 31 December 2020 was 193 (2019: 169), 167 were Setcar’s employees.
The Directors’ emoluments (including Non-Executive Directors) are as follows:
2020 2019
€ €
Wages and salaries 836,709 775,708
Total 836,709 775,708
The aggregate emoluments of the highest paid Director totalled €501k (2019: €434k).
A detailed analysis of the remuneration of the Directors is detailed within the Directors’ Remuneration Report on pages 28 to 29.
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55
8. Results from operating activities:
Results from operating activities includes:
2020 2019
€ €
Audit of the Group and Company financial statements 103,047 81,997
Audit of the subsidiaries’ financial statements 37,968 31,500
Other non-audit services provided by Group’s auditor 4,422 4,528
Tool manufacturing 508,363 280,083
Travel 78.012 221,397
Technical consultancies 223,732 406,105
Shipping and logistic expenses 365,317 105,211
Insurance 112,122 39,485
Marketing 27,866 26,804
Tool manufacturing expenses increase to €508,363 (2019: €280,083) and are mainly referred to Setcar’s third parties services and Directa Plus S.p.A.’s
fabrics printing service.
Technical consultancies decreased to €223,732 (2019: €406,105) thanks to the reorganisation of services.
The increase of shipping and logistics expenses to €365,317 (2019: €105,211) and in Insurance costs is mainly referred to Setcar, included full year
in 2020.
Marketing expenses is approximately in line with previous year expenditure, meanwhile travel expenses decreased to €73,822 (2019: €221,397)
due to the travel restrictions imposed after the outbreak of Covid-19 pandemic.
9. Net finance expenses
Finance expenses include:
2020 2019
€ €
Interest Income (1,175) (3,988)
Interest on loans and other financial costs 45,719 10,454
Interest on financial leasing 21,589 16,700
Interest cost for benefit plan 10,131 8,819
Foreign exchanges losses/(gains) 270,268 (160,548)
Total 346,532 (128,563)
Foreign exchange losses of €270,268 (2019: €160,548) are mainly related to Sterling to Euro movement in the Group’s Sterling bank account.
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Notes to the consolidated financial statements
continued
10. Taxation
2020 2019
€ €
Current tax expense 404 449
Deferred tax expense/(recovery) (124, 818) (25,674)
Total tax expenses (124,414) (25,225)
Reconciliation of tax rate
2020 2019
€ €
Loss before tax (4,657,387) (3,426,439)
Italian statutory tax rate 24% 24%
(1,117,773) (822,345)
Impact of temporary differences 155,430 62,887
Losses recognised (31,016) (37,662)
Impact of tax rate in foreign jurisdiction 47,820 27,942
Losses not utilised 1,069,953 794,403
Total tax expenses (124,414) (25,225)
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 €27,762,446 (€ 24,040,737 in 2019).
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11. Intangible assets
Development
cost Patents Goodwill Others Brands Total
Cost € € € € € €
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
Additions 379,998 111,151 – 35,814 – 526,963
Currency translation differences (218) (3,344) (5,205) (289) (7,108) (16,163)
Balance at 31/12/2020 3,144,804 545,740 298,348 285,105 377,017 4,651,012
Amortisation
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 1,713,795 145,348 – 52,769 6.402 1,937,760
Amortisation 2020 357,746 218,247 – 18,593 75,899 670,485
Balance at 31/12/2020 2,089,541 363,595 – 71,362 82,301 2,608,245
Carrying amounts
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
Balance 31/12/2020 1,055,262 182,145 298,348 213,743 294,715 2,042,767
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, throughout the support of external experts, carried out an impairment test on goodwill accounted following the acquisition of
Setcar S.A. in 2019.
The CGU is represented by Setcar itself, whose carrying amount as of 31 December 2020 was estimated equal to €4,205k.
The recoverable amount was determined based on the Discounted Cash Flow (“DCF”) method. Such method is based on the general concept
that the value of a company is equivalent to the discounted amount of the cash flows it will generate in the future within the forecast horizon
and the terminal value beyond.
It has been adopted a discount rate of 10.9% and an annual growth rate in perpetuity of 1.7%.
Based on such assumptions, the recoverable amount was estimated equal to €17,500k. In addition, it was performed a sensitivity analysis,
assuming a +/- 0.5% variation in the discount rate and a +/- 0.5% variation in the perpetuity growth rate. This led to a recoverable amount
estimated in the range of €16,500k and €18,700k.
As a conclusion, the verifications have shown that the book values can be fully recovered and no goodwill impairment is required as of
31 December 2020.
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Notes to the consolidated financial statements
continued
12. Property, plant and equipment
Industrial Computer Office Plant & ROU Under
equipment equipment equipment machinery Land assets construction Total
Cost € € € € € € € €
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
Additions 52,825 17,967 9,391 171,819 – 322,354 – 574,356
Disposals – – – (23,343) – – – (23,343)
Currency translation differences (21,101) – (16,232) (53,298) (11,257) (45) – (101,934)
Balance at 31/12/2020 1,267,415 74,521 172,627 4,297,207 597,138 779,128 2,445 7,190,481
Depreciation
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
Depreciation 2020 378,873 7,693 35,432 517,406 – 80,984 – 1,020,388
Currency translation differences (17,894) – (2,356) (30,851) – – – (51,101)
Balance at 31/12/2020 556,309 43,807 100,663 2,123,314 – 157,120 – 2,981,213
Carrying amounts
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 4,730,752
Balance 31/12/2020 711,106 30,714 71,965 2,173,892 622,008 597,138 2,445 4,209,268
Asset held under financial leases with a net book value of € 703,122 are included in the above table within Plant & Machinery.
13. Investments in subsidiaries
Details of the Company’s subsidiaries as at 31 December 2020 are as follows:
Shareholding
Subsidiaries Country Principal activity 2020 2019
Directa Plus S.p.A. Italy Producer and supplier of graphene based 100% 100%
materials and related products
Directa Textile Solutions Srl Italy Commercialise textile membranes, 73.5% 60%
including graphene-based technical and
high-performance membranes
Setcar S.A. Romania Waste management and decontamination 51% 51%
services business
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 Srl 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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Directa Plus
Annual Report & Accounts 2020
59
13. Investments in subsidiaries continued
The Company’s investment as capital contributions in Directa Plus S.p.A. are as follows:
Directa S.p.A.
At 31 December 2018 16,180,336
Additions 5,000,000
At 31 December 2019 21,180,336
Additions 2,500,000
At 31 December 2020 23,680,336
14. Trade and other receivables
Group Company
2020 2019 2020 2019
Current € € € €
Account receivables 2,174,967 2,169,307 – –
Tax Receivables 443,857 460,521 23,265 44,117
Other receivables 238,636 313,458 142,997 159,287
Total 2,857,460 2,943,286 166,262 203,404
Group Company
2020 2019 2020 2019
Non-current € € € €
Other receivables 140,649 109,698 – –
Total 140,649 109,698 – –
Group account receivables of €2,174,967 are mainly composed by eight major clients, which cover 67% of the total amount.
Group Tax Receivables are composed of Italian VAT receivables of €255,170, UK VAT receivables of €21,848, Romanian VAT receivables of €53,452
and a RDEC Tax Credit receivable of €102,988.
Other receivables are mainly composed of governments grants €96,992 and prepayments €121,490.
Non-current other receivables of €140,649 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 2020 the ageing of account receivables was:
2020 2019
Days overdue € €
0-60 1,895,323 1,929,268
61-180 50,372 154,397
181-365 231,109 103,782
365 + 57,786 20,710
Allowance of impairment (59,623) (38,849)
Total 2,174,967 2,169,308
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
14. Trade and other receivables continued
At the end of each financial period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted
on payments. Collective impairment allowances, with exception of receivables collected in 2021, are determined based on the following rules:
Days overdue % allowance
0-60 0%
61-180 30%
181-365 60%
365+ 100%
In 2020, 85% 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 2020 the Group recognised provision for €20,774 mainly referred to Setcar’s overdue debts.
15. Deferred tax liabilities
2020 2019
€ €
Deferred tax liabilities 138,147 294,191
Deferred tax assets – losses (129,724) (159,132)
Total 8,423 135,059
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 and defined benefit scheme are detailed below:
2020 2019
€ €
Deferred tax liabilities – cost capitalised 121,504 156,695
Deferred tax liabilities – other 8,220 2,437
Deferred tax liabilities arising from acquisition 8, 423 135,059
Deferred tax assets – losses exc. Setcar (129,724) (159,132)
Total 8,423 135,059
16. Cash and cash equivalents
Group Company
2020 2019 2020 2019
€ € € €
Cash at bank 7,075,447 10,890,718 4,283,625 7,669,360
Cash in hand 5,045 15,357 – –
Total 7,080,492 10,906,075 4,283,625 7,669,360
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Annual Report & Accounts 2020
61
17. Equity
2020 2019
€ €
Share Capital 190,996 190,512
Share Premium 31,395,612 31,395,612
Foreign currency translation reserve (7,015) 4,147
Retained earnings (21,824,229) (17,656,325)
Non-controlling interests 906,885 1,240,194
Balance at 31 December 10,662,249 15,174,139
Number of Share
Share capital ordinary shares capital (€)
At 31 December 2018 48,468,827 154,465
Share issue on 9 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
Share issue on 26 June*** 111,980 309
Share issue on 30 June**** 63,624 175
At 31 December 2020 61,174,587 190,996
* 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.
*** On 26 June 2020, 111,980 ordinary share with a nominal value of £0.0025 each were issued as effect of the exercise of options of ordinary shares for Directors and Senior Manager.
**** On 30 June 2020, 63,624 ordinary share with a nominal value of £0.0025 each were issued as effect of the exercise of options of ordinary shares for Directors and Senior Manager.
Share premium
Share premium €
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 Octotber 2019 8,580,393
Expenditure relating to the raising of shares (610,808)
At 31 December 2019 31,395,612
Shares issued –
Expenditure relating to the raising of shares –
At 31 December 2020 31,395,612
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 € 7,015.
Non- controlling interest
Non-controlling interest refers to the minority shareholders of the Company who own less than 50% of the overall share capital.
As of 31 December 2020 it’s composed by 49% of Setcar S.A. and 26,46% of Directa Textile Solutions Srl.
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
18. Loans and borrowings
Group Company
2020 2019 2020 2019
€ € € €
Non-current Loans and borrowings 1,017,716 – – –
Current Loans and borrowings 981,065 484,701 – –
Total 1,998,781 484,701 – –
2020 Current Non current
€ € € Repayment Interest rate
Bank of Transilvania 692,716 – 692,716 36-months Changeable
4.7% ROBOR
3M + 2.5%/year
GVC Investment Company LMT 977,385 977,385 – 12-months 1.5%/year
Intesa San Paolo 300,000 – 300,000 24-months 1.5%/year
Intesa San Paolo 25,000 – 25,000 72-months 1.5%/year
Reconciliation of liabilities arising from financing activities
Cash flows Non cash flows
1 January Interest Capital Accrued Liabilities 31 December
2020 paid repayment interest acquired 2020
€ € € € € €
Borrowings 484,701 – (360,164) 11,822 1,862,422 1,998,781
Total 484,701 – (360,164) 11,822 1,862,422 1,998,781
19. Leases liabilities
The following table details the movement in the Group’s lease obligations for the period ended 31 December 2020:
2020 2019
€ €
Non-current lease liabilities 627,138 439,690
Current lease liabilities 214,935 184,900
Total 842,073 624,590
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Annual Report & Accounts 2020
63
20. Employee benefits provision
2020 2019
€ €
Employee benefits 444,483 416,095
Total 444,483 416,095
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 1 January 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 2019 and 2020 is as follows:
€
Amount at 31 December 2018 282,031
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
Service cost 57,081
Interest cost 10,131
Actuarial gain/losses (7,821)
Past service cost –
Benefit paid (21,442)
Amount at 31 December 2020 444,483
Variables analysis
Detailed below are the key variables applied in the valuation of the defined benefit plan liabilities.
2020 2019
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%
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
20. Employee benefits provision continued
Sensitivity analysis
Detailed below are tables showing the impact of movements on key variables:
Actuarial hypothesis – 2020
Decrease 10% Increase 10%
Variation Variation
Rate DBO € Rate DBO €
Increase salary Male 1.08% (2,900) 1.32% 4,087
Female 1.04% 1.27%
Turnover Male 1.53% (2,470) 1.87% 3,500
Female 1.35% 1.65%
Interest rate 2.07% 13,269 2.53% (11,482)
Inflation rate 0.99% (3,022) 1.21% 4,185
21. Trade and other payables
Group Company
2020 2019 2020 2019
Non-current € € € €
Other payables 65,397 66,629 – –
Contingent consideration at fair value through P&L – 130,061 – –
Total 65,397 196,690 – –
Group Company
2020 2019 2020 2019
Current € € € €
Trade payables 1,364,787 1,055,856 54,725 1,702
Employment costs 519,466 419,331 – –
Other payables 1,228,655 2,831,436 62,020 81,997
Contingent consideration at fair value through P&L 572,268 650,303 – –
Total 3,685,176 4,956,926 116,745 83,699
Other payables mainly refer to the remaining portion of debt due to Setcar’s previous shareholders.
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Annual Report & Accounts 2020
65
22. 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 2020 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 that the Company consider defaulted if any instalment is unpaid more than
sixty (60) days past its original due date or where there is evidence that identifies the debtor’s state of insolvency.
The Group’s cash and cash equivalents and restricted cash are held with major financial institutions. The Group monitors credit risk by reviewing
the credit quality of the financial institutions that hold the cash and cash equivalents and restricted cash.
The Group’s trade receivables consist of receivables for revenue mainly in Italy and Romania. Management believes that the Group’s exposure to
credit risk is manageable and currently the Group’s standard payment terms are 30 to 60 days from date of invoice are largely met from the clients.
At the end of the period, 85% of account receivables have an ageing less of 60 days and refers to orders delivered close to the year end. As at
31 December 2020 the Group recognised a bad debt provision for €20,774.
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
2020 2019
Group Note € €
Trade receivables 14 2,174,967 2,169,308
Cash and cash equivalent 16 7,080,492 10,906,076
Total 9,255,459 13,075,384
The largest customer within trade receivables account for 14% of debtors. Management continually monitors this dependence on the largest
customers and are continuing to develop the commercial pipeline to reduce this dependence, spreading revenues across a variety of customers.
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
22. 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
2020 € € €
Financial liabilities
Trade payables 1,364,787 1,364,787 –
Lease Liabilities 842,073 214,935 627,138
Loans 1,998,781 959,520 1,064,310
Total 4,205,641 2,539,242 1,691,448
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 484,701 484,701 –
Total 2,189,844 1,734,155 455,689
f) Currency risk
The Group usually raises money issuing shares in pounds, it follows that the Group usually holds sterling bank accounts as result of capital raise.
Sterling bank accounts are mainly used to manage expenses of the Company (such as UK advisors, LSE fees and costs related to the Board) in UK.
The cash held in Sterling continues to be subject to currency risk.
EUR
Cash held in GBP 3,552,791
As at 31 December 2020 if the exchange rate EUR/GBP increase by 10% the impact on P&L would be a loss equal to €0.32 million (if decrease by
10% would be a profit equal to €0.39 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 2020
67
23. Earnings per share
Change in Weighted
number of Total number number of
ordinary shares of ordinary shares Days ordinary shares
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 Jan 2019 2,647,609 51,116,436 285 39,912,834
Issued on 21 Oct 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
Existing shares – 60,998,983 181 30,248,811
Issued on 29 June 2020 111,980 61,110,963 2 334,855
Issued on 30 June 2020 63,624 61,174,587 182 30,503,493
At 31 December 2020 175,604 61,174.587 365 61,087,158
Basic Diluted
2020 2019 2020 2019
€ € € €
Loss attributable to the owners of the Parent (4,195,011) (3,585,215) (4,532,973) (3,401,214)
Weighted average number of ordinary shares
in issue during the year 61,055,433 52,973,511 61,055,433 53,054,737
Fully diluted average number of ordinary shares
during the year 61,055,433 52,973,511 61,055,433 53,054,737
Loss per share (0.07) (0.07) (0.07) (0.07)
The effect of anti-dilutive potential ordinary shares is ignored in calculating the diluted loss per share.
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Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
24. Share schemes
The Employees’ Share Scheme is administered by the Remuneration Committee and 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) and additional 60,000 Ordinary
Shares were granted in May 2017. All those awards expired within May 2020. In November 2020 further 1,801,000 Ordinary Shares were granted
to key employees and as of 31 December 2020 the total number of outstanding awards is 1,801,000. 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. Outstanding shares as of 31 December 2020 are all “Market value
share options”. 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% 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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Annual Report & Accounts 2020
69
24. Share schemes continued
Vesting of awards
Outstanding awards will vest over three years in equal one third tranches on each anniversary of the grant date to the extent that the market-based
performance targets have been met. Vested awards may generally be exercised between the third (75% of vested shares, while the remaining 25%
from the fourth) and tenth anniversaries from the date of grant.
The inputs to the Monte-Carlo simulation were as follows:
Monte-Carlo simulation Black Scholes Model
31 Dec 2020 31 Dec 2020 31 Dec 2019 31 Dec 2019
Market value Performance Market value Performance
shares shares shares shares
Share price 60p – 69p –
Exercise price 66p – 75p –
Expected volatility 54% – 36% –
Compounded Risk-Free Interest Rate 0.10% – 4.25% –
Expected life 6 years – 3 years –
Number of options issued* 1,801,000 – 60,000 –
*Number of options issued is an input of the Monte-Carlo simulation 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 2018 1,735,610 – (95,733) – – 1,639,877 – – –
31 December 2019 1,639,877 – (25,523) (733,066) (821,288) 60,000 75p 12 May 2017 12 May 2020
31 December 2020 60,000 1,801,000 – – (60,000) 1,801,000 66p 12 Nov 2020 12 Nov 2023
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.
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Directa Plus
Annual Report & Accounts 2020
Notes to the consolidated financial statements
continued
25. Related parties
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed
in this note.
Remuneration of key management personnel
The below figures represent remuneration of key management personnel for the Group, who are part of the Executive Management Team but
not part of the Board of Directa Plus Plc. The remuneration is set out below in aggregate for each of the categories specified in IAS 24 ‘Related
Party Disclosures’.
2020 2019
€ €
Short-term employee benefits and fees 278,619 251,353
Social security costs 68,576 69,037
347,195 320,390
For Directors remuneration please see Director’s Remuneration Report.
Transactions with shareholders
The following sales with shareholder of the Group were recorded, excluding VAT, during the year:
2020 2019
€ €
Sale of products 3,948 –
Products are sold on normal commercial terms and conditions.
Other transaction Group
Other related party transactions during the year under review are shown in the table below:
2020 2019
€ €
Sale of products 15,886 –
Products are sold on normal commercial terms and conditions.
26. Contingent Liabilities and Commitments
The Group has the following contingent liabilities relating to bank guarantees on operating lease arrangements and government grants.
2020 2019
€ €
Bank guarantees 141,553 114,440
27. Post balance sheet events
On 12 February 2021, the General Meeting of Setcar S.A. approved to increase the share capital of the Company through the conversion into shares
of the loans granted by the two main shareholders (Directa Plus S.p.A. and GVC Investment Company Limited). Following the loan conversion into
equity, the total share capital of Setcar S.A. will be 9.953.599 lei – Eur 2.041.931, fully subscribed and paid, divided into a total of 19.907.198
registered shares. The loan granted by Directa Plus S.p.A. amounted to Eur 1.040.485. As a result of the conversion, Directa Plus S.p.A. will increase
its stake in Setcar S.A. from 51% to 52%.
Directa Plus
Annual Report & Accounts 2020
Directa Plus
Annual Report & Accounts 2020
Directa Plus in 2020
Discover how we are using graphene to help customers’
revolutionise 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 revolutionise the performances
of their own end products in commercial applications such as
textiles, 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 Chairman’s review
03 At a glance
04 Target market progress
06 Our strategy and business model
08 Market review
10 Chief Executive 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
38 Consolidated statement of comprehensive income
39 Consolidated and Company statement of financial position
40 Consolidated statement of changes in equity
40 Company statement of changes in equity
41 Consolidated and Company statement of cash flows
42 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
David Gann – Non-Executive Director
Neil Warner – Non-Executive Director
Richard Hickinbotham – Non-Executive Director
Company Secretary
Paul Cooper
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 joint broker
Cenkos Securities
6.7.8 Tokenhouse Yard
London EC2R 7AS
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 Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
United Kingdom
Financial PR adviser
Tavistock
1 Cornhill
London EC3V 3ND
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 2020