Welcome to the
Graphene Age
®
Annual Report & Accounts 2023
Directa Plus plc
Annual Report & Accounts 2023
About Directa Plus
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.
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Contents
01 Financial 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 values 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
Financial highlights
Directa Plus plc
Annual Report & Accounts 2023
01
Product sales and service revenue in line with previous year at €10.53m
(2022: €10.86m)
Total income (including grants) in line with previous year at €10.86m
(2022: €11.28m)
Adjusted LBITDA* decreased by 19% to €2.56m (2022: €3.15m)
Loss before tax improved by 19% to €4.31m (2022: €5.33m)
Reported (basic) loss per share improved at €0.06 (2022: €0.07)
Cash and cash equivalents at year end of €2.39m (2022: €5.73m)
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Total patents granted at year end of 86 (2022: 80)
* Adjusted LBITDA represents loss from operating activities before tax, interest, depreciation and amortisation, adjusted by one-off provisions,
inventory write-offs, non-recurring legal expenses and onerous contract provision (please refer to the CFO statement for further details).
€10.53m
Product sales and service
revenue in line with previous
year (2022: €10.86m)
€10.86m
Total income (including
grants) in line with previous
year (2022: €11.28m)
€2.39m
Cash and cash equivalents
at year end (2022: €5.73m)
02
Directa Plus plc
Annual Report & Accounts 2023
Chairman’s review
Delivering on our strategy
We remain focused on delivering across the
four pillars of our growth strategy: (i) a unique,
low-cost graphene production process;
(ii) the manufacture of pristine graphene
nanoplatelets free of chemical pollutants and
tailored to customers’ needs; (iii) a reduced
time to market for new products, benefitting
from considerable accumulated knowhow
and strong IP; and (iv) market reach leveraged
through carefully assessed partnerships.
opportunities, capitalising on the growing
demand for graphene and positioning
ourselves for the high growth in the market.
Notably, Directa Plus singed a landmark deal
to acquire the proprietary know-how to
prepare tailored graphene compounds,
initially for use in Batteries and Polymers.
The Group also entered a strategic alliance
with The SPECTRUM Group, to support
Directa Plus’ expansion into the military
technology sector in the US.
The graphene market is growing at pace and
Directa Plus has never been in a stronger
position to capitalise on this building
momentum. In 2023, the global graphene
market was worth $195.7m and is expected
to reach $256.7m in 2024, growing then at
a CAGR of 35.1% from 2024 to 20301.
Good progress has been made in
implementing our strategy in respect of our
two main verticals – Environmental
Remediation and Textiles – and we continue
to assess and conservatively invest in other
opportunities and new markets, in advance
of the foreseeable growth in the graphene
market. Post year end we increased our
holding in Setcar S.A., our Environmental
Remediation subsidiary, to 99.95%, to
accelerate the commercialisation of our
Grafysober technology and to capture value
from the crystallisation of pipeline
opportunities within the Environmental
vertical. The €1.5m cost of acquisition was
compelling to us and was part funded by a
€1m loan from our major shareholder Nant
Capital LLC which is to be repaid out of the
proceeds of the fundraise.
Strengthening our offering
Directa Plus has made considerable progress
in strengthening its offering and we have seen
increasing traction for our products, resulting
in exciting new contract wins, including in
new markets, and strengthened partnerships.
Of particular note is the €5.5m, three-year
contract secured by Setcar with LIBERTY
Galati, the Group’s largest contract to date.
We also strengthened our partnerships in the
year, extending graphene-enhanced products
to consumers. We launched a new product,
GRAPHITO, with Candiani Denim, and
expanded our collaboration with Miguel
Caballero MC Armor, solidifying Directa Plus
as a partner and a driver of product
innovation and sustainable textiles.
ESG
Directa Plus’s product is chemical free and
involves a low energy consumption
production process. As businesses across all
sectors are progressively turning towards
more sustainable solutions, our graphene
technology can confer material improvements
in the performance and sustainability of our
customers’ products. Our Grafysober®
technology, which is fast gaining traction,
substitutes for the use of oil-based products
and can be advantageously applied to oil and
chemical decontamination, produced water
and steel mill wastes.
We have built a strong and dedicated team to
drive the growth of the business, and we
recognise the value in supporting our
employees to both maintain the ethos of the
business and achieve the best return on effort.
The Board is committed to pursuing good
corporate governance and understands its
importance in promoting the long-term
growth of the business.
Summary and looking ahead
Directa Plus made good progress in 2023,
securing new contracts, expanding into new
markets and, in particular, growing its pipeline
of opportunities. The Group strengthened its
offering to serve its customers, met a growing
demand for graphene and delivered against
its growth strategy to advance the Group
towards profitability. I would like to take this
opportunity to thank our team for their
dedication and hard work over the past year.
As the graphene market is forecast to expand
considerably in 2024 and beyond, the Group
has never been better positioned to capture
the significant opportunities ahead and to
deliver value across our growing network of
partners and customers.
Alongside a clear focus on growing our core
markets, we remain committed to investing
appropriately in new markets and
Richard Hickinbotham
Chairman
25 June 2024
“I am pleased to report a year
of solid progress for Directa
Plus, delivering against our
four strategic pillars across
each of our key verticals,
particularly Environmental
Remediation and Textiles,
driven by a growing market
demand for our graphene
technology.”
Businesses are increasingly concerned
with providing more sustainable products
and solutions and our G+® technology has
the ability to sit at the heart of this
transformation globally.
The leadership team has focussed on client
delivery and strengthening the business;
improving its margins, securing new contracts,
and further developing our technology.
With this continued development, the Group
has built a significant pipeline of opportunities
and tenders at various stages of development
and across all verticals, including potential
participation in a major contract being sought
by Setcar. In order to invest further in the
delivery of the Group’s strategic plan, the
Company announced a £6.9 million fundraise,
post period end, on 11 June 2024 effected
through a placing and subscription. The
fundraise is expected to complete before
the end of June, subject to the approval of
shareholders at a General Meeting to be
held on 27 June 2024, and will place the
Group in a strong position to accelerate its
growth and path to profitability.
1. Graphene Market Size, Share, Trends & Growth Report 2030 (grandviewresearch.com)
Directa Plus plc
Annual Report & Accounts 2023
03
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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
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Environmental
remediation
Using our Grafysorber® technology
to help the oil & gas industry to
tackle environmental issues from
hydrocarbon pollution.
Textiles
Printing our nanoplatelets on
fabrics, and enhanced membranes
for the sports, luxury, fashion,
workwear and military markets.
Other verticals
Exploring and launching a wide
range of other applications for our
technology such as composites,
paints and batteries.
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Directa Plus plc
Annual Report & Accounts 2023
Investment case
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 86 patents granted and 46 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.
Double digit €m revenue
3
• 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
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1. Planar Thermal Circuit® applied to a cycling technical shirt.
2. Bike tire enhanced with G+® 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®) and a high-performance PA filament (Radilon®).
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2023
05
“The Group delivered an improved operational and financial performance in FY23, benefiting
from improved margins driven by the growing value of our technology, successful investment
in innovation, and a reduction in direct costs. We also secured our largest contract to date with
LIBERTY Galati demonstrating the building momentum for the Group’s products and solutions.
Our increased stake in Setcar and the significant opportunities ahead, together with the
capital increase to be finalised by the end of June 2024, provide confidence in the long-term
success of the Group.”
Giulio Cesareo, Founder and CEO of Directa Plus
Environmental Remediation 69% of revenue (2022: 75%)
• Grafysorber® technology gaining commercial traction as evidenced by the
Group’s largest contract to date of €5.5m with LIBERTY Galati.
• Successful demonstration of pilot plant for the continuous treatment of
produced water using Grafysorber®, further broadening the range of potential
applications of Grafysorber®.
• Opportunity pipeline for Grafysorber® has continued to build strongly.
Textiles 30% of revenue (2022: 23%)
• Extended key customer agreements including with Miguel Caballero MC Armor
in Latin America and Grassi SpA, who doubled order levels on 2022.
• Strengthened partnerships in the year, extending graphene-enhanced products
to consumers, with the launch of a new product, GRAPHITO, with Candiani Denim.
Other developments
• Directa Plus signed a strategically important deal to acquire the proprietary
know-how to prepare tailored graphene compounds, initially for use in Batteries
and Polymers.
• The Group entered into a strategic alliance with The SPECTRUM Group, to support
Directa Plus’ expansion into the military technology sector in the US.
• The Group was awarded a new tender by the Italian Region of Lombardy as
part of its 'Ricerca & Innova' programme to further develop Graphene Plus
air filtration applications.
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Directa Plus plc
Annual Report & Accounts 2023
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.
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G+® production process
NATURAL
GRAPHITE
INTERCALATED
GRAPHITE
PLASMA
SUPER-EXPANSION
EXFOLIATION AND
CONCENTRATION
PRISTINE GRAPHENE
NANOPLATELETS
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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 2023
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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.
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Directa Plus plc
Annual Report & Accounts 2023
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 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
70% of revenue contributions in FY23 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 2023
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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
+ 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 – and important factor for commercial
customers – and does not need any chemical or solvent additives.
10
Directa Plus plc
Annual Report & Accounts 2023
Chief Executive Officer’s review
During the year we focused heavily on
improving margins through several commercial
actions, including benefit from an increasing
appreciation of the value of our technology,
successful investment in innovation, direct
cost reduction and the optimisation of our
production process. We are now a more
robust business that is well positioned to scale.
Directa Plus delivered revenues for FY23 of
€10.5m, with a 19% decrease in adjusted
LBITDA (€2.56m) vs 2022, which was in line
with consensus market expectations.
Year-end cash at €2.4m was 14% ahead of
expectations, reflecting the Board’s continued
focus on improved gross margins and
cash management.
We continued to deliver across the four pillars
of our strategy – Process, Product, Time to
Market and Partnerships – in all key verticals,
and I am proud of the progress made in
particular in our two core verticals,
Environmental and Textiles, where we
prioritised actions to shorten our time to
market and secure new contracts. Highlights
in the year included a €5.5m three-year
contract with LIBERTY Galati in the Group’s
Environmental division and an expansion
of our contract with MC Armor in Latin America
in Textiles.
As part of our strategy, we are also focused
on investing appropriately in other valuable
opportunities where we foresee significant
future demand for our graphene, as
demonstrated by the accelerated development
of the Group’s graphene compounds for
applications in the battery and polymer
markets and the launch of Graphito, an
eco-denim textile, in June 2023.
The Group is in the process of completing a
capital raise post-period end, bolstering our
ability to drive sustainable growth and financial
returns through strategic investments.
Giulio Cesareo CEO
“In FY23 Directa Plus secured new contracts in
all verticals and across key geographies. This
reflects the growing appetite for our graphene
technology and its applications globally.”
€10.5m
Directa Plus delivered
revenues for FY23 of
€10.5m.
€2.4m
Cash at €2.4m, 14% ahead of
expectations, reflecting the
Board’s continued focus on the
improvement in gross margins.
86 patents
86 patents granted
and 46 pending as of
December 2023.
Overview
Strategic report
Governance
Financial statements
Additional information
Market opportunity
The global market for graphene is expected to
grow significantly over the next 10 years. In
2023 the global graphene market was valued
at USD 195.7 million and is projected to grow
at a compound annual growth rate (CAGR) of
35.1% from 2024 to 20302. The market is also
expected to witness significant growth from
increasing demand from research institutes
and multinational companies for research
and development.
The market opportunity for our
graphene-based products is evident within
our two main verticals. In Environmental, our
Grafysorber® decontamination solution is
gaining relevance and is proving to be more
effective than other traditional offers available
in the market. With an increased focus on
Environmental, Social and Governance
initiatives globally, corporations and
governments are turning to more sustainable
methods to positively impact the environment
and Directa Plus’ products can play a critical
role in this creation. In textiles, our graphene
technology is experiencing greater traction,
particularly in the defence and workwear
sectors, where G+® can play
2. https://www.grandviewresearch.com/
industry-analysis/graphene-industry
Annual Report & Accounts 2023 11
Directa Plus plc
an important role due to its advanced
properties that provide tangible benefits to
the final user. Within these verticals, we
strengthened our position in Europe during
the Year and are now exploring new
geographical market opportunities such as
North America and Southeast Asia.
In addition to our two main verticals, part of
the Group’s strategy is focused on investing
in valuable opportunities in which we have
identified an increased market demand
for graphene. We believe, for a relatively
conservative investment, we can develop
products that can generate high commercial
traction, with a fast time to market, such
as paints and batteries. The Group made
good progress in these areas in FY23,
securing new wins, grants and expanding
our partner network.
Directa Plus’ graphene-based paint solution
provides enhanced anti-flame and
anti-corrosion properties compared to normal
paints and in 2023 we continued working with
Pigmentsolution GmbH, a European
distributor of speciality chemicals and
ingredients, to support the development
and distribution of Directa Plus’s new
patented Graphene Plus product,
Grafyshield®, initially in Germany, Austria,
Switzerland and Poland, with the potential
for further expansion in Europe.
The Group is currently exploring the use of G+®
applications in the batteries, polymers and
concrete industries and in December 2023 we
signed a landmark agreement with an Italian
innovator to acquire, for a modest cost, the
proprietary know-how for a system capable
of preparing tailored graphene compounds.
The acquired technology accelerates our
route to market by combining our proven
G+® technology with a complementary system
to produce market ready low-cost solutions,
initially for batteries and polymers. The
global market for batteries and polymers is
experiencing exponential growth, driven by
technological advancements, and increasing
demand for sustainable materials, fuelled by
the increase in demand for electric vehicles
and the expansion of renewable energy
1
2
The global market for
graphene is expected to
grow significantly over the
next 10 years, projected to
grow at a compound annual
growth rate of 35.1% from
2024 to 20302.
1. WORKWEAR SECTORS: Directa Plus’ products can play a critical role in this creation. Within textiles, our graphene
technology is experiencing greater traction, particularly in the defence and workwear sectors, where G+® can play an
important role due to its properties having a tangible benefit on the final user.
2. BATTERIES: Directa Plus’ signed a landmark agreement with an Italian innovator to acquire the proprietary know-how
for a system capable of preparing tailored graphene compounds for application initially in batteries and polymers.
The global market for batteries and polymers is experiencing significant growth, driven by technological advancements.
12
Directa Plus plc
Annual Report & Accounts 2023
Chief Executive Officer’s review continued
storage systems. Similarly, the polymer
industry is evolving with a focus on
high-performance, sustainable materials,
opening up new opportunities for innovation
and growth.
Environmental remediation
(69% of annual revenue)
The Environmental division is the biggest
driver of growth for Directa Plus and in
recent years we have secured significant
new contracts globally thanks to our
well-proven and unique Grafysorber®
technology. It is a hybrid graphene-based
solution for treating water sludges and
emulsions containing hydrocarbons and is
at least five times more effective than
current technologies – absorbing more
than 100 times its own weight of oil-based
pollutants which may then be recovered.
The Group’s environmental remediation
activities are principally carried out through
Setcar, a subsidiary company based in
Romania, which has accelerated the
commercialisation of Grafysorber. In FY23,
Setcar secured Directa Plus’ largest contract
to date with LIBERTY Galati, the largest
integrated steel producer in Romania, to
provide a solution for the treatment of oily
mills sludge produced in the manufacturing
of steel. This €5.5m three-year contract has
the potential for further expansion up to a
total value of €8.0m. Post-period end, Setcar
renewed its contract with FORD Otosan, an
automotive business in Romania owned by
Ford Motor Company, for the fifth time, to
deliver Total Waste Management Services
(TWM) for a total value of €1.9m. Since the
first contract was signed with FORD Otosan
in 2020, following the Group’s acquisition of
Setcar, the annual contract value has now
increased by a total of c. 46%.
€5.5m
Our largest contract to date
with potential for expansion
up to €8m, with LIBERTY
Galati, the largest steel
producer in Romania.
2
1
Post-period end, the Group acquired a further
49% stake in Setcar, taking our shareholding
to 99.95%. This acquisition represents an
exciting opportunity for Directa Plus to take
further control of the environmental supply
chain and capture maximum value from the
commercial offering made possible by our
Grafysorber technology. Setcar is located in
Braila, a location with high potential as it is
just 10 km from the Ukraine border, on the
Danube River. Braila has a river port and is a
free zone. We believe Braila has potential to
be a gateway to the forthcoming reconstruction
of Ukraine and that the acquisition will also
accelerate our ability to capture a larger share
of the significant global environmental
market from a highly strategic area.
The Group also launched a pilot for a new
concept for produced water treatment using
Grafysorber®, through Setcar, and is in line
with the Group’s strategy to adopt new
technologies that can decontaminate and
limit the waste of precious elements such
as water.
1. SETCAR – LIBERTY GALATI: The Group’s environmental remediation activities are principally carried out through Setcar, a subsidiary
company based in Romania and the largest integrated steel producer in the Country, which has accelerated the commercialisation
of Grafysorber®, to provide a solution for the treatment of oily mills sludge produced in the manufacturing of steel.
2. GRAFYSORBER®: The Group also launched a pilot for a new concept for produced water treatment using Grafysorber®,
through Setcar, which was showcased at the Setcar Environmental division and is in line with the Group’s strategy to adopt
new technologies that can decontaminate and limit the waste of precious elements such as water.
Overview
Strategic report
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Financial statements
Additional information
Annual Report & Accounts 2023 13
Directa Plus plc
Workwear
In May 2023, the Group secured a new
exclusive agreement with longstanding
customer, Grassi SpA (‘Grassi’), to expand the
use of its Graphene Plus Thermal Planar
Circuit® (PTC®) technology in the workwear
and military markets. Grassi is a leading Italian
workwear and outerwear manufacturer with a
strong focus on innovation and sustainability
and was the first manufacturer in the textiles
vertical to integrate Directa Plus’ G+®
technologies into its product line. Directa Plus
has been working in partnership with Grassi
since 2017 to provide the workwear industry
with sustainable clothing and has already
supplied over 250,000 linear meters of
graphene-treated lining to Italian public
organisations. In 2023 alone, Grassi more than
doubled its orders on previous 2022 levels.
This expansion of our contract adds to the
Company’s recurring revenue stream on its
Graphene Plus PTC® technology and
demonstrates the continuing appetite from
end users across the textile industry for
garments which have no biological or
environmental impact. The Group is currently
in discussions with other international
manufacturers for the use of Directa Plus’
G+® technologies.
3
2
Through integration with Setcar, Grafysorber
has been developed over the past few years
to generate new products and processes to
enable the provision of environmental
services. This has enabled us to secure larger
contracts as evidenced in FY23 and now with
multiple market opportunities, we are
confident in further international expansion
for this division.
Textiles (30% of annual revenue)
Directa Plus has a growing customer base
within its Textiles vertical, evidenced by the
increase in divisional revenues and growth
in meters of produced product in FY23 as
we expanded our range of applications.
This year we have experienced an increased
appetite for our products across the workwear
and defence industries, where we see that
the benefits of our technology are understood
the most.
We secured a new exclusive
agreement with Grassi SpA
(Grassi), to expand the use
of its Graphene Plus Thermal
Planar Circuit® technology
in the workwear and
military markets.
1
1. FAIRS AND EVENTS – MILANO UNICA 2024: By taking part in national and international events, Directa Plus can showcase its
products and latest developments.
2. CHRONOS CORPS COLLABORATION: This collaboration seamlessly blends fashion and technology, showcasing the versatility of
Directa Plus materials. Crafted with Coating G+®, this bag not only boasts a sleek design but also offers unmatched functionality,
including antimicrobial protection, UV resistance, and advanced fingerprint recognition for secure access.
3. G+® TEXTILE TECHNOLOGIES: Can be applied to any type of fabric and enhance not only the thermal, antistatic and
antimicrobial features, but also the appearance of the fabric by giving the typical shimmery grey colour.
14
Directa Plus plc
Annual Report & Accounts 2023
Chief Executive Officer’s review continued
Defence
We experienced good traction in the defence
sector in FY23 where we predict increasing
volumes in the near-term as a result of
ongoing developments with partners and
potential customers. In December 2023,
we announced a significant expansion of
our contract with CIA Miguel Caballero, a
prominent manufacturer of bulletproof vests
and personal protective equipment (PPE),
who we have partnered with since July 2022,
as the manufacturer had exceeded their
minimum contractual orders for the year.
This demonstrates the appetite from CIA
Miguel Caballero to use our innovative
solutions as a way to produce safer, more
advanced protective wear for individuals in
high-risk professions.
Directa Plus also signed a strategic
partnership with The SPECTRUM Group,
a US strategic advisory and government
relations firm, to explore the potential of
G+® technologies in the US defence sector,
in FY23. Spectrum will leverage its expertise
and extensive network to support Directa Plus
in driving its business expansion into the
military technology sector. Since partnering
with Spectrum, we have attended eight
exhibitions for textiles from which we have
generated several prospects that are
testing industrial production with our
technology, with potential opportunities in
2024, demonstrating the benefit partnerships
can bring.
Luxury
During the year, Directa Plus launched
GRAPHITO, in collaboration with Candiani
Denim (Candiani), an international textile
producer based in Italy, focused on
innovation and sustainability. GRAPHITO
is an eco-denim textile and represents a
significant advancement in the sustainable
fashion industry by addressing denim’s
environmental impact and extending the
lifespan of denim garments. Directa Plus has
been involved in the luxury market following
our inception and continues to see orders
and interest from well-known brands in the
development of innovative, technical new
products to add to their collections, providing
the Group with confidence in the exciting
opportunities ahead.
Air filters
Within the air filters space, the Group was
awarded a new tender by the Italian Region
of Lombardy as part of its ‘Ricerca & Innova’
programme to further develop Graphene
Plus air filtration applications. The project is
for an 18-month period and has a total
value of c. €400,000, enabling the Group to
continue investing in and developing our
air filter applications, leveraging the
antiviral and antimicrobial properties of our
G+® technology.
Intellectual property
As at December 2023, the Group’s patent
portfolio comprised 86 patents granted and
46 pending, grouped into 22 families. This
has increased from 80 patents granted and
37 pending, in December 2022.
We aim to create value from our wide IP
portfolio. Discussions on licensing contracts
are ongoing with potential for further patent
applications and awards in 2024.
1
c. €400,000
A new tender by the Italian
Lombardy Region, part of its
‘Ricerca & Innova’ programme
to develop Graphene Plus
air filtration applications.
2
1. PTC® COMBAT BOOT: Directa Plus’ textile solutions were also used in shoes and combat booth to assure a higher thermal comfort
thus avoiding hot spots. The PTC® absorbs the heat from the lateral part of the shoe and redistributes it to the tip of the toe.
2. GRAPHITO DENIM: Graphito is a state-of-the art denim that integrates the unique technical performances of G+®. Graphito respects
the environment and has antimicrobial properties that makes it self-sanitising.
Overview
Strategic report
Governance
Financial statements
Additional information
Annual Report & Accounts 2023 15
Directa Plus plc
Environmental, Social
and Governance
Environmental, Social and Governance
considerations are an important part of what
drives Directa Plus’ business.
Graphene Plus is a unique product, produced
in a unique and sustainable way; G+® products
are obtained through a proprietary patented
process based on the physical transformation
of natural graphite, characterised by:
(i) a water-based process, (ii) no added
chemistry, (iii) a high purity, and (iv) zero
discharge of hazardous chemicals.
In our production process we consider raw
materials supply chains, energy consumption,
water and wastewater, atmospheric emissions,
the production of waste and any effect on
biodiversity. We are constantly assessing
our production processes, working with
recognised environmental organisations to
ensure the safety and sustainability of our
products. Our method of producing G+®
always uses low energy consumption and
generates low waste, making the entire
process environmentally friendly.
1
2
With regards to our commercialisation
strategy, it is our mandate to only work with
environmentally responsible industrial
partners, and to seek to improve products in
existing markets. This means that we can help
produce and sell better quality products than
are currently available, with better performance
and longer life for end-users.
In December 2021 Directa Plus received the
Green Economy Mark from the London Stock
Exchange, with over 75% of revenue
contributions derived from the Environmental
Remediation division.
Directa Plus employees are critical to the
Group’s success and the Board is focused on
supporting each employee where possible.
We are a responsible employer and carefully
consider all aspects of employee rights, equal
opportunities, health and safety at work and
training and education. We also have a
remuneration policy intended to attract, retain,
and motivate high-calibre executives to deliver
outstanding shareholder returns and at the
same time maintain an appropriate
compensation balance with the other
employees of the Group.
With respect to our local community, Directa
Plus is well-known and deeply rooted in the
Milan area. We promote our regional economy
by identifying local suppliers, with whom it is
possible to structure lasting partnerships. We
believe it is essential to actively contribute to
initiatives that can have a positive impact on
the social fabric of the area.
The Board also fully supports good corporate
governance and recognises that it enhances its
decision-making processes by improving the
success of the Company and increasing
shareholder value over the medium to
long-term.
ESG Rating
In 2022 Directa Plus engaged Integrum, an
independent ESG ratings agency with the
objective to gather initial data upon which the
Company can enhance its ESG reporting and
practices for transparency for all stakeholders.
Integrum assessed and scored the Company
against robust frameworks and was then
ranked relative to specific sub-sector peers
and overall rating of “B”. Integrum reinstated
the “B” rating for Directa Plus’ performance
in FY23.
Outlook
The Group delivered a good operational
and financial performance in FY23,
strengthening our path towards profitability.
Our performance continues to provide
confidence in our ability to capitalise on
new market opportunities and leverage key
partnerships to support expansion. We have
continued to perform in line with our stated
strategy to position ourselves as a much
stronger business.
We are seeing increasing traction in graphene
technology and its applications globally and
I am confident we have the right strategy
and team in place to capture this growing
market demand.
Giulio Cesareo
Chief Executive Officer
25 June 2024
With new wins in early
FY24, we have started
the year with promising
momentum. We are seeing
increasing traction in
graphene technology and
its applications globally.
1. G+® VERSATILITY: G+® Membranes can be seamlessly integrated in any kind of garment. Whether we’re
referring to fashion clothing, casual garments or technical equipment.
2. THE PLANAR THERMAL CIRCUIT®: It is the first textile technology Directa Plus developed. The technology consists of
a functional print enhanced with G+® that absorbs body heat and redistributes it inside the garment, avoiding hot spots.
16
Directa Plus plc
Annual Report & Accounts 2023
Chief Financial Officer’s review
Giorgio Bonfanti Chief Financial Officer
“The key focus in 2023 has been on improving
margins and tightly managing the Group’s cash
resources, demonstrated by this year’s financial
performance. The finance team has remained
focussed on supporting the Group’s strategic
decision making, managing financial resources
efficiently and mitigating risks. The Group
continues to invest in line with its strategic plan
to accelerate business growth and accelerate
its path towards profitability.”
The capital raise to be finalised
by the end of June 2024, subject to the
shareholders’ approval, will play a critical
role in accelerating this growth through
strengthening the operational and financial
capabilities of the Group.
Key Performance Indicators
The Board measures the performance of the
Group through several important KPIs. As a
growing business operating across different
vertical markets, identifying measurable data
that will provide useful insight year-on-year
is not always straightforward but the KPIs
below aim to help shareholders navigate the
Group’s progress:
• Product sales and service revenue was
in line with previous year at €10.53m
(2022: €10.86m)
• Total income (including grants) was
in line with previous year at €10.86m
(2022: €11.28m)
• Adjusted LBITDA* decreased by 19%
to €2.56m (2022: €3.15m), in line with
market expectations
• Loss before tax improved by 19% to
€4.31m (2022: €5.33m)
• Reported (basic) Loss per share improved
to €0.06 (2022: €0.07)
• Cash and cash equivalents at year end
of €2.39m (2022: €5.73m) was ahead of
market expectations
* Adjusted EBITDA loss represents results from
operating activities before tax, interest, depreciation
and amortisation, adjusted by one-off provisions,
inventory write-offs, non-recurring legal expenses
and onerous contract provision (details overleaf).
Financial review
2023 continued to be a difficult trading
environment as markets globally faced
challenges stemming from adverse
macroeconomic and geopolitical conditions,
following high inflation in 2022 and resulting
in significantly higher interest rates during
the year.
€10.53m
€10.86m
€2.39m
Product sales and service
revenue in line with previous
year (2022: €10.86m)
Total income (including grants)
in line with previous year
(2022: €11.28m)
Cash and cash equivalents
at year end (2022: €5.73m)
Overview
Strategic report
Governance
Financial statements
Additional information
Annual Report & Accounts 2023 17
Directa Plus plc
The Group has continued to strategically
address the inevitable inflationary cost
increases to preserve and improve margins
whilst conserving cash. During FY23, this
resulted in:
• successful renegotiation of main contracts,
underscoring client appreciation of our
technology;
• achieving significant direct production
cost reductions (approximately 60-70%)
through targeted investments in the
production line; and
• optimisation of general expenses.
Whilst revenue remained flat, these efforts
yielded positive results delivering an improved
adjusted LBITDA position of 19% vs 2022
at €2.56m.
In response to the high interest rates prevailing
in the market, the Group also implemented a
more cautious treasury management strategy,
with the objective of securing improved levels
of interest on cash held in bank accounts,
thereby mitigating cash consumption by a
further €46k in 2023.
Cash at the year-end was €2.39 million, with the
benefit of a reduction in the monthly cash burn
rate during FY23.
Post-period end, the Group’s fundraise, to be
finalised by the end of June 2024 subject to the
shareholders’ approval, will generate gross
proceeds of c. £6.9 million through a placing
and subscription, involved the issuance of up
to 37,805,551 new Ordinary Shares at a price of
18p each. The capital raised will be utilised to
accelerate additional investment in the
development of both primary and secondary
vertical markets, to shorten the path to
profitability, and maintain momentum on the
medium/long term opportunities.
The proceeds from the capital raise will be
applied as follows:
• £1.5 million for the Setcar acquisition -
approximately £860,000 to repay the loan
provided by Nant Capital LLC which was
used to part pay the €1.5 million acquisition
of the minority interest (49%) in Setcar
alongside £0.6 million to strengthen the
internal cash resources of Setcar;
• £1.1 million for capital expenditure in
dedicated equipment within the
Environmental division and improvements
in the production line with a Nitrogen
production unit to replace Argon; and
• £2.4 million for capital for growth by
strengthening the commercial and
operational capabilities of the Directa
Plus team:
– £1.0 million for new hires for the internal
salesforce alongside agents and
professional services to access to new
markets (US and Asia) and adding a new
expert engineer alongside additional
technical and operating hires in Setcar;
– £0.4 million to strengthen the operational
capabilities and professional support to
improve the production line and further
the direct cost reduction;
– £0.5 million to maintain momentum on
other opportunities focused on research
and development.
€ million FY23 FY22
Result from operating activities (4.18) (5.02)
(+) Depreciation and amortisation 1.27 1.40
LBITDA (2.91) (3.61)
(+) One-off provision 0.28 –
(+) Inventory write-off 0.17 0.11
(+) Lawsuit expenses 0.05 0.16
(+/-) Onerous contracts provision (0.15) (0.19)
Adjusted LBITDA (2.56) (3.15)
€ million FY23 FY22
Loss before tax (4.31) (5.33)
(+) One-off provision 0.28 –
(+) Inventory write-off 0.17 0.11
(+) Lawsuit expenses 0.05 0.16
(+/-) Onerous contracts provision (0.15) 0.19
(+/-) FX gain/loss (0.03) 0.20
Adjusted loss before tax (3.99) (4.67)
• The balance of the fundraise to go
towards general working capital needs
to support growth.
Looking ahead, the Group’s short-term
priorities remain focused on reducing cash
consumption and enhancing profitability.
Alternative performance
measures
This report includes both statutory and
adjusted financial measures, the latter of
which the Directors believe better reflect the
underlying performance of the Group by
excluding certain items that if included could
distort a reader’s understanding of the results.
The table below shows a reconciliation of
statutory and adjusted measures for LBITDA
and Loss before taxation.
Adjustments refer to:
• a bad debt provision of €0.28 million
referred to unpaid receivables referred to
contracts carried out in 2021 and 2022;
• an inventory write-off of €0.17 million in
2023 and €0.11 million in 2022, attributable
to obsolete Co-Masks which are now
experiencing a low market demand
following the end of the Covid-19
pandemic. The obsolete Co-Masks are
now fully written-off;
• legal costs of of €0.05 million in 2023 and
€0.16 million in 2022 linked to the
protection of Directa Plus’ IP portfolio and
disbursements relating to a lawsuit that
dates back to 2017;
• a provision of €0.19 million in 2022 for the
total expected loss on the conclusion of an
onerous long-term contract where recovery
was deemed uncertain under IFRS15,
which was reversed out in 2023 after the
conclusion of the contract, and provision of
€0.04 million accounted in 2023 for the total
expected loss in 2024 on the conclusion of
an onerous long-term contract in Laos; and
• non-cash exchange rate effects, especially
on the conversion of GBP cash balances
to Euro.
A description of the principal risks and
uncertainties facing the Group is set out in the
Directors’ Report of the Annual Report.
Giorgio Bonfanti
Chief Financial Officer
25 June 2024
18
Directa Plus plc
Annual Report & Accounts 2023
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.. 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 an Advisory Board member
and member of the Industry Council of the US
National Graphene Association.
Giulio 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
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Additional information
Directa Plus plc
Annual Report & Accounts 2023
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 2023
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 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 on page 24.
c) The need to foster the company’s business relationships with
suppliers, customers and others. The Board recognises that the
success of the Company is reliant on the stakeholders of the
business and, to this effect, the Company engages with these
stakeholder groups on a regular basis. Details of the Company’s
process to obtain feedback from customers and suppliers are listed
in the section “Stakeholder and social responsibilities” of the
Corporate Governance Statement on page 24.
d) The impact of the company’s operations on the community and
environment. The Board has always considered the health and
safety of people and environmental protection as top priorities. In
order to manage its environmental responsibilities in a systematic
and proactive manner both Directa Plus S.p.A. and Setcar S.A.
implemented the ISO 14001 certification. This helps the Group to
achieve the intended outcomes of its environmental management
system which provides value for the environment, the organization
and the interested parties. The Board recognises its responsibilities
with regard 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. Please refer to the CEO’s 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 on 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, benefitting from their knowledge of the market, strong
reputation and commercial channels.
The Group is currently targeting two key markets (Environmental
Remediation and Textiles), 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 finally, the Group keeps investing and
monitoring high value future opportunities, such as the Lithium-Sulphur
Batteries, Coatings, Concrete and Polymers.
The Group operates in a fast-changing environment. The Group keeps
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
25 June 2024
Overview
Strategic report
Governance
Financial statements
Additional information
Directors’ report
Principal activities
Directa Plus is a technology-based 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 a majority 51% stake in Setcar S.A., 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. Post period, in 2024, Directa Plus increased its shareholding in
Setcar S.A. from 50.99% to 99.95% to further maximize the returns from
the opportunities in its Environmental Remediation division.
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 2023, 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 16 to 17
(The Strategic Report), and in this Directors’ Report, together with
the description of principal risks and uncertainties. A 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.
Directa Plus plc
Annual Report & Accounts 2023
21
Directors
The following Directors held office as indicated below for the year
ended 31 December 2023 and up to the date of signing this report
(where not specifically mentioned):
•
•
•
•
•
Richard Hickinbotham
Giulio Giuseppe Cesareo
Wesley Clark
Sarah Cope
Giorgio Bonfanti
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 2023 are
set out in note 17 to the consolidated financial statements. As of
31 December 2023, 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 3,657,247 5.54
* 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 delivers 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 very 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 2023
Directors’ report
continued
Risk
Mitigation and management strategy
Likelihood*
Impact (on
the Group)**
Change***
International conflicts, inflation trends and
high interest rates
Certain
Major
→
Directors monitor the main geopolitical
developments and constantly assess all the
potential impacts on the Group’s business,
consequently re-adjusting – where necessary –
its strategy and operational priorities.
Recent international conflicts (e.g. in Ukraine and the
Middle East) have been exacerbating strong inflation
trends that have seen Central Banks raising interest rates.
The Group does not have any contracts with Russian,
Ukrainian or Israeli clients and our major clients’
business activities appear – in general – not to be
currently at risk.
The Group has promptly reacted to inflation through
an effective policy of price list readjustments and cost
optimization. Moreover, the Group carefully manages
its funds and treasury allocation to capture the
positive interest rates on the market.
Overall, Directors believe that the conflicts will not
affect the going concern assessment of the Group,
and – under certain circumstances – it may create
some potential opportunities. For example, the
increase in value of the oil and waste recovered or the
opening of other applications for G+® could have
positive outturns for the Group.
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 S.A.. 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 S.A.
in 2019, and the further stake increase in 2024,
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 the
Group’s graphene-based products.
Management constantly monitors the regulatory
framework to ensure a prompt understanding of
any 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 the
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.
Possible
Moderate
Key employees risks
The Group depends upon the continued service
and performance of the Executive Officers and key
employees. The loss of the services of any of
Executive Officers or other key employees could
have an adverse impact on the Group’s operations,
reputation and business activities.
Risks is mitigated by providing long-term incentive
arrangements to key employees, building a
motivated management team, together with
significant opportunities for carrier development.
Possible
Major
→
↓
→
→
→
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2023
23
Risk
Mitigation and management strategy
Likelihood*
Impact (on
the Group)**
Change***
Funding risk
The Group’s growth requires access to funding.
It is possible that the Group will need to raise extra
capital in the future to continue to develop the
Group’s business or to take advantage of future
acquisition opportunities. No assurance can be
given that any such additional financing will be
available or that, if available, it will be available
on terms favorable to the Group or to the
Group’s shareholders.
Risk is mitigated by maintaining good
relationships with the Group’s main shareholders.
The Company is in the process of finalising a
c.£6.9 million capital raise by the end of June 2024,
subject to the shareholders’ approval.
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
behavior and human supervision.
Annual general meeting
The notice for the convening of the 2024 AGM together with the
proposed resolutions is contained in the Notice of AGM sent to all
shareholders and is available via the Company’s website. Due to the
timing of the fundraise and the consequent delay in finalising the audit
process and the signing of the accounts there is insufficient time for the
2023 Annual Report and Accounts to be laid at the AGM on 27 June
2024. The Company intends therefore to convene a later General
Meeting of shareholders at which the Annual Report may be laid.
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 a
General Meeting of shareholders at which the 2023 Annual Report
is to be laid.
For and on behalf of the Board of Directors
®
25 June 2024
24
Directa Plus plc
Annual Report & Accounts 2023
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 2023 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 for improvement in our daily operations.
In 2023, after the strong inflation experienced across the world, the organisation has been working to prioritise the
recovery of margins with effective actions aimed at renegotiating the company’s main contracts, reducing direct
production costs and optimising general expenses.
Compliance with each of the principles set out in the QCA code is summarised in this section.
Role of the Chairman
The Board as a whole is responsible for effective corporate governance.
As Chairman of the Board, I have overall responsibility for the corporate
governance arrangements of the Company in addition to ensuring
that corporate governance arrangements are fully adopted within
the Company.
In addition, my role as Chairman is to lead the Board, ensuring its
smooth running and the effective contribution of all Board members.
Strategy and business model
The Company’s business model, strategy and key markets are set out
in the 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
Investor Meet Company 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 is maintaining a high level of attention towards
its stakeholders health and safety and has achieved an exemplary
safety record amongst its workforce;
customers – we have deep and wide relationships with our customers
that 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
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 2023
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;
a 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
stakeholder sentiment and to obtain their feedback.
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 potentially serious adverse
impact on the Company’s performance.
Page 27 includes additional information about the Company’s internal
control system.
The Board
The primary function of the Board is to provide effective leadership
and direction to enhance the long-term value of the Company to its
shareholders and other stakeholders. The Board has overall
responsibility for reviewing the strategic plans and performance
objectives, financial plans and annual budget, key operational
initiatives, major funding and investment proposals, financial
performance reviews, and corporate governance practices.
The Chief Executive ensures that the Directors’ knowledge is kept up
to date on key issues and developments pertaining to the Group, its
operational environment and to the Directors’ responsibilities as
members of the Board. During the course of the year, Directors received
updates from the Company Secretary and, if required, from external
advisers on a number of corporate governance matters.
The Board consists of 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 included 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 to 19.
The Board keeps under review the skills required to effectively pursue
the Company’s strategy and discharge its duties. The Chief Financial
Officer is also 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 their activities undertaken
during the 2023 financial year can be found on pages 30 and 31.
®
26
Directa Plus plc
Annual Report & Accounts 2023
Corporate governance report
continued
Board
The Board consists of two Executive Directors 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 NEDs 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 this continued 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 2023 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
Giulio Cesareo 7 7 N/A N/A N/A N/A
Giorgio Bonfanti 7 7 N/A N/A N/A N/A
Richard Hickinbotham 7 7 N/A N/A 2 2
Wesley Clark 7 6 4 4 N/A N/A
Sarah Cope 7 7 4 4 2 2
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2023
27
Internal control
The Directors are responsible for establishing and maintaining the
Company’s system of internal control and reviewing its effectiveness.
The system of internal control is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and can only
provide reasonable but not absolute assurance against material
misstatement or loss.
The main features of the internal control system are as follows:
•
•
•
close management of the business by the Executive Directors. There
are clearly delineated approval limits throughout the Company and a
well-defined organisational structure. Controls are monitored at the
appropriate level;
monthly management accounts are prepared and reviewed by
the Board, including reviewing variances against prior months and
against budgets;
clear segregation of duties within the Company’s finance function
help ensure the Company’s assets are safeguarded and that proper
financial records are maintained; and
•
a list of matters that 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, the working capital and other borrowing facilities
available to it and from the issue of equity capital.
The conflict in Ukraine and Middle East, high inflation and increased
interest rates by the Central Banks have been an additional cause of
uncertainty over the macro-economic outlook, affecting both the
political and business environments. These events have had a
significant impact on global economies and markets, and on the
operations and operational funding of companies experiencing
widespread inflationary cost pressures and supply chain disruption.
Management believes that the Group has the systems and protocols in
place to address the challenges, however at the date of approval of
these financial statements it is not clear how long the current
circumstances are likely to last and what the long-term impact will be.
The Group held cash and cash equivalents of Euro 2.39 million at
31 December 2023 (31 December 2022: Euro 5.73 million) and is
currently funded through Euro 6.79 million of shareholder equity
and Euro 2.27 million of loans and bank debt, most of which are
repayable over four years. As of 31 May 2024, the Group held €0.86m
of gross cash. Post period, on 11 June 2024 the Group announced
the launch of a fundraise of £6.9 million, by way of a placing and
subscription, to fund the acquisition of the minority interests of its
subsidiary Setcar and to sustain the expected high growth of the
business. The capital raise will be effective subject to shareholders’
approval at a General Meeting to be held on 27 June 2024.
The Directors prepared a cash flow forecast for the Group and the
Parent Company for the period to December 2025 to assess if there is
sufficient liquidity in place to support the plan and strategy for the
future development of the Group. This forecast showed that the Group
and the Parent Company, subject to the finalisation of the capital raise,
will have sufficient financial headroom for the entire forecast period if
reasonably plausible downside scenario do not occur. In respect of the
capital raise, at the date of signing these financial statements, the
Company has a formal commitment by participating investors and the
success of the capital raise is only dependent on the shareholders’
approval during the General Meeting to be held on 27 June 2024. There
is however no guarantee that the capital raise will complete, and within
the necessary timeframe, nor that the funding to meet the Group’s
obligations will be secured. In the event the fund raise is not approved
or does not complete, the Group will immediately need to seek
alternative forms of funding, such as debt financing or sale of assets.
In addition, the Directors, in formulating the plan and strategy for the
future development of the business, considered reasonably plausible
downside scenarios including reductions in forecast revenues and gross
margin. Under those stressed scenarios which considered the funding
from the proposed capital raise, the Group could exhaust its cash
resources before December 2025, and therefore be required to raise
additional funding which is not guaranteed.
As such, the Parent Company and the Group are dependent on raising
the required funds from the successful completion of the proposed
capital raise within the necessary timeframe; and are also dependent
on raising additional funding in the event that plausible downside
scenarios occur, which are not guaranteed.
These events or conditions indicate that a material uncertainty exists
that may cast significant doubt on the Group and Parent Company’s
ability to continue as going concern and therefore, the Group and the
Parent Company may be unable to realise their assets or discharge their
liabilities in the normal course of business. The Directors review
regularly updates to the scenario planning such that it can put in place
mitigating actions and maintain the viability of the company and will
keep stakeholders informed as necessary.
Based on the analysis above, and that it is in the interest of the
Company’s shareholders to approve and finalise the capital raise, the
Directors have a reasonable expectation that the capital raise will be
successful with the required funds and within the necessary timeframe
and, in the event of the stress test scenario occurring, the Group and
the Company will be able to raise additional funding and will have
adequate resources to support their activities for the foreseeable future.
The Directors have concluded that it is appropriate to adopt the going
concern basis of accounting in the preparation of the financial
statements. The financial statements have therefore been prepared on
the going concern basis. The financial statements do not include the
adjustments that would result if the Group and the Company were
unable to continue as going concerns.
Richard Hickinbotham
Non-Executive Chairman
25 June 2024
®
28
Directa Plus plc
Annual Report & Accounts 2023
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.
Having regard to the adverse market conditions, inflation trends,
high interest rates and the performance of the Group in 2023, 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 an appropriate decision in order not to overload
the cost structure.
The remuneration of the Directors, in Euros, for the year ended
31 December 2023 was as follows:
National Total
Insurance Pension emoluments
Salary/Fees Bonus contributions contributions 2023
2023 €’000 €’000 €’000 €’000 €’000
Non-Executive Chairman
Richard Hickinbotham 75 – – – 75
Executive
Giulio Cesareo 375 – – 18 393
Giorgio Bonfanti 138 – 9 32 179
Non-Executive
Wesley Clark 46 – – – 46
Sarah Cope 46 – – – 46
Total 680 – 9 50 739
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2023
29
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
At 31 December 2023 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 5.99 200,000 –
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 2023
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 auditors 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 2023 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 assumptions 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 2023.
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 2023
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 2023 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 being 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; and
•
an annual review of remuneration for all Executive Directors and
Senior Managers of the Company.
Sarah Cope
Chair of the Remuneration Committee
®
32
Directa Plus plc
Annual Report & Accounts 2023
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 2023
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 2023 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 the
preparation of the Group financial statements 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 financial statements which indicates
that the Parent Company and the Group are dependent on raising the
required funds from the successful completion of the proposed capital
raise within the necessary timeframe; and are also dependent on
raising additional funding in the event that plausible downside
scenarios occur, which are not guaranteed. 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 Group and the Parent Company’s ability to continue as
going concerns. Our opinion is not modified in respect of this matter.
Given the conditions and uncertainties disclosed in Note 1, we
considered going concern to be a Key Audit Matter.
Our evaluation of the Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of
accounting and in response to the Key Audit Matter included:
•
•
•
•
•
•
Obtaining the Directors’ analysis and associated cash flow forecasts in
respect of the Directors’ assessment of going concern and challenging
the key underlying judgments and assumptions. In doing so we
assessed the reasonableness of the assumptions over revenue,
operating and capital expenditures using our knowledge of the
business and through comparing forecasts against recent actuals;
Assessing managements accuracy at forecasting the Group’s future
ability to generate cash flows by comparing forecast Earnings Before
Interest and Tax (“EBIT”) to 2023 actuals and obtaining explanation
for variances;
Obtaining and challenging Management’s cash flow forecast and
downside scenario tests and performing our own downside scenarios,
which included determining the point at which liquidity breaks.
The key inputs and assumptions assessed included reducing and
delaying future revenue and reducing profit margins;
Testing the mathematical accuracy and integrity of the forecast and
agreeing the current cash resources to supporting documentation;
Assessing the results of the conditional placing, and discussing the
capital raise as announced in June 2024 with management to
understand the feasibility of the expected gross proceeds; and
Reviewing the adequacy and completeness of disclosures in the
financial statements in respect of going concern based on the
management’s going concern assessment.
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 responsibilities and the responsibilities of the Directors with respect
to going concern are described in the relevant sections of this report.
Directa Plus plc
Annual Report & Accounts 2023
33
Our involvement with component auditors
For the work performed by component auditors, we determined the
level of involvement needed in order to be able to conclude whether
sufficient appropriate audit evidence has been obtained as a basis for
our opinion on the Group financial statements as a whole. Our
involvement with component auditors included the following:
•
•
•
the Group audit team was actively involved in the direction and
supervision of the audits performed by the component auditors
along with the consideration of findings and determination of
conclusions drawn;
as part of our audit strategy, we issued detailed group instructions to
component auditors detailing the 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 held regular remote meetings with the Romanian
Component and performed a remote review of their audit files.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. In addition to the matter described
in the material uncertainty related to going concern section above,
we determined the matters below to be the key audit matter to be
communicated in our report.
Overview
Strategic report
Governance
Financial statements
Additional information
Overview
Coverage
Key audit
matters
•
•
•
100% (2022: 98%) of Group loss before tax
100% (2022: 99%) of Group revenue
99% (2022: 96%) of Group total assets
2023 2022
Revenue and profit recognition
for long-term contracts 3 3
Going Concern 3 3
Recoverability of investment 3 ✗
in subsidiary undertakings
(parent company)
Materiality
Group financial statements as a whole
€160,000 (2022: €150,000) based on 1.5%
(2022: 1.5%) of revenue.
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 S.r.l. 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.
®
34
Directa Plus plc
Annual Report & Accounts 2023
Independent auditor’s report
continued
Key audit matter
How the scope of our audit addressed the key audit matter
Revenue and profit recognition for long-term contracts
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 has one open long term contract, for which it recognised
€0.22m of revenue and €0.25m of costs in the period. The Group
recognised this revenue over time and measured progress based on
the input method by considering the costs incurred to date, relative
to the total estimated forecast costs.
This is considered a significant risk as the stage of completion and
forecast costs are areas of significant judgement.
These judgements have a consequential impact on the revenue
recognised and certain contract balances in the balance sheet.
Having considered the above, we determined that long-term contract
revenue and other related contract balances have an inherent high
degree of estimation uncertainty with a range of possible outcomes,
and hence we determined long term contract accounting to be a key
audit matter.
We obtained an understanding of and evaluated management’s
processes and controls for ensuring its long-term contract meets the
requirements of IFRS 15.
For the Group’s one long term contract, we carried out the following
detailed testing:
•
obtained an understanding of the contract and its particulars by
obtaining the initial contract with the customer and holding
discussions with commercial teams and management.
agreed forecast revenue to contractual agreements, including variations.
reconciled revenue recognised with amounts applied for and amounts
certified by its client, and agreed the amounts received to bank.
re-performed the key calculations behind the margin applied, the
profit taken and the stage of completion, as well the determination
of contract assets and liabilities.
corroborated costs incurred after the period end and forecast costs
to complete the project to documentary evidence.
challenged management over costs that were not in line with our
expectations and obtained supporting documentation as applicable
to corroborate explanations.
held discussions with management to understand and challenge
other areas of judgement taken including anticipated completion
date and the impact of any delays. We obtained corroborating
evidence for the explanations provided.
tested a sample of costs incurred in the year and ensured that they
had been correctly allocated to the project.
•
•
•
•
•
•
•
We considered the adequacy of the disclosures in the financial
statements in relation to specific contracts and also the disclosures
in respect of significant judgements and estimates.
Key observations
We consider that the estimates and judgements made by management in respect of long-term contract revenue recognition and the associated
disclosures are appropriate.
Recoverability of investment in subsidiary undertakings (parent company)
The applicable accounting policies are detailed in Note 2 (h) and disclosures in Note 13 and the applicable judgements applied in Note 1(d).
Further information is disclosed in Note 13.
The carrying value of the Parent Company’s investment in its
subsidiary undertakings was €18.6m at year end after an impairment
of €13.6m as disclosed in Note 13.
In accordance with the requirements of IAS 36 Impairment of assets,
management has performed impairment reviews in relation to the cost
of the Parent Company’s investment in its subsidiary undertakings.
The impairment review included significant estimates and judgements
in respect of future growth rates and cash flows and this is therefore
deemed to be a key audit matter.
Key observations
We obtained the Group’s discounted cash flow forecasts, supporting its
impairment assessment and evaluated the appropriateness of key
assumptions. We assessed the methodology used by management
against the requirement of IAS 36 and challenged and evaluated key
inputs including:
•
assessing the mathematical accuracy of the model’s underlying
calculations and agreeing the cash flow forecasts to the plan
approved by the Board;
evaluating the appropriateness of forecast cash flows by
understanding management’s process for forecasting, examining
the support for forecast cash flows and assessing subsidiary specific
cash flow assumptions for reasonableness;
comparing the projected growth rates used to historical performance
to consider the historical accuracy of management’s projections; and
considering the market capitalisation of the Group and whether this
gave rise to any indicators of impairment, given the early-stage nature
of the Group’s graphene businesses.
•
•
•
•
Based on the procedures performed, we found the judgements and estimates made by management in the impairment assessment of the
investments in subsidiary undertakings to be reasonable.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2023
35
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.
performance materiality, to determine the extent of testing needed.
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,
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements
Parent company financial statements
2023
2022
Materiality
€160,000
€150,000
Basis for determining
materiality
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.
2023
€60,000
2022
€60,000
2% of net assets capped at 40% 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
Rationale for the
percentage applied for
performance materiality
€120,000
€110,000
€45,000
€45,000
75% of materiality (2022: 75%).
Performance materiality was set at 75% based on consideration of factors including the level of historical errors
and nature of activities.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each
significant 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 (2022: €60,000
to €140,000). In the audit of each component, we further applied
performance materiality levels of 75% (2022: 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 (2022: €3,000). We also
agreed to report differences below this threshold that, in our view,
warranted reporting on qualitative grounds.
®
36
Directa Plus plc
Annual Report & Accounts 2023
Independent auditor’s report
continued
Other information
The Directors are responsible for the other information. The other
information comprises the information included in the Annual report
other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. 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.
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
Matters on
which we are
required to
report by
exception
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.
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:
Non-compliance with laws and regulations
Based on:
•
our understanding of the Group and the industry in which it operates;
•
•
discussion with management and those charged with governance; and
obtaining and understanding of the Group’s policies and procedures
regarding compliance with laws and regulations.
We considered the significant laws and regulations to be Companies Act
2006, UK adopted international accounting standards, UK tax legislation,
the QCA Corporate Governance Code and the AIM Listing Rules.
The Group is also subject to laws and regulations where the consequence
of non-compliance could have a material effect on the amount or
disclosures in the financial statements, for example through the
imposition of fines or litigations. We identified such laws and regulations
to be employment law and applicable health and safety legislation.
Overview
Strategic report
Governance
Financial statements
Additional information
Directa Plus plc
Annual Report & Accounts 2023
37
Our procedures in respect of the above included:
•
•
•
•
review of minutes of meeting of those charged with governance for
any instances of non-compliance with laws and regulations;
review of correspondence with regulatory and tax authorities for any
instances of non-compliance with laws and regulations;
review of financial statement disclosures and agreeing to supporting
documentation; and
review of legal expenditure accounts to understand the nature of
expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to material
misstatement, including fraud. Our risk assessment procedures included:
•
•
•
•
•
•
enquiry with management and those charged with governance
regarding any known or suspected instances of fraud;
obtaining an understanding of the Group’s policies and procedures
relating to:
– detecting and responding to the risks of fraud; and
– internal controls established to mitigate risks related to fraud.
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;
review of minutes of meeting of those charged with governance for
any known or suspected instances of fraud;
discussion amongst the engagement team as to how and where
fraud might occur in the financial statements; and
performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud.
Based on our risk assessment, we considered the areas most
susceptible to fraud to be management override of controls and
revenue recognition.
Our procedures in respect of the above included:
•
•
•
•
testing a sample of journal entries throughout the year, which met a
defined risk criteria, by agreeing to supporting documentation;
assessing significant estimates made by management for bias; and
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;
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;
•
•
assessing whether the judgements made in accounting estimates
were indicative of a potential bias; 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.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members, including
component engagement teams, 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. For component engagement teams, we also
reviewed the result of their work performed in this regard.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of
not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with
laws and regulations is from the events and transactions reflected in the
financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
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, UK
25 June 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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38
Directa Plus plc
Annual Report & Accounts 2023
Consolidated statement of comprehensive income
for the year ended 31 December 2023
31 Dec 2023 31 Dec 2022
Note € €
Continuing operations
Revenue 3 10,530,395 10,856,144
Other income 3 332,963 424,926
Changes in inventories of finished goods and work in progress (247,961) (191,510)
Raw materials and consumables used 6 (5,350,490) (5,856,661)
Employee benefits expenses 7 (4,444,577) (4,424,087)
Depreciation and amortisation 11/12 (1,270,193) (1,403,932)
Other expenses 8 (3,734,813) (4,421,177)
Results (used in) operating activities (4,184,676) (5,016,298)
Finance income 9 72,270 5,904
Finance expenses 9 (194,660) (317,804)
Net finance costs (122,390) (311,900)
Loss before tax (4,307,066) (5,328,198)
Tax income 10 31,718 53,197
Loss after tax from continuing operations (4,275,348) (5,275,001)
Loss of the year (4,275,348) (5,275,001)
Other comprehensive expense items that will not be reclassified to profit or loss
Defined Benefit Plan re-measurement gains and losses 20 (10,769) (6,790)
Other comprehensive expense for the year (no tax impact) (10,769) (6,790)
Total comprehensive expense for the year (4,286,117) (5,281,791)
Loss attributable to
Owner of the Parent (3,856,103) (4,822,044)
Non-controlling interests (419,245) (452,957)
(4,275,348) (5,275,001)
Total comprehensive expense attributable to:
Owners of the Company (3,866,872) (4,828,834)
Non-controlling interests (419,245) (452,957)
(4,286,117) (5,281,791)
Loss per share
Basic loss per share 24 (0.06) (0.07)
Diluted loss per share 24 (0.06) (0.07)
The notes on pages 42 to 70 form part of these financial statements.
Overview
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Directa Plus plc
Annual Report & Accounts 2023
39
Consolidated and Company statement of financial position
for the year ended 31 December 2023
Group Company
31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22
Note € € € €
Assets
Intangible assets 11 1,436,684 1,664,666 – –
Investments 13 – – 18,622,777 30,260,336
Property, plant and equipment 12 3,290,809 3,861,151 – –
Other receivables 14 162,923 69,720 – –
Non-current assets 4,890,416 5,595,537 18,622,777 30,260,336
Inventories 5 881,450 1,121,912 – –
Trade and other receivables 14 4,396,748 4,115,846 96,265 114,884
Cash and cash equivalent 16 2,393,303 5,727,768 1,024,286 3,787,989
Current assets 7,671,501 10,965,526 1,120,551 3,902,873
Total assets 12,561,917 16,561,063 19,743,328 34,163,209
Equity
Share capital 17 205,469 205,469 205,469 205,469
Share premium 17 39,181,789 39,181,789 39,181,789 39,181,789
Foreign currency translation reserve 17 (44,902) (39,161) – –
Accumulated losses 17 (33,882,143) (30,069,844) (19,770,339) (5,346,322)
Equity attributable to owners of Group 5,460,213 9,278,253 19,616,919 34,040,936
Non-controlling interests 17 1,121,911 1,546,887 – –
Total equity 6,582,124 10,825,140 19,616,919 34,040,936
Liabilities
Loans and borrowings 18 1,528,108 1,378,141 – –
Lease liabilities 19 183,056 395,260 – –
Employee benefits provision 20 357,520 554,444 – –
Other payables 21 64,014 64,366 – –
Deferred tax liabilities 15 – 33,095 – –
Non-current liabilities 2,132,698 2,425,306 – –
Loans and borrowings 18 742,904 767,677 – –
Lease liabilities 19 206,509 239,068 – –
Trade and other payables 21 2,856,835 2,112,875 126,409 122,273
Provision 22 40,847 190,997 – –
Current liabilities 3,847,095 3,310,617 126,409 122,273
Total liabilities 5,979,793 5,735,923 126,409 122,273
Total equity and liabilities 12,561,917 16,561,063 19,743,328 34,163,209
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own
statement of comprehensive income in these financial statements. The Company loss after tax for the year was €14,509,549 (2022: €1,200,138).
The loss in 2023 was mainly attributable to the impairment loss on the investment held by Directa Plus plc in Directa Plus S.p.A. for a total amount
of c.€13.6 million. An impairment trigger was identified following a decrease in the market capitalisation of the Group over the last 12 months.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
Giulio Cesareo
Chief Executive Officer
Date: 25 June 2024
Company registered number: 04679109
The notes on pages 42 to 70 form part of these financial statements.
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40
Directa Plus plc
Annual Report & Accounts 2023
Consolidated statement of changes in equity
for the year ended 31 December 2023
Foreign
currency Non-
Share Share translation Accumulated controlling Total
capital premium reserve deficit Total interests equity
€ € € € € € €
Balance at 31 December 2021 205,393 39,159,027 (23,109) (25,352,139) 13,989,172 2,041,938 16,031,110
Total comprehensive expense for the year
Loss of the year – – – (4,822,044) (4,822,044) (452,957) (5,275,001)
Total other comprehensive expense – – – (6,790) (6,790) – (6,790)
Total comprehensive expense for the period – – – (4,828,834) (4,828,834) (452,957) (5,281,791)
Capital raised and exercise of share option 76 22,762 – – 22,838 – 22,838
Expenditure related to the issuance of shares – – – – – – –
Translation reserve – – (16,052) – (16,052) – (16,052)
Share-based payment decrease – – – 111,130 111,130 – 111,130
Increase in share capital of Setcar – – – – – (42,094) (42,094)
Balance at 31 December 2022 205,469 39,181,789 (39,161) (30,069,843) 9,278,254 1,546,887 10,825,141
Total comprehensive expense for the year
Loss of the year – – – (3,856,103) (3,856,103) (419,245) (4,275,348)
Total other comprehensive expense – – – (10,769) (10,769) – (10,769)
Total comprehensive expense for the period – – – (3,866,872) (3,866,872) (419,245) (4,286,117)
Translation reserve – – (5,741) – (5,741) (5,731) (11,472)
Share-based payment – – – 54,573 54,573 – 54,573
Balance at 31 December 2023 205,469 39,181,789 (44,902) (33,882,143) 5,460,213 1,221,911 6,582,124
Company statement of changes in equity
for the year ended 31 December 2023
Share Share Accumulated Total
capital premium deficit equity
€ € € €
Balance at 31 December 2021 205,393 39,159,027 (4,220,247) 35,144,173
Loss for the year – – (1,200,138) (1,200,138)
Capital raised and exercise of share option 76 22,762 – 22,838
Expenditure related to the issuance of shares – – – –
Share-based payment – – 74,063 74,063
Balance at 31 December 2022 205,469 39,181,789 (5,346,322) 34,040,936
Loss for the year – – (14,509,549) (14,509,549)
Capital raised and exercise of share option – – – –
Expenditure related to the issuance of shares – – – –
Share-based payment – – 85,532 85,532
Balance at 31 December 2023 205,469 39,181,789 (19,770,339) 19,616,919
The notes on pages 42 to 70 form part of these financial statements.
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Directa Plus plc
Annual Report & Accounts 2023
41
Consolidated and Company statement of cash flows
for the year ended 31 December 2023
Group Company
31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22
Note € € € €
Cash flows from operating activities
Loss for the year before tax (4,307,066) (5,328,198) (14,509,549) (1,200,138)
Adjustments for:
Depreciation 12 817,611 861,125 – –
Amortisation of intangible assets 11 452,582 542,807 – –
Disposal loss on tangible assets 24,014 20,509 – –
Share-based payment expense 7 54,573 111,130 85,532 74,063
Finance income 9 (72,270) (5,904) (39,214) –
Finance expense 175,350 303,044 3,018 209,818
Interest of lease liabilities 9 19,310 14,760 – –
Impairment of investments 13 – – 13,602,359 –
(2,835,896) (3,480,727) (857,854) (916,257)
Decrease/(increase) in:
– inventories 240,461 248,963 – –
– trade and other receivables 14 (374,105) (694,450) 18,619 90,407
– trade and other payables 712,208 120,918 4,136 (49,545)
– provisions and employee benefits (224,170) 28,819 – –
– Other provision 22 (150,150) 190,997 – –
Net cash used in operating activities (2,631,652) (3,585,480) (835,099) (875,395)
Cash flows from investing activities
Interest received 9 46,108 5,904 – –
Investment in intangible assets (213,538) (415,195) – –
Investment in subsidiary 13 – – (1,964,800) (4,580,000)
Contingent consideration 21 – – – –
Acquisition of property, plant and equipment (271,281) (759,821) – –
Net cash used in investing activities (438,711) (1,169,112) (1,964,800) (4,580,000)
Cash flows from financing activities
Proceeds from Capital raise and exercise of share options 17 – 22,838 – 22,838
Interest on loan and other financial costs 9 (159,225) (97,456) (3,018) (2,042)
New borrowings 18 945,278 988,938 – –
Repayment of borrowings 18 (820,084) (1,312,840) – –
Repayment of lease liabilities (244,762) (223,197) – –
New lease liabilities – 191,700 – –
Net cash (used in)/from financing activities (278,793) (430,017) (3,018) 20,796
Net (decrease) in cash and cash equivalent (3,349,156) (5,184,609) (2,802,917) (5,434,599)
Cash and cash equivalent at beginning of the year 5,727,768 11,130,468 3,787,989 9,430,364
Exchange gains/(losses) on cash and cash equivalents 14,691 (218,091) (39,214) (207,776)
Cash and cash equivalent at end of the year 2,393,303 5,727,768 1,024,286 3,787,989
The notes on pages 42 to 70 form part of these financial statements.
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42
Directa Plus plc
Annual Report & Accounts 2023
Notes to the consolidated financial statements
for the year ended 31 December 2023
1. Basis of preparation
a) Statement of compliance
These consolidated and parent Company financial statements have been prepared in accordance with UK-adopted International Accounting
Standards (“IFRS”). The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the
preceding year, unless otherwise stated.
All notes, except as otherwise indicated, are presented in Euros (“€”).
I. Going Concern
The going concern assessment of the Parent Company has been performed as part of the Group’s going concern assessment.
The Group meets its working capital requirements through the receipt of revenues from the provision of its services and sale of products mainly in
Europe, the management of capital and operating expenditure, the working capital and other borrowing facilities available to it and from the issue
of equity capital.
The conflict in Ukraine and Middle East, high inflation and increased interest rates by the Central Banks have been an additional cause of
uncertainty over the macro-economic outlook, affecting both the political and business environments. These events have had a significant impact
on global economies and markets, and on the operations and operational funding of companies experiencing widespread inflationary cost
pressures and supply chain disruption.
Management believes that the Group has the systems and protocols in place to address the challenges, however at the date of approval of these
financial statements it is not clear how long the current circumstances are likely to last and what the long-term impact will be.
The Group held cash and cash equivalents of Euro 2.39 million at 31 December 2023 (31 December 2022: Euro 5.73 million) and is currently funded
through Euro 6.79 million of shareholder equity and Euro 2.27 million of loans and bank debt, most of which are repayable over four years. As of
31 May 2024, the Group held €0.86m of gross cash. Post period, on 11 June 2024 the Group announced the launch of a fundraise of £6.9 million, by
way of a placing and subscription, to fund the acquisition of the minority interests of its subsidiary Setcar and to sustain the expected high growth
of the business. The capital raise will be effective subject to shareholders’ approval at a General Meeting to be held on 27 June 2024.
The Directors prepared a cash flow forecast for the Group and the Parent Company for the period to December 2025 to assess if there is sufficient
liquidity in place to support the plan and strategy for the future development of the Group. This forecast showed that the Group and the Parent
Company, subject to the finalisation of the capital raise, will have sufficient financial headroom for the entire forecast period if reasonably plausible
downside scenario do not occur. In respect of the capital raise, at the date of signing these financial statements, the Company has a formal
commitment by participating investors and the success of the capital raise is only dependent on the shareholders’ approval during the General
Meeting to be held on 27 June 2024. There is however no guarantee that the capital raise will complete, and within the necessary timeframe, nor
that the funding to meet the Group’s obligations will be secured. In the event the fund raise is not approved or does not complete, the Group will
immediately need to seek alternative forms of funding, such as debt financing or sale of assets.
In addition, the Directors, in formulating the plan and strategy for the future development of the business, considered reasonably plausible
downside scenarios, including reductions in forecast revenues and gross margin. Under those stressed scenarios which considered the funding
from the proposed capital raise, the Group could exhaust its cash resources before December 2025, and therefore be required to raise additional
funding which is not guaranteed.
As such, the Parent Company and the Group are dependent on raising the required funds from the successful completion of the proposed capital
raise within the necessary timeframe; and are also dependent on raising additional funding in the event that plausible downside scenarios occur,
which are not guaranteed.
These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent Company’s ability to
continue as going concerns and therefore, the Group and the Parent Company may be unable to realise their assets or discharge their liabilities in
the normal course of business. The Directors review regularly updates to the scenario planning such that it can put in place mitigating actions and
maintain the viability of the company and will keep stakeholders informed as necessary.
Based on the analysis above, and that it is in the interest of the Company’s shareholders to approve and finalise the capital raise, the Directors have
a reasonable expectation that the capital raise will be successful with the required funds and within the necessary timeframe and, in the event of
the stress test scenario occurring, the Group and the Company will be able to raise additional funding and will have adequate resources to support
their activities for the foreseeable future. The Directors have concluded that it is appropriate to adopt the going concern basis of accounting in the
preparation of the financial statements. The financial statements have therefore been prepared on the going concern basis. The financial
statements do not include the adjustments that would result if the Group and the Company were unable to continue as going concerns.
b) Basis of consolidation
I. Subsidiaries
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements
are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
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Directa Plus plc
Annual Report & Accounts 2023
43
1. Basis of preparation continued
The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in
proportion to their relative ownership interests.
II. Transactions eliminated on consolidation
The consolidated financial statements present the results of the Company and its subsidiaries (“the Group”) as if they formed a single entity.
Intercompany transactions and balances between group companies are therefore eliminated in full.
III. Non-controlling interest
Non-controlling interest in the net assets of the consolidated subsidiaries are identified separately from the Group’s equity. Non-controlling
interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share
changes in equity since the date of the combination. The non-controlling interest’s share of losses, where applicable, are attributed to the non-
controlling interests irrespective of whether the non-controlling shareholders have a binding obligation and are able to make an additional
investment to cover the losses.
c) Functional and presentation currency
These financial statements are presented in Euro (“€”) and is considered by the Directors to be the most appropriate presentation currency to assist
the users of the financial statements. The functional currency of the Company and of the Italian operating subsidiaries is Euro (“€”). The functional
currency of the Romanian subsidiary is Romanian Leu.
d) Use of estimates and judgements
The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the circumstances and the results of which form
the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised if the revision affects only that period.
Critical estimates and judgements that have the most significant effect on the amounts recognised in the financial statements and/or have a
significant risk of resulting in a material adjustment within the next financial year are as follows.
Estimates
Management identified the following estimates for the preparation of the financial statements. The Group has not made any material judgments.
I. Valuation of share based payments
The estimation related to share-based payment expenses includes the selection of an appropriate valuation option pricing model, consideration
as to the inputs necessary for the valuation model chosen, and the estimation of the number of awards that will ultimately vest. Inputs subject to
estimation relate to the future volatility of the share price which has been estimated based on the historical observed volatility from trading in the
Company’s shares, over a historical period of time between the date of the grant and the date of exercise. Management has used a Monte-Carlo
model to calculate the fair value of the awards which include market based performance conditions. Further disclosure of inputs relevant to the
calculations is set out in note 25 to the financial statements.
II. Carrying value of goodwill
The carrying value of goodwill, and the cash generating units (“CGU’s”) to which it relates, is assessed annually for impairment through comparing
the recoverable amount to the CGU’s carrying value. To determine the recoverable amount of the CGU, being the Group a public company listed on
the AIM market of the London Stock Exchange, Management considers the Group’s market capitalisation at the end of the reporting period as an
indicator of its fair value. If the market capitalisation exceeds the CGU’s carrying value, no impairment is needed. Further disclosure of evaluations
is set out in note 11 to the financial statements.
III. Valuation of inventory
Inventories are stated at the lower of cost or net realisable value. The cost of inventories comprises of net prices paid for materials purchased,
production labour cost and factory overhead. Net realisable value represents the estimated selling price less all estimated costs of completion and
costs to be incurred in marketing, selling and distribution. Inventory provisions are recognised for slow-moving, obsolete or unsalable inventory
and are reviewed on a six-monthly basis. The valuation of Inventory includes key estimates and judgments made by Management including normal
production capacity, market demand and selling opportunities. If actual demand or usage were to be lower than estimated, additional inventory
provisions for excess or obsolete inventory may be required.
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44
Directa Plus plc
Annual Report & Accounts 2023
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 considers the Group’s market
capitalisation at the end of the reporting period as an indicator of the fair value of the assets owned and managed by these subsidiaries. As each of
the subsidiaries are owned (directly or indirectly) by the Company the creditworthiness of the subsidiary is the same as the creditworthiness of the
Company. Further details are set out in note 13.
V. Revenue recognition and long-term contract accrued income
The determination of anticipated costs for completing a contract is based on estimates that can be affected by a variety of factors such as potential
variances in scheduling and cost of materials along with the availability and cost of qualified labour and subcontractors, productivity, and possible
claims from subcontractors.
The determination of anticipated revenues includes the contractually agreed revenue and may also involve estimates of future revenues from
claims and unapproved variations, if such additional revenues can be reliably estimated and it is considered probable that they will be recovered.
A variation results from a change to the scope of the work to be performed compared to the original contract signed. An example of such contract
variation could be a change in the project specification, whereby costs related to such variation might be incurred prior to the client’s formal
contract amendment signature. A claim represents an amount expected to be collected from the client or a third party as reimbursement for costs
incurred that are not part of the original contract.
A modification is only then accounted for as a separate contract if the goods and services are distinct in that the customer can benefit from the
good or service on its own. In both cases, management’s judgments are required in determining the probability that additional revenue will be
recovered from these variations and in determining the measurement of the amount to be recovered. As risks and uncertainties are different for
each project, the sources of variations between anticipated costs and actual costs incurred will also vary for each project. The long-term nature of
certain arrangements usually results in significant estimates related to scheduling and prices. The determination of estimates is based on internal
policies as well as historical experience. Furthermore, management regularly reviews underlying estimates of project profitability. In FY23 the Group
applied this accounting treatment for one specific long-term contract in its Environmental Remediation services in Laos.
VI. Onerous contract provision
The determination of the minimum unavoidable loss to complete a contract is based on estimates that could be affected by a variety of factors
including cost of materials, cost of labour, productivity and variations. Management reviews all contracts on a regular basis to identify indications
that a contract may be onerous. Where sufficient evidence exists that a contract will be onerous Management provide for the total anticipated loss
on the contract immediately.
2. Significant accounting policies
a) Functional currency
The financial statements of each Group company are measured using the currency of the primary economic environment in which that company
operates (the functional currency). The consolidated financial statements record the results and financial position of each Group company in Euro,
which is the functional currency of the Company and the presentational currency for the consolidated financial statements.
I. Transaction and balances
Transactions in foreign currencies are converted into the respective functional currencies at initial recognition, using the exchange rates at the
transaction date. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling at the reporting date. Non-
monetary assets and liabilities are not retranslated. All exchange differences are recognised in profit or loss. On consolidation, the results of
overseas operations not in Euro are translated at the rates approximating to those ruling when the transactions took place. All assets and liabilities
of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at
closing rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
b) Financial instruments
There are no other categories of financial assets other than those listed below:
I. Trade and other receivables and amount due from subsidiaries
Trade and other receivables and amounts due from subsidiaries are recognised and carried at the original invoice amount less any provision
for impairment.
The Group recognises a loss allowance for expected credit losses (“ECL”) on financial assets that are measured at amortised cost which comprise
mainly of trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
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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.
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Annual Report & Accounts 2023
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-month basis.
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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 (“CGU’s”). The Group’s CGU’s
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 CGU’s 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.
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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; and
– 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).
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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.
Changes in accounting standards
a) New standards, interpretations and amendments effective from 1 January 2023
Insurance contracts – IFRS 37:
IFRS 17 Insurance Contracts is a comprehensive new accounting standard for insurance contracts covering recognition and measurements,
presentation and disclosure. IFRS 17 replaces IFRS 4 insurance contracts. IFRS 17 applies to all types of insurance contracts (i.e. life, non-life, direct
insurance and re-insurance), regardless of the type of entities that issue them as well as to certain guarantees and financial instruments with
discretionary participation features; a few scope exceptions will apply. The overall objective of IFRS 17 is to provide a comprehensive accounting
model for insurance contracts that is more useful and consistent for insurers, covering all relevant accounting aspects. IFRS 17 is based on a general
model, supplemented by:
•
•
a specific adaptation for contracts with direct participation features (the variable fee approach); and
a simplified approach (the premium allocation approach) mainly for short duration contracts.
The new standard had no impact on the Group’s consolidated financial statements.
Definition of accounting estimates – AMENDMENTS TO IAS 8
The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of
errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates.
The amendments had no impact on the Group’s consolidated financial statements.
Disclosure of accounting policies – AMENDMENTS TO IAS 1 AND IFRS PRACTICE STATEMENT 2
The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and examples to help entities apply
materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more
useful by replacing the requirement for entities to disclose their “significant” accounting policies with a requirement to disclose their “material”
accounting policies and adding guidance on how entities apply the concept of materiality in making decision about accounting policy disclosures.
The amendments have not had any impact on the measurement, recognition or presentation of any items in the Group’s financial statements.
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Annual Report & Accounts 2023
Notes to the consolidated financial statements
continued
2. Significant accounting policies continued
Deferred tax related to assets and liabilities arising from a single translation – AMENDMENTS TO IAS 12
The amendments to IAS 12 Income Tax narrow the scope of the initial recognition exception, so that it no longer applies to transactions that give
rise to equal taxable and deductible temporary differences such as leases and decommissioning liabilities.
The amendments had no impact on the Group’s consolidated financial statements.
International tax reform – Pillar Two model rules – AMENDMENTS TO IAS 12
The amendments to IAS 12 have been introduced in response to the OECD’s BEPS Pillar Two rules and include:
•
•
a mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar
Two model rules; and
disclosure requirements for affected entities to help users of the financial statements better understand an entity’s exposure to Pillar Two income
taxes arising from that legislation, particularly before its effective date.
The mandatory temporary exception – the use of which is required to be disclosed- applies immediately. The remaining disclosure requirements
apply for annual reporting periods beginning on or after 1 January 2023, but not for any interim periods ending on or before 1 December 2023.
The amendments have had no impact as the effective tax rate for the Group is higher than the 15% minimum rate proposed in the OECD’s BEPS
Pillar Two rules. Further disclosure has been included in note 10.
b) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretation which have been issued by the IASB that are effective in future
accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2024:
•
•
•
•
liability in a Sale and Leaseback (Amendments to IFRS 16 Leases);
classification of Liabilities with Covenants (Amendments to IAS 1 Presentation of Financial Statements);
non-current Liabilities with Covenants (Amendments to IAS 1 Presentation of Financial Statements); and
supplier Finance Arrangements (Amendments to IAS 7 Statements of Cash Flows and IFRS 7 Financial Instruments. Disclosures).
The following amendments are effective for the period beginning 1 January 2025:
•
lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates)
The Group is currently assessing the impacts of these new accounting standards and amendments. The Group does not believe that the
amendments to IAS 1 will have a significant impact on the classification of its long-term debt as its classification is consistent with the contractual
arrangement. The Group does not expect any other standards issued by the IASB, but are yet to be effective, to have a material impact on the Group.
3. Operating segments
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief
operating decision makers (CEO, CFO and COO), as defined in IFRS 8, in order to allocate resources to the segments and to assess its performance.
For management purposes, also considering the materiality the Group is organized into the following segments:
•
•
•
Textile
Environmental
Others
Textile and Environmental were considered by Management the most advanced strategic segments in terms of commercial readiness.
Management’s strategic needs are constantly monitored and an update of the segments will be provided if required.
Segment profit/(loss) represents the profit/(loss) earned by each segment, including all the direct costs that are directly correlated with the
segment. Overhead, assets and liabilities not directly attributable to a specific segment have been allocated as Head Office.
As the business evolves this is an area that will be assessed on a regular basis and additional segmental reporting will be provided at the
appropriate time.
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51
3. Operating segments continued
Textile Environmental Others Head office Consolidated
2023 € € € € €
Revenue 3,203,752 7,229,677 96,966 – 10,530,395
Cost of sales* (2,078,194) (4,161,253) (64,508) – (6,303,955)
Gross profit 1,125,558 3,068,424 32,458 – 4,226,440
Other income 62,251 16,295 112,515 141,902 332,963
Other expenses:
– R&D expenses (125,704) – (5,645) – (131,349)
– Advisory (8,545) (298,058) (174,587) (1,085,389) (1,566,579)
– Operating expenses (267,946) (3,175,696) (104,128) (2,228,188) (5,775,958)
– Depreciation and amortisation (386,930) (858,445) (24,818) – (1,270,193)
Operating profit/(loss) 398,684 (1,247,480) (164,205) (3,171,675) (4,184,676)
Net financial costs – – – (122,390) (122,390)
Tax – 31,718 – – 31,718
Profit/(loss) of the year 398,684 (1,215,762) (164,205) (3,294,065) (4,275,348)
Total assets 3,991,458 7,839,333 731,126 – 12,561,917
Total liabilities 2,501,851 3,346,950 130,992 – 5,979,793
*Includes changes in inventories of finished goods.
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) – (7,117,455)
Gross profit 782,446 2,854,166 102,077 – 3,738,689
Other income 161,271 113,865 23,415 126,375 424,926
Other expenses:
– R&D expenses (186,587) (420) (76,988) – (263,995)
– Advisory (94,784) (421,042) (45,000) (1,055,002) (1,615,828)
– Operating expenses (411,727) (3,057,472) (90,439) (2,336,519) (5,896,157)
– Depreciation and amortisation (329,964) (1,038,337) (35,632) – (1,403,933)
Operating loss (79,345) (1,549,240) (122,567) (3,265,146) (5,016,298)
Net financial costs – – – (311,900) (311,900)
Tax – 53,197 – – 53,197
Loss of the year (79,345) (1,496,043) (122,567) (3,577,046) (5,275,001)
Total assets 4,582,368 11,164,786 813,909 – 16,561,063
Total liabilities 1,849,107 3,633,655 253,161 – 5,735,923
*Includes Changes in inventories of finished goods.
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Notes to the consolidated financial statements
continued
3. Operating segments continued
2023 2022
€ €
Sale of products 3,323,174 3,171,133
Sale of services 7,207,221 7,685,011
Government grants 160,015 171,135
Other 172,948 253,791
Total income 10,863,358 11,281,070
Geographical breakdown of revenues is:
2023 2022
€ €
Italy 3,031,727 2,663,918
Romania 7,211,161 8,096,804
Rest of the world 287,507 95,422
Total 10,530,395 10,856,144
In 2023, the three main customers accounted for more than 10% of Group revenues for sales of products and services. This largest customer
accounted for 17% of revenues (€1,769,827), the second for 13% (€1,364,472), whilst the third for 12% (€1,303,949).
Other Income of €332,963 mainly include Government Grants for €160,015 and R&D Expenditure Credit (“RDEC”) for €27,000. The RDEC is an Italian
incentive scheme (art.3 DL 145/2013) designed to encourage companies to invest in research and development. The credit can be used to reduce
corporation tax or to offset outstanding payables related to social security.
4. Government grants
Information regarding government grants:
2023 2022
€ €
Green.Tex – 11,299
Techfast – 136,421
Filiere 112,515 23,415
Ricerca e Innova 47,500 –
Total 160,015 171,135
In 2023, Directa Plus concluded the activities related to the ‘Filiere’ project and obtained the funds in early 2024.
In July 2023, the Company was awarded a project tender from the Italian Region of Lombardy as part of its Ricerca e Innova programme to further
develop Graphene Plus air filtration applications. It is a 18-month project for a total value of c.€400,000 which includes a non-repayable grant
of €142,500 and a zero-interest loan €264,642 which will be repaid over seven years. This award will enable Directa Plus to continue investing and
developing its air filter applications, leveraging the antiviral and antimicrobial properties of its G+® technologies.
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4. Government grants continued
The key terms of government grants are:
Filiere Ricerca e Innova
Starting date 2022 2023
Ending date 2023 2024
Duration (months) 12 18
Total amount 135,930 407,142
Final report submitted Yes On-going
There are no capital commitments built into the ongoing grants. Government grants have been recognised within other income in the income
statement and as other receivables in the balance sheet.
5. Inventory
2023 2022
€ €
Finished products 627,078 917,280
Spare parts 109,492 93,292
Raw material 144,880 111,340
Total 881,450 1,121,912
As of 31 December 2023, the decrease in the inventory value was partially driven by a c. €170k write-off of the Co-Masks value still in stock, as the
gradual Covid-19 pandemic de-escalation has slowed down the sales of Directa Plus’ face masks.
The finished products mainly referred to Directa Plus SpA. Spare parts inventory was required to enhance maintenance efficiency and is composed
of a small number of critical items with a material cost per unit.
6. Raw materials and consumables
2023 2022
€ €
Raw materials and consumables 3,898,083 4,796,333
Textile products 1,452,407 1,060,328
Total 5,350,490 5,856,661
The decrease in raw materials and consumables is mainly linked to the sales and services provided in the Group’s Environmental Remediation
vertical. The increase in the textile products is a result of the business growth in this vertical.
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Notes to the consolidated financial statements
continued
7. Employee benefits expenses
2023 2022
€ €
Wages and salaries 3,797,869 3,578,948
Social security costs 456,405 573,778
Employee benefits 98,062 144,277
Share option expense 54,573 111,130
Other costs 141,536 146,116
Total 4,548,445 4,554,249
Capitalised cost in “Intangible assets” (103,868) (130,162)
Total charged to the Income Statement 4,444,577 4,424,087
The average number of employees (excluding Non-Executive Directors) during the period was as follows:
2023 2022
Sales and Administration 30 32
Engineering, R&D and production 157 159
Total 187 191
The total average number of employees of the Group as at 31 December 2023 was 187 (2022: 191), of which 162 were employed by Setcar.
The Directors’ emoluments (including Non-Executive Directors) are as follows:
2023 2022
€ €
Wages and salaries 738,935 768,055
Total 738,935 768,055
The aggregate emoluments (wages, salaries and social contributions) of the highest paid Director totalled €393k (2022: €406k).
Group’s share-base payment expenses were €54,573, of which €85,532 accounted for in the Parent Company accounts as directly attributable to the
Executive Directors, more than offset by cost reverse-outs in Directa Plus S.p.A. due to awards cancellations and expiries (2022: €30,959).
A detailed analysis of the remuneration of the Directors is detailed within the Directors’ Remuneration Report on pages 28 to 29.
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8. Other expenses
2023 2022
€ €
Audit of the Group and Company financial statements 120,485 108,525
Audit of the subsidiaries’ financial statements 45,504 37,735
Other non-audit services provided by Group’s auditor 5,709 7,780
Tool manufacturing 281,182 504,411
Analyses and tests 101,180 224,451
Travel 171,585 145,045
Technical consultancies 353,403 316,966
Shipping and logistic expenses 358,793 446,894
Insurance 189,551 186,145
Marketing 25,112 15,718
Legal, tax and administrative consultancies 1,143,050 1,286,662
Other expenses mainly include professional services (such as audit, legal, tax and administrative consultancies), R&D/technical consultancies and
tests, travels, shipping/logistic and insurance.
9. Net finance expenses
Finance expenses include:
2023 2022
€ €
Interest income (46,108) (5,904)
Interest on loans and other financial costs 159,225 82,696
Interest on lease liabilities 19,310 14,760
Interest cost for benefit plan 16,125 18,309
Foreign exchanges (gains)/losses (26,162) 202,039
Total 122,390 311,900
The raise in interest rates by the Central Banks over the year directly affected the interest on loans and other financial costs. This effect was partially
offset by positive interest rates of €46,108.
In the year the Group benefited from foreign exchange gains of €26,162 (2022: €202,039 losses).
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Notes to the consolidated financial statements
continued
10. Taxation
2023 2022
€ €
Current tax expense (1,384) (1,581)
Deferred tax recovery 33,102 54,778
Total tax income 31,718 53,197
Reconciliation of tax rate
2023 2022
€ €
Loss before tax (4,307,066) (5,328,198)
Italian statutory tax rate 24% 24%
(1,033,696) (1,278,768)
Impact of temporary differences 42,633 93,175
Losses recognised (10,915) (39,978)
Impact of tax rate in foreign jurisdiction (44,936) (60,007)
Losses not utilised 1,078,632 1,338,775
Total tax income 31,718 53,197
Tax losses are carried forward and not recognised as a deferred tax asset due to the uncertainty regarding generating future taxable profits.
Tax losses carried forward are €39,285,232 (€35,720,602 in 2022).
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11. Intangible assets
Development
cost Patents Goodwill Others Brands Total
€ € € € € €
Cost
Balance at 31/12/2021 3,280,147 718,047 293,957 280,983 371,021 4,944,155
Additions 130,162 274,740 – 9,974 – 414,876
Currency translation differences 2 – 38 25 52 117
Balance at 31/12/2022 3,410,311 992,787 293,995 290,982 371,073 5,359,148
Additions 103,868 120,769 – 1,813 – 226,450
Currency translation differences (62) – (1,486) (1,022) (2,029) (4,599)
Balance at 31/12/2023 3,514,117 1,113,556 292,509 291,773 369,044 5,580,999
Amortisation
Balance at 31/12/2021 2,478,569 435,425 – 83,292 154,592 3,151,878
Amortisation 2022 371,719 81,670 – 14,964 74,454 542,807
Currency translation differences 2 – – 25 (230) (203)
Balance at 31/12/2022 2,850,290 517,095 – 98,281 228,816 3,694,482
Amortisation 2023 259,029 107,185 – 12,138 74,230 452,582
Currency translation differences (62) – – (1,015) (1,672) (2,749)
Balance at 31/12/2023 3,109,257 624,280 – 109,404 301,374 4,144,315
Carrying amount
Balance at 31/12/2021 801,578 282,622 293,957 197,691 216,429 1,792,277
Balance at 31/12/2022 560,021 475,692 293,995 192,701 142,257 1,664,666
Balance at 31/12/2023 404,860 489,276 292,509 182,369 67,670 1,436,684
As disclosed in note 2(e) development costs capitalised in the year are mainly based on time spent by employees who are directly engaged
in the development of the G+® technology.
Management carried out an impairment test on goodwill accounted following the acquisition of Setcar S.A. in 2019.
The CGU is represented by Setcar itself, whose carrying amount as of 31 December 2023 was €4.6m. A calculation of goodwill based on a
discounted cash flow method is considered to be subject to a high degree of estimation uncertainty given fluctuations in the Groups EBIT.
For this reason, the carrying value of the Group’s goodwill has been assessed against other indicators, including the Groups market
capitalisation, which as of 31 December 2023 was c. €18.6 million, and significantly in excess of the net assets of the Group.
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Annual Report & Accounts 2023
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 31/12/2021 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 31/12/2022 2,011,729 87,093 141,151 4,743,296 587,723 779,128 2,362 8,352,482
Additions 107,973 1,787 4,181 22,455 – – 134,885 271,281
Disposal (64,123) – (1,964) (91,897) – – (2,362) (160,346)
Currency translation differences (13,238) – (540) (17,381) (3,214) – (764) (35,137)
Balance 31/12/2023 2,042,341 88,880 142,828 4,656,473 584,509 779,128 134,121 8,428,280
Depreciation
Balance 31/12/2021 822,067 53,119 145,468 2,624,999 – 259,522 – 3,905,175
Depreciation 267,411 10,211 38,873 442,228 – 102,402 – 861,125
Disposal (23,926) (1,591) (47,378) (201,507) – – – (274,402)
Currency translation differences (637) – 122 (52) – – – (567)
Balance 31/12/2022 1,064,915 61,739 137,085 2,865,668 – 361,924 – 4,491,331
Depreciation 283,337 9,795 20,814 407,183 – 96,482 – 817,611
Reclass 31,842 – (31,842) – – – – –
Disposal (64,057) – (1,964) (84,437) – – – (150,458)
Currency translation differences (8,942) – (451) (11,620) – – – (21,013)
Balance 31/12/2023 1,307,095 71,534 123,642 3,176,794 – 458,406 – 5,137,471
Carrying amounts
Balance 31/12/2021 778,742 31,496 55,965 2,007,110 587,640 519,606 2,407 3,982,966
Balance 31/12/2022 914,973 25,353 35,911 1,877,628 587,723 417,204 2,362 3,861,151
Balance 31/12/2023 735,246 17,346 19,186 1,479,679 584,509 320,722 134,121 3,290,809
Asset held under financial leases with a net book value of €419,296 are included in the above table within Plant & Machinery.
13. Investments in subsidiaries
Details of the Company’s subsidiaries as at 31 December 2023 are as follows:
Subsidiaries Country Principal activity 2023 2022
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% 51%
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
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Directa Plus plc
Annual Report & Accounts 2023
59
13. Investments in subsidiaries continued
The Company’s investment as capital contributions in Directa Plus S.p.A. are as follows:
Directa S.p.A.
At 31 December 2021 25,680,336
Additions 4,580,000
At 31 December 2022 30,260,336
Additions 1,964,800
Impairment loss (13,602,359)
At 31 December 2023 18,622,777
14. Trade and other receivables
Group Company
2023 2022 2023 2022
Current € € € €
Account receivables 3,645,064 2,964,480 – –
Tax receivables 482,800 687,670 24,489 24,230
Other receivables 268,884 463,696 71,776 90,654
Total 4,396,748 4,115,846 96,265 114,884
Group Company
2023 2022 2023 2022
Non-current € € € €
Other receivables 162,923 69,720 – –
Total 162,923 69,720 – –
Group account receivables of €3,645,064 are mainly composed by six major clients, covering 69% of the total amount.
Group Tax Receivables are composed of Italian VAT receivables of €213,482, UK VAT receivables of €24,489, Romanian VAT receivables of €105,326,
RDEC Tax Credit receivables of €97,432 and other Italian Tax receivables of €42,071.
Other receivables are mainly composed of governments grants for €134,978 and prepayments for €120,339.
Non-current other receivables refer for €162,923 to specific projects where the collection of a certain amount, although due, is postponed to the
end of the project itself.
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Annual Report & Accounts 2023
Notes to the consolidated financial statements
continued
14. Trade and other receivables continued
As at 31 December 2023 the ageing of account receivables was:
2023 2022
Days overdue € €
0-60 3,477,705 2,841,939
61-180 146,505 69,607
181-365 20,854 13,465
365 + – 39,469
Total 3,645,064 2,964,480
The Group recognises a loss allowance for expected credit losses on trade receivables. As at 31 December 2023 the Group recognised provision
for €460,894 mainly referred to Setcar’s overdue debts.
15. Deferred tax assets and liabilities
2023 2022
€ €
Deferred tax liabilities 59,647 98,694
Deferred tax (assets) (59,647) (65,599)
Total – 33,095
Tax losses are carried forward and not recognised as a deferred tax asset due to the uncertainty regarding generating future taxable profits.
The deferred tax liabilities arise from the capitalisation of development costs and defined benefit scheme are detailed below:
2023 2022
€ €
Deferred tax liabilities – cost capitalised 27,929 48,269
Deferred tax liabilities – other (363) (9,788)
Deferred tax liabilities arising from acquisition 31,718 33,095
Deferred tax assets – incl. consolidation adjustment (59,284) (38,481)
Total – 33,095
16. Cash and cash equivalents
Group Company
2023 2022 2023 2022
€ € € €
Cash at bank 2,389,687 5,721,538 1,024,286 3,787,989
Cash in hand 3,616 6,230 – –
Total 2,393,303 5,727,768 1,024,286 3,787,989
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Directa Plus plc
Annual Report & Accounts 2023
61
17. Equity
Group Company
2023 2022 2023 2022
€ € € €
Share Capital 205,469 205,469 205,469 205,469
Share Premium 39,181,789 39,181,789 39,181,789 39,181,789
Foreign currency translation reserve (44,902) (39,161) – –
Accumulated deficit (33,882,143) (30,069,844) (19,770,339) (5,346,322)
Non-controlling interests 1,121,911 1,546,887 – –
Balance at 31 December 6,582,124 10,825,140 19,616,919 34,040,936
Number of Share
Share capital ordinary shares capital (€)
At 31 December 2021 66,032,126 205,393
Share issue on 28 February* 25,523 76
At 31 December 2022 66,057,649 205,469
At 31 December 2023 66,057,649 205,469
*On 28 February 2022, 25,523 ordinary shares with a nominal value of £0.0025 each were issued as effect of the exercise of option of ordinary shares for a Directa Plus S.p.A. employee.
Share premium
Share premium €
At 31 December 2021 39,159,027
Shares issued 22,762
Expenditure relating to the raising of shares –
At 31 December 2022 39,181,789
Shares issued –
At 31 December 2023 39,181,789
On 28 February 2022, 25,523 ordinary shares were issued as effect of the exercise of option of ordinary shares for a Directa Plus S.p.A. employee,
at a price of £0.75 each. The Company accounted for €22,762 of gross share premium reserve. No other shares were issued during 2023.
Share capital
Financial instruments issued by the Directa Plus Group are treated as equity only to the extent that they do not meet the definition of a financial
liability. The Directa Plus Group’s ordinary shares are classified as equity instruments.
Share premium
To the extent that the company’s ordinary shares are issued for a consideration greater than the nominal value of those shares (in the case of the
company, £0.0025 per share), the excess is deemed Share Premium. Costs directly associated with the issuing of those shares are deducted from
the share premium account, subject to local statutory guidelines.
Foreign currency translation reserve
Exchange differences resulting from the consolidation process of Setcar S.A. are recognised in the translation reserve for an amount of €44,902.
Non- controlling interest
Non-controlling interest refers to the minority shareholders of the company who own less than 50% of the overall share capital.
As of 31 December 2023, non-controlling interest is composed by 49% of Setcar S.A. and 26.46% of Directa Textile Solutions S.r.l..
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Directa Plus plc
Annual Report & Accounts 2023
Notes to the consolidated financial statements
continued
18. Loans and borrowings
Group Company
2023 2022 2023 2022
€ € € €
Non-current loans and borrowings 1,528,108 1,378,141 – –
Current loans and borrowings 742,904 767,677 – –
Total 2,271,012 2,145,818 – –
2023 Current Non-current
€ € € Repayment Interest rate
Bank of Transilvania 603,021 241,208 361,813 36-months Variable
6.22% ROBOR
3M + 2.5%/Year
Bank of Transilvania IMM INV 321,115 113,310 207,805 60-months Variable
6.22% ROBOR
3M +2.5%
MARJA BANK
Bank of Transilvania IMM INVEST 51,270 51,270 – 9-Months Variable
6.5% ROBOR
6M+4.20%/Year
Bank of Transilvania IMM INVEST 16,101 16,101 – 12-Months Variable
PROIECT POIM tva 6.5% ROBOR
6M+4.20%/Year
Bank of Transilvania IMM INVEST 34,638 12,226 22,412 36-Months Variable
PROIECT POIM inv 6.5% ROBOR
6M+3.65%/Year
Intesa San Paolo 207,564 74,804 132,760 72-months 1.5%/Year
+ EURIBOR 3M
Intesa San Paolo 15,730 6,250 9,480 72-months 1.5%/Year
+ EURIBOR 3M
Intesa San Paolo 438,540 123,561 314,979 72-months 1.5%/Year
+ EURIBOR 3M
Banca Popolare di Sondrio 394,824 101,215 293,609 72-months 1.5%/Year
+ EURIBOR 3M
Ricerca e Innova (Finlombarda) 185,240 – 185,240 84-months –
Reconciliation of liabilities arising from financing activities
Cash flows Non cash flows
1 January Capital Liabilities Accrued Liabilities 31 December
2023 repayment acquired interest acquired 2023
€ € € € € €
Borrowings 2,145,818 820,084 945,278 – – 2,271,012
Total 2,145,818 820,084 945,278 – – 2,271,012
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Directa Plus plc
Annual Report & Accounts 2023
63
18. Loans and borrowings continued
Net debt reconciliation
2023 2022
€ €
Loans and borrowings 2,271,012 2,145,818
Lease liabilities 389,565 634,328
Less: cash and cash equivalent (2,393,303) (5,727,768)
Net debt 267,274 (2,947,622)
Total equity 6,582,124 10,825,140
Debt to capital ratio (%) 4.06% (27.23%)
19. Leases liabilities
The following table details the movement in the Group’s lease obligations for the period ended 31 December 2023:
2023 2022
€ €
Non-current lease liabilities 183,056 395,260
Current lease liabilities 206,509 239,068
Total 389,565 634,328
20. Employee benefits provision
2023 2022
€ €
Employee benefits 357,520 554,444
Total 357,520 554,444
Provisions for benefits upon termination of employment primarily related to provisions accrued by Italian companies for employee retirement,
determined using actuarial techniques and regulated by Article 2120 of the Italian Civil code. The benefit is paid upon retirement as a lump sum,
the amount of which corresponds to the total of the provisions accrued during the employees’ service period based on payroll costs as revalued
until retirement. Following the changes in the law regime, from 1 January 2007, accruing benefits have been contributing to a pension fund or a
treasury fund held by the Italian administration for post-retirement benefits (“INPS”). For companies with less than 50 employees it will be possible
to continue this scheme as in previous years. Therefore, contributions of future TFR provisions to pension funds or the INPS treasury fund
determines that these amounts will be treated in accordance to a defined contribution scheme, not subject to actuarial evaluation. Amounts
already accrued before 1 January 2007 continue to be accounted for a defined benefit plan and to be assessed on actuarial assumptions.
The breakdown for 2022 and 2023 is as follows:
€
Amount at 31 December 2021 500,535
Service cost 76,108
Interest cost 18,309
Actuarial losses 6,790
Benefit paid (47,298)
Amount at 31 December 2022 554,444
Service cost 14,170
Interest cost 16,125
Actuarial losses 10,769
Benefit paid (237,988)
Amount at 31 December 2023 357,520
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Directa Plus plc
Annual Report & Accounts 2023
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.
2023 2022
Annual rate interest 3.30% 3.30%
Annual rate inflation 2.10% 2.10%
Annual increase TFR 7.41% 7.41%
Tax on revaluation 17.00% 17.00%
Social contribution 0.50% 0.50%
Increase salary male 2.20% 2.20%
Increase salary female 2.10% 2.10%
Rate of turnover male 2.00% 2.00%
Rate of turnover female 1.80% 1.80%
Sensitivity analysis
Detailed below are tables showing the impact of movements on key variables:
Actuarial hypothesis – 2023
Decrease 10% Increase 10%
Variation Variation
Rate DBO € Rate DBO €
Increase salary Male 1.95% (3,049) 2.45% 4,064
Female 1.85% 2.35%
Turnover Male 1.00% (16,078) 3.00% 14,551
Female 0.80% 2.80%
Interest rate 3.05% 8,582 3.55% 8,582
Inflation rate 1.85% (5,468) 2.35% (5,468)
21. Trade and other payables
Group Company
2023 2022 2023 2022
Non-current € € € €
Other payables 64,014 64,366 – –
Total 64,014 64,366 – –
Group Company
2023 2022 2023 2022
Current € € € €
Trade payables 1,693,569 1,088,849 1,846 28,915
Employment costs 184,838 264,627 – –
Other payables 978,428 759,399 124,563 93,358
Total 2,856,835 2,112,875 126,409 122,273
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Directa Plus plc
Annual Report & Accounts 2023
65
22. Provision
Group Company
2023 2022 2023 2022
Current € € € €
Provision 40,847 190,997 – –
Total 40,847 190,997 – –
The 2023 provision of €40,847 relates to the expected future losses expected to be incurred on an onerous long-term contract in Laos, where the
recovery of excess costs is deemed uncertain under IFRS15.
The 2022 provision of €190,997 related to the expected future losses incurred on an onerous long-term contract in Guatemala that was
completed in the year.
23. Financial instruments
Financial risk management
The Group’s business activities expose the Group to the following financial risks:
a) Market risk
Market risk arises from the Group’s use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the fair value of
future cash flow of a financial instrument will fluctuate because of changes in interest rates or foreign exchange rates. As at 31 December 2023 the
Group is exposed to variable interest rate risk for the loans issued by Setcar and by Directa Plus S.p.A. under the Italian Government Covid-19
Recovery Plan. Despite the rise in interest rates by the Central Banks over the recent months, those loans, being 90% guaranteed by the Italian
Government, bear a relatively low interest rate (1.5% + EURIBOR) and, if the interest rate had increased or decreased by 200 basis points during the
year the reported loss after taxation would not have been materially different to that reported.
b) Capital Risk
The Group’s objectives for managing capital are to safeguard the Group’s ability to continue as going concern, so that it can continue to provide
returns for shareholders and benefits for other stakeholders and to provide an adequate return to shareholders by pricing products and services
commensurately with the level of risk. There were no changes in the Group’s approach to capital management during the year.
c) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
The Group’s credit risk is primarily attributable to its trade receivables that the Company consider defaulted if any instalment is unpaid more than
sixty (60) days past its original due date or where there is evidence that identifies the debtor’s state of insolvency.
The Group’s cash and cash equivalents and restricted cash are held with major financial institutions. The Group monitors credit risk by reviewing
the credit quality of the financial institutions that hold the cash and cash equivalents and restricted cash.
The Group’s trade receivables consist of receivables for revenue mainly in Italy and Romania. Management believes that the Group’s exposure to
credit risk is manageable and currently the Group’s standard payment terms are 30 to 60 days from date of invoice are largely met from the clients.
At the end of the period, 90% of account receivables have an ageing less of 60 days and refers to orders delivered close to the year end. As at
31 December 2023 the Group recognised a cumulated bad debt provision for €460,894.
Every new customer is internally analysed for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered.
Advance payment usually applies for the first order and the exposure to credit risk is approved and monitored on an ongoing basis individually for
all significant customers. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of
financial position. The Group does not require collateral in respect of financial assets.
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Annual Report & Accounts 2023
Notes to the consolidated financial statements
continued
23. Financial instruments continued
d) Exposure to credit risk
2023 2022
Group Note € €
Trade receivables 14 3,645,064 2,964,480
Cash and cash equivalent 16 2,393,303 5,727,768
Total 6,038,367 8,692,248
The largest customer within trade receivables accounts for 21% of debtors. Management continually monitors this dependence on the largest
customers and are continuing to develop the commercial pipeline to reduce this dependence, spreading revenues across a variety of customers.
e) Liquidity risk
It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Liquidity risk arises from the Group’s
management of working capital and the finance charges and principal repayments on its debt instruments. The Group manages liquidity risk by
maintaining adequate reserves and banking facilities and by continuously monitoring forecast and actual cash flows. The Board reviews regularly
the cash position to ensure there are sufficient resources for working capital requirements and to meet the Group’s financial commitments.
Carrying amount Up to 1 year 1-5 years
2023 € € €
Financial liabilities
Trade payables 1,693,569 1,693,569 –
Lease liabilities 389,565 206,509 183,056
Loans 2,271,012 742,904 1,528,108
Total 4,354,146 2,642,982 1,711,164
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 2,145,818 767,677 1,378,141
Total 3,868,995 2,095,594 1,773,401
f) Currency risk
The Group usually raises money issuing shares in pounds, it follows that the Group usually holds sterling bank accounts as result of capital raise.
Sterling bank accounts are mainly used to manage expenses of the Company (such as UK advisors, LSE fees and costs related to the Board) in UK.
The cash held in Sterling continues to be subject to currency risk.
EUR
Cash held in GBP 973,722
If the exchange rate EUR/GBP increase by 10% the impact on P&L would be a loss equal to €0.1 million (if decrease by 10% would be a profit
equal to €0.1 million).
The Group holds accounts also in other currency (such as USD and RON) but just for business purposes and for not material amount.
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Annual Report & Accounts 2023
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 2022 25,523 66,057,649 365 66,053,593
Existing shares – 66,057,649 365 66,057,649
At 31 December 2023 – 66,057,649 365 66,057,649
Basic Diluted
2023 2022 2023 2022
€ € € €
Loss attributable to the owners of the Parent (3,856,103) (4,822,044) (3,856,103) (4,822,044)
Weighted average number of ordinary shares
in issue during the year 66,057,649 66,053,593 – –
Fully diluted average number of ordinary shares
during the year – – 67,052,006 67,189,085
Loss per share (0.06) (0.07) (0.06) (0.07)
The effect of anti-dilutive potential ordinary shares is ignored in calculating the diluted loss per share.
25. Share schemes
The 2020 Employees’ Share Scheme is administered by the Remuneration Committee.
The Directors are entitled to grant awards over up to 10 per cent of the Company’s issued share capital from time to time.
Under the 2020 Employees’ Share Scheme, in November 2020 1,801,000 options over Ordinary Shares were granted to key employees and
additional 150,000 options were granted to an Executive Director in June 2021 under the same Scheme. As of 31 December 2023, the total
number of outstanding Ordinary Shares awards is 150,000.
At the date of this report, an additional 331,046 share options had vested in 2020 under the 2016 Employees’ and NED Share Schemes that
have not yet been exercised.
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Annual Report & Accounts 2023
Notes to the consolidated financial statements
continued
25. Share schemes continued
The main terms of the 2020 Employees’ Share Schemes are set out below:
Eligibility
All persons who at the date on which an award is granted under the Employees’ Share Scheme are employees (or employees who are also office-
holders) of a member of the Group and are eligible to participate. The Remuneration Committee decides to whom awards are granted under the
Employees’ Share Scheme, the number of Ordinary Shares subject to an award, the exercise date(s) (subject to the below) and the conditions
which must be achieved for the award to be exercisable.
Types of award
Awards granted under the Employees’ Share Scheme have the form of market value share options. “Market value share options” are share options
with an exercise price equal to the market value of a share at the date of grant. The right to exercise the award is generally dependent upon the
participant remaining an officer or employee throughout the performance period. This is subject to the good leaver provisions. Awards granted
under the Share Schemes will not be pensionable.
Individual limits
The value of Ordinary Shares over which an employee or Executive Director may be granted awards under the Employees’ Share Scheme in any
financial year of the Company shall not exceed 200 per cent of his basic rate of salary at the date of grant.
Variation of share capital
Awards granted under the Share Schemes may be adjusted to reflect variations in the Company’s share capital.
Vesting of awards
Outstanding awards will vest over three years in equal one third tranches on each anniversary of the grant date to the extent that the market-based
performance targets have been met. Vested awards may generally be exercised between the third and tenth anniversaries from the date of grant.
75% of vested shares can be exercised after the third anniversary, while the remaining 25% from the fourth.
The inputs to the Monte-Carlo simulation were as follows:
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.
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Annual Report & Accounts 2023
69
25. Share schemes continued
Details of the number of share options outstanding are as follows:
2021 2022 2023
Outstanding at start of period 1,801,000 1,688,000 1,503,000
Granted during the period 150,000 – –
Cancelled during the period (263,000) (185,000) (358,000)
Expired during the period – – (331,669)
Vested during the period – – (663,331)
Outstanding at end of period 1,688,000 1,503,000 150,000
Exercisable period option price 66-118p 66p-118p 66p-118p
Grant date 12 Nov 20 – 15 Jun 21 12 Nov 20 – 15 Jun 21 12 Nov 20 – 15 Jun 21
Exercisable date 12 Nov 23 – 15 Jun 24 12 Nov 23 – 15 Jun 24 12 Nov 23 – 15 Jun 24
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’.
2023 2022
€ €
Short-term employee benefits and fees 129,065 227,159
Social security costs 39,837 74,423
168,902 301,582
The decrease in the 2023 remuneration is mainly explained by the layoff of an executive manager.
For Directors remuneration please see Director’s Remuneration Report.
Other transaction Group
Other related party transactions during the year under review are shown in the table below:
2023 2022
€ €
Sale of products – 6,625
Products are sold on normal commercial terms and conditions.
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Directa Plus plc
Annual Report & Accounts 2023
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.
2023 2022
€ €
Bank guarantees 38,435 38,435
28. Post balance sheet events
In February 2024, Directa Plus S.p.A. signed a conditional share sale purchase agreement with GVC Investment Company Ltd to acquire a further
48.96% stake in Setcar S.A.. Following completion of the Acquisition in May 2024, Directa Plus’ shareholding in Setcar increased from 50.99% to
99.95%. The total consideration was equal to €1.5 million, of which €1 million provided by Nant Capital LLC with a financing facility. The acquisition
represents an opportunity for Directa Plus to take further control of the environmental supply chain and capture maximum value from the
commercial offering made possible by the Grafysorber® technology.
On 11 June 2024, the Group announced the launch of a proposed capital increase of £6.9 million gross capital raise, to be finalised by the end of
June 2024 subject to the shareholders’ approval, to fund the acquisition of the minority interests of its subsidiary Setcar and sustain the expected
high growth of the business.
Directa Plus plc
Annual Report & Accounts 2023
Directa Plus plc
Annual Report & Accounts 2023
About Directa Plus
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 Financial highlights
02 Chairman’s review
03 At a glance
04 Investment case
05 Target market progress
06 What is graphene?
07 Our values 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
Cavendish Capital Markets Limited
One Bartholomew Close
London EC1A 7BL
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 Strategic Communications
71-73 Carter Lane
London EC4V 5EQ
United Kingdom
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Printed sustainably in the UK
by Pureprint, a CarbonNeutral®
company with FSC® chain
of custody and an ISO 14001-
certified environmental
management system recycling
over 99% of all dry waste.
Directa Plus plc
7th Floor
50 Broadway
London SW1H 0DB
United Kingdom
Welcome to the
Graphene Age
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www.directa-plus.com
Annual Report & Accounts 2023