Source - LSE Regulatory
RNS Number : 3768K
Directa Plus PLC
05 May 2022
 

5 May 2022

 

Directa Plus plc

("Directa Plus" or the "Company")

 

Final Results for the Year to 31 December 2021

 

Strong 2021 performance, well-positioned for growth

 

Directa Plus (AIM: DCTA), a leading producer and supplier of graphene nanoplatelets based products for use in consumer and industrial markets, today publishes its full year results for the year ended 31 December 2021, delivering revenue and profitability which have exceeded consensus market expectations. The Company continues to lead in the production of graphene-based products which support the transition to net zero.

 

Year to date, the Company is trading in line with FY2021, with an expected acceleration through the second quarter and into the second half of the year. Accordingly, the Board is confident of the Company's continued growth trend and remains comfortable with current consensus revenue forecasts for FY2022. The Company continues to take actions to mitigate cost increases through price increases, expected productivity gains and cost reductions, whilst accelerating investments in key capabilities. In addition, the Company is waiting on the final decision on the award of a significant tender in Romania for its Environmental Remediation services, which is expected to be communicated shortly and, if awarded, to start in the second half of 2022.

 

 

Financial & Operational Highlights

·   Product sales and service revenue increased by 33.9% to €8.62m (2020: €6.43m), slightly above market expectations

·   Total income (including grants) increased by 39.3% to €9.45m (2020: €6.78m)

·   LBITDA* improved to €1.99m (2020: €2.62m)

·   Reported (basic) Loss per share was €0.06 (2020: €0.07)

·   Cash and cash equivalents at year end of €11.13m (2020: €7.08m)

·   Total patents granted at year end of 72 (2020: 38)

·   Approximately 29k cubic meters of sludge treated and 7k metric tonnes of hydrocarbons recovered **

·   63k metres of textile printed, dyed and laminated in 2021

 

* LBITDA represents loss from operating activities before tax, interest, depreciation and amortization.

** Only with reference to the main project with OMV Petrom

 

Target market progress

 

Environmental Remediation (76% of revenue (2020: 68%))

·   In March 2021, completed the draining, cleaning and washing of a first oil storage unit for Petrotel Lukoil S.A. for c. €0.4 million of services revenue.

·  In early 2021, secured an extension and increase of the contract with OMV Petrom for the provision of decontamination and oil recovery services using Grafysorber® technology.

·   In July 2021, won an additional tender with OMV Petrom for a four-year contract, with a total value of more than €3.2m, to treat approximately 80,000 cubic meters of sludge and waste produced during the first upstream separation process.

·   In April 2022, received authorisation from the United States Environment Protection Agency for the Company's Grafysorber® technology to be used on any oil contamination on US territory.

·   In April 2022, received the first order of Grafysorber® based absorbent materials from a UK company.

·   Established a pipeline of active contract tenders across Europe, including a number of high value opportunities.

 

Textiles (21% of revenue (2020: 30%))

·   In the first half of 2021, launched Directa Plus' own line of performance sportswear, the Cosmic Collection, which provides a showcase for the versatility of G+® and increases brand awareness.

·   In November 2021, won a project tender from the State of Lombardy's TECH FAST program, for a total duration of 12 months and a total value of c. €0.3 million, of which 50 per cent. is non-refundable. The program will support the Company in developing applications for G+® graphene in industrial filtration, such as for air-conditioning or transportation filters.

·   In December 2021, signed a Letter of Intent with Radici Group, an Italian-based global chemicals and materials group and a major player in the non-woven materials industry to collaborate on an exclusive basis to develop specific products for the global air and water filtration markets.

 

Others

·   In February 2021, signed a 3-year supply agreement and joint R&D collaboration with NexTech for the supply and development of new grades of G+® graphene nanoplatelets for the production of Lithium Sulphur batteries.

·   In June 2021, NexTech's European subsidiary was established in Italy with the initial objective being to evaluate the feasibility of producing cathode active materials in Italy, using G+® graphene nanoplatelets.

·   In March 2022, Oxfordshire County Council began its second trial of a patented asphalt concrete modifier enhanced by the Company's G+® graphene. Half of a 700-metre stretch of the road is being laid with GiPave®, while the other half will be resurfaced using conventional asphalt, so that the two surfaces can be compared.

 

Awards

·   Awarded the London Stock Exchange's Green Economy Mark, which recognises Directa Plus as contributing to the global green economy.

·   The Company received a special mention as a Rising Star in the 2021 Company Excellence Awards hosted by the Italian Stock Exchange and sponsored by Harvard Business Review Italy, the management consultants GEA and the Milan based fund managers ARCA.

 

Giulio Cesareo, Founder & CEO, said: "I believe that Directa Plus is now at an inflection point - we are successfully transitioning from a research focused company into a commercial company with a number of exciting opportunities in our targeted markets. The Company operates in fast changing environment, and it is currently refining its strategic plan to prioritise the verticals with higher potential in terms of commercialisation and financial returns. The fundraise completed in December 2021 will allow us to accelerate growth in the most promising of these areas, where the Group continues to build an active pipeline of contract tenders."

 

For further information please visit http://www.directa-plus.com/ or contact:

 

Directa Plus plc

+39 02 36714458

Giulio Cesareo, CEO / Giorgio Bonfanti, CFO

 

 

 

Cenkos Securities plc (Nominated Adviser and Joint Broker)

+44 131 220 6939

Neil McDonald / Adam Rae

 

 

 

Singer Capital Markets (Joint Broker)

+44 20 7496 3069

Rick Thompson / Phil Davies

 

 

 

Tavistock (Financial PR and IR)

+44 20 7920 3150

Simon Hudson / Heather Armstrong

 

 

About Directa Plus

Directa Plus (www.directa-plus.com) is one of the largest producers and suppliers of graphene-based products for use in consumer and industrial markets. The Company's graphene manufacturing capability uses proprietary patented technology based on a plasma super expansion process. Starting from natural graphite, each step of Directa Plus' production process - expansion, exfoliation and drying - creates graphene-based materials and hybrid graphene materials ready for a variety of uses and available in various forms such as powder, liquid and paste.

 

This proprietary production process uses a physical process, rather than a chemical process, to process graphite into pristine graphene nanoplatelets, which enables Directa Plus to offer a sustainable, non-toxic product, without unwanted by-products. Directa Plus' products are made of hybrid graphene materials and graphene nano-platelets. The products (marketed as G+®) have multiple applications due to its properties. These G+® products can be categorised into various families, with different products being suitable for specific practical applications.

 

Directa Plus was established in 2005 and is based in Lomazzo (Como, Italy) and has been listed on the AIM market of the London Stock Exchange since May 2016. The Company holds the Green Economy Mark from London Stock Exchange which recognises companies that contribute to the global green economy.

 

Strategic Report

 

Chairman's Review

The macro economic challenges of 2020 continued into 2021 and 2022 with the Covid-19 pandemic and the war in Ukraine.  However, Directa Plus has continued to execute against its strategy and deliver growth, and continues to take actions to mitigate cost increases through price increases, expected productivity gains and cost reductions, whilst accelerating investments in key capabilities. Our teams have continued to perform above expectations throughout this prolonged period of volatility and I would like to share the Board's appreciation for their hard work and dedication. 2021 saw further strategic progress for the Company as new partnerships and new markets were established, supporting our long-term growth ambitions. I am pleased with the progress the business is making in refining the strategic plan to prioritise the verticals with higher potential in terms of commercialisation and financial returns.

 

 

2021 saw continued growth for the business with revenues from products and services increased by 33.9% to €8.62m (2020: €6.43 million), and total income by 39.3% to €9.45m (2020: €6.78 million). 

 

In December 2021, we successfully raised £7 million from our supportive shareholder base to accelerate our goal to commercialise our graphene-based products with an ever increasing and diverse customer base. We enter the new financial year well capitalised and ready to continue executing on our strategy.

 

Giorgio Bonfanti joined the Company in May 2021 and we welcomed him to the Board in November. He brings with him a wealth of experience and has already delivered significant contributions to the Company in his first year of service.

 

In recognition of our strong environmental credentials and contribution to sustainable business practices, the London Stock Exchange awarded the Company the Green Economy Mark in November 2021. This award is given to businesses across all industries that make significant contributions to the transition to a sustainable, low carbon economy.

 

Innovation remains at the heart of our product development and, as an example, in December 2021 we were granted an EU-wide patent covering the use of the Company's G+® pristine graphene nanoplatelets to boost the performance of rubber-based shoe outsoles.  Our IP portfolio now comprises 19 patent families with 72 patents granted and 27 patents pending and we continue to grow the portfolio.

 

We started the new financial year announcing that Oxfordshire County Council had started its second trial of a patented asphalt concrete modifier developed by Iterchimica and enhanced by the Company's G+®. This trial followed a successful pilot scheme in Curbridge, Oxfordshire in 2019.

 

At the end of March 2022, we announced that Grafysorber®, our patented decontamination technology had been granted authorization for use in the United States by the US Environmental Protection Agency, paving the way for entry into one of the world's largest markets for decontamination of oil spills.

 

Our robust and sustainable strategy remains at the centre of our operations. With strong foundations, laid over the last few years, we are well positioned for further growth and increased traction in all areas.  We are encouraged by increased levels of interest in the Directa Plus offering, and we continue to gain wider recognition for our proven innovative products. We have partnered with a number of new organisations in the year and we are confident in our future commercial opportunities. 

 

I would like to take this opportunity to thank our team, customers and shareholders for their continued support. The Board looks forward to the new financial year and beyond with optimism, albeit tempered by the potential economic consequences of war and commodity price spikes.

 

Sir Peter Middleton

Chairman

4 May 2022

 

Chief Executive Officer's Review

 

Introduction

Directa Plus continued to grow during 2021 despite the headwinds created by the worldwide pandemic and associated lockdowns.  The Company has become an acknowledged global leader in the production of graphene and its applications in existing and new products for consumers and industry.  We expect global graphene demand to continue to increase significantly and intend to position Directa Plus at the forefront of development using our patented process for the production of pristine, chemical free graphene nanoplatelets, tailored to partners' and customers' requirements.  We expect to build a substantial business by positioning Directa Plus in the verticals where technology capabilities, at attractive costs, meet with market opportunities and growing customer acceptance.

 

The fundraise we completed at the end of the year under review will allow the Company to undertake the next phase of growth and to take advantage of existing and new opportunities both in Europe and further afield.

 

Strategy and Business Model

Our strategy is primarily to target existing products and markets that can be significantly improved with the addition of Directa Plus products. The Company works with key partners, benefitting from their knowledge of the market, strong reputation and commercial channels.

 

Our proprietary scalable, modular manufacturing process to produce and supply high quality engineered tunable graphene materials at low production costs and 100% chemical free puts sustainability at the heart of our operations and acts as a powerful differentiator from competitors.  We have amassed 43 certifications over the years, all reporting the absence of negative impacts on biological systems.  We consider the health and safety of all stakeholders and environmental protection as top priorities and we have implemented a proactive approach by continuously monitoring our production process and products.  

 

We currently target four key markets in which we already have cornerstone customers and partners:

·   Environmental remediation - through our successful Setcar subsidiary, using Directa Plus' Grafysorber® technology to help the oil and gas industry to tackle environmental issues from hydrocarbon pollution;

·   Textiles - printing nanoplatelets on fabrics, and graphene enhanced membranes for the sports, luxury, fashion, workwear and military markets;

·   Composites - introducing the next generation of graphene-enhanced asphalts that are recyclable for a lower carbon world; and

·   Lithium-sulphur batteries - the development of a Lithium-Sulphur battery using the Directa Plus' G+® pristine graphene nanoplatelets as a key cathode component.

 

In addition to these key verticals, we continuously monitor other high potential markets where we believe that for a relatively small investment we can develop products that can generate high commercial traction and which have a fast time to market, such as paints, consumer electronics and filtration.

 

The Company operates in fast changing environment, and it is currently refining its strategic plan to prioritise the verticals with higher potential in terms of commercialisation and financial returns.

 

Environmental remediation

The Group's Setcar subsidiary has again delivered strong growth.  It is leading the expansion of Directa Plus' Grafysorber® technology into new markets and is rapidly gaining traction in the global oil & gas industry as a step change improvement from existing water treatment products and services.  Setcar has integrated well into the Group and is now examining opportunities to expand its service offering, based on our Grafysorber® products, internationally.

 

Reusable and sustainably produced, Grafysorber® is five times more effective at hydrocarbon clean-up than competitor products and allows for the recovery of financially valuable oils and sludges. In addition, Grafysorber® is sustainably produced, non-flammable and reusable, with the adsorbed hydrocarbons recoverable.

 

The Group continues to build an active pipeline of contract tenders, including high value opportunities.

 

In March 2021 we completed the draining, cleaning and washing of a first oil storage unit for Petrotel Lukoil S.A. for a total amount of c. €0.4 million of services.

 

In early 2021, the contract with OMV Petrom was extended and increased. Initially awarded in July 2019, the contract was for the provision of decontamination and oil recovery services using Grafysorber® technology.  The initial value of the contract was €150,000 and this was increased to €410,000 for a six-month services period.  In July 2021, an additional tender with OMV Petrom was won for a four-year contract, with a total value of more than €3.2m, to treat some 80,000 cubic meters of sludge and waste produced during the first upstream separation process.  Up to 20,000 tons of crude oil with impurities below 1% will be recovered and sent to the refinery. At current oil prices (c. $700-800 per ton) this is generating significant value for the client. Directa Plus will supply a total of 700 high-performance adsorbent devices containing Grafysorber® to OMV Petrom.  As at the time of writing, we have treated 36,000 cubic meters of sludge and recovered 8,900 tons of crude oil.

 

We believe that Grafysorber® has significant export potential overseas and the Company continues to evaluate opportunities in discussion with possible partners focused on decontamination from hydrocarbons.  A vital first step in addressing the US market was achieved in late March 2022 with the grant of authorization by the United States Environment Protection Agency to use Grafysorber® at any oil spill on US territory.

 

In April 2022, the Company signed a first order of Grafysorber® based absorbing products with a major UK reselling company, with the aim to initially target mainly the northern European markets.

 

As announced at the time of the Fundraise in December, we plan to invest in the further development of Grafysorber® technology to broaden the number of applications we can offer. This will involve constructing a water treatment plant as well as providing dedicated equipment for in-house treatment of industrial water and for the removal of hydrocarbons and other organic pollutants. The Company also has recently located a Grafysorber® production unit in Sectar's premises in Romania, close to existing customers, and launched the production of absorbent materials such as Grafysorber®-made booms, pillows, socks and pads for the oil and gas industry.

 

Textiles

In 2020, the Covid-19 pandemic led Directa Plus to rapidly respond to the global crisis by developing the Co-mask™, a product to alleviate the effects of the pandemic by helping to reduce transmission of the virus.  The development and commercialisation of the Co-mask™ accelerated studies around the filter applications of G+® technology, which is proven to have anti-viral properties, is non-toxic and has no negative impacts on human skin.  This work is now producing additional applications which leverage the antimicrobial and antiviral properties of G+®and provides the basis for entry into the large global filter market.

 

In March 2021, Directa Plus announced a further test result relating to the absence of absorption of its pristine graphene nanoplatelets powder (Pure G+®) through human skin. A total of eight in vitro test results now show that Pure G+® has no potential negative impact on human health.

 

In April 2021, the new G+® graphene coating for fabrics was tested by an independent third-party laboratory and found to be suitable for human skin contact. The results showed zero erythema and oedema reactions across all subjects participating in the test and the G+® coated fabric was reported to be 'dermatologically tested' and non-irritating.

 

in July 2021, the peer-reviewed interdisciplinary open-access journal iScience published a scientific paper titled "Graphene Nanoplatelet and Graphene Oxide Functionalization of Face Mask Materials Inhibits Infectivity of Trapped SARS-CoV-2". The paper provides scientific evidence that the Company's G+® graphene nanomaterials and those from graphene oxide present a critical opportunity to significantly increase face mask efficacy. In relation to the anti-SARS CoV2 capability of Directa Plus' G+® graphene, the paper certifies that G+® filter fabric treated with PU G+® can inactivate 97% of the virus while G+® cotton can inactivate 99% of the virus.

 

The antibacterial and antiviral properties of the Company's G+® pristine graphene nanoplatelets represent significant opportunities for Directa Plus in textile and biomedical applications. The efficacy of G+® and its non-toxic and sustainable production characteristics overcome the problems of the current state-of-the-art solutions that are based on metal-ion or halogen treatments, which could be dangerous to human health and detrimental to the environment.

 

As a result of the fundraise we plan to advance the application of G+® technology to non-woven fabrics to confer antibacterial and antiviral properties for the industrial filtration market.  In December, Directa Plus signed a Letter of Intent with Radici Group, an Italian-based global chemicals and materials group and a major player in the non-woven materials industry, to collaborate on an exclusive basis for an initial period of 12 months. The collaboration will see G+® technologies combined with those of Radici to develop specific products for the global air and water filtration markets.  If the technical results envisaged are achieved, the two companies will negotiate a technical and commercial partnership agreement with Directa Plus to benefit from a revenue-sharing business model.

 

In July 2021 members of the Dutch and Belgian cycling teams won four medals at the Tokyo Olympics (one gold, two silver and one bronze) in the road race event wearing a shirt printed with Directa Plus's patented and proprietary technology, the G+® Planar Thermal Circuit®. The shirts for the national cycling teams at the Games were made by premium cycling brand, Bioracer, using fabric supplied by Italian company, Taiana, with the unique and high-performance print made using Directa Plus's sustainable graphene. This is an additional illustration of how the Company's G+® graphene supports the natural thermoregulation of the body, providing athletes with a competitive advantage.

 

In September 2021 Directa Plus' new G+® graphene coatings have being shown in two collections at the prestigious Milan Design Week. The Company's revolutionary new covering material has been selected for inclusion in collections being shown by two Italian companies.  Plinio il Giovane is a central Milan based producer of high-end furniture and upholstery and is showcasing a collection of chairs and sofas with G+® coverings. Danese Milano, a subsidiary of lighting company Artemide S.p.A., is an innovative producer of interior design accessories and is showing a desk pad covered with the G+® coating. Plinio il Giovane and Danese Milano both selected Directa's innovative material technology as a result of its disruptive performance compared to traditional upholstery fabrics and coatings. G+® coatings on organic and non-organic fabrics are antibacterial and antiviral against Sars-Cov-2; resistant to abrasion and wear and tear; resistant to UV light, and; thermally conductive for achieving the highest thermal comfort.

 

In April 2022 Directa Plus has signed a non-binding Letter of Intent with a leading worldwide supplier of automotive interiors to Tier 1 manufacturers.  The partners intend to develop a suite of new products for the automotive industry based on the antimicrobial properties (antibacterial and antiviral), thermal comfort and electrical conductivity properties of the Company's G+® enhanced fabrics.

 

In November 2021, the Company announced that a specially developed graphene membrane is integrated into the lining of the norda™ 001 G+® Spike high performance trail shoes.  Directa Plus was responsible for the G+® membrane which is integrated into the Dyneema® one-piece woven upper lining in the toe box of the shoes.  This provides the runner with additional comfort due to the thermal conductivity and abrasion resistance of the graphene G+® membrane while adding almost zero additional weight. Gear Patrol, the influential buying magazine, ranked norda™ 001 the most innovative trail running shoe of 2022.

 

We continue to strengthen our relationships with existing important customers in the workwear and luxury segments and to promote our presence in the textiles vertical Directa Plus launched its own line of performance sportswear, the Cosmic Collection, in the first half of 2021.  This collection aims to offer consumers advanced technology, which is also sustainable.  The Cosmic Collection provides a showcase for the versatility of G+® and its applications and will help to increase awareness of the Company and our technologies.

 

Composites

The asphalt and bitumen applications of G+® graphene technology is generating considerable traction, and the interest in the market for Iterchimica's GiPave® product, developed with Directa Plus, is growing internationally.  We have signed a three-year agreement with Iterchimica for the exclusive supply of G+® graphene products for the sector worldwide and have extended the partnership with a significant pipeline of opportunities.

 

In the UK, Oxfordshire County Council has now started its second trial to further test the benefits that GiPave® can bring.  The new trial will see two identical stretches of Marsh Lane in Oxford, which carries around 10,000 vehicles a day along a key city route, resurfaced with different materials.  Half of a 700-metre stretch of the road will be laid with GiPave®, while the rest will be resurfaced using conventional asphalt, so that the two surfaces can be compared.  This second trial follows a successful first pilot scheme in Curbridge, Oxfordshire in 2019.  Analysis of this scheme showed GiPave® increases the lifespan of the surface by up to 70 per cent compared to conventional resurfacing methods.

 

Lithium-Sulphur Batteries

Next generation Lithium-Sulphur battery chemistry offers advantages over Lithium-Ion as it has a superior energy density, significant cost advantages and a superior safety profile. Our collaboration with NexTech, a leading company in the field of Lithium-Sulphur batteries based in Nevada, USA, is making strong progress.

 

In November 2020, a memorandum of understanding was signed with NexTech. In February 2021, both parties agreed to form a stronger partnership, with a three-year supply agreement for the provision of a specific grade of G+® pristine graphene nanoplatelets and a joint R&D collaboration to develop new specific grades of nanoplatelets. A joint laboratory has been established in Lomazzo, where Directa Plus is located and both parties will dedicate selected scientists from their respective R&D teams.

 

We continue to support NexTech in the development of this disruptive technology, in which G+® will play a key role in terms of technical properties and the supply of our product at the scale necessary to satisfy the needs of the market.  In June 2021, NexTech established its European subsidiary in Italy ("NexTech Italia SpA"), with the initial objective being to evaluate the feasibility of producing cathode active materials in Italy, using our G+® graphene nanoplatelets, for the manufacture of Lithium-Sulphur (Li-S) batteries throughout Europe.

 

The Company is now ready to target other Lithium-Sulphur battery producers to accelerate the technology's commercialisation.

 

Other Verticals

 

Consumer Electronics

In December 2020, Directa Plus signed a development agreement with the soft goods division of a major international developer and manufacturer of consumer electronics and related services. The agreement covers the potential application of G+® graphene as a protective covering for consumer devices, exploiting the antiviral-antibacterial properties of G+® graphene as well as its thermal and electrical conductivity.  The partnership has delivered exceptional results to date.  In 2021 we received some promising orders for our G+® graphene and this collaboration continues to demonstrate the potential for significant volumes in the coming years.

 

Automotive

Directa Plus continues to invest in the technical and commercial agreement with Italdesign, part of Volkswagen AG, a global leader in automotive design and engineering. The agreement will see Directa Plus and Italdesign jointly develop a wide range of automotive components enhanced by the Company's graphene expertise.

 

Paints

In February 2021, research undertaken by scientists at the Polytechnic of Turin was published in an article in the journal Polymers showing that the use of water-based G+® graphene ink to coat polymeric foam confers significant flame-retardant properties. A simple application of G+® ink to the external faces of the foam provided good flame-retardant properties, tested in both horizontal and vertical planes. 

 

Using this study as a base, the Company is close to starting the commercialisation of graphene-based paints with significant anti-flame and anti-corrosion properties compared to normal paints.  We see great potential in this developing technology.

 

Intellectual Property

As at March 2022, the Group's patent portfolio comprised 72 patents granted and 27 pending, grouped into 19 families

 

In March 2021, Directa Plus was granted an EU-wide patent covering the use of its G+® graphene in golf ball applications.  The patent covers a family of formulations and compounds containing G+® graphene nanoplatelets.  Using these compounds at different loadings provides the basis for developing a new generation of high-performance golf balls aimed at both the professional and recreational markets.

 

In May 2021, Directa Plus was granted an EU-wide patent covering the production process for its G+® graphene nanoplatelets. The patent, titled 'Process for Preparing Graphene Nanoplatelets' covers the use of Directa Plus' unique water-based exfoliation technology for converting super-expanded graphite to pristine graphene nanoplatelets using no chemicals and with a very high conversion yield.

 

In December 2021 the Company has been granted an EU-wide patent covering the use of the Company's G+® pristine graphene nanoplatelets to boost the performance of rubber-based shoe outsoles. The patent, titled "Shoe sole comprising graphene", covers G+® graphene embedded in outsoles.  The specific formulation of G+® graphene for soles provides the ability to balance opposite performance characteristics such as durability and grip, in both dry and wet conditions.  This ability to balance opposing performance traits is unique to Directa Plus's G+® graphene and becomes markedly apparent on rubber-based technical shoe soles such as those used for running, trail running, hiking, and on motorbikes.  The patent covers both the formula for the compound and the final product outsole made with the compound.

 

Environmental, Social and Governance policies

Environmental sustainability is at the heart of Directa Plus's business - our research, manufacturing, commercialisation, and purpose - and we have been ISO 14001 certified since 2016, which have been recently renovated.

 

From the earliest stages of our research into graphene applications we were determined to design manufacturing processes for our pristine nanoplatelets that would avoid the need for chemical processes and so avoid wasteful by-products. We continue this approach now - always seeking to design the most efficient manufacturing and proving the safety and sustainability of our products working with recognised environmental organisations.

 

When deciding our commercialisation strategy, we made it a priority to work only with environmentally responsible industrial partners, and to seek to improve on products in existing markets. This means that we can help produce and sell better quality products than are currently available, with better performance and longer life for end-users.

 

We monitor all applicable performance indicators. 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.  Our commitment to sustainability is also demonstrated by our Grafysorber® based technology and products, which are environmentally friendly solutions aimed at solving both historical pollution problems and oil spills.

 

In Social and Governance, Directa Plus has held certifications ISO 9001 (for quality management standards) and ISO 14001 (environmental management systems) since 2016, successfully renewed annually.  We are also committed to identifying suppliers and partners who share the same sensitivity on sustainability issues as we do. We carefully consider all aspects of employee rights, equal opportunities, health and safety at work and training and education. 

 

Finally, 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 and in 2021, through the sale of CO-Mask™ face masks, we financed the Christmas meal for the Opera San Francesco in Milan.

 

Outlook

I believe that Directa Plus is now ready to enter into a new stage of growth.  We have many opportunities across different vertical markets, diversifying our business risks.  The recent fundraise will allow us to accelerate growth in the most promising of these vertical markets and to keep investing in high potential opportunities in other areas.

 

We are closely monitoring and assessing possible impacts from the war in the Ukraine and will adjust our strategy if necessary.  We do no business in Russia or Ukraine and so we are not directly exposed to this region, and we believe the rise in the oil prices may increase demand for our decontamination and recovery services.

 

Year to date, the Company is trading in line with FY2021, with an expected acceleration through the second quarter and into the second half of the year. Accordingly, we are confident of the Company's continued growth trend, and we remain comfortable with current consensus forecasts for FY2022. In addition, we are waiting on the final decision on the award of a significant tender in Romania for our Environmental Remediation services, which is expected to be communicated shortly and, if awarded, to start in the second half of 2022.

 

In summary, despite the challenges faced by all businesses, we retain a positive outlook for growth and our future success.

 

Giulio Cesareo

Chief Executive Officer

4 May 2022

 

Chief Financial Officer's Review

I am pleased to report the results of another important year of progress for the Group. During 2021, the finance team has worked hard to support our strategic decision-making and to manage efficiently our financial resources. The successful capital raise in December 2021 will be key in accelerating our business growth in the Group's next phase of development in 2022 and beyond.

 

Key Performance Indicators

The Board measures the performance of the Group through a number of important financial and non-financial KPIs.  In a young business with a number of different vertical markets, identifying measurable data that will provide useful insight year-on-year is not always straightforward but the KPIs below should help shareholders understand the Group's progress. Our financial KPIs show significant improvement compared to 2020.

 

The below summarises the financial KPIs with further details contained later in this report.

 

·   Product sales and service revenue increased by 33.9% to €8.62m (2020: €6.43m), slightly above market expectations

·   Total income (including grants) increased by 39.3% to €9.45m (2020: €6.78m)

·   LBITDA* improved to €1.99m (2020: €2.62m)

·   Reported (basic) Loss per share €0.06 (2020: €0.07)

·   Cash and cash equivalents at year end of €11.13m (2020: €7.08m)

* LBITDA represents loss from operating activities before tax, interest, depreciation and amortization.

 

Financial review

2021 represented another year of continued growth for the business. Revenues from products and services increased by 33.9% to €8.62m (2020: €6.43 million), and total income +39.3% to €9.45m (2020: €6.78 million).

 

The increase in revenues was mainly driven by growth in environmental remediation services of 50% to €6.56m. The Group's Romanian subsidiary Setcar, acquired in November 2019, is playing a key role in the growth of our environmental services offering and is delivering excellent results for the Group.

 

Other income increased by 140% to €0.83m. This result was positively affected by a €0.50 million one-off income from Setcar, as a result of the release of an undue obligation.  The remainder consists of grants and R&D expenditure credits, specific incentives and financing schemes that support the Group in its R&D activities.

 

The EBITDA loss for the period was €1.99m, decreasing by 24.1% compared to 2020 (loss of €2.62 million). The Group is closely monitoring increases in energy and transportation costs and the effects of increased inflation were seen in the second half of 2021 and this trend is intensifying into 2022, as a consequence of the war in the Ukraine. The Group is taking all possible measures to avoid margin reduction and is reacting promptly to increase product prices to reduce any impact on profitability.

 

Net loss for the period was reduced by 24.3% to €3.43m (2020: €4.53m).

 

At the end of 2021 the Group strengthened its funding position, and cash and cash equivalents at year end were €11.13m (2020: €7.08m).  In addition, during the year, Directa Plus raised a total of €1 million of bank loans, provided by two major Italian banks, under the Italian Government's Covid-19 Recovery Plan.  The loans are 80-90% guaranteed by the Italian Government and have allowed the Company to take advantage of the low-cost liquidity offered.

 

In December 2021, the Group completed a fundraising with gross proceeds of £7 million, by way of a placing and subscription.  Directa Plus issued 4,666,667 new Ordinary Shares at a price of 150p each, with almost no discount to the market price at the time of transaction.

 

The proceeds from the capital raise will be used for:

·   funding two significant future growth opportunities in the main existing verticals:

development of Grafysorber® to broaden the number of applications offered. The Group is locating a Grafysorber® production unit in Setcar's premises in Romania to:

§ construct a water treatment plant, providing dedicated equipment for in-house treatment of industrial water and for the removal of hydrocarbons and other organic pollutants using its Grafysorber® technology, and

§ produce absorbent materials such as Grafysorber®- made booms, pillows, socks and pads.

advance the application of Directa Plus' G+® technology to non-woven fabrics to confer antibacterial and antiviral properties. The Company has signed a Letter of Intent with Radici Group to collaborate on an exclusive basis to develop specific products for the global air and water filtration markets.

·   providing the financial strength necessary to fund the Company's continued investment in exploring and developing new growth opportunities,

·   providing the balance sheet strength to support the Company and its subsidiaries in responding to significant new tenders currently in progress, and

·   providing additional liquidity for its general working capital purposes

 

In the short term, the Group's priorities continue to be focused on the reduction of cash consumption and improving profitability. 

 

A description of the principal risks and uncertainties facing the Group is set out in the Directors' Report. The war in Ukraine in particular creates new, unforeseen risks.  In summary, the Directors believe that overall, the conflict will not affect the going concern of the Group and although we are seeing some inflation of costs (principally energy), the Company is keeping the margins under control.

 

Giorgio Bonfanti

Chief Financial Officer

4 May 2022

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In euro

Note

 

31 Dec 2021

31 Dec 2020

Continuing operations

 

 

 

 

Revenue

3

 

8,615,098

6,434,480

Other income

3/4

 

831,405

345,826

Changes in inventories of finished goods and work in progress

 

 

12,960

213,229

Raw materials and consumables used

6

 

(3,634,311)

(2,564,317)

Employee benefits expenses

7

 

(4,296,955)

(3,769,274)

Depreciation and amortisation

11/12

 

(1,543,567)

(1,690,872)

Other expenses

8

 

(3,516,424)

(3,279,927)

Results from operating activities

 

 

(3,531,794)

(4,310,855)

 

 

 

 

 

Finance Income

9

 

221,622

1,175

Finance expenses

9

 

(74,681)

(347,707)

Net finance costs

 

 

146,941

(346,532)

 

 

 

 

 

Loss before tax

 

 

(3,384,853)

(4,657,387)

Tax (expense)/income

10

 

(44,620)

124,414

Loss after tax from continuing operations

 

 

(3,429,473)

(4,532,973)

Loss of the year

 

 

(3,429,473)

(4,532,973)


Other Comprehensive income items that will not be reclassified to profit or loss

 

 

 

 

Defined Benefit Plan re-measurement gains and losses

20

 

(6,457)

7,821

Other comprehensive income/(expense) for the year (net of tax)

 

 

(6,457)

7,821

Total comprehensive (expense)/income for the year

 

 

(3,435,930)

(4,525,152)

 

Loss attributable to

 

 

 

 

Owner of the Parent

 

 

(3,652,364)

(4.195,011)

Non-controlling interests

 

 

222,891

(337,962)

 

 

 

(3,429,473)

(4,532,973)

 

Total comprehensive (expense)/income

attributable to:

 

 

 

 

Owners of the Company

 

 

(3,658,821)

(4,187,190)

Non-controlling interests

 

 

222,891

(337,962)

 

 

 

(3,435,930)

(4,525,152)

Loss per share

 

 

 

 

Basic loss per share

23

 

(0.06)

(0.07)

Diluted loss per share

23

 

(0.06)

(0.07)

 

CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION

 

 

Group

Company

 

In euro

Note

31-Dec-21

31-Dec-20

31-Dec-21

31-Dec-20

Assets

 

 

 

 

 

Intangible assets

11

1,792,277

2,042,767

-

-

Investments

13

-

-

25,680,336

23,680,336

Property, plant and equipment

12

3,982,966

4,209,267

-

-

Other receivables

14

185,623

140,649

-

-

Non-current assets

 

5,960,866

6,392,683

25,680,336

23,680,336

Inventories

5

1,370,875

1,375,947

-

-

Trade and other receivables

14

3,305,493

2,857,460

205,291

166,262

Cash and cash equivalent

16

11,130,468

7,080,492

9,430,364

4,283,625

Current assets

 

15,806,836

11,313,899

9,635,655

4,449,887

Total assets

 

21,767,702

17,706,582

35,315,991

28,130,223

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

17

205,393

190,996

205,393

190,996

Share premium

17

39,159,027

31,395,612

39,159,027

31,395,612

Foreign Currency Translation Reserve

17

 

(23,109)

 

(7,015)

 

-

 

-

Retained Earnings

17

  (25,352,139)

  (21,824,229)

(4,220,247)

(3,573,130)

Equity attributable to owners

of Group

 

13,989,172

9,755,364

35,144,173

28,013,478

Non-controlling interests

17

2,041,938

906,885

-

-

Total equity

 

16,031,110

10,662,249

35,144,173

28,013,478

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Loans and borrowings

18

2,403,881

1,017,716

-

-

Lease liabilities

19

463,047

627,138

-

-

Employee benefits provision

20

500,535

444,483

-

-

Other payables

21

64,357

65,397

-

-

Deferred tax liabilites

15

89,497

8,423

-

-

Non-current liabilities

 

3,521,317

2,163,157

-

-

Loans and borrowings

18

65,840

981,065

-

-

Lease liabilities

19

217,537

214,935

-

-

Trade and other payables

21

1,931,898

3,685,176

171,818

116,745

Current liabilities

 

2,215,275

4,881,176

171,818

116,745

Total liabilities

 

5,736,592

7,044,333

171,818

116,745

Total equity and liabilities

 

21,767,702

17,706,582

35,315,991

28,130,223

             

 

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements. The Company loss after tax for the year was € 956,408 (2019: € 558,846).

The financial statements were approved and authorised for issue by the board and were signed on its behalf by Giulio Cesare, Chief Executive Officer on 5 May 2022.

The notes below form part of these financial statements

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share

Share

Foreign Currency Translation

 

 

Non-controlling

Total

In euro

Capital

premium

Reserve

Retained Earnings

Total

interests

Equity

Balance at 31 December 2019

190,512

31,395,612

4,147

(17,656,325)

13,933,946

1,240,194

15,174,140

Total comprehensive (expense)/income for the year

 

 

 

 

 

 

 

Loss of the year

-

-

-

(4,195,011)

(4,195,011)

(337,962)

(4,532,973)

Total other comprehensive (expense)/income

-

-

-

7,821

7,821

-

7,821

Total comprehensive (expense)/income for the period

-

-

-

(4,187,190)

(4,187,190)

(337,962)

(4,525,152)

Capital raised

484

-

-

-

484

-

484

Translation reserve

-

-

(11,162)

-

(11,162)

-

(11,162)

Share-based payment

-

-

-

19,286

19,286

-

19,286

Increase in share capital of Directa Textile Solutions

-

-

-

-

-

4,653

4,653

Balance at 31 December 2020

190,996

31,395,612

(7,015)

(21,824,229)

9,755,364

906,885

10,662,249

Total comprehensive (expense)/income for the year

 

 

 

 

 

 

 

Loss of the year

-

-

-

(3,652,364)

(3,652,364)

222,891

(3,429,473)

Total other comprehensive (expense)/income

-

-

-

(6,457)

(6,457)

-

(6,457)

Total comprehensive (expense)/income for the period

-

-

-

(3,658,821)

(3,658,821)

222,891

(3,435,930)

Capital raised

14,397

8,306,293

.-

-

8,320,690

-

8,320,690

Expenditure related to the issuance of shares

-

(542,878)

-

-

(542,878)

-

(542,878)

Translation reserve

 

 

(16,094)

-

(16,094)

-

(16,094)

Share-based payment

-

-

-

130,910

130,910

-

130,910

Increase in share capital of Setcar

-

-

-

-

-

912,162

912,162

Balance at 31 December 2021

205,393

39,159,027

(23,109)

(25,352,139)

13,989,172

2,041,938

16,031,110

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

Share

Share

Retained

Total

In euro

Capital

premium

Earnings

equity

Balance at 31 December 2019

190,512

31,395,612

(2,616,722)

28,969,402

Loss for the year

-

-

(956,408)

(956,408)

Capital raised

484

-

-

484

Expenditure related to the issuance of shares

-

-

-

-

Share-based payment

-

-

-

-

Balance at 31 December 2020

190,996

31,395,612

(3,573,130)

28,013,478

Loss for the year

-

-

(709,825)

(709,825)

Capital raised

14,397

8,306,293

-

8,320,690

Expenditure related to the issuance of shares

-

(542,878)

-

(542,878)

Share-based payment

-

-

62,708

62,708

Balance at 31 December 2021

205,393

39,159,027

(4,220,247)

35,144,173

 

CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS

 

 

Group

Company

In euro

Note

2021

2020

2021

2020

 

 

Cash flows from operating activities

 

 

 

 

 

 

Loss for the year before tax

 

(3,384,853)

(4,657,387)

(709,825)

(956,408)

 

Adjustments for:

 

 

 

 

 

 

Depreciation

12

994,021

1,020,387

-

-

 

Amortisation of intangible assets

11

549,547

670,485

-

-

 

Share-based payment expense

7

130,910

19,286

62,708

-

 

Finance income

9

(221,622)

(1,175)

(211,056)

(867)

 

Finance expense

 

56,524

326,118

988

227,367

 

Interest of lease liabilities

9

18,157

21,589

-

-

 

 

 

(1,857,316)

(2,600,697)

(857,185)

(729,908)

 

Increase/Decrease in:

 

 

 

 

 

 

- inventories

 

5,072

(280,011)

-

-

 

- trade and other receivables

14

(493,008)

179,292

(39,029)

37,142

 

- trade and other payables

 

(1,207,601)

(1,398,380)

55,073

33,047

 

- provisions and employee benefits

 

37,457

24,844

-

-

 

Net cash from operating activities

 

(3,515,396)

(4,074,952)

(841,141)

(659,720)

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Interest received

9

1,616

1,175

-

867

 

Investment in intangible assets

 

(299,056)

(434,898)

-

-

 

Investment in subsidiary

13

-

-

(2,000,000)

(2,500,000)

 

Contingent consideration

21

(572,268)

(208,097)

-

-

 

Acquisition of property, plant and equipment

 

(767,719)

(195,991)

-

-

 

Net cash used in investing activities

 

(1,637,427)

(837,811)

(2,000,000)

(2,499,133)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from Capital raise

17

8,320,690

484

8,320,690

484

 

Expenditure related to the issuance of shares

17

(542,878)

-

(542,878)

-

 

Interest paid

9

(45,426)

(45,647)

(988)

(2,148)

 

New Borrowings

18

1,511,719

1,874,243

-

-

 

Repayment of borrowings

18

(81,666)

(360,164)

-

-

 

Repayment of lease liabilities

 

(179,646)

(100,235)

-

-

 

Net cash from (used in) financing activities

 

8,982,793

1,368,681

7,776,824

(1,664)

 

Net increase (decrease) in cash and cash equivalent

 

3,829,970

(3,544,082)

4,935,683

(3,160,516)

 

Cash and cash equivalent at beginning of the year

 

7,080,492

10,906,076

4,283,625

7,669,360

 

Exchange (losses)/gains on cash and cash equivalents

 

220,006

(281,502)

211,056

(225,219)

 

Cash and cash equivalent at end of the year

 

11,130,468

7,080,492

9,430,364

4,283,625

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

 

1.    Basis of preparation

a)     Statement of compliance

These consolidated and parent Company financial statements have been prepared in accordance with UK-adopted International Accounting Standards (IFRSs).The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year, unless otherwise stated.

All notes, except as otherwise indicated, are presented in Euros ("€").

 

I.          Going Concern

As of 31 December 2021, the Group (including the Company) had net assets of €16.03m (2020: €10.66m) and cash and cash equivalent of €11.13m (2020: €7.08m).

 

The Directors are aware that there is an ongoing need to monitor the cash flow requirements of the Company and Group for the upcoming months, particularly in light of the recent developments in the markets due to the COVID-19 pandemic, the recent war in Ukraine and inflation trends, which have had a significant, impact on global economies and more likely will affect the upcoming months.  In this regard, the Group prepares annual budgets and forecasts in order to ensure that they have sufficient liquidity to meet liabilities and commitments as they fall due. The Directors regularly review updates to the scenario planning such that the Board can put in place appropriate mitigating actions within their control.

 

Considering the recent capital raise undertaken in December 2021, which resulted in £7 million of additional gross funds, and based on the most recent cash flow projections, the Directors believe that the Group will have sufficient funds in place, up to a period of 12 months from the approval date of the financial statements, to meet liabilities as and when they fall due. Despite this, given the current global economic status, the Directors have carried out a downward sensitivity analysis stressing the base financial projections by applying a further material reduction in forecast revenues, and modelling mitigation or deferral of capital and operational expenditure within the control of Management and the Board. Based on these downward scenarios, the Directors believe that the Company will still have the funds to support the Group as a going concern until the end of 2023.

 

The Directors therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

 

b)    Basis of consolidation

I.           Business combination

The Group accounts for business combination using the acquisition method of accounting. The cost of the business combination is measured as the aggregate of the fair value of the assets acquired, liabilities incurred or assumed, and equity instruments issued. Costs attributable to the business combination are expensed as incurred.

 

The acquiree's identifiable assets and liabilities which meet the recognition conditions are recognised at the fair values at the acquisition date.

 

Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is a present obligation at acquisition date that arises from past events and its fair value can be measured reliably.

 

Any difference arising between the fair value and the tax base of the acquiree's assets and liabilities that give rise to a taxable or deductible difference results in the recognition of a deferred tax liability or asset.

 

Non-controlling interest arising from a business combination is measured at their share of the fair value of the assets and liabilities of the acquiree.

 

Goodwill is not amortised, but it is tested on an annual basis for impairment.

 

II.        Subsidiaries

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

 

The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests.

 

III.     Transactions eliminated on consolidation

The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

 

IV.    Non-controlling interest

Non-controlling interest in the net assets of the consolidated subsidiaries are identified separately from the Group's equity. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder's share changes in equity since the date of the combination. The non-controlling interest's share of losses, where applicable, are attributed to the non-controlling interests irrespective of whether the non-controlling shareholders have a binding obligation and are able to make an additional investment to cover the losses. 

 

c)    Functional and presentation currency

These financial statements are presented in Euro ("€") and is considered by the Directors to be the most appropriate presentation currency to assist the users of the financial statements. The functional currency of the Company and of the Italian operating subsidiaries is Euro ("€"). The functional currency of the Romanian subsidiary is RON.

 

d)    Use of estimates and judgements

The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances and the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period.

 

Critical estimates and judgements that have the most significant effect on the amounts recognised in the financial statements and/or have a significant risk of resulting in a material adjustment within the next financial year are as follows.

 

Estimates

I.           Valuation of share based payments

The estimation related to share based payment expenses includes the selection of an appropriate valuation option pricing model, consideration as to the inputs necessary for the valuation model chosen, and the estimation of the number of awards that will ultimately vest. Inputs subject to estimation relate to the future volatility of the share price which has been estimated based on the historical observed volatility from trading in the Company's shares, over a historical period of time between the date of the grant and the date of exercise. Management has used a Monte-Carlo model to calculate the fair value of the awards which include market based performance conditions. Further disclosure of inputs relevant to the calculations is set out in note 24 to the financial statements.

 

II.        Carrying value of goodwill

The carrying value of goodwill, and the cash generating units (CGUs) to which it relates, is assessed annually for impairment through comparing the recoverable amount to the CGU's carrying value. The value in use calculations require estimates in relation to uncertain items, including management's expectations of future revenue growth, operating costs, profit margins, operating cashflows and the discount rate applied. Future cash flows used in the value in use calculations are based on our latest two-year financial plans. Expectations about future growth reflect expectations of growth in the markets applicable to the group. The future cashflows are discounted using a pre-tax discount rate that reflects current market assessments of the time value of money. The discount rate used is adjusted for the specific risk to the group, including the countries to which cash flows will be generated. Further disclosure of evaluations is set out in note 11 to the financial statements.

 

III.      Valuation of inventory

Inventories are stated at the lower of cost or net realisable value. The cost of inventories comprises of net prices paid for materials purchased, production labour cost and factory overhead. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Inventory provisions are recognised for slow-moving, obsolete or unsalable inventory and are reviewed on a six-monthly basis. The valuation of Inventory includes key estimates and judgments made by Management including normal production capacity, market demand and selling opportunities. If actual demand or usage were to be lower than estimated, inventory provisions for excess or obsolete inventory may be required.

 

2.    Significant accounting policies

a)    Functional currency

The financial statements of each Group company are measured using the currency of the primary economic environment in which that company operates (the functional currency). The consolidated financial statements record the results and financial position of each Group company in Euro, which is the functional currency of the Company and the presentational currency for the consolidated financial statements.

 

I.     Transaction and balances

Transactions in foreign currencies are converted into the respective functional currencies at initial recognition, using the exchange rates at the transaction date. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling at the reporting date. Non-monetary assets and liabilities are not retranslated. All exchange differences are recognised in profit or loss. On consolidation, the results of overseas operations not in Euro are translated at the rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at closing rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

 

b)    Financial instruments

There are no other categories of financial assets other than those listed below:

 

I. Trade and other receivables and amounts due from subsidiaries

Trade and other receivables and amounts due from subsidiaries are recognised and carried at the original invoice amount less any provision for impairment.

 

The Group recognises a loss allowance for expected credit losses ("ECL") on financial assets that are measured at amortised cost which comprise mainly of trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

 

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.

 

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, on a conservative basis, such costs are amortised over a period of 10 years. 

·    Brand: 5 years

·    Development costs concerning personnel capitalized: 5 years

·    Others: 5 years

 

f)     Inventories

Inventories are stated at the lower of cost or net realisable value. The cost of inventories comprises of net prices paid for materials purchased, production labour cost and factory overhead. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Inventory provisions are recognised for slow-moving, obsolete or unsalable inventory and are reviewed on a six months basis.

 

g)    Goodwill

Goodwill represents the excess of the cost of a business combination over the Group's interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired.

 

Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree.  Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through profit or loss.

 

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.

 

h)    Impairment

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end.  Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (CGUs). The Group's CGUs generally align with each subsidiary. The recoverable amount is then estimated. The recoverable amount of an asset or a CGU is the greater of its net present value and its fair value less costs to sell.

 

Net present value is generally computed as the present value of the future cash flows, discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

 

An impairment loss is recognised if the carrying amount of an asset or a CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.

 

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had been recognised.

 

i)     Employee benefits

Defined benefit scheme surpluses and deficits are measured at:

-     The fair value of plan assets at the reporting date; less

-     Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus

-     Unrecognised past service costs; less

-     The effect of minimum funding requirements agreed with scheme trustees.

 

Remeasurements of the net defined obligation are recognised directly within equity. The remeasurements include:

-     Actuarial gains and losses

-     Return on plan assets (interest exclusive)

-     Any asset ceiling effects (interest exclusive).

 

Service costs are recognised in profit or loss and include current and past service costs as well as gains and losses on curtailments.

 

Net interest expense (income) is recognised in profit or loss and is calculated by applying the discount rate used to measure the defined benefit obligation (asset) at the beginning of the annual period to the balance of the net defined benefit obligation (asset), considering the effects of contributions and benefit payments during the period.

 

Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in profit or loss.

 

Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.

 

For more information please see note 20.

 

j)     Revenues

The Group operates diverse businesses and accordingly applies different methods for revenue recognition, based on the principles set out in IFRS 15.

 

The revenue and profits recognised in any reporting period are based on the delivery of performance obligations and an assessment of when control is transferred to the customer. In determining the amount of revenue and profits to record, and associated balance sheet items, management is required to review performance obligations within individual contracts. This may involve some judgemental areas.

 

Revenue is recognised either when the performance obligation in the contract has been performed (so 'point in time' recognition) or 'over time' as control of the performance obligation is transferred to the customer.

 

For each performance obligation to be recognised over time, the Group applies a revenue recognition method that faithfully depicts the Group's performance in transferring control of the goods or services to the customer. This decision requires assessment of the real nature of the goods or services that the Group has promised to transfer to the customer.

 

·    Revenues from sale of graphene based products are typically recognised at a point in time when goods are delivered to the customer as with this, the customer gains the right of control over the goods. However, for export sales, control might also be transferred when delivered either to the port of departure or port of arrival, depending on the specific terms of the contract with a customer. 

·    Revenues from sale of equipment (such as Mobile Production Units) are typically recognised at point in time when goods are delivered to the customers and site acceptance test is successfully performed.

·    Revenues from services relates mainly to environmental services provided by Setcar which are recognised:

at a point in time basis when contracts include an obligation to process waste once the process occurred according with the contract in place.

at the point in time when the waste is delivered to our platform with no further performance obligations.

over time in accordance with agreed project milestones being delivered.

 

Where cost has been incurred to undertake a performance obligation but this has not been realised at the year end the attributable costs are carried forward as work in progress.

 

k)    Government grants

Government grants are recognised when there is reasonable assurance that the entity will comply with the relevant conditions and the grant will be received. Grants are recognised in profit or loss on a systematic basis where the Group has recognised the initial expenses that the grants are intended to compensate. Where a grant has been received as a contribution for property, plant and equipment, or capitalised development costs, the income received has been credited against the asset in the statement of financial position.

 

l)     Finance income and finance costs

Finance income comprises interest income on funds invested. Interest income is recognised in the profit or loss, using the effective interest method. Finance costs comprise interest expense on borrowings.

 

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

 

m)  Investments in subsidiaries (Company only)

Investments are stated at their cost less any provision for impairment (for details refer to note h).

 

n)    Taxation

Tax expense comprises current and deferred tax. Current and deferred tax is recognised in the profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

 

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

 

Deferred tax is not recognised for:

·    temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

·    temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and

·    taxable temporary differences arising on the initial recognition of goodwill.

 

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

 

A deferred tax asset is recognised for deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

 

Adoption of new and revised standards

 

New standards, interpretations and amendments effective from 1 January 2021

The IFRS financial information has been drawn up on the basis of accounting policies consistent with those applied in the financial statements for the year to 31 December 2020, except for the following:

·    Interest Rate Benchmark Reform - Amendment to IFRS 7, IFRS 9, IFRS 16 and IAS 39.

 

The application of the above standards has had no impact on the disclosures or the amounts recognised in the Group's consolidated financial statements.

 

New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early.

 

The following amendments are effective for the period beginning 1 January 2022:

• Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);

• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

• Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); a

• References to Conceptual Framework (Amendments to IFRS 3).

 

The following amendments are effective for the period beginning 1 January 2023:

• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

• Definition of Accounting Estimates (Amendments to IAS 8); and

• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

 

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that 'settlement' includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments were originally effective for annual reporting periods beginning on or after 1 January 2022. However, in May 2020, the effective date was deferred to annual reporting periods beginning on or after 1 January 2023. In response to feedback and enquiries from stakeholders, in December 2020, the IFRS Interpretations Committee (IFRIC) issued a Tentative Agenda Decision, analysing the applicability of the amendments to three scenarios. However, given the comments received and concerns raised on some aspects of the amendments, in April 2021, IFRIC decided not to finalise the agenda decision and referred the matter to the IASB. In its June 2021 meeting, the IASB tentatively decided to amend the requirements of IAS 1 with respect to the classification of liabilities subject to conditions and disclosure of information about such conditions and to defer the effective date of the 2020 amendment by at least one year. The Group is currently assessing the impact of these new UK adopted accounting standards and amendments. The Group will assess the impact of the final amendments to IAS 1 on classification of its liabilities once the those are issued by the IASB.

 

The Group does not believe that the amendments to IAS 1, in their present form, will have a significant impact on the classification of its liabilities, as the conversion feature in its convertible debt instruments is classified as an equity instrument and therefore, does not affect the classification of its convertible debt as a non-current liability.

 

3.    Operating segments

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision makers (CEO, CFO, COO and CTO), as defined in IFRS 8, in order to allocate resources to the segments and to assess its performance.

 

For management purposes, also considering the materiality the Group is organized into the following segments:

-     Textile

-     Environmental

-     Others

 

Textile and Environmental were considered by Management the strategic segments able to sustain the growth. Management's strategic needs are constantly monitored and an update of the segments will be provided if required. Any further update of the segment analysis will be reflected in this section.

 

Segment profit/(loss) represents the profit/(loss) earned by each segment, including all the direct costs that are directly correlated with the segment. Overhead, assets and liabilities not directly attributable to a specific segment have been allocated as Head Office.

 

As the business evolves this is an area that will be assessed on a regular basis and additional segmental reporting will be provided at the appropriate time.

 

2021

 

Textile

Environmental

Others

Headoffice

Consolidated

Revenue

1,843,506

6,560,771

210,821

-

8,615,098

Cost of Sales*

(1,002,845)

(3,030,602)

(107,310)

-

(4,140,757)

Gross Profit

840,661

3,530,169

103,511

-

4,474,341

Other income

174,484

607,049

-

49,872

831,405

Other expenses:

 

 

 

 

 

R&D expense

(317,422)

(45,450)

(25,966)

-

(388,838)

Advisory

(50,004)

(481,992)

-

(887,722)

(1,419,718)

Operating expenses

(536,615)

(2,519,008)

(135,782)

(2,294,012)

(5,485,417)

Depreciation & amortisation

(331,492)

(1,177,445)

(34,630)

-

(1,543,567)

Operating Loss

(220,388)

(86,677)

(92,867)

(3,131,862)

(3,531,794)

Net financial costs

-

-

-

146,941

146,941

Tax

-

(44,620)

-

-

(44,620)

Loss of the year

(220,388)

(131,297)

(92,867)

(2,984,921)

(3,429,473)

 

Total assets

5,642,443

15,086,933

1,038,326

-

21,767,702

Total liabilities

1,746,301

3,739,745

250,546

-

5,736,592

 

2020

 

Textile

Environmental

Others

Head Office

Consolidated

Revenue

1,943,924

4,360,864

129,692

-

6,434,480

Cost of Sales*

(1,221,579)

(1,971,859)

(74,872)

-

(3,268,310)

Gross Profit

722,345

2,389,005

54,820

-

3,166,170

Other income

85,980

204,450

27,206

28,189

345,826

Other expenses:

 

 

 

 

 

R&D expense

(96,915)

(25,500)

-

-

(122,415)

Advisory

(50,752)

(335,248)

-

(905,021)

(1,291,022)

Operating expenses

(1,332,294)

(2,214,108)

(138,874)

(1,033,266)

(4,718,541)

Depreciation & amortisation

(508,331)

(1,143,250)

(39,291)

-

(1,690,872)

Operating Loss

(1,179,967)

(1,124,652)

(96,138)

(1,910,098)

(4,310,855)

Financial costs

-

-

-

(346,532)

(346,532)

Tax

-

-

-

124,414

124,414

Loss of the year

(1,179,967)

(1,124,652)

(96,138)

(2,132,216)

(4,532,973)

 

Total assets

5,609,005

11,083,261

1,014,317

-

17,706,582

Total liabilities

2,443,527

2,680,121

1,920,685

-

7,044,333

*Includes Changes in inventories of finished goods.

 

 

 

2021

2020

 

 

Sale of products

 

2,898,224

2,137,289

Sale of services

 

5,716,874

4,297,191

Government grants

 

166,112

159,815

Other

 

665,293

186,011

Total Income

 

9,446,503

6,780,306

 

Geographical breakdown of revenues is:

 

 

2021

2020

 

Italy

1,755,329

1,555,622

Romania

6,563,839

4,495,661

Rest of the world

295,930

383,197

Total

8,615,098

6,434,480

 

The Group has transacted with 3 main customers in 2021, which accounted for more than 10% of Group revenues for sales of products and services. This largest customer accounted for 16% of revenues (€1,349,981), the second largest to 12% (€1,006,649), whilst the third for 11% (€907,323).

 

Other Income of €831,405 mainly includes the release of an undue obligation for €503,904, as the former shareholders of Setcar renounced to dividends not paid yet, Government Grants for €166,112, and R&D Expenditure Credit (RDEC) for 33,425. 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:

 

 

2021

2020

 

Innodriver

25,000

-

Inno4covid

99,889

-

Green.Tex

30,616

54,278

COVID-19 government grants

-

103,536

Techfast

10,607

-

Total

166,112

157,814

 

During 2021, the Company took part in Inno4Covid, a European project for fostering innovation, prevention and surveillance in response to Covid-19. The project was 100% financed for a total amount of €99,889, of which 50% was collected during the year.

 

Directa Plus keeps investing in the activities related to the Green.Tex project, whose deadline was extended up until April 2022.

 

In 2021, the Company was also awarded with the inclusion in the Tech Fast project, with an overall value of approximately €290,000, financed at 50%. The tender, concerning eco-innovation for industrial antimicrobial and antiviral filtration through the use of graphene, will end in 2022.

 

Directa Plus also obtained the Innodriver grant (€25,000) to support the study of new products in the textile sector.

 

The key terms of government grants are:

 

 

 

 

Green.Tex

Tech fast

Inno4covid

Innodriver

Ecopave

Starting date

 

 

2020

2021

2021

2021

2017

Ending date

 

 

2022

2022

2021

2021

2021

Duration (months)

 

 

21

12

8

n.a.

37

Total amount

 

 

96,192

147,028

99,889

25,000

214,000

Final report submitted

 

 

on-going

on-going

Yes

Yes

Yes

 

There are no capital commitments built into the ongoing grants. Government grants have been recognised within other income.

 

5.    Inventory

 

 

2021

2020

Finished products

 

1,141,372

1,071,173

Spare parts

 

76,663

110,808

Raw material

 

93,798

97,712

Working in progress

 

59,042

96,254

Total

 

1,370,875

1,375,947

 

As of 31 December 2021, total inventory value is in line with 2020; 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

 

 

2021

 

2020

 

Raw material & consumables

2,711,528

1,670,305

Textile products

922,783

894,012

Total

3,634,311

2,564,317

The increase in raw materials is in line with the business growth.

 

7.    Employee benefits expenses

 

 

2021

2020

 

 

 

 

Wages and salaries

3,525,876

3,264,227

Social security costs

559,856

496,428

Employee benefits

111,964

89,169

Share option expense

130,910

19,286

Other costs

103,877

62,099

Total

4,432,483

3,931,208

Capitalised cost in "Intangible assets"

(135,528)

(161,935)

Total charged to the Income Statement

4,296,955

3,769,274

 

The average number of employees (excluding non-executive directors) during the period was as follows:

 

 

2021

2020

Sales and Administration

30

27

Engineering, R&D and production

165

166

Total

195

193

 

The total average number of employees of the Group as at 31 December 2021 was 195 (2020: 193), of which 166 employed by Setcar.

 

The Directors' emoluments (including non-executive directors) are as follows:

 

2021

2020

Wages and salaries

773,683

836,709

Total

195

193

 

The aggregate emoluments (wages, salaries and social contributions) of the highest paid Director totalled €527k (2020: €495k).

 

Share-base payment expenses were €130,910, of which €62,708 accounted for in the Parent Company accounts as directly attributable to the Executive Directors.  

 

8.    Other expenses 

Other expenses include:

 

 

2021

2020

Audit of the Group and Company financial statements

81,991

79,347

Audit of the subsidiaries' financial statements

36,230

37,968

Other non-audit services provided by Group's auditor

5,978

4,422

Tool manufacturing

296,965

508,363

Analyses & tests

377,028

128,152

Travel

69,659

78,012

Technical consultancies

277,117

223,732

Shipping and logistic expenses

260,014

365,317

Insurance

165,347

112,122

Marketing

32,989

27,866

Legal, tax and administrative consultancies

915,234

962,365

Analyses & tests expenses (€377,028) and technical consultancies refer to R&D activities outsourced to external labs and universities. Both cost categories have increased over the last year in line with the business growth.

 

The increase in the insurance expenses (€165,347) was mainly driven by the hard market conditions, which led to a general increase in premiums.

 

9.    Net Finance expenses

Finance expenses include:

 

 

2021

2020

Interest Income

 

(1,616)

(1,175)

Interest on loans and other financial costs

 

45,426

45,719

Interest on lease liabilities

 

18,157

21,589

Interest cost for benefit plan

 

11,098

10,131

Foreign exchanges losses/(gains)

 

(220,006)

270,268

Total

 

(146,941)

346,532

 

Foreign exchange income of €220,006 (2020: -€270,268) includes €211,056 of Sterling to Euro movement in the Group's Sterling bank accounts.

 

10.  Taxation

 

 

2021

2020

Current tax (expense)/income

 

(1,727)

404

Deferred tax expense/ (recovery)

 

(42,893)

(124,818)

Total tax expenses

 

(44,620)

(124,414)

 

Reconciliation of tax rate

 

 

2021

2020

Loss before tax

 

(3,384,853)

(4,657,387)

Italian statutory tax rate

 

24%

24%

 

 

(812,365)

(1,117,773)

Impact of temporary differences

 

4,431

155,430

Losses recognised

 

(49,052)

(31,016)

Impact of tax rate in foreign jurisdiction

 

(35,491)

47,820

Losses not utilised

 

847,857

1,069,953

Total tax expenses

 

(44,620)

(124,414)

 

Tax losses carried forward have been recognised as a deferred tax asset up to the point that they are recoverable against taxable temporary differences. All other tax losses are carried forward and not recognised as a deferred tax asset due to the uncertainty regarding generating future taxable profits. Tax losses carried forward are €31,494,057(€27,762,446 in 2020).

 

11.  Intangible assets

 

 

 

 

 

 

 

Cost

Development Cost

Patents

Goodwill

Others

Brands

Total

 

Balance at 31/12/2019

2,765,023

437,933

303,552

249,580

384,124

4,140,213

Additions

379,998

111,151

-

35,814

-

526,963

Currency translation differences

(218)

(3,344)

(5,204)

(289)

(7,107)

(16,162)

Balance at 31/12/2020

3,144,804

545,740

298,348

285,105

377,017

4,651,014

Additions

135,527

172,307

-

(1,063)

-

306,771

Currency translation differences

(184)

-

(4,391)

(3,059)

(5,996)

(13,630)

Balance at 31/12/2021

3,280,147

718,047

293,957

280,983

371,021

4,944,154

 

Amortisation

 

 

 

 

 

 

 

Balance at 31/12/2019

1,731,795

145,349

-

54,214

6,402

1,937,760

 

Amortisation 2020

357,746

218,247

-

18,593

75,899

670,485

Balance at 31/12/2020

2,089,541

363,596

-

72,807

82,301

2,608,245

Amortisation 2021

389,299

71,829

-

13,797

74,621

549,547

Currency translation differences

(271)

-

-

(3,313)

(2,330)

(5,914)

Balance at 31/12/2021

2,478,569

435,425

-

83,291

154,592

3,151,877

 

 

 

 

 

 

 

Carrying amounts

 

 

 

 

 

 

 

Balance 31/12/2019

 

1,033,228

 

292,584

 

303,552

 

196,811

377,722

 

2,202,452

Balance 31/12/2020

1,055,262

182,145

298,348

213,743

294,715

2,042,767

Balance 31/12/2021

801,578

282,623

293,957

199,137

216,428

1,792,277

 

As disclosed in note 1(d) development costs capitalised in the year are mainly based on time spent by employees who are directly engaged in the development of the G+® technology.

 

Management, throughout the support of external experts, carried out an impairment test on goodwill accounted following the acquisition of Setcar S.A. in 2019.

 

The CGU is represented by Setcar itself, whose carrying amount as of 31 December 2021 was estimated equal to €5.1m.

 

The impairment review of the CGU is based on an assessment of the CGU's value in use ("VIU"). In calculating VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate of 10.9% that reflects current market assessments of the time value of money and the risks specific to the asset/CGU and a perpetual annual growth rate of 1.6%.

 

Based on such assumptions, the recoverable amount was estimated equal to €27.4m. In addition, a sensitivity analysis was performed, assuming a +/- 0.5% variation in the discount rate and a +/- 0.5% variation in the perpetuity growth rate. This led to a recoverable amount estimated in the range of €26m and €29m.

 

As a conclusion, the verifications have shown that the book values can be fully recovered and no goodwill impairment is required as of 31 December 2021.

 

12.  Property, plant and equipment

 

Cost

Industrial

Equipment

Computer

Equipment

Office

Equipment

Plant &

Machinery

 

Land

ROU

Assets

Under

Costr.

Total

 

Balance at 31/12/2019

1,235,693

56,554

179,469

4,202,028

608,395

456,819

2,445

6,741,402

Additions

52,825

17,967

9,391

171,819

-

322,309

-

574,356

Disposals

-

-

-

(23,343)

-

-

-

(23,343)

Currency translation differences

(21,101)

-

(16,232)

(53,298)

(11,257)

-

-

(101,934)

 

Balance at 31/12/2020

 

1,267,415

 

74,521

 

172,627

 

4,297,207

 

597,138

 

779,128

 

2,445

 

7,190,481

Additions

392,141

10,095

13,934

416,922

-

-

-

833,092

Disposals

(6,435)

-

(3,143)

(31,124)

-

-

-

(40,703)

Currency translation differences

(32,070)

-

(2,228)

(50,895)

(9,498)

-

(38)

(94,728)

Balance at 31/12/2021

1,621,051

84,616

181,189

4,632,110

587,640

779,128

2,407

7,888,141

 

Depreciation

 

 

 

 

 

 

 

 

Balance at 31/12/2019

193,331

36,113

67,587

1,637,482

-

76,136

-

2,010,649

Depreciation 2020

 

378,873

 

7,693

 

35,432

 

517,406

 

-

 

80,984

 

-

 

1,020,388

Currency translation differences

 

(17,894)

 

-

 

(2,356)

 

(30,851)

 

-

 

-

 

-

(51,101)

Balance at 31/12/2020

556,309

 

43,807

 

100,663

 

2,123,314

-

157,120

-

 

2,981,213

 

Depreciation 2021

287,741

9,312

49,791

544,774

-

102,402

-

994,021

Currency translation differences

(21,983)

-

(4,986)

(43,089)

-

-

-

 

(70,059)

 

Balance at 31/12/2021

 

822,067

 

53,119

 

145,468

 

2,624,999

-

259,522

-

 

3,905,175

Carrying

amounts

Balance 31/12/2019

1,042,362

20,440

111,882

2,564,546

608,395

380,683

2,445

4,730,752

Balance 31/12/2020

711,106

30,714

71,965

2,173,892

622,008

597,138

2,445

4,209,268

Balance 31/12/2021

798,985

31,496

35,722

2,007,110

519,606

519,606

2,407

3,982,966

 

Assets held under financial leases with a net book value of € 557,243 are included in the above table within Plant & Machinery.

 

13.  Investments in subsidiaries

Details of the Company's subsidiaries as at 31 December 2021 are as follows:

 

 

 

 

Shareholding

Subsidiaries

Country

Principal activity

2021

2020

Directa Plus Spa

Italy

Producer and supplier of graphene based materials and related products

100%

100%

Directa Textile Solutions Srl

Italy

Commercialise textile membranes, including graphene-based technical and high-performance membranes

73.5%

73.5%

Setcar S.A.

Romania

Waste management and decontamination services business

52%        

51%         

 

Subsidiaries

Place of Business

Registered Office

Place of Business

Directa Plus Spa

Italy

Via Cavour 2, Lomazzo (CO) Italy

See registered office

Directa Textile Solutions Srl

Italy

Via Cavour 2, Lomazzo (CO) Italy

See registered office

Setcar S.A.

Romania

Str. Gradinii Publice 6, Braila Romania

See registered office

 

The Company's investment as capital contributions in Directa Plus Spa are as follows:

 

Directa Spa

At 31 December 2019

21,180,336

Additions

2,500,000

At 31 December 2020

23,680,336

Additions

2,000,000

At 31 December 2021

25,680,336

 

14.  Trade and other receivables

 

Current

 

Group

Company

 

2021

2020

2021

2020

 

Account receivables

2,339,369

2,174,967

-

-

Tax Receivables

465,953

443,857

49,539

23,265

Other receivables

500,171

238,636

155,752

142,997

Total

3,305,493

2,857,460

205,291

166,262

 

Non-Current

 

Group

Company

 

2021

2020

2021

2020

 

Other receivables

185,623

140,649

-

-

Total

185,623

140,649

-

-

 

Group account receivables of €2,339,369 are mainly composed by seven major clients, covering 60% of the total amount.

 

Group Tax Receivables are composed of Italian VAT receivables of €278,812, UK VAT receivables of €49,539, Romanian VAT receivables of €50,785, RDEC Tax Credit receivables of €73,894 and other Italian Tax receivables of €12,923.

 

Other receivables are mainly composed of governments grants for €213,160 and prepayments for €277,089.

 

Non-current other receivables of €185,623 refer to specific projects where the collection of a certain amount, although due, is postponed to the end of the project itself.  

 

As at 31 December 2021 the ageing of account receivables was:

 

 Days overdue

2021

2020

 

 0-60

1,771,113

1,895,323

 61-180

251,458

50,372

181-365

101,450

231,109

 365 +

215,348

57,786

 Total

2,339,369

2,174,967

 

As at 31 December 2021 the Group recognised provision for €46,892€ mainly referred to Setcar's overdue debts.

 

15.  Deferred tax liabilities

 

 

2021

2020

 

 

Deferred tax liabilities

 

174,158

138,147

Deferred tax assets - losses

 

(84,661)

(129,724)

Total

 

89,497

8,423

 

Deferred tax assets have been recognised on losses brought forward to the extent that they can be offset against taxable temporary differences in line with the requirements of IAS 12.

 

The deferred tax liabilities arise from the capitalisation of development costs and defined benefit scheme are detailed below:

 

2021

2020

 

Deferred tax liabilities Cost Capitalized

86,313

121,504

Deferred tax liabilities Other

(1,652)

8,220

Deferred tax liabilities arising from acquisition

89,497

8,423

Deferred tax assets - losses exc. Setcar

(84,661)

(129,724)

Total

89,497

8,423

 

16.  Cash and cash equivalents

 

Group

Company

 

2021

2020

2021

2020

 

Cash at bank

11,126,683

7,075,447

9,430,364

4,283,625

of which restricted cash

40,000

-

-

-

Cash in hand

3,785

5,045

-

-

Total

11,130,468

7,080,492

9,430,364

4,283,625

 

The Company holds €40,000 of restricted cash as a guarantee for a performance bond provided by a bank for a major contract in the Environmental vertical.

 

17.  Equity

 

 

2021

2020

 

 

Share Capital

 

205,393

190,996

Share Premium

 

39,159,027

31,395,612

Foreign currency translation reserve

 

(23,109)

(7,015)

Retained earnings

 

(25,352,139)

(21,824,229)

Non-controlling interests

 

2,041,938

906,885

Balance at 31 December

 

16,031,110

10,662,249

 

Share Capital

 

Number of

 

 

Ordinary

Share

 

Shares

Capital (€)

At 31 December 2019

60,998,983

190,512

Share issue on 26 June

111,980

309

Share issue on 30 June

63,624

175

At 31 December 2020

61,174,587

190,996

Share issue on 14 January *

190,872

535

Share issue on 29 December - capital raise **

1,670,518

4,962

Share issue on 30 December - capital raise **

2,996,149

8,900

At 31 December 2021

66,032,126

205,393

* On 14 January 2021, 190,872 ordinary shares with a nominal value of £0.0025 each were issued as effect of the exercise of options of ordinary shares for Directors and Senior Managers.

** On 29 and 30 December 2021, 4,666,667 ordinary shares with a nominal value of £0.0025 each were issued as effect of the Company's capital raise.

 

Share Premium

 

 

Share

In euro

 

premium

 

 

At 31 December 2019

 

31,395,612

Shares issued

 

-

Expenditure relating to the raising of shares

 

-

At 31 December 2020

 

31,395,612

Shares issued

 

8,306,293

Expenditure relating to the raising of shares

 

(542,878)

At 31 December 2021

 

39,159,027

 

On 29 and 30 December 2021, as a result of the Company's capital raise, 4,666,667 ordinary shares were issued at a price of £1.5 each. The Company accounted for €8,306,293 of gross share premium reserve, net of €542,878 of expenditure directly referred to the transaction. 

 

Share capital

Financial instruments issued by the Directa Plus Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Directa Plus Group's ordinary shares are classified as equity instruments.

 

Share premium

To the extent that the company's ordinary shares are issued for a consideration greater than the nominal value of those shares (in the case of the company, £0.0025 per share), the excess is deemed Share Premium. Costs directly associated with the issuing of those shares are deducted from the share premium account, subject to local statutory guidelines.

 

Foreign currency translation reserve

Exchange differences resulting from the consolidation process of Setcar are recognised in the translation reserve for an amount of € 7,183.

 

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 2021, non-controlling interest is composed by 48% of Setcar S.A. and 26.46% of Directa Textile Solutions Srl.

 

18.  Loans and borrowings

 

 

Group

Company

 

 

2021

2020

2021

2020

 

 

Non-current Loans and borrowings

Current Loans and borrowings

 

 

2,403,881

65,840

 

1,017,716

981,065

-

-

-

-

Total

 

1,998,781

-

-

 

 

2021

Current

Non current

Repayment

Interest rate

BANK OF TRANSILVANIA

660,328

-

660,328

36-months

Variable 4.7% ROBOR 3M + 2,5%/year

BANK OF TRANSILVANIA IMM INV

464,143

-

464,143

60-months

Variable 4.11% ROBOR 3M +2.11%/year+2%

GVC INVESTMENT COMPANY LMT

16,630

16,630

-

12-months

1.5%/year

INTESA SAN PAOLO

300,000

18,393

281,607

72-months

1.5%/year + EURIBOR 3M

INTESA SAN PAOLO

25,000

3,076

21,924

72-months

1.5%/year + EURIBOR 3M

INTESA SAN PAOLO

-500,000

-

500,000

72-months

1.5%/year + EURIBOR 3M

BANCA POPOLARE DI SONDIO

500,000

24,121

475,879

72-months

1.5%/year + EURIBOR 3M

 

Reconciliation of liabilities arising from financing activities

 

 

Cash flows  

Non Cash flows  

 

Borrowings

01 January

Capital Repayment

Liabilities acquired  

Accrued Interest

Loan conversion into equity   

31 December 2021

2021

1,998,781

(81,666)

1,511,719

1,642

(960,755)

2,469,721

Total

1,998,781

(81,666)

1,511,719

1,642

(960,755)

2,469,721

 

19.  Leases liabilities

The following table details the movement in the Group's lease obligations for the period ended 31 December 2021:

  

 

2021

2020

 

 

Non-current lease liabilities

 

463,047

627,138

Current lease liabilities

 

217,537

214,935

Total

 

680,584

842,073

 

20.  Employee benefits provision

 

 

2021

2020

 

 

Employee benefits

 

500,535

444,483

Total

 

500,535

444,483

 

Provisions for benefits upon termination of employment primarily related to provisions accrued by Italian companies for employee retirement, determined using actuarial techniques and regulated by Article 2120 of the Italian Civil code.  The benefit is paid upon retirement as a lump sum, the amount of which corresponds to the total of the provisions accrued during the employees' service period based on payroll costs as revalued until retirement.  Following the changes in the law regime, from January 1 2007 accruing benefits have been contributing to a pension fund or a treasury fund held by the Italian administration for post-retirement benefits (INPS).  For companies with less than 50 employees it will be possible to continue this scheme as in previous years.  Therefore, contributions of future TFR provisions to pension funds or the INPS treasury fund determines that these amounts will be treated in accordance to a defined contribution scheme, not subject to actuarial evaluation. Amounts already accrued before 1 January 2007 continue to be accounted for a defined benefit plan and to be assessed on actuarial assumptions.

 

The breakdown for 2020 and 2021 is as follows:

Amount at 31 December 2019

406,534

Service cost

57,081

Interest cost

10,131

Actuarial gain/losses

(7,821)

Past service cost

-

Benefit paid

(21,442)

Amount at 31 December 2020

444,483

Service cost

47,536

Interest cost

11,098

Actuarial gain/losses

6,457

Benefit paid

(9,039)

Amount at 31 December 2021

500,535

 

Variables analysis

Detailed below are the key variables applied in the valuation of the defined benefit plan liabilities. 

 

 

2021

2020

Annual rate interest

2.30%

2.30%

Annual rate inflation

1.10%

1.10%

Annual increase TFR

7.41%

7.41%

Tax on revaluation

17.00%

17.00%

Social contribution

0.50%

0.50%

Increase salary male

1.20%

1.20%

Increase salary female

1.15%

1.15%

Rate of turnover male

1.70%

1.70%

Rate of turnover female

1.50%

1.50%

 

Sensitivity analysis

Detailed below are tables showing the impact of movements on key variables:

 

Actuarial hypothesis - 2021

Decrease 10%

Increase 10%

 

 

 

Variation

 

Variation

 

 

Rate

DBO €

Rate

DBO €

Increase salary

Male

1.08%

(4,767)

1.32%

1,277

Female

1.04%

1.27%

Turnover

Male

1.53%

(4,962)

1.87%

1,325

Female

1.35%

1.65%

Interest rate

 

2.07%

11,788

2.53%

(14,631)

Inflation rate

 

0.99%

(6,032)

1.21%

2,546

 

21.  Trade and Other payables

 

Non-current

 

Group

Company

 

2021

2020

2021

2020

Other payables

64,357

65,397

-

-

Total

64,357

65,397

-

-

 

Current

 

 

 

 

 

Group

Company

 

2021

2020

2021

2020

Trade payables

946,694

1,364,787

93,332

54,725

Employment costs

609,397

519,466

-

-

Other payables

375,807

1,228,655

78,486

62,020

Contingent consideration at fair value through P&L

-

572,268

-

-

Total

1,931,898

3,685,176

171,818

116,745

 

In 2021 Setcar released an obligation to its former shareholders for a total amount of €504k, accounted as other income in the Consolidated statement of comprehensive income. As of December 2020, this amount was accounted within other payables.

 

Over 2021 the Group paid the last tranches of contingent consideration to the former shareholders of Setcar for a total amount of €572,268.

 

22.  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 2021 the Group is exposed to variable interest rate risk for a short term revolving loan and for the loans recently issued by Directa Plus SpA under the Italian Government Covid-19 Recovery Plan. Those loans, being 90% guaranteed by the Italian Government, bear a low interest rate (1.5% + EURIBOR) and, if the interest rate had increased or decreased by 100 basis points during the year the reported loss after taxation would not have been materially different to that reported.

 

b)    Capital Risk

The Group's objectives for managing capital are to safeguard the Group's ability to continue as going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. There were no changes in the Group's approach to capital management during the year.

 

c)    Credit Risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group's credit risk is primarily attributable to its trade receivables that the Company consider defaulted if any instalment is unpaid more than sixty (60) days past its original due date or where there is evidence that identifies the debtor's state of insolvency.

 

The Group's cash and cash equivalents and restricted cash are held with major financial institutions. The Group monitors credit risk by reviewing the credit quality of the financial institutions that hold the cash and cash equivalents and restricted cash.

 

The Group's trade receivables consist of receivables for revenue mainly in Italy and Romania. Management believes that the Group's exposure to credit risk is manageable and currently the Group's standard payment terms are 30 to 60 days from date of invoice are largely met from the clients. At the end of the period, 74% of account receivables have an ageing less of 60 days and refers to orders delivered close to the year end. As at 31 December 2021 the Group recognised a cumulated bad debt provision for €46,893.

 

Every new customer is internally analysed for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. Advance payment usually applies for the first order and the exposure to credit risk is approved and monitored on an ongoing basis individually for all significant customers. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. The Group does not require collateral in respect of financial assets.

 

d)    Exposure to credit risk

 

Group

 

Note

 

2021

2020

Trade receivables

14

 

2,339,369

2,174,967

Cash and cash equivalent

16

 

11,130,468

7,080,492

Total

 

 

13,469,837

9,255,459

 

The largest customer within trade receivables account for 13% 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.

 

2021

Carrying amount

Up to 1 year

1 -5 years

Financial liabilities

 

 

 

Trade payables

946,694

946,694

-

Lease Liabilities

680,584

217,537

463,047

Loans

2,469,721

65,840

2,403,881

Total

4,096,999

1,230,071

2,866,928

 

2020

Carrying amount

Up to 1 year

1 -5 years

Financial liabilities

 

 

 

Trade payables

1,364,787

1,364,787

-

Lease Liabilities

842,073

214,935

627,138

Loans

1,998,781

959,520

1,064,310

Total

4,205,641

2,539,242

1,691,448

 

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

9,159,734

 

As of January 2022, to reduce the exposure to liquidity risk, Directors decided to translate GBP 4.5 million into EUR. As at 24th March 2022 the total cash held in GBP is equal to £3.5 million. If the exchange rate EUR/GBP increase by 10% the impact on P&L would be a loss equal to €0.4 million (if decrease by 10% would be a profit equal to €0.4 million).

 

The Group holds accounts also in other currency (such as USD and RON) but just for business purposes and for not material amount.

 

23.  Earnings per share

 

Change in number of ordinary shares

Total number of ordinary shares

 

 

 

Days

Weighted number of ordinary shares

 

 

 

 

 

At 31 December 2020

175,604

61,174.587

365

61,087,158

Existing shares

 

61,174,587

13

2,178,821

Issued on 14 Jan 2021

190,872

61,365,459

349

58,675,466

Issued on 29 Dec 2021

1,670,518

63,035,977

2

345,403

Issued on 30 Dec 2021

2,996,149

66,032,126

1

180,909

At 31 December 2021

4,857,539

66,032,126

365

61,380,599

 

 

Basic

Diluted

 

2021

2020

2021

2020

 

 

 

 

 

Loss attributable to the owners of the Parent

(3,652,364)

(4,195,011)

(3,652,364)

(4,195,011)

Weighted average number of ordinary shares in issue during the year

61,380,599

61,087,158

-

-

Fully diluted average number of ordinary shares during the year

-

-

61,649,085

61,477,110

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.

 

24.  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 2021, the total number of outstanding Ordinary Shares awards is 1,184,000, of which 517,000 vested after the first year and 250,000 were revoked.

 

At the date of this report, an additional 539,080 share options had vested in 2020 under the 2016 Employees' and NED Share Schemes that have not yet been exercised.

 

The main terms of the 2020 Employee's Share Schemes are set out below:

 

Eligibility

All persons who at the date on which an award is granted under the Employees' Share Scheme are employees (or employees who are also office-holders) of a member of the Group and are eligible to participate. The Remuneration Committee decides to whom awards are granted under the Employees' Share Scheme, the number of Ordinary Shares subject to an award, the exercise date(s) (subject to the below) and the conditions which must be achieved in order for the award to be exercisable.

 

Types of Award

Awards granted under the Employees' Share Scheme have the form of market value share options. "Market value share options" are share options with an exercise price equal to the market value of a share at the date of grant. The right to exercise the award is generally dependent upon the participant remaining an officer or employee throughout the performance period. This is subject to the good leaver provisions described below. Awards granted under the Share Schemes will not be pensionable.

 

Individual Limits

The value of Ordinary Shares over which an employee or Executive Director may be granted awards under the Employees' Share Scheme in any financial year of the Company shall not exceed 200 per cent of his basic rate of salary at the date of grant.

 

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:

 

 

Monte-Carlo simulation

 

 

Market value shares

Share price

 

60p

Exercise price

 

66p

Expected volatility

 

54%

Compounded Risk-Free Interest Rate

 

0.10%

Expected life

 

6 years

Number of options issued*

 

1,801,000

 

*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. This is not representing any option issued in the period.

 

Details of the number of share options outstanding are as follows:

 

 

Outstanding at start of period

Granted during the period

Cancelled during the period

Expired during the period

Vested during the period

Outstanding at end of period

Exercisable period option price

Grant date

Exercisable date

31 December 2019

1,639,877

 

(25,523)

(733,066)

(821,288)

60,000

75p

12 May 2017

12 May 2020

31 December 2020

60,000

1,801,000

-

-

(60,000)

1,801,000

66p

12 Nov 2020

12 Nov 2023

31 December 2021

1,801,000

150,000

(250,000)

-

(517,000)

1,184,000

66p - 118p

12 Nov 2020 - 15 Jun 2021

12 Nov 2023 - 15 Jun 2023

 

Cancelation of share options during the period relates to the resignation of employees. Share options expired over the period refers 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 the third anniversary.

 

As of 14 January 2021, two Directors and two Senior Managers of the Company had exercised 190,872 ordinary shares, originally vested under the 2016 Employees Share Scheme.

 

25.  Related parties

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

 

Remuneration of key management personnel

The below figures represent remuneration of key management personnel for the Group, who are part of the Executive Management Team but not part of the Board of Directa Plus PLC. The remuneration is set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'.

 

 

2021

2020

 

Short-term employee benefits and fees

407,451

278,619

Social security costs

102,469

68,576

 

509,920

347,195

 

The increase in 2021 is mainly explained by the fact that during the year an employee was appointed as part of the Executive Management Team of Directa Plus SpA.

 

Transactions with shareholders

The following sales with shareholder of the Group were recorded, excluding VAT, during the year:

 

2021

2020

 

Sale of products

-

3,948

 

Products are sold on normal commercial terms and conditions.

 

Other transaction Group

Other related party transactions during the year under review are shown in the table below:

 

2021

2020

 

Sale of products

19,395

15,886

 

Products are sold on normal commercial terms and conditions

 

26.  Contingent Liabilities and Commitments

The group has the following contingent liabilities relating to bank guarantees on operating lease arrangements and government grants.

 

 

2021

2020

Bank guarantees

 

163,340

141,553

 

27.  Post Balance Sheet events

At the date of this report, it is still unrealistic to properly assess the potential impacts of the Ukrainian conflict on the Group. Directors are monitoring the evolution of the macro-economic scenario and consequently re-adjusting, where necessary, the Group's strategy and operational priorities. The Group is likely to be hit by inflation trends (as a consequence of the increase in energy and transportation costs) and, presumably, by some contracts slowdown. However, Directors believe that overall, the conflict will not affect the going concern of the Group, and, under certain circumstances, it will create some potential opportunities, such as from the price increase of oil and other materials could generate significant outturns for the Group and its clients.

 

On 15 March 2022, Directa Plus S.p.A. granted its subsidiary Setcar SA a loan of €1 million, payable in 1 year with an annual interest rate of 4.5%. Those funds, raised in the context of the capital increase completed in December 2021, will support Setcar in responding to significant new tenders and provide additional liquidity for its general working capital purposes.

 

-ends-

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
FR EAESLEDEAEAA
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Related Charts

Directa Plus PLC (DCTA)

-1.00p (-5.00%)
delayed 16:57PM