Welcome to the
Graphene Age
®
Annual Report & Accounts 2022
Directa Plus plc
Annual Report & Accounts 2022
Directa Plus in 2022
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 Investment case
21 Directors’ report
24 Corporate governance report
28 Directors’ remuneration report
30 Audit Committee report
05 Target market progress
31 Remuneration Committee report
06 What is graphene?
32 Independent auditor’s report
07 Our strategy and business model
38 Consolidated statement of comprehensive income
08 Directa Plus ESG
39 Consolidated and Company statement of financial position
09 Chemical free production process
40 Consolidated statement of changes in equity
10 Chief Executive Officer’s review
40 Company statement of changes in equity
16 Chief Financial Officer’s review
41 Consolidated and Company statement of cash flows
18 Directors’ biographies
42 Notes to the consolidated financial statements
20 Section 172
IBC Directors, secretary and advisers
Overview
Strategic report
Governance
Financial statements
Additional information
Highlights
Directa Plus plc
Annual Report & Accounts 2022
01
Proven, successful strategy maintained
• Environmental: c.8k cubic meters of sludge treated and more than 2k metric
tonnes of hydrocarbons recovered in 2022
• Textiles: more than 74k of textile printed, padded and laminated in 2022
Financial highlights
• Product sales and service revenue increased by 26% to €10.86m (2021:
€8.62m), slightly above consensus market expectations
• Total income (including grants) increased by 19.4% to €11.28m (2021: €9.45m)
• Adjusted LBITDA* increased to €3.15m (2021: €2.49m)
• Loss before tax increased to €5.33m (2021: €3.38m)
• Reported (basic) loss per share was €0.07 (2021: €0.06)
• Cash and cash equivalents at year end of €5.73m (2021: €11.13m)
• Total patents granted at year end of 80 (2021: 72)
* Adjusted LBITDA represents loss from operating activities before tax, interest, depreciation and amortization, adjusted by one-off income,
inventory write-offs, non-recurring legal expenses and onerous contract provision (please refer to the CFO statement for further details).
€10.86 m
€11.28 m
€5.73 m
Product sales and service revenue
(2021: €8.62m)
Increased by 26%
Total income (including grants)
(2021: €9.45m)
Increased by 19.4%
Cash and cash equivalents
at year end (2021: €11.13m)
02
Directa Plus plc
Annual Report & Accounts 2022
Chairman’s review
The market for graphene-based products is
broad and developing rapidly and expected
to be worth €0.5bn p.a. by 2026, a compound
annual growth of 36%. Directa Plus is very
well positioned to capitalise on this growth
through its unique platform technology
that supplies G+® graphene material into
many applications and products, created in
close collaboration with our partners and
customers. Whilst the Group is focused on
developing its core vertical markets, there
is also the opportunity to expand into
new markets as and when appropriate for
the business, as graphene continues to
revolutionise new and existing products
and materials.
Focused on customer needs
With strong foundations laid over the last few
years we are encouraged by the accelerated
levels of interest in the Group’s offering and
we continue to gain wider recognition for
our proven, innovative products.
We have partnered with a number of new
organisations in the year to offer the high-
performance benefits of our G+® graphene
and we are confident in our commercial
prospects. We have established new, long-
standing and deepening partnerships with
leading industrial companies across a range
of sectors, including a global chemicals and
materials group, Alcantara and REDA Energy
that provide opportunities for growth as we
leverage on their established expertise and
international reach.
The Group has also secured a number of
notable new customers and contracts during
the year across all key verticals and markets,
including MC Armor in South America and
Alfredo Grassi SpA in Italy in the textiles sector,
Reda Energy in the UK environmental sector
and a major Gipave asphalt contract. Notably,
we also signed a new exclusive agreement
with Pigmentsolution, a European distributor
of speciality chemicals and ingredients, to
support the development and distribution
of the Group’s new patented Grafyshield G+®
product that enhances the anti-corrosion
and flame-retardant properties of paint
systems. These wins throughout the year
demonstrate the increasing appetite for our
products and our competitive advantage as
we continue to build on our leading position
in the graphene market.
Board changes
I became interim Chairman following the
Annual General Meeting in June 2022 at
which Sir Peter Middleton stepped down as
Chairman and today I am delighted to accept
the Board’s invitation to be Chairman.
During the year we were pleased to welcome
two new Non-Executive Directors to the
Board: General Wesley Clark, in October,
and Sarah Cope, in November. Among many
accreditations, General Clark is a businessman
with experience across a variety of sectors
and his experience and contacts will enable
us to gain faster access to the most significant
high-potential graphene opportunities in the
United States. He has in-depth knowledge
of the US innovation eco-system, not only
in the defence sector but also in oil and gas
and new energy, including batteries and
renewables. Sarah has over twenty years of
financial and capital market experience and
has previously advised AIM listed companies
in the Oil and Gas sector. Her knowledge will
help us in our next phase of development as
we address global decontamination markets
with Grafysorber®.
We entered 2023 with a high calibre Board
with a diverse range of strengths and
experience that Directa Plus can benefit from.
Summary and outlook
The Group made significant progress in 2022
and is well positioned to serve a growing
customer base globally. I would particularly
like to take this opportunity to thank our
dedicated team who have continued to work
hard to strengthen our position within the
graphene market.
The new business wins in the year, alongside
the grant of important new patents,
demonstrates the breadth and depth of our
graphene technology that can be used across
a wide range of growth markets. As the
awareness of the capabilities of graphene
continues to build, it is clear that large supply
chains are now increasingly considering
incorporating graphene into their product
portfolios to enhance performance and to
provide more sustainable solutions.
Whilst we remain cognisant of inflationary
pressures, I am confident in our ability to
continue to mitigate these throughout our
current financial year. We entered 2023 in a
robust position, with an expanding network
of customers and partners, a record order
book and a supportive market backdrop.
The Board is confident in the Group’s ability
to take advantage of the substantial
opportunities that lie ahead.
Richard Hickinbotham
Chairman
9 May 2023
“I am pleased to provide my
first report as Chairman of
Directa Plus covering a year
of strong operational and
strategic progress.”
The Group delivered revenue growth of 26%
from products and services to €10.86m and
LBITDA increased to €3.61m. These results
were achieved in a context challenged by
inflationary cost pressures and supply chain
disruption that impacted customer scheduling.
During the year the Group secured a number
of important new business wins, further
strengthening our position within the
expanding graphene market and
demonstrating our increasing commercial
traction. We continue to see growing interest
in the ability of graphene to transform the
performance of our customers’ products and
to support a more sustainable future. The
Group has maintained its focus on developing
and delivering market leading products and
services within our two principal business
verticals: Environmental Remediation and
Textiles. We remain focused on prioritising
those verticals where we have already
established strong momentum and where
there is high potential in terms of
commercialisation and financial returns. I am
confident therefore in the Group’s ability to
continue delivering for all its stakeholders.
Delivering on our strategy
A robust and sustainable strategy remains
at the core of the Group’s activities and is
focused around four key pillars: a unique,
low-cost graphene production process;
the manufacture of pristine graphene
nanoplatelets free of chemical pollutants and
tailored to customers’ needs; a reduced time
to market for new products, benefiting from
considerable accumulated knowhow and
strong IP; and market reach leveraged through
carefully assessed partnerships. Our strategy
and financial results are covered in more
detail in the Chief Executive Officer’s statement.
Directa Plus plc
Annual Report & Accounts 2022
03
C
o
r
e
f
o
c
u
s
m
a
r
k
e
t
s
Overview
Strategic report
Governance
Financial statements
Additional information
At a glance
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
• Consistent quality
• Certified as non-toxic
• Taylor-made particles shape
• High purity
• Abundant, safe and non-toxic raw material
Target vertical markets
1
2
3
Environmental
remediation
Textiles
Other verticals
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.
Exploring and launching a wide
range of other applications for our
technology such as composites,
paints and batteries.
W
h
y
i
n
v
e
s
t
?
04
Directa Plus plc
Annual Report & Accounts 2022
Investment case
Directa Plus is one of the largest producers and suppliers of graphene-based products for
use in consumer and industrial markets worldwide.
Our vision is to continue to be at the frontline of graphene innovation globally: developing what is possible
today and evolving graphene technology for our industrial partners and customers of the future.
Our mission is to deliver the best quality graphene at the best possible price in the most sustainable way,
whilst supporting the industrialisation of existing and new vertical applications.
Why invest?
1
Unique graphene production process
and strong IP
• We have a unique and proven process to produce pristine,
chemical free graphene nanoplatelets, tailored to our
partners’ and customers’ requirements, which is both
flexible and scalable.
• We have strong IP and our portfolio now comprises 22
patent families with 80 patents granted and 37 patents
pending and we continue to grow the portfolio.
2
Delivering a pristine quality product
at the best price
• Directa Plus has developed a proprietary process that
creates value-added materials from graphite; from
unique 3D materials to highly two dimensional (large
surface area) single layer graphene platelets.
• This “top down” production process is unique, patented,
low cost and environmentally friendly, employing no
chemicals and only physical processes for the separation
and exfoliation of graphene-based materials.
3
Double digit €m revenue with 63% CAGR
over past five years
• Our competitive time to market ensures an efficient
process to deliver for customers.
4
Partnership with leading companies
deliver outstanding products
• Directa Plus has benefitted from an early mover
position in the commercial production and supply of
graphene materials and solutions.
• Many commercial partners through which products
can be purchased in multiple verticals including
environmental remediation, oil/water separation,
bicycle tyres, textiles, asphalt, paints, amongst others.
5
Unique graphene production process
and strong IP
• Significant growth opportunity across diverse
applications and vertical markets.
• We have developed a platform technology that
creates graphene-based semifinished products
applicable to many applications.
1
2
3
4
1. Planar Thermal Circuit® applied to a cycling technical shirt.
2. Bike tire enhanced with G+® Graphene Plus® which assures a rolling resistance without compromising grip.
3. G+® outsoles significantly improve durability and elastic response while maintaining grip.
4. The G+® technology exploit remarkable properties in a wide range of extruded moulded items. We developed ready-to-use
master batches, PLA filament (Grafylon® G+®) and a high-performance PA filament (Radilon® G+®).
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
05
“I am incredibly proud of the successes achieved by our dedicated team this year against a challenging economic
backdrop. We have secured several contract wins and invested in our technology to position the business to
serve a range of customers globally as the awareness of the capabilities of graphene continues to grow.
In the current climate, businesses across all sectors are turning to more sustainable methods and our G+®
technology has the ability to sit right at the heart of many of these sectors globally. The prospects for Directa
Plus are increasingly positive and we have entered FY23 in a robust position. Our focus now is on developing
our core verticals which are able to generate significant product demand and higher recurring revenue from
customers. With an expanding network of customers and partners, a record order book alongside a strong
balance sheet, I am confident in the Group's ability to deliver on its growth ambitions for the year ahead."
Giulio Cesareo, Founder and CEO of Directa Plus
Environmental Remediation 75% of revenue (2021: 76%)
• Installed two production units to increase production capacity and benefits derived
from lower unit production costs.
• Commercial Agreement with UK based REDA Energy to distribute Grafysorber®
oil response products in agreed territories in Northern Europe.
• Authorisation from the US Federal Environment Protection Agency (EPA) for
Grafysorber® technology to be used on any oil contamination on US territory.
• Established pipeline of active tenders and high value opportunities.
Textiles 23% of revenue (2021: 21%)
• First exclusive supply agreement in Latin America with CIA Miguel Caballero
SAS in Colombia.
• Contract extension with Alfredo Grassi S.p.A. to broaden the collaboration for the
workwear markets in Italy and France.
• Supply agreement with Officine di Cartigliano in Italy to improve equipment
performance and address antistatic issues.
• Continued to partner with a global chemicals and materials group on an exclusive
basis to develop specific products for the global air filtration markets.
• Post period end granted an Italian patent for G+® graphene technology for air
filtration applications.
T
a
r
g
e
t
m
a
r
k
e
t
p
r
o
g
r
e
s
s
Others
• New major contract in the composites vertical covering the resurface of a total of
250 km section of the A4 Torino-Milano motorway section with Gipave, a sustainable
asphalt solution containing G+® graphene
• New exclusive agreement with Pigmentsolution GmbH to support the development
and distribution of Directa Plus’ new patented Graphene Plus (G+®) paints product,
Grafyshield G+®, initially in Germany, Austria, Switzerland, and Poland.
• Continued investment in next generation manufacturing equipment to materially
reduce direct production costs and to mitigate inflationary cost pressures.
• Post period end granted an Italian patent for G+® graphene technology
for air filtration applications.
®
The market opportunity for these materials is huge.
06
Directa Plus plc
Annual Report & Accounts 2022
Graphene is the name given to a single plane of carbon atoms, arranged in a honeycomb
structure. It is the building block of natural graphite.
Graphene is two-dimensional but only one atom thick, thereby making it the thinnest two-dimensional
material in the world. It has extremely high tensile strength, electrical conductivity and transparency and
is incredibly light. Due to these characteristics and the way it operates as a super-additive, graphene
enhances the properties of the materials to which it is added or gives them new characteristics.
Currently on the market there are two different approaches to produce graphene:
Nowadays there are many different graphene families on the market, with totally different physico-chemical
feature as well as different target markets.
The main families are:
Top-down approach
Starting from natural graphite, by means
of physico-chemical exfoliation methods
Graphene nanoplatelets – physical exfoliation
Main markets: Special additive for environment,
textile, polymers, asphalt, concrete, coating, energy, etc.
Graphene oxide – chemical exfoliation
Main markets: Polymers, sensors
Main markets: Electronics,
flexible electronic, sensors
Monolayer graphene –
chemical vapour deposition
Synthesis method by means
of chemical vapour deposition
Bottom-up approach
Directa Plus uses a multi-step patented top-down method to produce G+®, a process that does not involve
the use of chemicals nor solvents and is only based on physical treatments of natural graphite.
The process is therefore extremely sustainable, and the output products are free from contaminants.
G+® is the purest and most crystalline form of Pristine Graphene Nanoplatelets: every gram of Graphite is directly
transformed into a gram of Graphene Plus.
W
h
a
t
i
s
g
r
a
p
h
e
n
e
?
G+® production process
NATURAL
GRAPHITE
INTERCALATED
GRAPHITE
PLASMA
SUPER-EXPANSION
EXFOLIATION AND
CONCENTRATION
PRISTINE GRAPHENE
NANOPLATELETS
®
®
Directa’s process can generate different graphene
morphologies (several graphine families, different lateral
dimension and thickness, different density and physical
forms) to satisfy totally different markets.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
07
O
u
r
s
t
r
a
t
e
g
y
a
n
d
b
u
s
n
e
s
s
m
o
d
e
i
l
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.
Business model
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, and we have a Grafysorber® production unit in our subsidiary Setcar in Romania, 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 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.
Integrating our intellectual
property into new products
allows our customers
to gain significant
competitive advantage.
Brand
strength and
endurance
Sector-
specialist
knowledge
This could be royalty payments,
upfront enabling licence
payments, joint-ventures
to get closer to end-users or
a combination of all three.
Flexible
approach
Operational
excellence
The commercialisation model
we follow is based on
capturing for our shareholders a
proportion of customers’
additional revenues and profits.
International
reach
Exceptional
service
As a company, we are committed
to sharing in the proceeds of
customers’ growth from new
products, rather than merely
supplying an essential ingredient.
i
l
S
u
s
t
a
n
a
b
e
b
u
s
n
e
s
s
i
08
Directa Plus plc
Annual Report & Accounts 2022
Directa Plus ESG
Environmental, Social and Governance considerations are an important part of what drives
Directa Plus’ business, with a strong commitment to a sustainable business, minimising
our impact on the environment, social values and collaborative working practices and
governance aligned with the QCA Governance code in parallel with a commitment to
engagement with all stakeholders.
To further enhance our commitment to ESG, the Group is developing a more comprehensive
sustainability plan with a commitment to delivering a more detailed sustainability strategy.
Environment
Graphene Plus (“G+®”) is a unique product, produced in a unique and sustainable way; G+® products are obtained
through a proprietary patented process based on the physical transformation of natural graphite: (i) water-based
process, (ii) no chemistry, (iii) high purity, (iv) zero discharge of hazardous chemicals.
In our production process we consider raw materials supply chains, energy consumption, water and wastewater,
atmospheric emissions, the production of waste and any effect on biodiversity. We are constantly assessing our
production processes, working with recognised environmental organisations to ensure the safety and sustainability
of our products. Our method of producing G+® always uses low energy consumption and low waste generation,
making the entire process environmentally friendly.
With regards to our commercialisation strategy, it is our mandate to only work with environmentally responsible
industrial partners, and to seek to improve 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.
Environmental remediation is a key division at the heart of this and we have been ISO 14001 certified since 2016.
In December 2021 Directa Plus received the Green Economy Mark from the London Stock Exchange, with over
75% of revenue contributions in FY22 derived from the Environmental Remediation division.
Social
The Board considers one of its key stakeholder groups to include its workforce and make efforts to support our
employees where possible. We are a responsible employer and carefully consider all aspects of employee rights,
equal opportunities, health and safety at work and training and education. We also have a renumeration policy,
intended to attract, retain and motivate high calibre executives to deliver outstanding shareholder returns and at
the same time maintain an appropriate compensation balance with the other employees of the Group.
With respect to our local community, Directa Plus is well-known and deeply rooted in the Milan area. We promote
our regional economy by identifying local suppliers, with whom it is possible to structure lasting partnerships.
Governance
The Board 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 Company complies with the Quoted Companies Alliance corporate governance code (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.
ESG rating
Directa Plus has embarked on the development of a full ESG Strategy and has engaged Integrum, an independent
ESG ratings agency. With the objective to gather initial data upon which the Company can enhance its ESG reporting
and practices for transparency for all stakeholders.
Integrum assessed and scored the company against robust frameworks including the SASB framework, Minerva
Analytics and the Cambridge Impact Framework (latter against the UN Sustainability Goals).
Measures including managing greenhouse gas emissions and waste consumption were assessed as well as the
company’s policy on incorporating ESG concerns into Directa Plus’ products and services and managing risk from
government regulations and policy proposals that address social factors affecting the industry.
The Company was then ranked relative to specific sub-sector peers and an overall score, and rating was applied.
The Company was given a ‘B’ rating.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
09
C
h
e
m
c
a
i
l
f
r
e
e
p
r
o
d
u
c
t
i
o
n
p
r
o
c
e
s
s
G+® Technology
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
Patented, modular process
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
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.
Scalable, portable production
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.
®
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.
10
Directa Plus plc
Annual Report & Accounts 2022
Chief Executive Officer’s review
As one of the largest producers and suppliers
of graphene-based products, we have built
Directa Plus with a clear strategy based on
our four key pillars:
1. A unique graphene production process
with strong IP – we have designed an
in-house, patented process that is simple,
scalable and sustainable utilising physics
without the need for over complicated
and pollutive chemistry;
2. Pristine G+® graphene – we produce
graphene nanoplatelets with tunable xyz
dimensions tailored to the needs of each
vertical and customer;
3. Time to market – we have continued to
build considerable product and process
know-how since our first product launch
in 2015 and we now have 43 products on
the market; and
4. Partnerships – we aim to work with leading
industrial partners with large international
footprints that provide significant growth
opportunities: These partners are
important reference customers that
support the roll out of graphene enhance
products and services globally.
The strong foundation of our key pillars
enabled us to achieve our target to scale
production capacity to 100t p.a. in the year
and to deliver double digit revenue of
a 63% CAGR over the past five years.
Our mission remains to deliver the best quality
graphene at the best possible price in the
most sustainable way, whilst supporting the
industrialisation of existing and new vertical
applications. The Group continued to enhance
products in other areas based on its patented
technology, where it has identified significant
potential commercial opportunities, including
paints, composites, concrete, polymers and
Lithium-Sulphur batteries.
Giulio Cesareo CEO
“2022 was a year of solid operational
performance fuelled by new contract wins and
increasing traction in the graphene market.
We delivered strong top line growth and
maintained focus on developing and delivering
market leading products and services in our
two core business verticals: Environmental
Remediation and Textiles.”
63%
We have delivered
double digit revenue
of 63% CAGR over the
past five years.
€10.86m
We achieved good growth
and strong financial
performance, achieving
revenue of €10.86m.
43
We have continued to build
considerable product and
process know-how and we now
have 43 products on the market.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022 11
By delivering on our core strategy we achieved
another year of strong growth with revenue
ahead 26% on the previous year at €10.86m,
slightly above market expectations due to a
solid trading performance in December 2022,
and LBITDA and LBT in line with expectations.
During the year we experienced revised
timelines on some orders due to the
re-profiling of certain projects, as a result of
the uncertain macroeconomic backdrop.
We have nevertheless achieved continued
growth across the business’ key vertical
markets and geographies.
Like many businesses in the year, the Group
was impacted by higher energy and raw
material costs, which affected our direct
production costs, and general cost increases
on outsourced services. We worked to mitigate
these potential impacts by increasing the price
of our own products and also implementing
a cost reduction plan including investment in
new milling equipment that reduced direct
production costs. These measures allowed the
Group to progressively improve margins over
the second half of the year and to position the
business to withstand future headwinds by
taking full advantage of the technology
platform we have developed.
The development of graphene technology
and its applications is accelerating across
a range of industries due to its exceptional
properties, including electrical and thermal
conductivity, antibacterial and antivirus
efficacy. Directa Plus is well positioned
to capitalise on this opportunity using
our patented process for the production
of pristine, chemical free, graphene
nanoplatelets, tailored to new and existing
partners’ and customers’ requirements.
We expect to build a substantial business
by positioning Directa Plus in the verticals
where technology capabilities, at attractive
costs, meet with market opportunities and
growing customer acceptance.
The Company entered 2023 in a solid
position, building on momentum from the
end of the prior year. With an expanding
network of customers and partners, a record
order book and a supportive market
backdrop, we are confident in the Group’s
ability to take advantage of the huge
opportunity that is ahead.
Strategy
We are building a highly scalable business
by targeting new and existing products and
markets that can be significantly improved
with the addition of our graphene-based
products. We work closely with our partner
network, benefitting from their knowledge
of different markets, strong reputation
and commercial channels to identify the
right opportunities that will deliver
commercialisation and financial return.
We continuously monitor potential markets
where we believe that for a relatively small
investment, we can develop products that
can generate high commercial traction and
which have a fast time to market, such as
paints and filtration.
Sustainability is at the heart of our operations
and acts as a powerful differentiator from
our competitors. We have amassed 43
certifications over the years, all reporting
the absence of negative impacts on
biological systems.
2
1
1. G+® ENHANCED GARMENTS: Graphene is a versatile material that can also be used in the textile
industry. In fact, we developed four different technologies for textile applications: Planar
Thermal Circuit® (PTC®), G+® Membranes, G+® Dyeing and G+® Coating. In the picture a sweatshirt
by Hugo Boss that features our PTC® Graphene Plus print.
2. G+® SEMIFINISHED PRODUCTS: Directa Plus developed different semifinished products for
different industrial applications. Each additive is tailor made to ensure the best performance
possible for that specific application.
12
Directa Plus plc
Annual Report & Accounts 2022
Chief Executive Officer’s review continued
We consider the health and safety of all
stakeholders and environmental protection
as top priorities, and we have implemented a
proactive approach by continuously monitoring
our production process and products.
During the year, we delivered strong top line
growth and maintained focus on developing
and delivering market leading products and
services in our two core business verticals –
Environmental Remediation and Textiles. The
Company continued to deliver enhancements,
based on its patented technology, to products
in other areas where Directa Plus has identified
significant potential commercial opportunities,
including paints, composites, concrete,
polymers, and Lithium-Sulphur batteries.
Environmental remediation
(75% of annual revenue)
Environmental remediation activities are
principally carried out through Setcar,
a subsidiary company based in Romania.
Significant progress was achieved in this key
vertical in 2022 with another year of strong
growth with revenues ahead 24% and
Grafysorber® technology rapidly gaining
traction in a number of new markets.
Grafysorber® is a truly ground-breaking
technology that is the only commercially
available hybrid graphene-based solution for
treating water contaminated by hydrocarbons.
Grafysorber has many advantages over
traditional products and can work on a wide
range of hydrocarbon and several other
organic pollutants. It absorbs 100 times its
weight, it is safe for the operators and the
environment, and it is light and easy to handle.
We have continued to invest to further
improve performance and to broaden the
range of potential applications, in addition
to our existing water treatment products
and services.
In the first half of the year we installed our first
production unit for Grafysorber® materials in
Romania. In response to growing demand, the
Group has subsequently installed a second
Grafysorber® production unit into Romania to
further increase production capacity.
In April 2022 the Group received authorisation
from the US Federal Environment Protection
Agency (EPA) for Grafysorber® technology
to be used on any oil contamination on
US territory, providing the business with
an entrance into the very large US oil
decontamination market. The Group is also
looking to further expand product and service
sales into Asia over the longer term.
In the UK, the Company signed a Commercial
Agreement with UK based REDA Energy in
July 2022, a leading chemical manufacturer
and supplier to the oil and gas industry, to
distribute Grafysorber® oil response products
in agreed territories in Northern Europe. The
Commercial Agreement follows the successful
testing of Directa Plus’ products by REDA
customers in the North Sea. Directa Plus
has been able to further improve its oil spill
response products, enhancing their ease of
use and performance. The Group delivered
REDA’s first product order in June 2022 and
it is now also exploring wider opportunities
for the application of the Group’s water
decontamination technology.
The Group keeps working on a number of
large and small contracts providing waste
treatment and decontamination services,
both locally and internationally.
Directa Plus still awaits the final decision on
the award of a significant contract in Romania
for the Group’s Environmental Remediation
services and the Directors continue to believe
that the Group is well positioned to secure
the tender.
Textiles (23% of annual revenue)
Directa Plus continued to gain strong
commercial momentum in the Textiles
vertical during the year with revenue growth
of 33%. There is significant interest in
incorporating technology into wearables
which will further expand the broad spread
of applications for G+® graphene that is now
incorporated into fabrics through four
different technologies:
• G+® PLANAR THERMAL CIRCUIT®:
a functional print that can be applied to
any type of fabrics, creating a circuit.
• G+® MEMBRANES: G+® is incorporated into
the polyurethane membrane that can be
laminated self-standing or combined with
a PTFE membrane directly to a fabric.
• G+® DYEING: The fabric is immersed in
a water-based bath containing G+®
yielding a completely antimicrobial fabric.
• G+® COATINGS: a special coating process,
based on water, able to obtain high-
performance polyurethane, enhanced
with G+®.
Workwear
A key highlight includes the signing of an
extension agreement with Alfredo Grassi
S.p.A, a European workwear manufacturer, to
broaden the existing collaboration to include
our Planar Thermal Circuit® (PTC®) for the
workwear markets in Italy and France. This
will enable the development of new products
for Grassi which will increase comfort for the
wearer – a key differentiator as temperatures
increase around the world. We have been
working with Grassi for over five years and
this extension agreement demonstrates
the reliability of our technology and ability
to deliver consistently for our customers.
It will enable us to further develop our
understanding of market trends and drivers
affecting demand for workwear products.
Military
We secured our first exclusive supply
agreement for printed graphene textile Planar
Thermal Circuit® (PTC®) in Latin America with
a Columbian based manufacturer of ballistic
protection clothing, CIA Miguel Caballero SAS.
Directa Plus will provide a total of 77,500 linear
metres of PTC® printed material over a four
year period, commencing from October 2022,
for a total contract value of over €1 million.
This agreement further demonstrates the
applicability of our technology to a wide
range of materials.
Luxury
We continue to work with a major luxury
Italian brand, which has been a customer
since 2019, generating important volumes
and relying on our technology to promote
its technical fabrics collections.
Automotive
In April 2022, the Company signed a Letter of
Intent (LOI) with a leading global supplier of
automotive interiors to Tier 1 manufacturers.
The supplier intends to develop a suite of
new products for the automotive industry
based on the antimicrobial properties
(antibacterial and antiviral), thermal comfort
and electrical conductivity properties of G+®
enhanced fabrics.
The LOI has a 12-month term and sees Directa
Plus and the supplier agree to combine
resources, competence and expertise to
develop G+® enhanced fabrics into a suite
of ready to use products for the automotive
industry. If both parties are satisfied with
the results achieved after the 12 months,
the partners shall undertake to negotiate
a Supply Agreement between the two
companies. Directa Plus is already working
with the supplier to produce prototypes for
a number of global Tier 1 car manufacturers.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022 13
Air filters
In March 2023, the Company was granted an
Italian patent for its G+® graphene technology
for air-filtering applications and the
development of an industrial-tested G+®
product for the expanding air filtration market.
This significant award is in partnership with an
Italian-based global chemicals and materials
company. The companies have been working
together since December 2021 on an exclusive
basis to develop specific products for the
global air and water filtration markets.
Textiles for consumer electronics
Directa Plus continues to collaborate with the
soft goods division of a major international
developer and manufacturer of consumer
electronics and related services. The
agreement covers the potential application
of G+® as a protective covering for consumer
devices, exploiting its antiviral- antibacterial
properties as well as its thermal and electrical
conductivity. The partnership has delivered
exceptional results to date with the
collaboration continuing to demonstrate the
potential for significant volumes in the
coming years.
Other textiles applications
We secured a supply agreement with Officine
di Cartigliano, an Italian based leader in the
production of tanning equipment for the
textile industry for its G+® technology, worth
€150,000 over one year on a take or pay basis.
Officine di Cartigliano will be using a
formulation of the Company’s G+® based
textile finishing application to improve the
performance of its equipment, particularly
to address antistatic issues.
The Group is also exploring the sportswear
industry to exploit the G+® heat dispersion
and antimicrobial properties to understand
the potential of this vast market.
3
Additional potential high
return verticals
Composites
The asphalt applications of the Group’s G+®
graphene technology have great potential
and the product developed with Iterchimica
provides exceptional results in terms of
increased durability and reduced carbon
footprint. Market interest for the product is
growing internationally and is gaining
significant commercial traction.
In March 2022, Oxfordshire County Council
conducted its second trial of a patented
asphalt concrete modifier developed by
Iterchimica and enhanced by our Graphene
Plus product. This follows an initial pilot trial in
Oxfordshire in 2019. The new trial will see two
identical stretches of Marsh Lane in Oxford,
which carries around 10,000 vehicles a day
along a key city route, resurfaced with different
materials. Half of a 700-metre stretch of the
road will be laid with GiPave®, while the rest
will be resurfaced using conventional asphalt,
so that the two surfaces can be compared.
In the second half of the year we secured a
new major contract for the A4 Torino-Milano
motorway section, managed by the ASTM
2
1
1. G+® IN BATTERIES: Lithium-sulphur batteries can be enhanced with G+® Graphene Plus® to improve performances. These batteries have
a 5 times higher energy density than standard lithium-sulphur batteries. Moreover, the production costs are reduced thanks to the reduced
cost of the cathodes and the water-based production process. This makes the batteries 99% recyclable. They have an intrinsically safe
chemistry and are not subject to fire or explosion risks. For this reason, its transport and distribution are safer and environmentally friendly.
2. G+® WATER TREATMENT: Directa Plus developed Grafysorber®, the most effective oil treatment for oil contaminated water. It works both
with high and low hydrocarbons and can absorb up to 100 times its weight. Moreover, Grafysorber® is lightweight and therefore easy to
handle, transport and store. It is made with a 100% sustainable process and is non-toxic and waste-free.
3. PLANAR THERMAL CIRCUIT®: the Planar Thermal Circuit® PTC® is a functional print that can be applied to any type of fabrics. It assures
thermal comfort: when applied to a shirt it equalises and dissipates heat; when applied to a jacket it equalises and retains heat.
14
Directa Plus plc
Annual Report & Accounts 2022
Chief Executive Officer’s review continued
Group to provide a sustainable, resilient and
safe asphalt made with G+® graphene and
specially selected recycled hard plastics (e.g.,
toys, fruit crates, litter bins). The asphalt will
re-use 70% of milled material from the existing
pavement, thus reducing the use of new
natural aggregates to only 30%. The works will
involve both directions for a total of 250 km.
GiPave® was developed by Iterchimica with
the support of Directa Plus and resulted from
a three-year research programme with a
patent filed in 2017. The product uses waste
plastics that would not normally be recycled
and the asphalt containing GiPave® can itself
be entirely recycled – promoting the ‘circular
economy’, which reduces waste and the need
for new materials.
Paints
Another area showing considerable early
potential is within the graphene-based paints
vertical. We have developed a graphene-
based paint solution which provides
enhanced anti-flame and anti-corrosion
properties compared to normal paints. We
have hired a team of experienced people in
the field and initiated positive discussions with
major international players in Europe and Asia
to accelerate commercialisation and we are
excited about the potential of this technology.
In the second half of the year we signed a new
exclusive agreement with Pigmentsolution
GmbH, a European distributor of speciality
chemicals and ingredients, to support the
development and distribution of Directa Plus’
new patented Graphene Plus (G+®) product,
Grafyshield G+®, initially in Germany, Austria,
Switzerland and Poland, with the potential for
further expansion in Europe. The initial 12
month contract will enable us to assess
these important markets and measure the
potential for further territorial expansion in
the longer- term. It is a significant win for
the Group as it demonstrates the appetite
for and competitive advantage of our
Grafyshield G+® product.
The global anticorrosion coating market is
estimated to be valued at 41.20 USD billion by
2027, and the global flame-retardant coating
market is estimated to be 4.83 USD billion.
Lithium-Sulphur batteries
Lithium-Sulphur is a next generation battery
chemistry offering advantages over
Lithium-Ion as it has a superior energy
density, significant cost advantages and a
superior safety profile. We have continued
to support our partner NexTech in the
development of this technology, in which
G+® will play a key role in terms of technical
properties and the supply of the product at
the scale necessary to satisfy the needs of the
market. In the first half of the year, we agreed
the removal of exclusivity originally agreed in
the contract, and this allows Directa Plus to
collaborate with other players in the industry.
We remain focused on supporting the
development of such a potentially disruptive
technology and we have already targeted
another Lithium-Sulphur battery producer to
accelerate the technology’s commercialisation.
Others
We have maintained our investment in
potential additional high return opportunities
that could generate significant value for
the Group in the upcoming years. The
Group is currently looking with great interest
at G+® applications in the concrete and
polymers industries.
Intellectual property
As at March 2023, the Group’s patent portfolio
comprised 81 patents granted and 37 pending,
grouped into 22 families. This has increased
from 72 patents granted and 27 pending,
grouped into 19 families in March 2022.
2
1
81
Our patent portfolio
comprised 81 patents
granted and 37 pending,
grouped into 22 families.
1. NORDA SHOES FOR TRAIL RUNNING ENHANCED WITH G+®: Norda developed a high-tech shoe for
trail running containing G+®. Grafytherm® is the Graphene Plus® membrane used in the shoe upper
lining to confer thermal comfort, lightness and an antimicrobial effect.
2. G+® TIRES: G+® in all kinds of tires enhances rolling resistance, impermeability, heat dissipation and
elastic modules. The main properties include a higher durability of the tire therefore less maintenance
and a higher balance between rolling resistance and grip and an enhanced thermal dissipation.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022 15
New patents during the year include:
• an Italian patent covering the use of the
Company’s G+® applied to textile substrates
for high bacterial filtration efficiency media
for filtration applications;
In December 2021 Directa Plus received the
Green Economy Mark from the London Stock
Exchange, with over 75% of revenue
contributions derived from the Environmental
Remediation division.
• a grant of a US patent titled “Golf ball
comprising graphene”. The patent will
enable Directa Plus to license its
technology in the key US market; and
• a patent from the United States Patent
and Trademark Office for the grant of
a patent covering the Company’s G+®
embedded polyurethane membrane,
developed explicitly for the textile industry,
together with its production method and
its applications.
We aim to create value from our wide IP
portfolio. Discussions on potential licensing
contracts are ongoing with potential for further
patent applications and awards in 2023.
Environmental, Social and
Governance policies
Environmental, Social and Governance
considerations are an important part of what
drives Directa Plus’ business.
Environment
Graphene Plus is a unique product, produced
in a unique and sustainable way; G+® products
are obtained through a proprietary patented
process based on the physical transformation
of natural graphite: (i) water-based process,
(ii) no chemistry, (iii) high purity, (iv) zero
discharge of hazardous chemicals.
In our production process we consider raw
materials supply chains, energy consumption,
water and wastewater, atmospheric
emissions, the production of waste and any
effect on biodiversity. We are constantly
assessing our production processes, working
with recognised environmental organisations
to ensure the safety and sustainability of our
products. Our method of producing G+®
always uses low energy consumption and low
waste generation, making the entire process
environmentally friendly.
With regards to our commercialisation
strategy, it is our mandate to only work with
environmentally responsible industrial
partners, and to seek to improve products
in existing markets. This means that we can
help produce and sell better quality products
than are currently available, with better
performance and longer life for end-users.
Environmental remediation is a key division at
the heart of this and we have been ISO 14001
certified since 2016.
Social
The Board considers one of its key
stakeholder groups to include its workforce
and makes efforts to support our employees
where possible. We are a responsible
employer and carefully consider all aspects
of employee rights, equal opportunities,
health and safety at work and training and
education. We also have a remuneration
policy intended to attract, retain and
motivate high calibre executives to deliver
outstanding shareholder returns and at the
same time maintain an appropriate
compensation balance with the other
employees of the Group.
With respect to our local community, Directa
Plus is well-known and deeply rooted in the
Milan area. We promote our regional economy
by identifying local suppliers, with whom it is
possible to structure lasting partnerships. We
believe it is essential to actively contribute to
initiatives that can have a positive impact on
the social fabric of the area.
Governance
The Board 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 Company complies with the Quoted
Companies Alliance corporate governance
code (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.
ESG Rating
Directa Plus has embarked on the
development of a full ESG Strategy and has
engaged Integrum, an independent ESG
ratings agency. With the objective to gather
initial data upon which the Company can
enhance its ESG reporting and practices for
transparency for all stakeholders.
Integrum assessed and scored the company
against robust frameworks including the
SASB framework, Minerva Analytics and the
Cambridge Impact Framework (latter against
the UN Sustainability Goals).
Measures including managing greenhouse
gas emissions and waste consumption were
assessed as well as the company’s policy on
incorporating ESG concerns into Directa Plus’
products and services and managing risk
from government regulations and policy
proposals that address social factors affecting
the industry.
The Company was then ranked relative to
specific sub-sector peers and an overall score,
and rating was applied. The Company was
given a ‘B’ rating.
Outlook
This year we secured a number of high-level
wins in our core verticals, Environmental
Remediation and Textiles. We also invested in
our technology and expanded our customer
and partner networks to position the business
to be able to successfully serve a range of
customers globally as awareness of the
capabilities of graphene continues to grow.
The Company has entered the new financial
year in a solid position, building on the
momentum established in 2022. With an
expanding network of customers and
partners, a record order book and a supportive
market backdrop, we are confident in the
Group’s ability to take advantage of the huge
opportunity that is ahead.
As we build scale we expect to drive further
production efficiencies and are excited about
potential opportunities to expand our
capacity with new installations in new
geographic locations.
In parallel, we aim to create value from our
wide IP portfolio. We are discussing potential
licensing contracts that could accelerate the
spread of our technology worldwide and
generate positive cashflows for the Group.
While aware of the ongoing macroeconomic
pressures, we have a dedicated and
experienced team and supportive market
tailwinds. The Board is confident in delivering
results for 2023 in line with current expectations.
Giulio Cesareo
Chief Executive Officer
9 May 2023
16
Directa Plus plc
Annual Report & Accounts 2022
Chief Financial Officer’s review
Giorgio Bonfanti Chief Financial Officer
“2022 was an important year of growth, in
which the Group delivered a 26% increase
in product and service revenue underpinned
by strong traction in Environmental
Remediation and Textiles. Noting the
challenging and adverse market conditions,
Directa Plus has efficiently managed its
financial resources, mitigated the main risks
and is working hard to improve its business
growth and to recover margin.”
Key Performance Indicators
The Board measures the performance of the
Group through a number of important
financial and non-financial KPIs. In a young
business with a number of different vertical
markets, identifying measurable data that
will provide useful insight year-on-year is not
always straightforward but the KPIs below
aim to help shareholders understand the
Group’s progress.
Summary of financial KPIs with further details
contained later in this report:
• Product sales and service revenue
increased by 26% to €10.86m (2021:
€8.62m), above market expectations
• Total income (including grants) increased
by 19.4% to €11.28m (2021: €9.45m)
• Adjusted LBITDA* increased to €3.15m
(2021: €2.49m)
• Loss before tax increased to €5.33m
(2021: €3.38m)
• Reported (basic) Loss per share was €0.07
(2021: €0.06)
• Cash and cash equivalents at year end of
€5.73m (2021: €11.13m)
* Adjusted EBITDA loss represents results from
operating activities before tax, interest, depreciation
and amortisation, adjusted by one-off income,
inventory write-offs, non-recurring legal expenses
and onerous contract provision (details overleaf).
26%
Product sales and service
revenue increased by
26% to €10.86m
(2021: €8.62m).
19.4%
Total income (including
grants) increased by
19.4% to €11.28m
(2021: €9.45m).
€5.73m
Cash and cash equivalents
at year end of €5.73m
(2021: €11.13m).
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022 17
Financial review
In 2022, the Group delivered another year of
significant growth. Revenue from products and
services increased by 26% to €10.86 million
(2021: €8.62 million), and total income by
19.4% to €11.28 million (2021: €9.45 million).
The increase in revenue was driven by our two
main verticals. Environmental Remediation
services gained further traction with revenue
growth of 24% to €8.14 million, supported by
new and expanded contracts delivered by our
subsidiary Setcar, leveraging on our technology
and promoting G+® in the oil & gas industry
globally. Textiles grew by 33%, with sales of
€2.46 million due to the contribution of
recurring and new contracts.
During the year, global markets were
challenged by adverse macro-economic and
geopolitical conditions. The war in Ukraine,
together with post-pandemic supply chain
issues, led to double digit inflation trends and
created unprecedented market conditions. In
the first half of the year, the Group was
impacted by cost increases, from significant
energy cost rises to increases in the cost of
subcontracted services and general expenses.
Management has sought to mitigate these cost
pressures through price increases for the
Group’s products and investment to
significantly reduce direct production costs.
Our investment in next generation milling
equipment in particular has built on Directa’s
throughput cost reduction project that was
successfully begun six years ago. These
actions, focused on margin recovery, are
expected to have a material positive effect that
will be increasingly evident during the new
financial year.
Alternative performance
measures
This report includes both statutory and
adjusted financial measures, the latter of
which the Directors believe better reflect the
underlying performance of the Group by
excluding certain items that if included could
distort a reader’s understanding of the results.
The table below shows a reconciliation of
statutory and adjusted measures for LBITDA
and Loss before taxation.
Adjustments refer to:
• one-off other income of €0.5 million
reported in the 2021 accounts from the
release of an undue obligation to the former
shareholders of Setcar;
• inventory write-off of €0.11 million in 2022,
attributable to obsolete Co-Masks which are
now experiencing a low market demand
following the end of the Covid-19 pandemic;
• legal costs of €0.16 million linked to the
protection of Directa Plus’ IP portfolio and
disbursements relating to a lawsuit that
dates back to 2017;
€ million FY22 FY21
Result from operating activities (5.02) (3.53)
(+) Depreciation and amortisation 1.40 1.54
LBITDA (3.61) (1.99)
(-) One-off income – (0.50)
(+) Inventory write-off 0.11 –
(+) Legal costs 0.16 –
(+) Onerous contracts provision 0.19 –
Adjusted LBITDA (3.15) (2.49)
€ million FY22 FY21
Loss before tax (5.33) (3.38)
(-) One-off income – (0.50)
(+) Inventory write-off 0.11 –
(+) Legal costs 0.16 –
(+) Onerous contracts provision 0.19 –
(+/-) FX gain/loss 0.20 (0.22)
Adjusted loss before tax (4.67) (4.11)
• provision of €0.19 million for the total
expected loss in 2023 on the conclusion
of an onerous long-term contract where
recovery is deemed uncertain under
IFRS15. The Group is currently in discussion
with the customer to seek an acceptable
resolution; and
• non-cash exchange rate effects, especially
on the conversion of GBP cash balances
to Euro.
In December 2021, the Group completed a
fundraise with gross proceeds of £7 million,
by way of a placing and subscription to
accelerate additional investment in
development of both our primary and
secondary vertical markets. As of December
2022, the Group had €5.73 million of cash and
cash equivalents. The forecasts prepared by
the Directors show that the Group has
sufficient liquidity in place to support the plan
and strategy for the future developments of
the business over the next 18 months.
However, the Directors also modelled some
downside scenarios, based on contract losses
or delays and margin reductions, that could
adversely impact the Group and require it to
search for additional funds before December
2024, and could represent a material
uncertainty over going concern. Nevertheless,
the Board has a reasonable expectation that
the Group has adequate resources in place
to maintain investment and operations in
line with its strategic business plan, and they
have concluded it is appropriate to adopt
the going concern basis of accounting in the
preparation of the financial statements.
A description of the principal risks and
uncertainties facing the Group is set out in the
Directors’ Report. Whilst the war in Ukraine,
inflation, and increased Central Bank interest
rates pose on-going challenges, we are
monitoring these external factors and
continue to react to mitigate any potential
further risk. In the short term, the Group’s
priorities continue to be focused on the
reduction of cash consumption and
improving profitability as we develop our core
verticals to deliver for our shareholders,
partners and customers.
Giorgio Bonfanti
Chief Financial Officer
9 May 2023
18
Directa Plus plc
Annual Report & Accounts 2022
Directors’ biographies
Richard Hickinbotham
Non-Executive Chairman
Relevant strengths
•
•
Deep understanding of AIM markets
Investor relations and financial
communication
•
Growing businesses and funding
Giulio Cesareo
CEO and Founder
Relevant strengths
Giorgio Bonfanti
CFO
Relevant strengths
•
•
•
Industry knowledge and credentials
Strategic and business expertise
Engineering expertise
•
•
•
Financial reporting and accounting
Budget and business plan
M&A and funding
Giorgio is a professional with corporate
finance, M&A, and accounting experience.
Before joining Directa Plus in May 2021,
Giorgio was a Senior Manager at PwC, in their
Deals practice. He supported national and
international clients in M&A transactions, such
as acquisitions, disposal, joint ventures, IPOs
and business plans. He also has a previous
experience at KPMG as an auditor.
Giorgio holds a degree in Business
Administration and a Master of Science in
Accounting, Finance and Control from
Bocconi University.
Richard Hickinbotham is an experienced City
professional, having served previously as
Head of Equity Research at Singer Capital
Markets, 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 he is
Chairman of the Remuneration Committee
and a member of the Audit and Nomination
Committees. Richard holds a BSc. in
Mechanical Engineering from Imperial College
and is a qualified Chartered Accountant.
Giulio Cesareo is one of the founders of
Directa Plus. He began his professional career
in 1982 in Italy working for Falck and Techint.
From 1986 to 2004, he worked in the carbon
and graphite business for Union Carbide,
UCAR and Graftech, reaching the positions of
the President and CEO of the Italian company
and Vice President and General Manager of
the worldwide Advanced Carbon and Graphite
business unit. In his role at Union Carbide,
Giulio managed business units in USA, France
and Italy. Giulio is Advisory Board member
and member of the Industry Council of the
US National Graphene Association
Giulio Cesareo was awarded a degree in
Mechanical Engineering from the Polytechnic
University of Milan, an MBA and an Executive
MBA from Bocconi University of Milan and
attended Strategic and Financial Management
Programs at Stanford University (USA). He
serves as a board member of Fondazione
Quarta, a non-profit organisation focused on
scientific research in areas of social activity
and was also Board Member of: Centro di
cultura scientifica “Alessandro Volta”, an
organisation aimed at promoting the practical
applications of a scientific culture.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
19
Wesley Clark
Non-Executive Director
Sarah Cope
Non-Executive Director
Relevant strengths
Relevant strengths
•
•
•
Extensive public and private Board experience
Strong US military network
Clean energy and environment expertise
•
•
•
Experienced Audit Committee Chair
UK Capital Markets and M&A experience
Corporate governance
General Clark, a US national, is Chairman and
CEO of Wesley K. Clark & Associates, a strategic
consulting firm; Chairman and Founder of
Enverra, Inc., a licensed investment bank, and
Chairman of Energy Security Partners, LLC. In
the not-for-profit space, he is a Senior Fellow
at UCLA’s Burkle Center for International
Relations and a Director of the Atlantic
Council. A best-selling author, General Clark
has written four books and is a frequent
contributor to T.V. and news media.
Wesley Clark retired as a four-star general after
38 years in the United States Army, having
served in his last posts as Commander of US
Southern Command and then as Commander
of U.S. European Command/ Supreme Allied
Commander, Europe. He graduated first in his
class at West Point and completed degrees in
Philosophy, Politics, and Economics at Oxford
University (B.A. and M.A.) as a Rhodes scholar.
Sarah has over 20 years’ experience as an
investment banker in London, advising small
and mid-sized companies at Board level on
corporate governance, strategy, amalgamations
and disposals, capital markets and regulatory
compliance.
Previously, she has advised AIM listed
companies in the Oil and Gas sector as both
Nominated Advisor and Broker, assisting
publicly traded companies to raise finance for
their exploration, development and production
projects around the world. Accordingly, she has
experience of AIM regulations and compliance.
Sarah has been a Non-Executive Director of
several public and private companies since
2018 and is currently a Non-Executive Director
of AIM traded Eneraqua Technologies plc,
Smarttech 247 plc and Helium One Global Ltd.
®
20
Directa Plus plc
Annual Report & Accounts 2022
Section 172
Section 172(1)(a) to (f) of the Companies Act 2006 requires Directors to
take into consideration the interests of stakeholders in their decision
making, to this effect the Board of Directors of Directa Plus Plc consider
that they have acted in such a way that would be most likely to
promote the success of the company in the long term, taking into
consideration the interests of all the stakeholders (investors,
employees, customers, suppliers and local communities).
a) The likely consequences of any decision in the long-term. Annually
the company reviews its medium to long term plan, which focuses on
the strategic direction of the Group as well as looking at the threats,
and opportunities it is facing. This plan is designed to ensure the long-
term optimal direction of the company, ensuring, at the same time,
the consideration of long-term requirements of the stakeholders.
b) The interests of the company’s employees. The Board considers its
employees to be one of the key stakeholders within the Group and
as such welcomes any feedback to ensure the alignment of both
party’s interests. Given the nature of the Group’s activities, its
employees are the greatest asset of the business and their interests
are always considered when determining the strategic direction
and vision of the Group.
Details of the Group’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 manage its environmental responsibilities in a systematic
and proactive manner both Directa Plus S.p.A. and Setcar SA
implemented the ISO 14001 certification. This 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 to 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 further
its security and health measures towards its employees and the
community in general. 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.
As the pandemic evolved, the Group maintained a primary attention
to the health measures and employees’ safety also in 2022. Please
refer to the CEO statement in the Strategic report for further
information on the Company’s considerations on ESG matters.
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. An ethical code
and whistleblowing process are in place and are reviewed regularly.
Further details of the Company’s Ethical values and behaviours are
listed in the section “Ethical values and behaviours” of the Corporate
Governance Statement at page 25.
f) The need to act fairly as between members of the company.
The Group’s Board currently consists of three Non-Executive Directors,
and two Executive Directors. The Board considers it collectively has an
appropriate balance of skills and experience, as well as an appropriate
balance of personal qualities and capabilities. This helps to ensure
that the impact of decisions on stakeholders is fair and equal, so they
too may benefit from the successful delivery of our plan.
We define principal decisions as both those that have long-term strategic
impact and are material to the Group, but also those that are significant
to our key stakeholder groups. In making its 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.
Global graphene demand is expected to increase significantly over
the next 10 years. The Group is well positioned to benefit from this
market growth and to play a key role in its near-term development.
The Group’s strategy is to target existing products and markets that can
be significantly improved with the addition of Directa Plus products.
The Group works with key partners, benefiting from their knowledge
of the market, strong reputation and commercial channels.
The Group is currently targeting two key markets (Environmental
Remediation and Textiles – including air and water filtration), currently
at an advanced stage of products and services commercialisation.
The Group has also launched high potential opportunities that are
providing encouraging signals and orders, such as Composites and
Paints. And finally, the Group keeps investing and monitoring high
value future opportunities, such as the Lithium-Sulphur Batteries,
Concrete and Polymers.
The Group operates in a fast-changing environment. The Group is
leveraging on the funds raised in December 2021 to keep investing and
growing, exploiting the competitive advantage gained so far and
prioritising the verticals with a faster commercial traction and higher
financial returns.
Giulio Cesareo
Chief Executive Officer
9 May 2023
Overview
Strategic report
Governance
Financial statements
Additional information
Directors’ report
Directa Plus plc
Annual Report & Accounts 2022
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 SA, completed in
November 2019, Directa Plus entered the environmental service market
with the aim to supply a complete range of services, from chemical
analysis for waste identification to water and soil treatment, leveraging
on the unique properties of the graphene-based products in our
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 50 Broadway, London, SW1H 0BL,
UK. Setcar is based in Romania, which is also its main country of
operations, and its registered office address is 6 Gradinii Publice Street,
810022, Braila.
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 2022, research and development, KPIs and the outlook for
future years, are set out in the Chairman’s Statement, Chief Executive
Officer’s Review and Chief Financial Officer’s Review on pages 10 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.
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 2022 and up to the date of signing this report
(where not specifically mentioned):
•
•
•
Giulio Giuseppe Cesareo
Richard Hickinbotham
Wesley Clark (appointed as a Board member 17 of October 2022)
•
•
•
•
•
Sarah Cope (appointed as a Board member on 21 November 2022)
Giorgio Bonfanti
Sir Peter Middleton (resigned from the BoD on 17 June 2022)
Neil Warner (resigned from the BoD on 21 November 2022)
David Michael Gann (resigned from the BoD on 17 October 2022)
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 of 31 December 2022 are set
out in Note 17 to the consolidated financial statements. As of 31 December
2022, a total of 66,057,649 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 18,975,652 28.73
Dompè Group 8,625,603 13.06
Unicorn Asset Management 5,873,333 8.89
Dr. Jean Marc Droulers /
Finanziaria Le Perray * 4,466,449 6.76
Galbiga Immobiliare S.r.l.** 3,958,228 5.99
Schroders Investment Management 3,857,247 5.84
Ruffer 2,356,666 3.57
* 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 23 to
the financial statements. The Directors continually consider 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 that could
have a serious adverse impact on Group’s performance.
®
22
Directa Plus plc
Annual Report & Accounts 2022
Directors’ report
continued
Risk
Mitigation and management strategy
Likelihood*
Impact (on
the Group)**
Change***
Certain
Major
→
Ukrainian conflict and inflation trends
Covid-19
Covid 19 pandemic has materially affected the
worldwide market, causing a general deterioration
of the economic environment
Changes in government policy and legal
and regulatory compliance
The Group operates in highly regulated industry
(Environmental services and waste disposal)
through its controlled subsidiary Setcar SA.
Any changes to government policy, standards or
regulatory requirements could affect the Group’s
operations and results.
M&A strategy and delivery
Directa Plus, after the acquisition of Setcar SA
in 2019, considers that integration risks and
issues could arise impacting the delivery of the
expected benefit.
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.
Directors are monitoring the conflict in Ukraine and
constantly assessing all the potential impacts on
the Group’s business, and consequently re-
adjusting – where necessary – its strategy and
operational priorities. The Group has been
impacted by inflation trends (as a consequence of
the increase in energy and transportation costs)
and by its collateral effects that led to some
contracts slowdown and postponements.
The Group does not have any contracts with Russian
or Ukrainian clients and the major clients’ business
activity appears – in general – not to be currently at risk.
Overall, Directors believe that the conflict will not
affect the going concern of the Group, and – under
certain circumstances – it will create some potential
opportunities. In fact, the value increase of the oil and
waste recovered or the opening of other applications
for G+® could have positive outturns for the Group.
In 2022 the health emergency has given the first
signs of slowdown, and the Company seems to
have overcome the difficult macro-economic
period with limited adverse effects.
However, the Board keeps committing high
attention to the safeguard of its stakeholders’
health and protection.
Certain
Moderate
Regulatory framework is constantly monitored by
Management, trying to have prompt
understanding of proposed changes.
Possible
Major
An integration plan and skilled resources have
been deployed to manage the post-acquisition
integration. Setcar has operated in the Group over
the last two years and the Board of Directors
believes that the integration has reached a good
level of effectiveness. The Board of Directors is
constantly considering how to improve the
integration and is kept promptly up to date.
Directa Plus continually monitors the market and
its competition and has resources to invest in
technological development and product
development as appropriate.
Unlikely
Moderate
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 knowledge and technology
without authorisation. There may not be adequate
protection for IP in every country in which the
Group’s products are or will be made available.
The Group monitors scientific papers, news flow
and graphene products brought to the market as
far as reasonably possible and will take cost-
effective legal action if required. The Group is
advised by suitably qualified and experienced
patent agents and meetings with the patent agents
are scheduled regularly.
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.
Risk is mitigated by providing share options to key
employees, building a motivated management
team, together with significant opportunities for
carrier development.
In 2022 the Group brought additional diversity and
expertise in its Board of Directors, renewing part of
its NEDs members. This change was addressed
ensuring the proper business continuity and
controls over the Group.
Possible
Moderate
Possible
Major
↓
→
↓
→
→
→
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
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 favourable 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 December 2021.
In addition, the Group has access to potential
additional sources of debt funding with major
Italian and Romanian banks, which could lessen
any further funding risk.
* 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
→
The Group’s policies, procedures and practices used to identify,
monitor and control a variety of risks may, in some cases, not be
effective. The Group’s risk management methods rely on a combination
of internally developed technical controls, standard practices,
observation of market behaviour and human supervision.
Annual general meeting
The notice for the convening of the AGM 2023 together with the
proposed resolutions will be contained in a Notice of AGM sent to all
shareholders and available via the Company’s website.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to
prepare the Group and Company financial statements in accordance
with the UK adopted international accounting standards. Under
company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the 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 UK
adopted international accounting standards, 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 Group and the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
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
®
9 May 2023
24
Directa Plus plc
Annual Report & Accounts 2022
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 2022 financial year.
Over the last recent years, we have been constantly reviewing 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.
In 2021 we have focused our efforts on upgrading some operations in the accounting and finance function, which is
playing a central role in facilitating the collaboration and alignment across all the Company’s activities. In 2022 we have
focused our efforts on improvements in sales and marketing. With increasing opportunities ahead of us, but also
increasing complexities, we have engaged a consulting company to support us in bringing greater focus to our strategic
priorities, key verticals and the products to which we dedicate most of our efforts. 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 15.
Relations with shareholders
The Chief Executive Officer and Chief Financial Officer are responsible
for shareholder liaison and have regular dialogue with institutional
investors in order to develop an understanding of their views.
Meetings with analysts and institutional shareholders of the Company
take place following the interim and annual results announcements as
well as on an ad hoc basis. These presentations are given by the Chief
Executive Officer and the Chief Financial Officer, updating on relevant
matters and in particular, on the progress of the Company in terms of its
operational performance, financial and strategic direction.
The Annual Report and accounts are published on the Company’s
website, www.directa-plus.com, and can be accessed by shareholders
and non-shareholders. Shareholders have the opportunity to meet
members of the Board at the Annual General Meeting of the Company
where Board members will be happy to respond to questions.
The Board believes that its current approach to shareholder
engagement is successful, based on the feedback received and the
Proactive Investor interviews publicly available. In addition, as
Chairman, I remain available to talk to shareholders whenever required.
Stakeholder and social responsibilities
The Board considers its key stakeholder groups to include:
•
•
•
•
workforce – we are a responsible employer, compliant with relevant
human resources legislation and recommended practices, as well as
Health, Safety and Environmental Protection regulations. In 2020 the
Covid-19 pandemic encouraged the Board to strengthen its security
and health measures towards its employees and community in
general. 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. Despite the pandemic
being relatively under control, it remains an uncertain threat at the
date of this report, and the Group is maintaining a high level of
attention towards its stakeholders health and safety;
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 plc
Annual Report & Accounts 2022
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 stakeholders.
The Company has always considered the health and safety of people
and environmental protection as top priorities. We take a proactive
approach to health, safety and environmental protection by monitoring
our production process and products and continuously reviewing our
policies. 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.
Risk management
The Directors are responsible for establishing and maintaining the
Company’s system of internal control and reviewing its effectiveness.
Page 22 sets 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 in two Executive Directors and three Non-Executive
Directors. The Board considers all the Non-Executive Directors to be
independent.
The number of meetings attended by the Board are disclosed on
page 26.
Directors
The Directors continue to remain satisfied that the Board is well
balanced and that the Directors possess the sufficient breadth of skills,
relevant experience, variety of backgrounds and knowledge to ensure
the Board functions appropriately, without being dominated by any
one Director. Details of qualities and capabilities that each Director
brings to the Board are added in the Director biography section.
Moreover, diversity is strongly considered ensuring the appropriate
balance of the Board is developed.
Full biographies of each Director can be found on pages 18 and 19.
The Board keeps under review the skills required to effectively pursue
the Company’s strategy and discharge its duties. The Chief Financial
Officer is also the Company Secretary; the Board does not feel that a
full time Company Secretary is currently required but will keep this
under review.
Board performance
The Board continually reflects on its performance to identify potential
areas for improvement.
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 2022 financial year can be found on pages 30 and 31.
®
26
Directa Plus plc
Annual Report & Accounts 2022
Corporate governance report
continued
Board
The Board consists of two executive Director and three Non-Executive Directors. The Board considers all the Non-Executive Directors to be
independent. The Board consists of four male Directors and one female Director. The current members of the Board and their membership on
the Board committees of the Company are as follows:
Board committees as
Board appointments Chair or member
Non- Non-
Executive Executive Independent independent Audit Remuneration
Name of Director Director Director Director Director Committee Committee
Giulio Cesareo 3 – – – – –
Giorgio Bonfanti 3 – – – – –
Richard Hickinbotham* – 3 3 – – Member
Wesley Clark – 3 3 – Member –
Sarah Cope – 3 3 – Chair Chair
*Richard Hickinbotham holds a total of 60,000 vested ordinary shares under a previous share option plan, a legacy from the initial remuneration package assigned following his
appointment in 2017. The Remuneration Committee has no intention to issue any options to NED in the future. Based on this, he is considered an independent Director.
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
UK adopted accounting standard and regulation.
to and monitored by the Board. The Board accepts that while these
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 that 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
The time commitments of the Non-executive Directors are carefully
reviewed by the Board and it is noted that Richard Hickinbotham, Sarah
Cope and Wesley Clark devote at least 2 days a month to the Company.
Details of the Directors’ attendance at each of the scheduled Board and
Committee Meetings for the 2022 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 6 6 N/A N/A N/A N/A
Giulio Cesareo 12 12 N/A N/A N/A N/A
Giorgio Bonfanti 12 12 N/A N/A N/A N/A
David Michael Gann 10 8 4 4 2 2
Neil William Warner 11 10 4 4 2 2
Richard Hickinbotham 12 12 2 2 1 1
Wesley Clark 2 2 N/A N/A N/A N/A
Sarah Cope 1 1 N/A N/A N/A N/A
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
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 the challenges, however at the date of approval of
these financial statements it is not clear how long the current
circumstances are likely to last and what the long-term impact will be.
The 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 Group’s held cash and cash equivalents of Euro 5.73 million at
31 December 2022 and is currently funded through Euro 39.39 million
of shareholder equity and Euro 2.15 million of loans and bank debt,
which is repayable in five years.
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.
The Covid-19 pandemic and the conflict in Ukraine have been an
additional cause of uncertainty over the macro-economic outlook,
affecting both the political and business environment. These events
have had a significant impact on global economies and markets, and
on the operations and operational funding of companies experiencing
widespread inflationary cost pressures and supply chain disruption.
In line with the global macro-economic environment and with its peers,
the Group has been affected in 2022 by significant cost increases, primarily
due to the direct and indirect impacts from energy costs, and also from
supply chain disruption affecting customer scheduling. However, there are
increased signs of a stabilising environment in 2023, with inflation forecast
to fall materially and global supply chains normalising.
The Directors prepared a cash flow forecast for the period to December
2024 to assess if there is sufficient liquidity in place to support the plan
and strategy for the future development of the business. This forecast
showed that the Group will have sufficient financial headroom for the
entire forecast period.
The Directors also modelled reasonably plausible downside scenarios.
These include scenarios which reflect the loss of major contracts,
reduction in margin and delays contracts being executed. Each of these
scenarios could adversely impact the Group. Management also
modelled the impact of mitigating factors within their control, including
delaying capital expenditure and additional reductions in costs in order
to maintain sufficient liquidity. Under these reasonably plausible
downsides, the Group would expend its cash resources before
December 2024 and require additional funding. While the Group
successfully raised £7m in 2021 that was fully subscribed by existing and
new investors, there is no certainty that the Group will be able to raise
further funds through the issue of equity in the future. As a consequence,
this represents a material uncertainty that may cast significant doubt on
the Group and Parent Company’s ability to continue as a going concern
and therefore the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business.
Based on the analysis above, the Directors have a reasonable
expectation that the Group has adequate resources to support the
Group’s activities for the foreseeable future and have concluded it is
appropriate to adopt the going concern basis of accounting in the
preparation of the financial statements. The financial statements do
not include the adjustments that would result if the Group was
unable to continue as a going concern.
Richard Hickinbotham
Non-Executive Chairman
9 May 2023
®
28
Directa Plus plc
Annual Report & Accounts 2022
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.
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.
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 Remuneration Committee. Each of the Executive
Directors has a service agreement that can be terminated at any time
Directors are not involved in specific discussions on their own
remuneration.
Given the adverse market conditions, inflation cost pressures and
issues on the supply chain experienced during the year, in 2022 the
Remuneration Committee, in agreement with Management, decided
not to pay any bonus awards to the Group’s executive team. Despite
some personal targets being achieved during the year, the Group
deemed it to be a proper decision in order not to overload the cost
structure even more.
The remuneration of the Directors, in Euros, for the year ended
31 December 2022 was as follows:
National Total
Insurance Pension emoluments
Salary/Fees Bonus contributions contributions 2022
2022 €’000 €’000 €’000 €’000 €’000
Non-Executive Chairman
Sir Peter Middleton* 35 – – – 35
Richard Hickinbotham 61 – – – 61
Executive
Giulio Cesareo 296 – 11 99 406
Giorgio Bonfanti 122 – 8 29 159
Non-Executive
David Gann* 46 – – – 46
Neil Warner* 46 – – – 46
Wesley Clark* 10 – – – 10
Sarah Cope* 5 – – – 5
Total 621 – 19 128 768
* Sir Peter Middleton resigned from the Board on 17 June 2022
David Gann resigned from the Board on 17 October 2022
Neil Warner resigned from the Board on 21 November 2022
Wesley Clark was appointed as a Board member on 17 October 2022
Sarah Cope was appointed as a Board member on 21 November 2022
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
29
National Total
Insurance Pension emoluments
Salary/Fees Bonus contributions contributions 2021
2021 €’000 €’000 €’000 €’000 €’000
Non-Executive Chairman
Sir Peter Middleton 71 – – – 71
Executive
Giulio Cesareo 292 129 11 95 527
Giorgio Bonfanti* 14 29 1 3 47
Non-Executive
David Gann 43 – – – 43
Neil Warner 43 – – – 43
Richard Hickinbotham 43 – – – 43
Total 506 158 12 98 774
* Giorgio Bonfanti was appointed as a Board member on 16 November 2021. The emoluments shown refer to the period of Directorship between 16 November 2021 and
31 December 2021
At 31 December 2022 the Directors’ interests in the ordinary share capital of the Company were as follows:
Directors’ interests
Number of Number of
Percentage vested ordinary unvested ordinary
Number of of issued shares under shares under
Director ordinary shares share capital option option
Giulio Cesareo* 3,958,228 5.99 400,000 200,000
Giorgio Bonfanti – – 34,000 116,000
Richard Hickinbotham 100,000 0.15 60,000 –
Wesley Clark – – – –
Sarah Cope – – – –
* Giulio Cesareo and his family are the sole beneficiaries of 3,958,228 ordinary shares held by Galbiga Immobiliare S.r.l. that are included in the above holding of ordinary shares.
The Chairman holds a total of 60,000 vested ordinary shares under a previous share option plan, a legacy from the initial remuneration package
assigned to Non-Executive Directors in the context of the Company’s IPO in 2016 and following his appointment as a Non-Executive Director in
2017. There have been no additional option awards under the NED share scheme which was subject only to market conditions, with an exercise
price of 75 pence/share. The Remuneration Committee and the Board of Directors have no intention of issuing share options to Non-Executive
Directors in the future.
The terms of the share options plans in place are reported in Note 25.
®
30
Directa Plus plc
Annual Report & Accounts 2022
Audit Committee report
Membership
The Board has established an Audit Committee with the
appropriate Terms of Reference, which is comprised of Sarah Cope
(chair) and Wesley Clark. The Committee reports to the Board in
respect of its responsibilities.
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.
Sarah Cope
Chair of the Audit Committee
Responsibilities
The Committee met four times in 2022 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; and
matching results against management forecasts for the year ended
31 December 2022.
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.
Overview
Strategic report
Governance
Financial statements
Additional information
Remuneration Committee report
Directa Plus plc
Annual Report & Accounts 2022
31
Membership
The Board has established a Remuneration Committee with approved
Terms of Reference, which is comprised of Sarah Cope (Chair) and
Richard Hickinbotham. The Committee reports to the Board in respect
of its responsibilities.
Responsibilities
The Committee met twice in 2022 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 Senior Managers of the Company.
An outline of the key responsibilities undertaken by the Committee in
the year are set out below:
•
•
•
•
the setting of financial and personal performance targets for the
Executive Directors and Senior Managers of the Company;
approval of annual bonus awards, determined against Company
(60% of total) and individual performance targets. Despite some
individual performance targets were met at year end, the
Remuneration Committee, in agreement with Management,
decided not to pay any bonus awards in order not to overload
the Group’s cost structure;
an annual review of remuneration for all Executive Directors and
Senior Managers of the Company; and
a review of the terms of the NED Share Option Scheme to include
provisions for good leavers and illness.
Sarah Cope
Chair of the Remuneration Committee
®
32
Directa Plus plc
Annual Report & Accounts 2022
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 2022
and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
the Parent Company financial statements have been properly
prepared in accordance with UK adopted international accounting
standards 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 2022 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and Company Statement of
Financial Position, the 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 their
preparation is applicable law and UK adopted international accounting
standards 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.
Material uncertainty related to going concern
We draw attention to Note 1 in the consolidated financial statements
that indicates that under reasonably plausible downside scenarios the
Group could exhaust its cash resources before December 2024, and
therefore be required to raise additional funding, which has been
successfully raised through equity in recent years. As stated in Note 1,
these events or conditions, along with other matters as set forth in
Note 1, indicate that a material uncertainty exists that may cast
significant doubt on the Company’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
We have highlighted going concern to be a key audit matter having
considered the Group is loss making, utilised Euro 5.4 million of cash in
2022 and had a cash balance at 31 December 2022 of Euro 5.7 million.
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s ability to
continue to adopt the going concern basis of accounting and in
response to the key audit matter included:
•
•
•
•
•
•
•
We obtained management’s cash flow forecast for the period to
31 December 2024, and through recalculation tested the integrity of
their model;
We validated the €4.2 million March 2023, cash position by agreeing
it to bank statement, to test management’s accuracy in forecasting
cash reserves;
We confirmed amounts drawn on the revolving credit line to be
€408k, providing a buffer of another €392k available to the Group to
draw upon;
We assessed the consistency of the cash flow forecast with the Board
approved budget and challenged the key assumptions used to
prepare the forecast;
We challenged managements accuracy on forecasting assumptions
in the model to assess the Group’s future ability to generate cash
flows by comparing forecast Earnings Before Interest and Tax (“EBIT”)
to 2022 actuals and obtained explanation for variances;
We obtained and challenged Management’s sensitivities and reverse
stress tests against our own downside scenarios, which were
performed to determine the point at which liquidity breaks. The key
inputs and assumptions assessed included reducing and delaying
future revenue and reducing margin;
We discussed the potential impact of the Ukrainian conflict with
management and the Audit Committee including the impact on
operations to date and their assessment of the associated continued
risks and uncertainties to ensure these were appropriately factored
into sensitivities and reverse stress tests; and
•
We reviewed the adequacy and completeness of disclosures in the
consolidated financial statements in respect of going concern based
on the management’s going concern assessment.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
Overview
Strategic report
Governance
Financial statements
Additional information
Overview
Coverage
Key audit
matters
Materiality
•
•
•
98% (2021: 99%) of Group profit before tax
99% (2021: 100%) of Group revenue
96% (2021: 97%) of Group total assets
2022 2021
Revenue Recognition X X
Going Concern X
Group financial statements
2022: €150,000 based on 1.5% of revenue
(2021: €129,000 based on 1.5% of revenue)
The materiality benchmark has been applied
consistently with the last year.
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 Sectar S.A. Specific
audit procedures on significant risks were carried out on Directa Textiles
Solutions Srl by a local BDO network member firm in 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 under our instruction as outline below.
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 its financial information was principally subject to analytical review
procedures and obtaining bank confirmation, which was performed by
the Group team.
Directa Plus plc
Annual Report & Accounts 2022
33
Our involvement with component auditors
For the work performed by the 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 our risk assessment and audit
procedures to be performed; and
We visited the Italy Component where we performed a detailed
review of their audit files and attended local clearance meetings
with them and management.
We performed a detailed review of the Romanian component auditor
working papers and attended local clearance meetings with them and
management remotely.
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.
In addition to the matter described in the Material Uncertainty Related
to Going Concern section, we have determined the matter described
below to be the key audit matter to be communicated in our report.
®
34
Directa Plus plc
Annual Report & Accounts 2022
Independent auditor’s report
continued
Key audit matter
How the scope of our audit addressed the key audit matter
Revenue recognition
The applicable accounting policies are detailed in Note 2 (j) and disclosures in Note 3 and the applicable judgements applied in Note 1(d).
The Group earned revenue of €10.86m (2021: €8.62m) in the year
ended 31 December 2022.
A significant portion of the revenue generated relates to two
components, Directa Plus S.p.A and Setcar S.A.
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,
being the sale of goods and the provision of environmental service,
which exist within the Group as well as the wide geographic
dispersion of sales.
Due to the fact there are multiple revenue streams and 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.
Our procedures included the following:
•
•
•
•
•
We reviewed the Group revenue recognition policy to confirm that
this is in line with both IFRS 15 Revenue from Contracts with
Customers and industry practices;
We reviewed consistency of application of methods of revenue
recognition in accordance with Group’s accounting policies;
In respect revenue from the sale of products that is recognised at a
point in time, we agreed a sample of sales in the year to sales
invoices issued to customers and goods delivery notes to check
revenue was recognised appropriately;
In respect of revenue from services provided, that is recognised over
time, we obtained evidence from customers, such as receipt and
acceptance of contractors’ reports that performance obligations had
been met for revenue recognised;
We 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 of
service completed to check that sales were recognised in the
correct period; and
•
Inspected a sample of credit notes issued during the year and post
year end to check that these had been issued appropriately against
revenue recorded in the period the credit note related to.
Key observations
Overall, based on these procedures, we consider revenue recognition to be appropriate.
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 plc
Annual Report & Accounts 2022
35
Group financial statements
Parent company financial statements
2022
Materiality
€150,000
2021
€129,000
2022
€60,000
2021
€55,000
Basis for determining
materiality
1.5% of revenue at the
planning stage
1.5% of revenue
Rationale for the
benchmark applied
Revenue has been selected as we consider it to be
the most relevant benchmark as the Group has
entered into mainstream trading and service related
business activities.
2% of net assets capped
at 40% of Group
Materiality
2% of net assets capped
at 43% of Group
Materiality
Directa Plus Plc is a holding company with investments
in subsidiaries. We have therefore considered net assets
to be the most appropriate benchmark.
Materiality was capped at a percentage of Group
materiality given the assessment of the component’s
aggregation risk.
Performance
materiality
Basis for determining
performance
materiality
€110,000
€100,000
€45,000
€41,000
75% of materiality and considering factors such as the nature of activities and historic audit adjustments.
Component materiality
We set materiality for each component of the Group based on a
percentage of between 40% 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 €60,000 to
€140,000. 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 them all
individual audit differences in excess of €3,000 (2021: €3,000). We also
agreed to report differences below this threshold 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 plc
Annual Report & Accounts 2022
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;
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;
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
37
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.
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.
Peter Acloque (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
United Kindgom
9 May 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
•
•
•
•
•
•
•
•
Assessing the susceptibility of the Group’s financial statements to
material misstatement, including how fraud might occur and
determined these areas to be management override of control, bias in
accounting estimates and the risk of fraud in revenue recognition;
In response to the risk of fraud in revenue recognition, the procedures
set out in the key audit matters section above;
Testing the appropriateness of journal entries made through the year
by applying specific criteria to detect possible irregularities and fraud,
obtaining support for the transactions under the criteria applied and
considering the nature of the transaction;
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 transactions and agreeing them to the 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.
We also communicated relevant identified laws and regulations and
identified fraud risks to all engagement team members and component
auditors who were all deemed to have appropriate competence and
capabilities and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
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.
®
38
Directa Plus plc
Annual Report & Accounts 2022
Consolidated statement of comprehensive income
for the year ended 31 December 2022
31 Dec 2022 31 Dec 2021
Note € €
Continuing operations
Revenue 3 10,856,144 8,615,098
Other income 3/4 424,926 831,405
Changes in inventories of finished goods and work in progress (191,510) 12,960
Raw materials and consumables used 6 (5,856,661) (3,634,311)
Employee benefits expenses 7 (4,424,087) (4,296,955)
Depreciation and amortisation 11/12 (1,403,933) (1,543,567)
Other expenses 8 (4,421,177) (3,516,424)
Results from operating activities (5,016,298) (3,531,794)
Finance income 9 5,904 221,622
Finance expenses 9 (317,804) (74,681)
Net finance costs (311,900) 146,941
Loss before tax (5,328,198) (3,384,853)
Tax (expense)/income 10 53,197 (44,620)
Loss after tax from continuing operations (5,275,001) (3,429,473)
Loss of the year (5,275,001) (3,429,473)
Other comprehensive income items that will not be reclassified to profit or loss
Defined Benefit Plan re-measurement gains and losses 20 (6,790) (6,457)
Other comprehensive expense for the year (no tax impact) (6,790) (6,457)
Total comprehensive expense for the year (5,281,791) (3,435,930)
Loss attributable to
Owner of the Parent (4,822,044) (3,652,364)
Non-controlling interests (452,957) 222,891
(5,275,001) (3,429,473)
Total comprehensive expense attributable to:
Owners of the Company (4,828,834) (3,658,821)
Non-controlling interests (452,957) 222,891
(5,281,791) (3,435,930)
Loss per share
Basic loss per share 24 (0.07) (0.06)
Diluted loss per share 24 (0.07) (0.06)
The notes on pages 42 to 70 form part of these financial statements.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
39
Consolidated and Company statement of financial position
for the year ended 31 December 2022
Group Company
31 Dec 22 31 Dec 21 31 Dec 22 31 Dec 21
Note € € € €
Assets
Intangible assets 11 1,664,666 1,792,277 – –
Investments 13 – – 30,260,336 25,680,336
Property, plant and equipment 12 3,861,151 3,982,966 – –
Other receivables 14 69,720 185,623 – –
Non-current assets 5,595,537 5,960,866 30,260,336 25,680,336
Inventories 5 1,121,912 1,370,875 – –
Trade and other receivables 14 4,115,846 3,305,493 114,884 205,291
Cash and cash equivalent 16 5,727,768 11,130,468 3,787,989 9,430,364
Current assets 10,965,526 15,806,836 3,902,873 9,635,655
Total assets 16,561,063 21,767,702 34,163,209 35,315,991
Equity
Share capital 17 205,469 205,393 205,469 205,393
Share premium 17 39,181,789 39,159,027 39,181,789 39,159,027
Foreign currency translation reserve 17 (39,161) (23,109) – –
Retained earnings 17 (30,069,844) (25,352,139) (5,346,322) (4,220,247)
Equity attributable to owners of Group 9,278,253 13,989,172 34,040,936 35,144,173
Non-controlling interests 17 1,546,887 2,041,938 – –
Total equity 10,825,140 16,031,110 34,040,936 35,144,173
Liabilities
Loans and borrowings 18 1,378,141 2,403,881 – –
Lease liabilities 19 395,260 463,047 – –
Employee benefits provision 20 554,444 500,535 – –
Other payables 21 64,366 64,357 – –
Deferred tax liabilities 15 33,095 89,497 – –
Non-current liabilities 2,425,306 3,521,317 – –
Loans and borrowings 18 767,677 65,840 – –
Lease liabilities 19 239,068 217,537 – –
Trade and other payables 21 2,112,875 1,931,898 122,273 171,818
Provision 22 190,997 20,000 – –
Current liabilities 3,310,617 2,215,275 122,273 171,818
Total liabilities 5,735,923 5,736,592 122,273 171,818
Total equity and liabilities 16,561,063 21,767,702 34,163,209 35,315,991
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 €1,200,138 (2021: €709,825).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
Giulio Cesareo
Chief Executive Officer
9 May 2023
Company registered number: 04679109
The notes on pages 42 to 70 form part of these financial statements.
®
40
Directa Plus plc
Annual Report & Accounts 2022
Consolidated statement of changes in equity
for the year ended 31 December 2022
Foreign
currency Non-
Share Share translation Retained controlling Total
capital premium reserve earnings Total interests equity
€ € € € € € €
Balance at 31 December 2020 190,996 31,395,612 (7,015) (21,824,229) 9,755,364 906,885 10,662,249
Total comprehensive (expense)/income for the year
Loss of the year – – – (3,652,364) (3,652,364) 222,891 (3,429,473)
Total other comprehensive (expense)/income – – – (6,457) (6,457) – (6,457)
Total comprehensive (expense)/income for the period – – – (3,658,821) (3,658,821) 222,891 (3,435,930)
Capital raised 14,397 8,306,293 – – 8,320,690 – 8,320,690
Expenditure related to the issuance of shares – (542,878) – – (542,878) – (542,878)
Translation reserve – – (16,094) – (16,094) – (16,094)
Share-based payment – – – 130,910 130,910 – 130,910
Increase in share capital of Setcar – – – – – 912,162 912,162
Balance at 31 December 2021 205,393 39,159,027 (23,109) (25,352,139) 13,989,172 2,041,938 16,031,110
Total comprehensive (expense)/income for the year
Loss of the year – – – (4,822,044) (4,822,044) (452,957) (5,275,001)
Total other comprehensive (expense)/income – – – (6,790) (6,790) – (6,790)
Total comprehensive (expense)/income for the period – – – (4,828,834) (4,828,834) (452,957) (5,281,791)
Capital raised and exercise of share option 76 22,762 – – 22,838 – 22,838
Expenditure related to the issuance of shares – – – – – – –
Translation reserve – – (16,052) – (16,052) – (16,052)
Share-based payment – – – 111,130 111,130 – 111,130
Increase in share capital of Setcar – – – – – (42,094) (42,094)
Balance at 31 December 2022 205,469 39,181,789 (39,161) (30,069,844) 9,278,253 1,546,887 10,825,140
Company statement of changes in equity
for the year ended 31 December 2022
Share Share Retained Total
capital premium earnings equity
€ € € €
Balance at 31 December 2020 190,996 31,395,612 (3,573,130) 28,013,478
Loss for the year – – (709,825) (709,825)
Capital raised 14,397 8,306,293 – 8,320,690
Expenditure related to the issuance of shares – (542,878) – (542,878)
Share-based payment – – 62,708 62,708
Balance at 31 December 2021 205,393 39,159,027 (4,220,247) 35,144,173
Loss for the year – – (1,200,138) (1,200,138)
Capital raised and exercise of share option 76 22,762 – 22,838
Expenditure related to the issuance of shares – – – –
Share-based payment – – 74,063 74,063
Balance at 31 December 2022 205,469 39,181,789 (5,346,322) 34,040,936
The notes on pages 42 to 70 form part of these financial statements.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
41
Consolidated and Company statement of cash flows
for the year ended 31 December 2022
Group Company
31 Dec 22 31 Dec 21 31 Dec 22 31 Dec 21
Note € € € €
Cash flows from operating activities
Loss for the year before tax (5,328,198) (3,384,853) (1,200,138) (709,825)
Adjustments for:
Depreciation 12 861,127 994,021 – –
Amortisation of intangible assets 11 542,806 549,547 – –
Disposal loss on tangible assets 20,508 – – –
Share-based payment expense 7 111,130 130,910 74,063 62,708
Finance income 9 (5,904) (221,622) 207,776 (211,056)
Finance expense 303,044 56,524 2,042 988
Interest of lease liabilities 9 14,760 18,157 – –
Other provision 21 190,997 – – –
(3,289,730) (1,857,316) (916,257) (857,185)
(Increase)/decrease in:
– inventories 248,963 5,072 – –
– trade and other receivables 14 (694,450) (493,008) 90,407 (39,029)
– trade and other payables 120,918 (1,207,601) (49,545) 55,073
– provisions and employee benefits 28,819 37,457 – –
Net cash from operating activities (3,585,480) (3,515,396) (875,395) (841,141)
Cash flows from investing activities
Interest received 9 5,904 1,616 – –
Investment in intangible assets (415,195) (299,056) – –
Investment in subsidiary 13 – – (4,580,000) (2,000,000)
Contingent consideration 21 – (572,268) – –
Acquisition of property, plant and equipment (759,821) (767,719) – –
Net cash used in investing activities (1,169,112) (1,637,427) (4,580,000) (2,000,000)
Cash flows from financing activities
Proceeds from Capital raise and exercise of share options 17 22,838 8,320,690 22,838 8,320,690
Expenditure related to the issuance of shares 17 – (542,878) – (542,878)
Interest paid 9 (97,456) (45,426) (2,042) (988)
New borrowings 18 988,938 1,511,719 – –
Repayment of borrowings 18 (1,312,840) (81,666) – –
Repayment of lease liabilities (223,197) (179,646) – –
New lease liabilities 191,700 – – –
Net cash from/(used in) financing activities (430,017) 8,982,793 20,796 7,776,824
Net increase/(decrease) in cash and cash equivalent (5,184,609) 3,829,970 (5,434,599) 4,935,683
Cash and cash equivalent at beginning of the year 11,130,468 7,080,492 9,430,364 4,283,625
Exchange (losses)/gains on cash and cash equivalents (218,091) 220,006 (207,776) 211,056
Cash and cash equivalent at end of the year 5,727,768 11,130,468 3,787,989 9,430,364
The notes on pages 42 to 70 form part of these financial statements.
®
42
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
for the year ended 31 December 2022
1. Basis of preparation
a) Statement of compliance
These consolidated and parent Company financial statements have been prepared in accordance with UK-adopted International Accounting
Standards (IFRSs). The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the
preceding year, unless otherwise stated.
All notes, except as otherwise indicated, are presented in Euros (“€”).
I. Going Concern
As of 31 December 2022, the Group (including the Company) had net assets of €10.83m (2021: €16.03m) and cash and cash equivalent of €5.73m
(2021: €11.13m).
The Directors are aware that there is an ongoing need to monitor closely the cash flow requirements of the Company and Group, particularly in
light of the recent developments in the markets due to the Covid-19 pandemic, the war in Ukraine and inflation trends, which have had a
significant impact on global economies and could affect the business. In this regard, the Group prepares annual budgets and forecasts in order to
ensure that there is sufficient liquidity to meet liabilities and commitments as they fall due. The Directors regularly review updates to the scenario
planning such that the Board can put in place appropriate mitigating actions that are within their control.
The Directors prepared a cash flow forecast for the period 2023-2024 to ensure that there is sufficient liquidity in place to support the plan and
strategy for the future development of the business. This forecast showed that the Group will have sufficient financial headroom for the entire
forecast period.
The Directors also modelled reasonably plausible downside scenarios. These include scenarios which reflect the loss of major contracts, reduction
in margin and delays contracts being executed. Each of these scenarios could adversely impact the Group. Management also modelled the impact
of mitigating factors within their control, including delaying capital expenditure and additional reductions in costs in order to maintain sufficient
liquidity. Under these reasonably plausible downsides, the Group would utilise its cash resources before December 2024 and require additional
funding. While the Group successfully raised £7m in 2021 that was fully subscribed by existing and new investors, there is no certainty that the
Group will be able to raise further funds through the issue of equity in the future. As a consequence, this represents a material uncertainty that may
cast significant doubt on the Group and Parent Company’s ability to continue as a going concern and therefore the Group may be unable to realise
its assets and discharge its liabilities in the normal course of business.
Based on the analysis above, the Directors have a reasonable expectation that the Group has adequate resources to support the Group’s activities
for the foreseeable future and have concluded it is appropriate to adopt the going concern basis of accounting in the preparation of the financial
statements. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
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 results in the recognition of a deferred tax liability or asset.
Non-controlling interest arising from a business combination is measured at their share of the fair value of the assets and liabilities of the acquiree.
Goodwill is not amortised, but it is tested on an annual basis for impairment.
II. Subsidiaries
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements
are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in
proportion to their relative ownership interests.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
43
1. Basis of preparation continued
III. Transactions eliminated on consolidation
The consolidated financial statements present the results of the Company and its subsidiaries (“the Group”) as if they formed a single entity.
Intercompany transactions and balances between group companies are therefore eliminated in full.
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 subsidiaries is Euro (“€”). The functional
currency of the Romanian subsidiary is Romanian Leu.
d) Use of estimates and judgements
The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the circumstances and the results of which form
the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised if the revision affects only that period.
Critical estimates and judgements that have the most significant effect on the amounts recognised in the financial statements and/or have a
significant risk of resulting in a material adjustment within the next financial year are as follows.
e) Estimates
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 CGU’s 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 two-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.
III. Valuation of inventory
Inventories are stated at the lower of cost or net realisable value. The cost of inventories comprises of net prices paid for materials purchased,
production labour cost and factory overhead. Net realisable value represents the estimated selling price less all estimated costs of completion and
costs to be incurred in marketing, selling and distribution. Inventory provisions are recognised for slow-moving, obsolete or unsalable inventory
and are reviewed on a six-monthly basis. The valuation of Inventory includes key estimates and judgments made by Management including
normal production capacity, market demand and selling opportunities. If actual demand or usage were to be lower than estimated, inventory
provisions for excess or obsolete inventory may be required.
®
44
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
1. Basis of preparation continued
IV. Investments
Judgement is required over the recoverability of any amounts invested into subsidiary companies, management estimates the expected future
cash flows that might be generated by the underlying operations and the potential value of the assets owned and managed by these subsidiaries.
As each of the subsidiaries are owned (directly or indirectly) by the Company the creditworthiness of the subsidiary is the same as the
creditworthiness of the Company. Further details are set out in Note 13.
V. Revenue recognition and long-term contract accrued income
The determination of anticipated costs for completing a contract is based on estimates that can be affected by a variety of factors such as potential
variances in scheduling and cost of materials along with the availability and cost of qualified labour and subcontractors, productivity, and possible
claims from subcontractors.
The determination of anticipated revenues includes the contractually agreed revenue and may also involve estimates of future revenues from
claims and unapproved variations, if such additional revenues can be reliably estimated and it is considered probable that they will be recovered.
A variation results from a change to the scope of the work to be performed compared to the original contract signed. An example of such contract
variation could be a change in the project specification, whereby costs related to such variation might be incurred prior to the client’s formal
contract amendment signature. A claim represents an amount expected to be collected from the client or a third party as reimbursement for costs
incurred that are not part of the original contract.
A modification is only then accounted for as a separate contract if the goods and services are distinct in that the customer can benefit from the
good or service on its own. In both cases, management’s judgments are required in determining the probability that additional revenue will be
recovered from these variations and in determining the measurement of the amount to be recovered. As risks and uncertainties are different for
each project, the sources of variations between anticipated costs and actual costs incurred will also vary for each project. The long-term nature of
certain arrangements usually results in significant estimates related to scheduling and prices. The determination of estimates is based on internal
policies as well as historical experience. Furthermore, management regularly reviews underlying estimates of project profitability.
VI. Onerous contract provision
The determination of the minimum unavoidable loss to complete a contract is based on estimates that could be affected by a variety of factors
including cost of materials, cost of labour, productivity and variations. Management reviews all contracts on a regular basis to identify indications
that a contract may be onerous. Where sufficient evidence exists that a contract will be onerous Management provide for the total anticipated loss
on the contract immediately
2. Significant accounting policies
a) Functional currency
The financial statements of each Group company are measured using the currency of the primary economic environment in which that company
operates (the functional currency). The consolidated financial statements record the results and financial position of each Group company in Euro,
which is the functional currency of the Company and the presentational currency for the consolidated financial statements.
I. Transaction and balances
Transactions in foreign currencies are converted into the respective functional currencies at initial recognition, using the exchange rates at the
transaction date. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling at the reporting date. Non-
monetary assets and liabilities are not retranslated. All exchange differences are recognised in profit or loss. On consolidation, the results of
overseas operations not in Euro are translated at the rates approximating to those ruling when the transactions took place. All assets and liabilities
of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at
closing rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
b) Financial instruments
There are no other categories of financial assets other than those listed below:
I. Trade and other receivables and 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 of trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
45
2. Significant accounting policies continued
The Group always recognises lifetime ECL on trade receivables. The expected credit losses on these financial assets are estimated using a provision
matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an
assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
II. Cash and cash equivalents
Cash and cash equivalents comprise demand deposits with an original maturity of up to 3 months which are readily convertible to a known
amount of cash and are subject to an insignificant risk of change in value.
There are no other categories of financial liabilities other than those listed below:
III. Trade and other payables
Trade payables are stated at their amortised cost.
IV. Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. At initial
recognition, financial liabilities are measured at their fair value, minus transaction costs that are directly attributable, and are subsequently
measured at amortised cost.
An equity instrument is any contract that evidences a residual interest in the asset of the Group after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
V. Leases
On commencement of a contract which gives the Group the right to use assets for a period of time in exchange for consideration, the Group recognises
a right-of-use asset and a lease liability. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any
initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payment
made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the
present value of the lease payment unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the
Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments, variable
payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably
certain to be exercised. Subsequent to initial measurement, the liability will be reducing for payment made and increased for interest. It is remeasured
to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the
corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
c) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are netted off against share premium.
d) Property, plant and equipment
I. Recognition and measurement
Property, plant and equipment are measured at cost less accumulated depreciation, Government grants received (where applicable) and
accumulated impairment losses.
Costs capitalised include expenditure that are directly attributable to the acquisition of the asset.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components)
of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and
the carrying amount of the item) are recognised in profit or loss.
II. Subsequent costs
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the
Group. Ongoing repairs and maintenance are expensed as incurred.
®
46
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
III. Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis in the statement of comprehensive income over the estimated
useful lives of each component.
Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally
constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives of significant items of property, plant and equipment are as follows:
•
•
IT equipment from 3 to 5 years.
Industrial equipment, office equipment and plant and machinery from 5 to 10 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted where appropriate.
e) Intangible assets
Intangible assets are measured at cost less accumulated amortisation and Government grants received (where applicable). The carrying value of
intangible assets is reviewed annually for impairment.
Patent rights acquired and development expenditure are recognised at cost.
Expenditure on internally developed products is capitalised if it can be demonstrated that:
•
•
•
•
•
•
it is technically feasible to develop the product;
adequate resources are available to complete the development;
there is an intention to complete and sell the product;
the Group is able to sell the product;
sale of the product will generate future economic benefits; and
expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the period the Group expects to benefit from selling the products developed (Useful Economic
Life). The amortisation expense is included within the cost of sales in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the
consolidated statement of comprehensive income as incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses.
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and
accumulated impairment losses.
I. Amortisation
•
Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the date that they are available for
use. The estimated useful lives of significant intangible assets are as follows:
•
•
•
•
Patents concerning G+® technology generate significant value to the Group over a period of 20 years, in line with the legal duration of the patent
and their useful lives. However, given the risk of technical obsolescence, such costs are amortised over a period of 10 years.
Brand: 5 years.
Development costs concerning personnel capitalised: 5 years.
Others: 5 years.
f) Inventories
Inventories are stated at the lower of cost or net realisable value. The cost of inventories comprises of net prices paid for materials purchased,
production labour cost and factory overhead. Net realisable value represents the estimated selling price less all estimated costs of completion and
costs to be incurred in marketing, selling and distribution. Inventory provisions are recognised for slow-moving, obsolete or unsalable inventory
and are reviewed on a six months basis.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
47
2. Significant accounting policies continued
g) Goodwill
Goodwill represents the excess of the cost of a business combination over the Group’s interest in the fair value of identifiable assets, liabilities and
contingent liabilities acquired.
Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests
in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent
consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability,
remeasured subsequently through profit or loss.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive
income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is
credited in full to the consolidated statement of comprehensive income on the acquisition date.
h) Impairment
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end.
Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may
not be recoverable. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (CGUs). The Group’s CGUs generally
align with each subsidiary. The recoverable amount is then estimated. The recoverable amount of an asset or a CGU is the greater of its net present
value and its fair value less costs to sell.
Net present value is generally computed as the present value of the future cash flows, discounted to present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset or a CGU exceeds its estimated recoverable amount. Impairment losses are
recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior years are assessed at each
reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had been recognised.
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.
®
48
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in profit or loss.
Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.
For more information please see Note 20.
j) Revenues
The Group operates diverse businesses and accordingly applies different methods for revenue recognition, based on the principles set out in IFRS 15.
The revenue and profits recognised in any reporting period are based on the delivery of performance obligations and an assessment of when
control is transferred to the customer. In determining the amount of revenue and profits to record, and associated balance sheet items,
management is required to review performance obligations within individual contracts. This may involve some judgemental areas.
Revenue is recognised either when the performance obligation in the contract has been performed (so ‘point in time’ recognition) or ‘over time’ as
control of the performance obligation is transferred to the customer.
For each performance obligation to be recognised over time, the Group applies a revenue recognition method that faithfully depicts the Group’s
performance in transferring control of the goods or services to the customer. This decision requires assessment of the real nature of the goods or
services that the Group has promised to transfer to the customer.
•
Revenues from sale of graphene-based products are typically recognised at a point in time when goods are delivered to the customer as with
this, the customer gains the right of control over the goods. However, for export sales, control might also be transferred when delivered either to
the port of departure or port of arrival, depending on the specific terms of the contract with a customer.
•
Revenues from services relates mainly to environmental services provided by Setcar which are recognised:
– At a point in time basis when contracts include an obligation to process waste once the process occurred according with the contract in place.
– At the point in time when the waste is delivered to our platform with no further performance obligations.
– Over time in accordance with agreed project milestones being delivered.
Fixed price long-term service agreements are recognised over time according to the stage of completion reached in the contract by measuring the
proportion of costs incurred for work performed relative to the total estimated costs.
The Group excludes the measure of progress of any goods or services for which the entity has not transferred control to a customer, such as costs
which are excluded from the progress measurement including those costs related to inefficiencies or unproductive time.
Contract costs are recognised in the income statement when incurred. When it is probable that the total contract costs will exceed total contract
revenue, the expected loss is recognised immediately. As per IAS 37 an onerous contract is a contract in which the unavoidable costs of meeting
the obligations under the contract exceed the economic benefits expected to be received under it. In line with the principles of IAS 37 the loss will
be recognised if there is a present obligation, payment is probable and the amount can be estimated reliably. The amount recognised will be the
best estimate of the expenditure required to settle the present obligation at the balance sheet date.
k) Government grants
Government grants are recognised when there is reasonable assurance that the entity will comply with the relevant conditions and the grant will
be received. Grants are recognised in profit or loss on a systematic basis where the Group has recognised the initial expenses that the grants are
intended to compensate. Where a grant has been received as a contribution for property, plant and equipment, or capitalised development costs,
the income received has been credited against the asset in the statement of financial position.
l) Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is recognised in the profit or loss, using the effective interest
method. Finance costs comprise interest expense on borrowings.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss
using the effective interest method.
m) Investments in subsidiaries (Company only)
Investments are stated at their cost less any provision for impairment (for details refer to Note h).
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
49
2. Significant accounting policies continued
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
a) New standards, interpretations and amendments effective from 1 January 2022
The following amendments are effective for the period beginning 1 January 2022:
•
•
•
•
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
References to Conceptual Framework (Amendments to IFRS 3).
These amendments to various IFRS standards are mandatorily effective for reporting periods beginning on or after 1 January 2022. See the
applicable notes for further details on how the amendments affected the Group.
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
IAS 37 defines an onerous contract as a contract in which the unavoidable costs (costs that the Group has committed to pursuant to the contract)
of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
The amendments to IAS 37.68A clarify, that the costs relating directly to the contract consist of both:
•
•
the incremental costs of fulfilling that contract- e.g. direct labour and material; and
an allocation of other costs that relate directly to fulfilling contracts: e.g. Allocation of depreciation charge on property, plant and equipment
used in fulfilling the contract.
The Group, prior to the application of the amendments, did not have any onerous contracts.
As a result of the amendments, certain other directly related costs have now been included by the Group in determining the costs of fulfilling the
contracts. The Group has therefore recognised an additional onerous contract provision as at 1 January 2022.
®
50
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
In accordance with the transitional provisions, the Group applies the amendments to contracts for which it has not yet fulfilled all its obligations at
the beginning of the annual reporting period in which it first applies the amendments (the date of initial application) and has not restated its
comparative information.
b) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future
accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2023:
•
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2); Definition of Accounting Estimates (Amendments to
IAS 8); and
•
Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
The following amendments are effective for the period beginning 1 January 2024:
•
•
•
IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback);
IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-current); and
IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants)
The Group is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that the
amendments to IAS 1 will have a significant impact on the classification of its liabilities, as the conversion feature in its convertible debt
instruments is classified as an equity instrument and therefore, does not affect the classification of its convertible debt as a non-current liability.
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the group.
3. Operating segments
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed
by the chief operating decision makers (CEO, CFO, 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
Textile and Environmental were considered by Management the most advanced strategic segments in terms of commercial readiness.
Management’s strategic needs are constantly monitored and an update of the segments will be provided if required. 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.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
51
3. Operating segments continued
Textile Environmental Others Head office Consolidated
2022 € € € € €
Revenue 2,460,398 8,136,050 259,696 – 10,856,144
Cost of sales* (1,677,952) (5,281,884) (157,619) – (7,117,456)
Gross profit 782,446 2,854,165 102,077 – 3,738,688
Other income 161,271 113,865 23,415 126,375 424,926
Other expenses:
– R&D expense (186,587) (420) (76,988) – (263,995)
– Advisory (94,784) (421,042) (45,000) (1,055,002) (1,615,828)
– Operating expenses (411,727) (3,057,472) (90,439) (2,336,519) (5,896,157)
– Depreciation and amortisation (329,964) (1,038,337) (35,632) – (1,403,933)
Operating loss (79,345) (1,549,240) (122,568) (3,265,145) (5,016,298)
Net financial costs – – – (311,900) (311,900)
Tax – 53,197 – – 53,197
Loss of the year (79,345) (1,496,042) (122,568) (3,577,046) (5,275,001)
Total assets 4,582,368 11,164,786 813,909 – 16,561,063
Total liabilities 1,849,107 3,633,655 253,161 – 5,735,923
Textile Environmental Others Head office Consolidated
2021 € € € € €
Revenue 1,843,506 6,560,771 210,821 – 8,615,098
Cost of sales* (1,002,845) (3,030,602) (107,310) – (4,140,757)
Gross profit 840,661 3,530,169 103,511 – 4,474,341
Other income 174,484 607,049 – 49,872 831,405
Other expenses:
– R&D expense (317,422) (45,450) (25,966) – (388,838)
– Advisory (50,004) (481,992) – (887,722) (1,419,718)
– Operating expenses (536,615) (2,519,008) (135,782) (2,294,012) (5,485,417)
– Depreciation and amortisation (331,492) (1,177,445) (34,630) – (1,543,567)
Operating loss (220,388) (86,677) (92,867) (3,131,862) (3,531,794)
Net financial costs – – – 146,941 146,941
Tax – (44,620) – – (44,620)
Loss of the year (220,388) (131,297) (92,867) (2,984,921) (3,429,473)
Total assets 5,642,443 15,086,933 1,038,326 – 21,767,702
Total liabilities 1,746,301 3,739,745 250,546 – 5,736,592
*Includes changes in inventories of finished goods.
®
52
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
3. Operating segments continued
2022 2021
€ €
Sale of products 3,171,133 2,898,224
Sale of services 7,685,011 5,716,874
Government grants 171,135 166,112
Other 253,791 665,293
Total income 11,281,070 9,446,503
Geographical breakdown of revenues is:
2022 2021
€ €
Italy 2,663,918 1,755,329
Romania 8,096,804 6,563,839
Rest of the world 95,422 295,930
Total 10,856,144 8,615,098
The group has transacted with 3 main customers in 2022, which accounted for more than 10% of Group revenues for sales of products and services.
This largest customer accounted for 13% of revenues (€1,382,080), the second largest to 11% (€1,143,446), whilst the third for 9% (€954,663).
Other Income of €424,926 mainly include Government Grants for €171,135 and R&D Expenditure Credit (RDEC) for €80,000. The RDEC is an Italian
incentive scheme (art.3 DL 145/2013) designed to encourage companies to invest in research and development. The credit can be used to reduce
corporation tax or to offset outstanding payables related to social security.
4. Government grants
Information regarding government grants:
2022 2021
€ €
Innodriver – 25,000
Inno4covid – 99,889
Green.Tex 11,299 30,616
Techfast 136,421 10,607
Filiere 23,415 –
Total 171,135 166,112
In 2022 Directa Plus concluded the activities related to the Green.Tex and Techfast projects.
Moreover, in October 2022 the Company was awarded with the inclusion in the Filiere project, fostered by Regione Lombardia for funding part of
Directa Plus’ activities in the paints vertical over 12 months. For this project the Company budgeted an overall value of approximately €270,000,
financed at 50%.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
53
4. Government grants continued
The key terms of government grants are:
Green.Tex Tech fast Filiere
Starting date 2020 2021 2022
Ending date 2022 2022 2023
Duration (months) 21 12 12
Total amount 96,192 147,028 135,930
Final report submitted Yes Yes on-going
There are no capital commitments built into the ongoing grants. Government grants have been recognised within other income.
5. Inventory
2022 2021
€ €
Finished products 917,280 1,141,372
Spare parts 93,292 76,663
Raw material 111,340 93,798
Working in progress – 59,042
Total 1,121,912 1,370,875
As of 31 December 2022, the total inventory value decreased compared to 2021. This effect was partially driven by a c. €112,000 write-off of the
Co-Masks value still in stock, as the gradual Covid-19 pandemic de-escalation has slowed down the sales of Directa Plus’ face masks. However,
the Company is exploring any opportunity to exploiting its R&D developments on the Co-Mask project to a number of new applications, such as
the air filtering industry.
The finished products mainly referred to Directa Plus SpA. Spare parts inventory was required to enhance maintenance efficiency and is composed
of a small number of critical items with a material cost per unit.
6. Raw materials and consumables
2022 2021
€ €
Raw material and consumables 4,796,333 2,711,528
Textile products 1,060,328 922,783
Total 5,856,661 3,634,311
The increase in raw material & consumable costs was mainly driven by the business growth and the cost increases experienced over the year due
to inflation on the markets.
®
54
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
7. Employee benefits expenses
2022 2021
€ €
Wages and salaries 3,578,948 3,525,876
Social security costs 573,778 559,856
Employee benefits 144,277 111,964
Share option expense 111,130 130,910
Other costs 146,116 103,877
Total 4,554,249 4,432,483
Capitalised cost in “Intangible assets” (130,162) (135,528)
Total charged to the Income Statement 4,424,087 4,296,955
The average number of employees (excluding Non-Executive Directors) during the period was as follows:
2022 2021
Sales and Administration 32 30
Engineering, R&D and production 159 165
Total 191 195
The total average number of employees of the Group as at 31 December 2022 was 191 (2021: 195), of which 162 were employed by Setcar.
The Directors’ emoluments (including Non-Executive Directors) are as follows:
2022 2021
€ €
Wages and salaries 768,055 773,683
Total 768,055 773,683
The aggregate emoluments (wages, salaries and social contributions) of the highest paid Director totalled €406k (2021: €527k).
Share-base payment expenses were €111,130, of which €74,063 accounted for in the Parent Company accounts as directly attributable to the
Executive Directors.
A detailed analysis of the remuneration of the Directors is detailed within the Directors’ Remuneration Report on pages 28 to 29.
Directa Plus plc
Annual Report & Accounts 2022
55
Overview
Strategic report
Governance
Financial statements
Additional information
8. Other expenses
Other expenses include:
2022 2021
€ €
Audit of the Group and Company financial statements 108,525 81,991
Audit of the subsidiaries’ financial statements 37,735 36,230
Other non-audit services provided by Group’s auditor 7,780 5,978
Tool manufacturing 504,411 296,965
Analyses & tests 224,451 377,028
Travel 145,045 69,659
Technical consultancies 316,966 277,117
Shipping and logistic expenses 446,894 260,014
Insurance 186,145 165,347
Marketing 15,718 32,989
Legal, tax and administrative consultancies 1,286,662 1,252,410
The inflation trends on the global markets in the year in some cases materially affected the Group’s cost base. Major effects were experienced in
transportation costs (Travel, Shipping and Logistic expenses) and outsourced and professional services (Audit, Legal, tax and administrative
consultancies).
Other costs, such as the Tool Manufacturing expenses (€504,411), increased in line with the Group business growth.
Analyses & tests expenses (€224,451) and technical consultancies (€316,966) refer to R&D activities outsourced to external labs and universities.
9. Net finance expenses
Finance expenses include:
2022 2021
€ €
Interest Income (5,904) (1,616)
Interest on loans and other financial costs 82,696 45,426
Interest on lease liabilities 14,760 18,157
Interest cost for benefit plan 18,309 11,098
Foreign exchanges losses/(gains) 202,039 (220,006)
Total 311,900 (146,941)
Foreign exchange losses of €202,039 (2021: €220,006 gains) includes €207,776 of Sterling to Euro movement in the Group’s Sterling bank accounts.
®
56
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
10. Taxation
2022 2021
€ €
Current tax expense (1,581) (1,727)
Deferred tax expense/(recovery) 54,778 (42,893)
Total tax income/(expenses) 53,197 (44,620)
Reconciliation of tax rate
2022 2021
€ €
Loss before tax (5,328,198) (3,384,853)
Italian statutory tax rate 24% 24%
(1,278,768) (812,365)
Impact of temporary differences 93,175 4,431
Losses recognised (39,978) (49,052)
Impact of tax rate in foreign jurisdiction (60,007) (35,491)
Losses not utilised 1,338,775 847,857
Total tax (expenses)/income 53,197 (44,620)
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 €35,720,602 (€31,494,057 in 2021).
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
57
11. Intangible assets
Development
cost Patents Goodwill Others Brands Total
€ € € € € €
Cost
Balance at 31/12/2020 3,144,804 545,740 298,348 285,105 377,017 4,651,014
Additions 135,527 172,307 – (1,063) – 306,771
Currency translation differences (184) – (4,391) (3,059) (5,996) (13,630)
Balance at 31/12/2021 3,280,147 718,047 293,957 280,983 371,021 4,944,154
Additions 130,162 274,740 – 9,974 – 414,876
Currency translation differences 2 – 38 25 52 117
Balance at 31/12/2022 3,410,311 992,787 293,995 290,982 371,073 5,359,146
Amortisation
Balance at 31/12/2020 2,089,541 363,596 – 72,807 82,301 2,608,245
Amortisation 2021 389,299 71,829 – 13,797 74,621 549,547
Currency translation differences (271) – – (3,313) (2,330) (5,914)
Balance at 31/12/2021 2,478,569 435,425 – 83,291 154,592 3,151,877
Amortisation 2022 371,719 81,670 – 14,964 74,454 542,806
Currency translation differences 2 – – 25 (230) (203)
Balance at 31/12/2022 2,850,290 517,094 – 98,280 228,816 3,694,480
Carrying amounts
Balance at 31/12/2020 1,055,262 182,145 298,348 212,297 294,715 2,042,767
Balance at 31/12/2021 801,578 282,623 293,957 197,692 216,428 1,792,277
Balance at 31/12/2022 560,021 475,693 293,995 192,702 142,256 1,664,666
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 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 2022 was estimated equal to €5.4m.
The impairment review of the CGU is based on an assessment of the CGU’s value in use (“VIU”). In calculating VIU, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate of 11.9% that reflects current market assessments of the time value of money
and the risks specific to the asset/CGU and a perpetual annual growth rate of 2.3% on a terminal EBIT of €5.4 million.
Based on such assumptions, the recoverable amount was estimated equal to €33.7m. In addition, a sensitivity analysis was performed, 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 €31m and €36m.
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 2022.
®
58
Directa Plus plc
Annual Report & Accounts 2022
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 31/12/2020 1,267,415 74,521 172,627 4,297,207 597,138 779,128 2,445 7,190,481
Additions 392,141 10,095 13,934 416,922 – – – 833,092
Disposals (6,435) – (3,143) (31,124) – – – (40,703)
Currency translation differences (32,070) – (2,228) (50,895) (9,498) – (38) (94,728)
Balance at 31/12/2021 1,621,051 84,616 181,189 4,632,110 587,640 779,128 2,407 7,888,141
Additions 430,272 2,477 8,737 317,042 – – – 758,528
Disposals (39,333) – (48,935) (206,642) – – – (294,910)
Currency translation differences (261) – 160 786 83 – (45) 723
Balance at 31/12/2022 2,011,729 87,093 141,151 4,743,296 587,723 779,128 2,362 8,352,481
Depreciation
Balance 31/12/2020 556,309 43,807 100,663 2,123,314 – 157,120 – 2,981,213
Depreciation 2021 287,741 9,312 49,791 544,774 – 102,402 – 994,021
Currency translation differences (21,983) – (4,986) (43,089) – – – (70,059)
Balance at 31/12/2021 822,067 53,119 145,468 2,624,999 – 259,522 – 3,905,175
Depreciation 2022 267,411 10,211 38,873 442,228 – 102,402 – 861,127
Disposal 2022 (23,926) (1,591) (47,378) (201,507) – – – (274,402)
Currency translation differences (637) – 120 (52) – – – (569)
Balance at 31/12/2022 1,064,915 61,740 137,082 2,865,669 – 361,924 – 4,491,330
Carrying amounts
Balance 31/12/2020 711,106 30,714 71,965 2,173,892 597,138 622,008 2,445 4,209.268
Balance 31/12/2021 798,985 31,496 35,722 2,007,110 587,640 519,606 2,407 3,982,966
Balance 31/12/2022 946,814 25,353 4,068 1,877,628 587,723 417,204 2,362 3,861,151
Asset held under financial leases with a net book value of €400,634 are included in the above table within Plant & Machinery.
13. Investments in subsidiaries
Details of the Company’s subsidiaries as at 31 December 2022 are as follows:
Shareholding
Subsidiaries Country Principal activity 2022 2021
Directa Plus S.p.A. Italy Producer and supplier of graphene-based 100% 100%
materials and related products
Directa Textile Solutions S.r.l. Italy Commercialise textile membranes, 73.5% 73.5%
including graphene-based technical and
high-performance membranes
Setcar S.A. Romania Waste management and decontamination 51% 52%
services business
Subsidiaries Place of Business Registered Office and place of business
Directa Plus S.p.A. Italy Via Cavour 2, Lomazzo (CO) Italy
Directa Textile Solutions S.r.l. Italy Via Cavour 2, Lomazzo (CO) Italy
Setcar S.A. Romania Str. Gradinii Publice 6, Braila Romania
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
59
13. Investments in subsidiaries continued
The Company’s investment as capital contributions in Directa Plus Spa are as follows:
Directa S.p.A.
At 31 December 2020 23,680,336
Additions 2,000,000
At 31 December 2021 25,680,336
Additions 4,580,000
At 31 December 2022 30,260,336
14. Trade and other receivables
Group Company
2022 2021 2022 2021
Current € € € €
Account receivables 2,964,480 2,339,369 – –
Tax receivables 687,670 465,953 24,230 49,539
Other receivables 463,696 500,171 90,654 155,752
Total 4,115,846 3,305,493 114,884 205,291
Group Company
2022 2021 2022 2021
Non-current € € € €
Other receivables 69,720 185,623 – –
Total 69,720 185,623 – –
Group account receivables of €2,964,480 are mainly composed by six major clients, covering 60% of the total amount.
Group Tax Receivables are composed of Italian VAT receivables of €348,109, UK VAT receivables of €24,230, Romanian VAT receivables of €89,898,
RDEC Tax Credit receivables of €124,562 and other Italian Tax receivables of €100,872.
Other receivables are mainly composed of governments grants for €266,630 and prepayments for €185,551.
Non-current other receivables of €69,720 refer to specific projects where the collection of a certain amount, although due, is postponed to the
end of the project itself.
®
60
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
14. Trade and other receivables continued
As at 31 December 2022 the ageing of account receivables was:
2022 2021
Days overdue € €
0-60 2,841,939 1,771,113
61-180 69,607 251,458
181-365 13,465 101,450
365 + 39,469 215,348
Total 2,964,480 2,339,369
The Group recognises a loss allowance for expected credit losses on trade receivables. As at 31 December 2022 the Group recognised provision for
€15,181 mainly referred to Setcar’s overdue debts.
15. Deferred tax liabilities
2022 2021
€ €
Deferred tax liabilities 98,694 174,158
Deferred tax (assets) (65,599) (84,661)
Total 33,095 89,497
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:
2022 2021
€ €
Deferred tax liabilities – cost capitalised 48,269 86,313
Deferred tax liabilities – other (9,788) (1,652)
Deferred tax liabilities arising from acquisition 33,095 89,497
Deferred tax assets – losses exc. Setcar (38,481) (84,661)
Total 33,095 89,497
16. Cash and cash equivalents
Group Company
2022 2021 2022 2021
€ € € €
Cash at bank 5,721,538 11,126,683 3,787,989 9,430,364
of which restricted cash – 40,000 – –
Cash in hand 6,230 3,785 – –
Total 5,727,768 11,130,468 3,787,989 9,430,364
In 2021 the Company holds €40,000 of restricted cash as a guarantee for a performance bond provided by a bank for a major contract in the
Environmental vertical.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
61
17. Equity
2022 2021
€ €
Share capital 205,469 205,393
Share premium 39,181,789 39,159,027
Foreign currency translation reserve (39,161) (23,109)
Retained earnings (30,069,844) (25,352,139)
Non-controlling interests 1,546,887 2,041,938
Balance at 31 December 10,825,140 16,031,110
Number of Share
Share capital ordinary shares capital (€)
At 31 December 2020 61,174,587 190,996
Share issue on 14 January* 190,872 535
Share issue on 29 December – capital raise** 1,670,518 4,962
Share issue on 30 December – capital raise** 2,996,149 8,900
At 31 December 2021 66,032,126 205,393
Share issue on 28 February*** 25,523 76
At 31 December 2022 66,057,649 205,469
* On 14 January 2021, 190,872 ordinary shares with a nominal value of £0.0025 each were issued as effect of the exercise of options of ordinary shares for Directors and Senior Managers.
** On 29 and 30 December 2021, 4,666,667 ordinary shares with a nominal value of £0.0025 each were issued as effect of the Company’s capital raise.
***On 28 February 2022, 25,523 ordinary shares with a nominal value of £0.0025 each were issued as effect of the exercise of option of ordinary shares for a Directa Plus SpA employee.
Share premium
Share premium €
At 31 December 2020 31,395,612
Shares issued 8,306,293
Expenditure relating to the raising of shares (542,878)
At 31 December 2021 39,159,027
Shares issued 22,762
Expenditure relating to the raising of shares –
At 31 December 2022 39,181,789
On 28 February 2022, 25,523 ordinary shares were issued as effect of the exercise of option of ordinary shares for a Directa Plus SpA employee,
at a price of £0.75 each. The Company accounted for €22,762 of gross share premium reserve.
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 € 39,161.
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 2022, non-controlling interest is composed by 49% of Setcar S.A. and 26.46% of Directa Textile Solutions Srl.
®
62
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
18. Loans and borrowings
Group Company
2022 2021 2022 2021
€ € € €
Non-current loans and borrowings 1,378,141 2,403,881 – –
Current loans and borrowings 767,677 65,840 – –
Total 2,145,818 2,469,721 – –
2022 Current Non-current
€ € € Repayment Interest rate
Bank of Transilvania 407,908 407,908 – 36-monthts Variable
4.7% ROBOR
3M + 2,5%/year
Bank of Transilvania IMM INV 436,817 113,933 322,884 60-monthts Variable
4.11% ROBOR
3M +2.11%/
year+2%
Intesa San Paolo 281,607 74,043 207,564 72-monthts 1.5%/year
+ EURIBOR 3M
Intesa San Paolo 21,924 6,194 15,730 72-monthts 1.5%/year
+ EURIBOR 3M
Intesa San Paolo 500,000 61,248 438,752 72-monthts 1.5%/year
+ EURIBOR 3M
Banca Popolare di Sondrio 491,970 98,759 393,211 72-monthts 1.5%/year
+ EURIBOR 3M
Reconciliation of liabilities arising from financing activities
Cash flows Non cash flows
1 January Capital Liabilities Accrued Liabilities 31 December
2021 repayment acquired interest acquired 2022
€ € € € € €
Borrowings 2,469,721 (1,296,210) 988,938 – (16,630) 2,145,818
Total 2,469,721 (1,296,210) 988,938 – (16,630) 2,145,818
Net debt reconciliation
2022 2021
€ €
Loans and borrowings 2,145,818 2,469,721
Lease liabilities 634,328 680,584
Less: cash and cash equivalent (5,727,768) (11,130,468)
Net debt (2,947,622) (7,980,163)
Total equity 10,825,140 16,031,110
Debt to capital ratio (%) (27.23%) (49.78%)
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
63
19. Leases liabilities
The following table details the movement in the Group’s lease obligations for the period ended 31 December 2022:
2022 2021
€ €
Non-current lease liabilities 395,260 463,047
Current lease liabilities 239,068 217,537
Total 634,328 680,584
20. Employee benefits provision
2022 2021
€ €
Employee benefits 554,444 500,535
Total 554,444 500,535
Provisions for benefits upon termination of employment primarily related to provisions accrued by Italian companies for employee retirement,
determined using actuarial techniques and regulated by Article 2120 of the Italian Civil code. The benefit is paid upon retirement as a lump sum,
the amount of which corresponds to the total of the provisions accrued during the employees’ service period based on payroll costs as revalued
until retirement. Following the changes in the law regime, from January 1 2007 accruing benefits have been contributing to a pension fund or a
treasury fund held by the Italian administration for post-retirement benefits (INPS). For companies with less than 50 employees it will be possible
to continue this scheme as in previous years. Therefore, contributions of future TFR provisions to pension funds or the INPS treasury fund
determines that these amounts will be treated in accordance to a defined contribution scheme, not subject to actuarial evaluation. Amounts
already accrued before 1 January 2007 continue to be accounted for a defined benefit plan and to be assessed on actuarial assumptions.
The breakdown for 2021 and 2022 is as follows:
€
Amount at 31 December 2020 444,483
Service cost 47,536
Interest cost 11,098
Actuarial gain/losses 6,457
Benefit paid (9,039)
Amount at 31 December 2021 500,535
Service cost 76,108
Interest cost 18,309
Actuarial gain/losses 6,790
Benefit paid (47,298)
Amount at 31 December 2022 554,444
®
64
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
20. Employee benefits provision continued
Variables analysis
Detailed below are the key variables applied in the valuation of the defined benefit plan liabilities.
2022 2021
Annual rate interest 3.3% 2.30%
Annual rate inflation 2.10% 1.10%
Annual increase TFR 7.41% 7.41%
Tax on revaluation 17.00% 17.00%
Social contribution 0.5% 0.50%
Increase salary male 2.2% 1.20%
Increase salary female 2.10% 1.15%
Rate of turnover male 2.00% 1.70%
Rate of turnover female 1.80% 1.50%
Sensitivity analysis
Detailed below are tables showing the impact of movements on key variables:
Actuarial hypothesis – 2022
Decrease 10% Increase 10%
Variation Variation
Rate DBO € Rate DBO €
Increase salary Male 1.98% (5,302) 2.42% 5,844
Female 1.89% 2.31%
Turnover Male 1.80% (4,968) 2.20% 5,153
Female 1.62% 1.98%
Interest rate 2.97% 18,239 3.36% (16,643)
Inflation rate 1.89% (7,979) 2.31% 8,555
21. Trade and other payables
Group Company
2022 2021 2022 2021
Non-current € € € €
Other payables 64,366 64,357 – –
Total 64,366 64,357 – –
Group Company
2022 2021 2022 2021
Current € € € €
Trade payables 1,088,849 946,694 28,915 93,332
Employment costs 264,627 520,380 – –
Other payables 759,399 444,824 93,358 78,486
Total 2,112,875 1,911,898 122,273 171,818
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
65
22. Provision
Group Company
2022 2021 2022 2021
Current € € € €
Provision 190,997 20,000 – –
Total 190,997 20,000 – –
In compliance with IAS 37, the Group accounted for a provision relating to the expected loss on an onerous contract in Guatemala, where the
recovery of excess costs is deemed uncertain under IFRS15. The Group is currently in discussion with the customer to seek an acceptable resolution.
23. Financial instruments
Financial risk management
The Group’s business activities expose the Group to the following financial risks:
a) Market risk
Market risk arises from the Group’s use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the fair value of
future cash flow of a financial instrument will fluctuate because of changes in interest rates or foreign exchange rates. As at 31 December 2022 the
Group is exposed to variable interest rate risk for a short term revolving loan and for the loans issued by Directa Plus SpA under the Italian
Government Covid-19 Recovery Plan. Those loans, being 90% guaranteed by the Italian Government, bear a low interest rate (1.5% + EURIBOR)
and, if the interest rate had increased or decreased by 200 basis points during the year the reported loss after taxation would not have been
materially different to that reported.
b) Capital risk
The Group’s objectives for managing capital are to safeguard the Group’s ability to continue as going concern, so that it can continue to provide
returns for shareholders and benefits for other stakeholders and to provide an adequate return to shareholders by pricing products and services
commensurately with the level of risk. There were no changes in the Group’s approach to capital management during the year.
c) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
The Group’s credit risk is primarily attributable to its trade receivables that the Company consider defaulted if any instalment is unpaid more than
sixty (60) days past its original due date or where there is evidence that identifies the debtor’s state of insolvency.
The Group’s cash and cash equivalents and restricted cash are held with major financial institutions. The Group monitors credit risk by reviewing
the credit quality of the financial institutions that hold the cash and cash equivalents and restricted cash.
The Group’s trade receivables consist of receivables for revenue mainly in Italy and Romania. Management believes that the Group’s exposure to
credit risk is manageable and currently the Group’s standard payment terms are 30 to 60 days from date of invoice are largely met from the clients.
At the end of the period, 95% of account receivables have an ageing less of 60 days and refers to orders delivered close to the year end. As at
31 December 2022 the Group recognised a cumulated bad debt provision for €15,181.
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.
®
66
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
23. Financial instruments continued
d) Exposure to credit risk
2022 2021
Group Note € €
Trade receivables 14 2,964,480 2,339,369
Cash and cash equivalent 16 5,727,768 11,130,468
Total 8,692,248 13,469,837
The largest customer within trade receivables accounts for 23% of debtors. Management continually monitors this dependence on the largest
customers and are continuing to develop the commercial pipeline to reduce this dependence, spreading revenues across a variety of customers.
e) Liquidity risk
It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Liquidity risk arises from the Group’s
management of working capital and the finance charges and principal repayments on its debt instruments. The Group manages liquidity risk by
maintaining adequate reserves and banking facilities and by continuously monitoring forecast and actual cash flows. The Board reviews regularly
the cash position to ensure there are sufficient resources for working capital requirements and to meet the Group’s financial commitments.
Carrying amount Up to 1 year 1-5 years
2022 € € €
Financial liabilities
Trade payables 1,088,849 1,088,849 –
Lease liabilities 634,328 239,068 395,260
Loans 2,145,818 2,469,721 760,206
Total 3,868,995 3,797,638 1,155,466
Carrying amount Up to 1 year 1-5 years
2021 € € €
Financial liabilities
Trade payables 946,694 946,694 –
Lease liabilities 680,584 217,537 463,047
Loans 2,469,721 65,840 2,403,881
Total 4,096,999 1,230,071 2,866,928
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 3,225,304
As of January 2022, in light of the favourable exchange rates and to reduce the exposure to liquidity risk, Directors decided to translate GBP 4.5
million into EUR, which supported the operating activities of Directa Plus over the year. As at 1st March 2023 the total cash held in GBP is equal
to £2.8 million. If the exchange rate EUR/GBP increase by 10% the impact on P&L would be a loss equal to €0.3 million (if decrease by 10% would
be a profit equal to €0.3 million).
The Group holds accounts also in other currency (such as USD and RON) but just for business purposes and for not material amount.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
67
24. Earnings per share
Change in Weighted
number of Total number number of
ordinary shares of ordinary shares Days ordinary shares
At 31 December 2021 4,857,539 66,032,126 365 61,380,599
Existing shares – 66,032,126 58 10,492,776
Issued on 28 February 2022 25,523 66,057,649 307 55,560,817
At 31 December 2022 25,523 66,057,649 365 66,053,593
Basic Diluted
2022 2021 2022 2021
€ € € €
Loss attributable to the owners of the Parent (4,822,044) (3,652,364) (4,822,044) (3,652,364)
Weighted average number of ordinary shares
in issue during the year 66,053,593 61,380,599 – –
Fully diluted average number of ordinary shares
during the year – – 67,189,085 61,649,085
Loss per share (0.07) (0.06) (0.07) (0.06)
The effect of anti-dilutive potential ordinary shares is ignored in calculating the diluted loss per share.
25. Share schemes
The 2020 Employees’ Share Scheme is administered by the Remuneration Committee.
The Directors are entitled to grant awards over up to 10 per cent of the Company’s issued share capital from time to time.
Under the 2020 Employees’ Share Scheme, in November 2020 1,801,000 options over Ordinary Shares were granted to key employees and
additional 150,000 options were granted to an Executive Director in June 2021 under the same Scheme. As of 31 December 2022, the total
number of outstanding Ordinary Shares awards is 567,000.
At the date of this report, an additional 539,080 share options had vested in 2020 under the 2016 Employees’ and NED Share Schemes that
have not yet been exercised.
®
68
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
25. Share schemes continued
The main terms of the 2020 Employee’s Share Schemes are set out below:
Eligibility
All persons who at the date on which an award is granted under the Employees’ Share Scheme are employees (or employees who are also office-
holders) of a member of the Group and are eligible to participate. The Remuneration Committee decides to whom awards are granted under the
Employees’ Share Scheme, the number of Ordinary Shares subject to an award, the exercise date(s) (subject to the below) and the conditions
which must be achieved in order for the award to be exercisable.
Types of Award
Awards granted under the Employees’ Share Scheme have the form of market value share options. “Market value share options” are share options
with an exercise price equal to the market value of a share at the date of grant. The right to exercise the award is generally dependent upon the
participant remaining an officer or employee throughout the performance period. This is subject to the good leaver provisions. Awards granted
under the Share Schemes will not be pensionable.
Individual Limits
The value of Ordinary Shares over which an employee or Executive Director may be granted awards under the Employees’ Share Scheme in any
financial year of the Company shall not exceed 200 per cent of his basic rate of salary at the date of grant.
Variation of share capital
Awards granted under the Share Schemes may be adjusted to reflect variations in the Company’s share capital.
Vesting of awards
Outstanding awards will vest over three years in equal one third tranches on each anniversary of the grant date to the extent that the market-based
performance targets have been met. Vested awards may generally be exercised between the third and tenth anniversaries from the date of grant.
75% of vested shares can be exercised after the third anniversary, while the remaining 25% from the fourth.
The inputs to the Monte-Carlo simulation were as follows:
Market value shares Market value shares
Monte-Carlo simulation (1st granting Nov20) (2nd granting Jun21)
Share price 60p 127p
Exercise price 66p 118.20p
Expected volatility 54% 61%
Compounded Risk-Free Interest Rate 0.10% 0.16%
Expected life 6 years 6 years
Number of options issued* 1,801,000 150,000
*Number of options issued is an input of the Monte-Carlo simulation and refers to the total options granted by the Company in November 2020 and June 2021. This is not
representing any option issued in the period.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2022
69
25. Share schemes continued
Details of the number of share options outstanding are as follows:
2020 2021 2022
Outstanding at start of period 60,000 1,801,000 1,175,333
Granted during the period 1,801,000 150,000 –
Cancelled during the period – (263,000) (123,333)
Expired during the period – – –
Vested during the period (60,000) (512,667) (485,000)
Outstanding at end of period 1,801,000 1,175,333 567,000
Exercisable period option price 66p 66p-118p 66p-118p
Grant date 12 Nov 20 12 Nov 20 – 15 Jun 21 12 Nov 20 – 15 Jun 21
Exercisable date 12 Nov 23 12 Nov 23 – 15 Jun 23 12 Nov 23 – 15 Jun 23
Cancellation of share options during the period relates to the resignation of employees. Share options expired over the period refer to those
performance share options that did not meet the performance criteria on the third anniversary of their granting. Vested share options are Market
share options that met the criteria on each anniversary.
26. Related parties
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note.
Remuneration of key management personnel
The below figures represent remuneration of key management personnel for the Group, who are part of the Executive Management Team
but not part of the Board of Directa Plus PLC. The remuneration is set out below in aggregate for each of the categories specified in IAS 24
‘Related Party Disclosures’.
2022 2021
€ €
Short-term employee benefits and fees 227,159 407,451
Social security costs 74,423 102,469
301,582 509,920
The decrease in the 2022 remuneration is mainly explained by the variable remuneration and the layoff of an executive manager.
For Directors remuneration please see Director’s Remuneration Report.
Other transaction Group
Other related party transactions during the year under review are shown in the table below:
2022 2021
€ €
Sale of products 6,625 19,395
Products are sold on normal commercial terms and conditions.
®
70
Directa Plus plc
Annual Report & Accounts 2022
Notes to the consolidated financial statements
continued
27. Contingent liabilities and commitments
The group has the following contingent liabilities relating to bank guarantees on operating lease arrangements and government grants.
2022 2021
€ €
Bank guarantees 38,435 163,340
Directa Plus plc
Annual Report & Accounts 2022
Directa Plus plc
Annual Report & Accounts 2022
Directa Plus in 2022
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 Investment case
05 Target market progress
06 What is graphene?
07 Our strategy and business model
08 Directa Plus ESG
09 Chemical free production process
10 Chief Executive Officer’s review
16 Chief Financial Officer’s review
18 Directors’ biographies
20 Section 172
21 Directors’ report
24 Corporate governance report
28 Directors’ remuneration report
30 Audit Committee report
31 Remuneration Committee report
32 Independent auditor’s report
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
Richard Hickinbotham – Non-Executive Chairman
Giulio Cesareo – CEO and Founder
Giorgio Bonfanti – Chief Financial Officer
Wesley K. Clark – Non-Executive Director
Sarah Cope – Non-Executive Director
Company Secretary
Giorgio Bonfanti
Registration number
04679109
Registered office
7th Floor
50 Broadway
London SW1H 0DB
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
Singer Capital Markets
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
Alma PR
71-73 Carter Lane
London EC4V 5EQ
United Kingdom
y
b
d
e
c
u
d
o
r
p
d
n
a
d
e
n
g
i
s
e
D
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.
Welcome to the
Welcome to the
Graphene Age
Graphene Age
D
i
r
e
c
t
a
P
l
u
s
A
n
n
u
a
l
R
e
p
o
r
t
&
A
c
c
o
u
n
t
s
2
0
2
2
Directa Plus Plc
7th Floor
50 Broadway
London SW1H 0DB
United Kingdom
®
www.directa-plus.com
®
Annual Report & Accounts 2022