Good afternoon, welcome to the Directa Plus PLC half-year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press Send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. I would now like to hand you over to CEO Giulio Cesareo. Good afternoon to you.
Thank you. Good afternoon to everybody. My name is Giulio Cesareo. I'm the Founder and CEO of the company. I have 40 years of experience in the graphite and graphene arena, starting with 20 years in Union Carbide and 20 with Directa Plus. In front of me there is our CFO, Giorgio. Please introduce yourself.
Good afternoon, everybody. My name is Giorgio Bonfanti. I'm the group CFO of Directa Plus. I joined the company more than four years ago after some many experience.
Nowadays, we will try to give you a concise view of what are the opportunities for Directa Plus in the future. I would like to start by telling that if you go on the website, you will see a general consensus on an explosive expected growth of the graphene sector. All the different groups are talking of compound annual growth rate between 20% and 40% for the next 10 years, with a significant focus on three verticals: battery, defense, and environment. We consider Directa to be a leading company in this area.
We have a process that has been, during this year, redesigned and reengineered with the objective to generate new products, not just graphene, but also nanographenite. I will go deep on analysis of the process and of the product in the next few slide. Time to market is still very aggressive in the range of 3 months. We are signing significant partnership. One of these, unfortunately, we will not have chance to disclose too much, but it's very, very important for the future of the company and is in the defense arena. If we move to the process, I think that this is the slide covering the old process.
I will give you much more detail in a slide that has been prepared to show the difference between the old and the new. Only one comment. For your information, we have 116 granted patent and 39 pending, and 107 of these patents have my name as inventor or co-inventor.
G+ graphene. Our material is an enabling material, so it transfers a number of different properties across different verticals and applications. For example, from thermal conductivity to antimicrobial properties, high electrical conductivity, improved mechanical properties, high absorption capacity, flame retardant, anti-corrosion. We have a number of different products across different verticals covered by a strong IP portfolio. We have IP portfolio of 22 patent families, 4 of which are covering the production process and 18 are covering products and applications. Let's jump in the first part of the presentation, which will give you a few highlights on the main events of the first half of 2025, starting from operational performance. This is key for us.
This is a game changer, so we'll go more in deeper in the next slide, but we are making some significant improvements on our production system that will allow us to have a drastic reduction in operational direct costs, and we'll have the access to new kind of products. We'll cover more in detail in the coming part of the presentation. On the two main verticals, environmental remediation and textiles, just a couple of quick comments. On environmental, we keep working on the restructuring of Setcar after we acquired the full ownership, almost full ownership one year ago. This has translated into solid results in the first half, and we signed also new important contracts, using Grafysorber as the main material for deploying the contracts, Midia International on different front.
On textiles, we keep working on workwear and defense , a very important news, as Giulio said, is the fact that we secured the first sole source contract by a primary governmental defense department. In terms of financials, in the first half of the year, we had revenue increased by 15%. This was thanks to the new strategic focus, but most importantly, we were able to reduce our EBITDA loss by 38%. This was the result of a continuous progress in terms of keep reducing direct production costs, but also a reduced cost control and optimization. Cash, as of June 2025, was approximately EUR 3 million, so in line with management expectations. We keep working on carefully managingBalancing investment in growth with business sustainability.
In the next part, we'll go more in detail on the main strategic actions we have put in place.
Yes, we put in place, five strategic action really, to generate and capture the right momentum and the opportunity we see in the market. Let's start with the three levers underpinning the strategy. The first and most important nowadays is production. We did a massive action on the production line, re-engineering and redesigning it. We have now full automation. We will have the chance to use new precursors with which from argon to nitrogen in the Super Expansion to reduce cost. I will go with more detail in the next slide covering production. It's important to stress to your attention that we will be able with this system to reduce drastically production costs and to assess to new market.
With regard to sales, we are accelerating the market adoption in the existing vertical. Still a main focus on environmental and textile, but especially with the new material in our hands, we will be able to satisfy not the quality, because the quality demand from certain application was already performing properly, but the price expectation of customer and also on this I try to give you additional info in the next slide. R&D is working very well in a very close collaboration with production and sales, and we will focus on real opportunities, real market, and customer request. So, we are not checking all the graphene opportunities without a real connection with the market.
Now, if we move to the slide, covering production, as I told you, this is a most important move we made, and let me try to explain. On the upper side of the slide, there is the old system. On the bottom, the new one. What are the reason, to change from one system to the other? The reason are very simple, inability to produce, nanographene. Second and more important, we start to realize that some of our, key competitors were capturing our market offering, nanographene material. We decide, to move from an old design that has fixed parameters, so that was utilizing a kind of algorithm, maximizing the input of energy to obtain a significant amount of pristine graphene nanoplatelets.
High input, low productivity, and a fixed number of morphology. Moving to a new design where we prioritize what we can define the adaptive control logic. We are able now to adapt the process during the production phase and to adapt the process also to different precursors. This is key to get important, very important cost reduction, to get productivity increase. We have the full automation. Before there was a minor automation in each department. We have a fast, very fast setup change, so we can move from one precursor to the other.
We have also a new cleaning process that is able with very high pressure water to clean the entire production line and also to keep, you know, the material that normally was eliminated as a material for a next production. We, as I mentioned, we can work on different precursor. The last comment I want to make is that if you look at the third box in the bottom part of the slide, we are moving from the old exfoliation to what we call additional exfoliation and interlocking. What does it mean? We are able now to put together different materials. We are able to cover a specific material with our graphene, adding binder and other product.
This satisfy mainly more significant needs in the battery arena. The plant has been reconfigured as an integrated platform, fully automated. Doing this activity, we decided to certify all the drawings, which is a very important step because nowadays we can license the technology anywhere in the world. Opportunities to license the technology are rising right now.
As, as Giulio said, this upgrade in our production plant, are a game changer for us because we will have mainly two benefits. The first one is the fact that we reduce our direct production cost, as we said. This will allow us also to rebalance in certain cases our prices and to get easier access to the markets depending on the vertical and applications. The second point is the fact that we will be able to produce new kind of products. We'll have two different categories. The G-class traditional products with graphene nanoplatelets in it for higher performances, higher price, but also some niche application, specific application with high potential. At the same time, we'll also access the nanographenite and blended materials markets with high volumes for industrial applications. We will have a double offering.
In this slide, we try to summarize, very briefly the main differences between the two categories.
Yes. you know, let me tell you that the boundary between, graphene and nanographenite is, in many cases, is very thin. If you look at the upper part of this slide, below 10 layer, we have nano, graphene. Over, we have nanographenite. For us, the difference is related to number of steps within . You can, analyze a system, that is, designed, to produce high productivity at the proper level. You know, we are able really to drastically reduce the number of steps and create, a material that is top quality but low cost. The key markets are, always the same: energy, advanced composite, textile, the market we are in.
For example, in battery cathodes, we are able to produce a very interesting specific material for our USA partner. Now we will move into the battery anode arena with the nanographenite. Positioning on one side is tailor-made, on the other is volume-based. The compound annual growth for nanoplatelets of graphene is between 35% and 40% and vice versa, between 10% and 15% with nanographenite.
Okay. In the next slide, we try to recap the most important opportunities in terms of sales and contracts in our pipeline on the two main verticals. The first one is on environmental remediation, we have a couple of important opportunities. The first one is with OMV Petrom, which is a long-standing contract. We've been using Grafysorber for a number of contracts with them. Now they are decommissioning the exhausted wells they own in the Romanian ground. It's a 20 years project. They have to decommission 30,000 wells, and we have an open discussion. We still need to define total value for Setcar S.A., but this will be a very important contract for us. The second one is with Tenaris Romania.
For a total waste management contract, we submitted an offer of approximately EUR 2 million per year. We are waiting for the outcome of the tender. This will start from January 2026. On textiles, as we said, we keep working in the workwear and defense applications because those are the applications where we believe that our properties and technology can be appreciated the most. What is key here is the fact that, as we said, that we won our first sole source contract with a leading governmental defense agency. Giulio, I'm not sure if you want to add anything.
Yes. We are very proud because it's a very large agency. It's not an Italian agency. Very prestigious. We're not allowed to disclose any information because we committed ourselves personally to avoid any flow not proper of information outside. The leverage is on significant properties of our material recognized by this agency to the point that they decide without intermediary to adopt the Directa and start to work with us.
Okay. The next slide is on Setcar.
Yes. Setcar restructuring progress plan has two objective. The first one is short-term, and is almost completed. We have a new board, a new governance with a board, a new general manager. We define head of sales, and we are looking for couple of new executive to reinforce the organization. We are continuously optimizing the workforce with the objective to introduce new talents. Since June 2024, we moved from 164, 465 people down to June 2025 to 144. The objective by the end of this year is to be in the range of 130 or below.
We are working on contract portfolio, removing the low-margin contracts, with a lot of focus on specific activities that are not anymore in the area of Directa technology. The medium-term objective is to explore this opportunity, keeping in the portfolio customers and materials that either maximize Directa technological expertise or generate significant profit. Let me make an example. Setcar S.A. has a technology to decontaminate the transformer with PCB oil that is working very well in generating the proper profit. We can move to a graphene technology, but the process is working well. The equipment is almost unique, so we don't want to lose this business opportunity. With regards to looking ahead, as I mentioned, restructuring is still in progress. Timing, unfortunately, often exposed to external factor.
One example, you know, we got a Midia International SA order of EUR 1.5 million. It has been structured on the fact that Setcar S.A. has the ability to decontaminate a drilling platform from hydrocarbons during all the activity. The drilling platform was supposed to move from the Middle East to the Black Sea. Now instead of passing via Suez Canal, nobody wants to insure them, so they will have to make a longer trip, and this could generate a delay. The only other pending significant contract for this year is the Ford contract that is an old customer of Setcar S.A. With regards to R&D, as I mentioned, we are focusing on real opportunities, existing market. We have six projects ongoing.
One is covering the lenses with a global company. We work to enforce polyamide composite in order to reduce infrared transmission, and we discovered that the lens doped with G+ graphene is significantly improving the impact resistance. Now we're targeting polycarbonate lenses that are a very significant market for defense and safety. The other important area where we are moving quite fast is PFAS. You probably know that PFAS, the so-called forever chemicals, are very dangerous, and they've been utilized in different industries to leverage their properties to resist heat, water, and oil. We are developing, and we finally defined a filter to remove PFAS from water, and we are already working in different area.
We are working in pharma area, testing and checking the removal of contaminants in the pharma water, agricultural, port, and semiconductors. We have also developed with the support of the external partner, a pilot decontamination unit that can be scaled up and offered to different industry and different customers. We are moving also back to the tire arena and starting with truck tires, but we are also testing and working with very large tire manufacturer, and the tests are still moving on. We have a big electronic conglomerate working with our G+ on polycarbonate enhanced for gaming devices. We are integrating our new materials into batteries, working with our NantG battery company and partner.
In fact, I'm flying to U.S.A. next week to drill down on some very close business opportunity with them. Last, we develop an HVAC system that will capture at the entrance of a normal air conditioning system, not just the particles, but will act as a significant antimicrobial filter system.
Just a couple of final slides on the market and an outlook. Starting from the market, we would like to represent this chart on the left of this slide, which clearly shows that the graphene market is expected to explode in terms of tons of graphene on the market. What is key here to highlight is the fact that we believe that we are well-positioned to benefit from the market growth because we have already products on the market. We have a strong IP portfolio, and we have a strong know-how thanks to our work with the R&D over the last years. We are expert in producing graphene.
We need to rely on the, on our partners in order to leverage on their industry knowledge, the technical capabilities, and their commercial network to accelerate the commercialization of the technology on the market.
Okay, just some closing comments. The first one back to the upgraded production line. This is by far the most important move we made with the objective to really consolidate the position on a long-term basis. Future growth Environmental and textile as core sector, but with an eye on batteries where, as I mentioned, we are ready with some very interesting products and on defense opportunity. We consider the momentum very good. As I mentioned at the beginning, the index, all the different index are showing an incredible attention to graphite and graphene. Some countries are also starting a project to reopen graphite mines and to design a new graphene industry. Of course, we are open to offer our technology in license.
The board really is convinced and confident that we will deliver the year-on-year EBITDA improvement that the market is waiting for us. Let me tell that, you know, without any doubt, the future is no longer a distant horizon, but it is unfolding now, and we are ready to shape it. I think that at this point we can stop and wait for the questions.
That's great. Giulio, Giorgio, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Giulio, Giorgio, as you can see, we have received a number of questions throughout today's presentation. Giorgio, if I may now come back to you to chair the Q&A, and I'll pick up from you at the end. Thank you.
Okay. I will read some questions, starting from the first one. How much of your H1 revenue is recurring? What visibility do you have for 2025 and beyond? We can say that approximately EUR 6 million of our revenues on a yearly basis are recurring so far. Recurring meaning, long-standing contracts and clients that we've been working for more than two years now. We believe that we have a solid base of recurring customers. Of course, this give us some comfort also for next year in terms of revenue growth. As we said, we expect to keep growing with at least a double-digit growth as we did, as we are doing in 2025 compared to 2024, also next year. I see that there are a couple of questions about EBITDA.
There is one which says, "What is the roadmap to achieving breakeven EBITDA, and what cost levers do you still need to pull?" Another couple of questions with similar questions. I will answer that. We covered during the presentation that we are in 3, maybe 2 different levers, 3 different levers. The first one, of course, is keep growing the business and market the contracts. As we said, we believe that we have a good pipeline for the coming months and year. In parallel to that, we are keep increasing our gross margin, and we're still reducing our direct production costs. The intervention and upgrades to the line are fundamental, and we are achieving good results on that.
Also a cost optimization with positive results. We believe that we are near to reaching EBITDA breakeven in the short term.
Let me add that some of these new opportunity, especially the defense one, could really explode the turnover, if we will continue with this growing phase that is not just a testing, but we are moving very close to significant number. Of course, we don't know exactly what is going to happen and when. In any case, we see differently from the past that between starting an opportunity because we have the product, because we have the material, because we have the quality, and now we will have in most of the cases the price, the time is much, much closer on one side because the Rector probably is doing the right things.
On the other, because, the entire, global companies digested the concept and the logic behind the nano materials and graphene.
Okay. Another question is, how scalable is Grafysorber technology across different countries? As we disclosed a few times to the market, we have acquired Setcar to create a business case for the deployment of Grafysorber on the market. What we are doing with Grafysorber is testing and providing a full service to the market. The idea is to create a successful business case, after that we can scale in other countries through two ways. One, probably the more probable one, and easy one is through licensing. We have put in place, thanks to our IP portfolio, we have put in place some, we are working on potential licensing in the future on Grafysorber.
Yes.
Now the question is, how strong is your IP portfolio, and are you continuing to file new patents?
Yes, the IP portfolio is really strong. We are filing some ideas, but now, especially now, with this defense opportunity, we are investing a lot in OA. Instead of filing that at a certain point, we'll disclose some key information, we are keeping everything confidential. We are created the defense business unit with a limited number of people and with a very, very protected area, covering the important information. Other places like PFAS or like some of the new material, we will continue to file as we did in the past.
Okay. The question is, what is your expected timeline for generating revenues from the graphene product line?
almost immediately because as I presented in one of the slide, the border between the two material is so thin that it's just a question to go back to some of the customer, they tested our graphene material, offering them a nanographite at an interesting new price, and we expect they will place the order. We have already a plan very clear on this
Okay. I believe we answered all the questions.
That's great, Giorgio. Giulio, if I may just jump back in then. Thank you for addressing all those questions from investors today. Of course, the company can review all questions submitted, and we'll publish those responses on the InvestorMeetCompany company platform. Giulio, before I redirect investors to provide you with their feedback, which is particularly important to the company, could I please just ask you for a few closing remarks to wrap up?
Yes. Let me mention a statement, quite old, that the way up and the way down are the same. What were once obstacle are now the very step of our ascent, you know. This was mentioned by Heraclitus, 500 years before Christ, I think it's really valid for a graphene company like Directa. I would like to add, you know, a very short and very simple comment from my side. Come and rise with us.
That's great. Giulio, Giorgio, thank you once again for updating investors today. Could I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations. This will only take a few moments to complete. I'm sure will be greatly valued by the company. On behalf of the management team of Directa Plus PLC, we would like to thank you for attending today's presentation. Good afternoon to you all.