TIDMSYME
RNS Number : 0864O
Supply @ME Capital PLC
29 September 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION 2014/596/EU, WHICH IS PART OF DOMESTIC
LAW OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
("UK") PURSUANT TO THE MARKET ABUSE (AMMENT) (EU EXIT) REGULATIONS
(SI 2019/310) ("UK MAR"). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
29 September 2023
Supply@ME Capital plc
(the "Company", " Supply@ME " or "SYME" and, together with its
subsidiaries, the "Group")
Unaudited interim results for the six months ended 30 June 2023
and entry into Top-Up Shareholder Loan Agreement and Side Letter
Agreement
SYME, the fintech business which provides an innovative fintech
platform (the "Platform") for use by manufacturing and trading
companies to access Inventory Monetisation(c) ("IM") solutions
enabling their businesses to generate cashflow, announces its
unaudited results for the six months ended 30 June 2023 ("H1 2023")
and entry into Top-Up Shareholder Loan Agreement and Side Letter
Agreement - details of which are set out in Appendices 1 and 2 to
this announcement, respectively.
Highlights from the H1 2023 interim results:
* Group revenue from continuing operations of GBP0.1m
in H1 2023 compared to nil in the comparative interim
period for the six-month period ended 30 June 2022
("H1 2022"). The GBP0.1m revenue includes a
combination of the various elements of revenue
related to:
* origination and due diligence fees (pre-IM), charged
directly by the Group to the Client Companies; and
* fees relating to the Platform usage and servicing
(post-IM), charged to the relevant independent Stock
Company involved in each IM.
* This increase reflects the completion of the first
IMs over the prior 12-month period and continued due
diligence activities.
* Group operating loss from continuing operations of
GBP2.3m in the current interim period compared to
GBP2.1m in H1 2022.
* Finance costs have significantly reduced by GBP1.4m
in H1 2023 compared to H1 2022 due to the replacement
of Mercator Capital Management Fund LP debt financing
with longer term equity funding from Venus Capital
S.A. ("Venus Capital") during 2022 and H1 2023.
* Loss from discontinuing operations of GBP0.2m in H1
2023, compared to a loss of GBP2.6m in H1 2022,
primarily as a result of:
* a gain on disposal of 81% of the TradeFlow Capital
Management Pte. Ltd. ("TradeFlow") operations (the
"TradeFlow Restructuring") of GBP0.7m recognised in
H1 2023; and
* no additional impairment or acquisition related
earn-out charges recognised in H1 2023, compared to
an aggregate total of GBP1.5m for these charges
recognised in H1 2022.
* The combined impact of the above resulted in a total
loss of GBP2.6m in H1 2023, compared to GBP6.2m in H1
2022.
* The completion of the TradeFlow Restructuring on 30
June 2023 resulted in the removal of the TradeFlow
net assets from the Group's consolidated balance
sheet as at 30 June 2023 and the recognition of two
new assets. Further details as set out below:
* the value of the TradeFlow net assets removed from
the Group's consolidated balance sheet as at 30 June
2023 was GBP1.6m. This included the net book value of
the intangible assets that were recognised by the
Group as part of the TradeFlow acquisition in July
2021;
* the addition of the new receivable balance of GBP2.0m
relating to the outstanding cash consideration still
to be received by the Company as at 30 June 2023; and
* the addition of the new investment of GBP0.3m
relating to the Group's remaining 19% ownership of
TradeFlow.
* Execution of the new equity funding that was
announced on 28 April 2023 with Venus Capital. This
resulted in a cash inflow to the Group of GBP2.0m,
net of commission and other share issue costs.
With the completion of inaugural IMs, the Group now expects
to start to build a demonstrable track record of revenue generation
as it scales delivery of new IM transactions.
Operational Highlights
* The completion of the TradeFlow Restructuring on 30
June 2023 was an important step for the Group as it
will allow us to better serve both the needs of our
client companies and the funders of both businesses.
It will create value for the Company shareholders
("Shareholders") by eliminating any perception of
conflicts of interest between the two businesses and
providing both businesses with greater commercial
opportunities through the clear differentiation of
responsibilities of the individual entities.
* Following the reconfiguration of investment advisory
business line through the disposal of majority stake
of TradeFlow, the Group is now focussed on its core
business lines:
* IM transactions from the pipeline originated by the
Group and funded by third-party investors ( "
Open-Market IM " ) ; and
* IM deals with local commercial banks and their client
companies ( " White-Label IM " ).
* Completion of commercial agreements for the inaugural
Open-Market IMs, using traditional funding, showcases
the Group's progress against the activity outlined in
its year end 2022 business update. In particular, s
ignificant progress has been made against the Group's
key operational key performance indicators ("KPIs")
with the evolving pipeline of IM opportunities.
* The pipeline (representing the value of the inventory
to be monetised) was valued at GBP404.5m as at 22
September 2023, which compares to GBP374.6.m as at 21
April 2022. This increase reflects the strength of
the proposition and its appeal to quality businesses,
across a diversified portfolio of companies both in
Italy and the UK, with demand driving opportunities
in other European countries.
* The Group is now in advanced stages of formalising a
White-Label IM agreement with a leading Italian
banking group ( " WL Inventory Funder " ) to execute
an initial IM transaction with an inventory value to
be monetised of up to EUR10m, which involves an
existing client of the WL Inventory Funder. This
White-Label IM agreement (which remains subject to
contract) is expected to allow the Group to scale its
revenue in Italy, leveraging the balance sheet and
the client base of the WL Inventory Funder in
specific supply chains.
* Similarly, the Group has started exploring similar
White-Label IM partnerships in the UK.
* Supply@ME has been collaborating with a group of
private investors and subject matter experts of
working capital solutions to launch an independent
Swiss-based trading business ( " CH Trading Hub " )
to replace the Cayman-based global inventory fund ( "
GIF " ), previously advised by TradeFlow. The CH
Trading Hub, owned by Société
Financière Européenne S.A. ( " SFE " ), is
also expected to assume control of the independent
Stock Companies from the GIF once this restructuring
is completed, to manage the overall trading
businesses using the Platform and the associated
services provided by the Group.
* Additionally, the CH Trading Hub will handle the
token route including implementation of the strategic
agreement with VeChain Foundation ("VE Chain"). In
this regard, the Group is working with the CH Trading
Hub on the launch of a security token framework which
will allow up to US$100m to be issued and subscribed,
mostly by institutional investors active in the
digital asset markets. The security token is expected
to be issued by a vehicle sponsored by SFE and be
tradeable on authorised digital asset exchanges.
* Discussions have commenced with a global investment
bank to serve as a cornerstone funder for IMs of the
Group's current and prospective pipeline, deploying a
scalable and multi-jurisdictional Open-Market IM
programme.
Summary of H1 2023 financial results
The below unaudited consolidated financial summary of the
Group's income statement is presented to distinguish the continuing
operations (being the Group's IM segment) and the discontinued
operations consisting of TradeFlow and its subsidiaries (the
"TradeFlow Group"). The unaudited consolidated financial summary of
the Group's balance sheet includes the total assets and liabilities
from both continuing and discontinued operations as at 31 December
2022, however, no longer includes the assets and liabilities of the
TradeFlow Group as at 30 June 2023, following SYME's disposal of
81% of the TradeFlow Group on 30 June 2023.
Consolidated financial summary:
6 months to 30 June 2023 6 months to 30 June 2022
Unaudited Unaudited
GBPm GBPm
Continuing operations
------------------------- -------------------------
Revenue from continuing operations 0.1 -
------------------------- -------------------------
Adjusted operating loss(1) from continuing operations (2.0) (2.0)
------------------------- -------------------------
Operating loss from continuing operations (2.3) (2.1)
------------------------- -------------------------
Loss from continuing operations (2.4) (3.6)
------------------------- -------------------------
Loss from discontinued operations(2) (0.2) (2.6)
------------------------- -------------------------
Total loss for the period (2.6) (6.2)
------------------------- -------------------------
As at 30 June 2023 As at 31 December 2022
Unaudited Audited
GBPm GBPm
------------------------- -------------------------
Total assets 3.4 8.3
------------------------- -------------------------
Net liabilities (2.1) (2.0)
------------------------- -------------------------
(1) Adjusted operating loss is the operating (loss) from
continuing operations before impairment charges.
(2) Discontinued operations relate to the operations of the
TradeFlow Group, and these have been presented in line with IFRS 5
("Non-current Assets Held for Sale and Discontinued Operations").
The prior period's income statement has been restated to aid
comparability in line with the standard. Revenue from discontinued
operations in H1 2023 was GBP0.7m (H1 2022: GBP0.2m).
Operational KPI
As at 22 September 2023 As at 21 April 2023
Unaudited Unaudited
Warehoused Goods monetisation pipeline GBP404.5 m GBP374.6m
------------------------ -------------------
The pipeline KPI shown above represents the current potential
value of warehoused goods inventory to be monetised rather than
pipeline revenue expected to be earned by the Group (being the
Company and its subsidiaries). As such, this provides a good
indicator of the level of demand for the Group's warehoused goods
monetisation services. This pipeline represents the value as at
most practical date possible prior to the issue of this interim
report (being 22 September 2023). The Company expects that the
increase of the pipeline will be reflected in new due diligence
activities over the coming months and, accordingly, additional due
diligence fees for the Group's subsidiaries. In the case of
positive due diligence outcomes, such pipeline would then be
expected to move into IM phase at which stage the Group's
subsidiaries will be able to charge its IM fees (including
origination fees, fees for the usage of the Platform and IM
servicing fees).
Entry into Top-Up Shareholder Loan Agreement and Side Letter
Agreement
On 28 September 2023, the Company and TAG entered into an
English law governed top-up unsecured shareholder loan agreement
(the "Top-Up Shareholder Loan Agreement"), pursuant to which The
AvantGarde Group S.p.A. (an entity ultimately beneficially
wholly-owned and controlled by Alessandro Zamboni, Chief Executive
Officer of the Company) ("TAG") agreed to provide the Company with
a further facility of up to GBP3,500,000 to cover the Company's
working capital and growth needs up to 30 June 2025 (the "Top-Up
Facility").
As disclosed in the Company's second supplementary prospectus
published on 30 June 2023 (the "Secondary Supplementary
Prospectus") , the Company entered into an English law governed
share purchase agreement with Dr. Thomas (Tom) James and John
Collis, former Directors (the "Buyers") on 30 June 2023, pursuant
to which, the Company sold 81% of the issued share capital of
TradeFlow Capital Management Pte. Limited . The GBP2,000,000 TAG
Amoun t (as defined in the Second Supplementary Prospectus) was
novated from the Buyers to TAG on the terms of an English law
governed debt novation deed entered into between the Company, the
Buyers and TAG on 30 June 2023 (the "Debt Novation Deed"). Pursuant
to the Debt Novation Deed, TAG agreed with the Company to settle
the TAG Amount in three tranches: GBP500,000 on 30 June 2023
(which, as at the date of this announcement, has been paid to the
Company by TAG); GBP1,000,000 on 30 September 2023; and GBP500,000
on 31 January 2024. On 28 September 2023, the Company and TAG
entered into an English law governed side letter agreement ("Side
Letter Agreement"), cast as a deed, in relation to the outstanding
TAG Amount, pursuant to which TAG agreed to pay to the Company
GBP1,000,000 on 31 October 2023, and GBP500,000 on 31 January
2024.
TAG has agreed to pay a 15% per annum compounding rate of
interest on the GBP1,000,000 of principal amount of the TAG Amount
for the period of 30 September 2023 to 31 October 2023, and shall
incur a 15% per annum compounding rate of interest on any
outstanding principal amount of the TAG Amount following the agreed
payment dates.
The entry by (i) the Company and TAG into the Top-Up Shareholder
Loan Agreement and (ii) the Company and TAG into the Side Letter
Agreement each constituted a material related party transaction for
the purposes of DTR 7.3 and were, accordingly, voted upon by the
independent Directors (excluding Alessandro Zamboni, who, in each
case, constituted a "related party" (as such term is defined in
IFRS)), and such independent Directors consider each such material
related party transaction in respect of the Top-Up Shareholder Loan
Agreement and the Side Letter Agreement to be fair and reasonable
from the perspective of the Company and its Shareholders who are
not a related party.
Alessandro Zamboni, CEO, Supply@ME Capital plc , said:
"The past six months have been productive for Supply@ME, with
our team working tirelessly on several key development workstreams.
I am delighted with the progress we have made. We've started to
build our track record on IMs which have unlocked a significant
increase in engagement and interest in the Supply@ME Platform, both
in our core markets and further afield. Our pipeline is strong and
the experience we have gained continues to streamline the
onboarding process. The launch of the Swiss Trading Hub will be a
key development which provides the long-term framework for
Inventory Monetisations and sends a clear and positive message to
potential Inventory Funders, in both traditional and digital asset
classes.
"We have also made further significant progress in building the
fundamentals for a scalable business model. The security token
framework is close to being launched - which is in line with future
trends of the crypto bond market - and, critically, on the
formalisation of our first white label partnership together with a
first transaction, which we expect to prove an effective working
relationship from day one. The new agreed funding facility gives us
a clear platform from which to pursue the exciting opportunities
that lie ahead.
"The SYME Board and I are positive about the prospects for the
Group, given the operational and strategic progress being made, and
we look forward to providing further business updates to the market
in due course."
- Ends -
For the purposes of UK MAR, the person responsible for arranging
release of this announcement on behalf of SYME is Alessandro
Zamboni, CEO.
Enquiries
Investors & analysts:
Alessandro Zamboni, CEO, Supply@ME Capital plc,
investors@supplymecapital.com
Media:
MHP Group, Supplyme@mhpgroup.com
APPIX 1 - CEO REPORT AND INTERIM FINANCIAL STATEMENTS
Chief Executive's report
Business model summary
The Group provide its innovative fintech Platform for use by
manufacturing and trading companies to access IM solutions enabling
their businesses to generate cashflow, via a non-credit approach
and without incurring debt. This is achieved by their existing
eligible inventory being added to the Platform and then monetised
via purchase by third party Inventory Funders ("IM
Transactions").
The completion of the TradeFlow Restructuring on June 2023 was
an important step for the Group. When we acquired TradeFlow in July
2021, we had a clear goal to support businesses at every stage of
the inventory lifecycle. We remain committed to this and will
continue to explore opportunities to integrate in-transit and
cross-border inventory programmes. John Collis and Tom James made a
valuable contribution to our business and our board, but this was a
necessary restructuring which removes any potential or perceived
conflict of interest. It will enable both businesses to better
realise their potential by providing greater commercial
opportunities through the clear differentiation of responsibilities
of the individual entities. With the completion of the TradeFlow
Restructuring we can now redouble our efforts and focus on our core
business lines.
Business model canvas: structural market drivers making business
more and more relevant
Corporates in our core markets and globally have taken a
multilayered approach to improving their supply chain resilience.
These steps have included increasing inventory levels, with the
incumbent cost of storing this inventory also increasing. The
impact on cashflow and the demand for funding to alleviate this has
never been greater. The dual drivers of inflation and climate
linked changes to seasonality of inventories has also prompted
reassessments and crystalised focus. There is now an abundance of
highly profitable, long-established manufacturing and trading
businesses which present an opportunity for investors, particularly
those comfortable with receivables, to generate strong returns by
monetising their inventories via the Platform.
Traditional financial institutions are not specialists in
inventory. Historically, the difficulties in evaluating the
inventories and the risk of fraud due to infrequent and imprecise
monitoring combined with the unattractive prospect of disposing of
unsold inventory have reduced engagement with this asset class,
with lenders offering restrictive terms and unattractive rates.
However, the need for a commercial facility for inventory is clear.
Supply@ME has developed the systems and technology which remove the
barriers to entry and provide certainty and security for Inventory
Funders. We also have now begun to establish a track record of
completed IM transactions supported by different funding
routes.
Supply@ME's onboarding process for clients has been honed and is
now demonstrably straightforward. We have, and are continuing to,
invest heavily in our inventory ingestion, rule processing, and
monitoring technology and expertise to ensure that it plugs
seamlessly into existing systems and enhances monitoring.
We are confident in our ability to attract and convert client
companies in our core markets and to add to this list of countries.
For Inventory Funders, we are now progressing several paths and
have commenced discussions to secure a cornerstone funder. This
type of partnership will unlock a new level of momentum for the
business. In tandem with this, the completion of the next stage of
the security token framework will, alongside traditional funding,
ensure we are increasingly well placed to furnish the demand in our
pipeline.
New funding structure
Supply@ME's acquisition of TradeFlow Capital had, as one of its
central goals, the creation of an independent trading business, the
Stock Companies, owned by a regulated fund, which would use
Supply@Me's IM Platform to facilitate the IM transactions. The
regulated fund GIF also served to raise equity capital for IM
Transactions. The restructuring of our relationship with TradeFlow
was driven by an evolution in the regulation of the fund management
industry, in particular, the direction from the Monetary Authority
of Singapore, that TradeFlow should separate its licensed fund
management activities from the rest of its business.
Since then, Supply@ME has been collaborating with a group of
private investors and subject matter experts in working capital
solutions, to launch an independent Swiss-based trading business ("
CH Trading Hub ") to replace the GIF, previously advised by
TradeFlow.
Switzerland is traditionally an important trading hub (in
particular for raw materials and commodities) and one of the more
advanced jurisdictions regarding the regulation over the digital
asset industry.
The CH Trading Hub, owned by Société Financière Européenne S.A.
(" SFE "), will invest its equity capital to build up a dedicated
internal structured financing team. It is expected that SFE will
assume the control of the independent Stock Companies from the GIF
once this restructure is completed, to manage the overall trading
businesses using the platform and the services provided by the
Group from this point.
Finally, the CH Trading Hub will handle the token route
including progressing the strategic agreement with VeChain. In this
regard, the Group is working with the CH Trading Hub on the
launching of a security token framework which will see up to
US$100m issued which is expected to be subscribed mostly by
institutional investors active in the digital asset markets. The
security token will be issued by a vehicle sponsored by SFE and it
will be tradeable on authorised digital asset exchanges.
Updates to the Platform
Over the past six months, the Group has continued to improve its
Platform to ensure that it is and will continue to be best-in-class
and that it has the capabilities to scale with the business and
diversification of the required monetisation portfolios, both in
terms of geographies and industries.
We have continued to leverage the enhanced expertise we brought
onto our team via key hires in 2022, and to leverage and further
build out the vital partnerships with our software factory and
information and commercial technology ( " ICT " ) partners.
To that end the key areas of more recent development can be
broken down into five modules.
1. Onboarding Module
In order to more efficiently & effectively manage the
pipeline of client prospects for Inventory Monetisation, a
dedicated Onboarding Module has been implemented. This module
allows:
* analysis and identification of eligible inventory
items using purpose-built workflows to drive due
diligence tasks;
* clear and transparent pipeline tracking;
* comprehension and insight into the inventory
associated risks;
* secure exchange of data for clients and to various
third parties;
* production of critical inputs into the Trading and
Monitoring modules;
* production of due diligence reports for presentation
to potential Inventory Funders.
With the above information, it allows the Platform to represent
clients to prospective Inventory Funders and finalise the
commercial agreements governing the IM transaction.
2. Data Module
Data and analyses are core to our business model and what makes
the Platform distinct.
As previously discussed in the Annual Report and Accounts for
the year ended 31 December 2022, the 'data factory' software module
allows for the required level of data ingestion we have envisaged
alongside API management and the automated application of key
business rules. We have continued to enhance this module, utilising
" Test & Learn " methodologies that have enabled us to augment
our analysis models and interact with our key partners more
effectively.
The inventory data-lake continues to be enhanced, hitting key
milestones, to enable advanced inventory data analytic metrics such
as seasonality, obsolescence risk, critical components, margin and
sales trends, inventory risk scores, and to enable robust and
accurate monitoring and reporting.
3. Trading Module
Leveraging the feedback from the first IM transactions with
existing clients, we continue to improve both our processes (from
efficiency and client focussed points of view), security protocols,
and user experience of the Trading Module.
4. Monitoring & Reporting Module
We have achieved key checkpoints in developing the key controls
and KPIs that need to be monitored for each Inventory Monetisation
and believe that these are key to providing Inventory Funders
comfort against the risk of potential fraud.
We continue to build out the suite of reports for the various
audiences, such as Client Companies, Stock Companies, Inventory
Funders, in a robust and auditable manner.
5. Web3 Module
The Group continues to leverage its relationship with VeChain
and to enhance on the Web3 solution. Integrating the technology to
the Platform ready for Web3 will help us to introduce the IM as a
new asset class to a broader range of investors. It also means the
Group is able to harness the developments in this nascent sector at
pace, including the ability to explore the issuance of non-fungible
tokens (NFTs), participating in digital ownership and
business-to-business (B2B) marketplaces, decentralised finance and
tokenised governance protocol. In this space, the Group and the CH
Trading Hub will continue to explore further collaborations with
digital asset investment banks and exchanges.
Update on the Group's Operational KPIs
Client company origination
Origination of client companies with inventory suitable for
Inventory Monetisation has seen a significant increase both in the
quality of businesses we are engaging and the strength of initial
discussions. The first IM Transactions already have positively
changed the tone and we are now operating at a more optimal level
at each stage of client engagement. Our business in Italy is at a
more advanced stage, however the impact of the UK IM has been
significant, and we expect business in that market to follow a
similar timeline as we have already experienced in Italy.
Pipeline of client companies now stands at GBP 404.5 m as at 22
September 2023. The drivers for inventory solutions are also
diversifying, with supply chain frustrations, the impact of
inflation and climate all prompting enquiries. We are confident in
the appeal of the Platform to client companies in our core markets
and also expect to expand, the list of territories in which we
operate, due to a combination of market factors and demand from
potential clients.
Italy
The group now has the track record of two IM Transactions, in
markedly different sectors, being industrial vehicles and tyre
retreading, which serves to emphasise the value of our Platform to
a deeper pool of prospective clients. Our existing businesses are
also now vital advocates and reference points for those wishing to
engage with Inventory Monetisation. The benefits of this are
significant. This third-party endorsement of our unique and
innovative model is also helping us to attract larger businesses
with significant portfolios of monetisable inventory.
The Group is now in advanced stages of formalising a White-Label
IM agreement with the WL Inventory Funder to execute an initial IM
transaction with an inventory value to be monetised of up to
EUR10m, which involves an existing client of the WL Inventory
Funder. This White-Label IM agreement (which remains subject to
contract) will allow the Group to scale its revenue in Italy,
leveraging the balance sheet and the client base of the WL
Inventory Funder in specific supply chains. This first transaction
will likely see us expanding the IM footprint in the agrifood
sector, focusing on those goods which retain long-term value and
high demand.
Formalising our first White Label partnership, much like our
first IM Transaction , has required significant discussion and due
diligence , including the involvement of a Big 4 consultancy firm.
It is a new product for our partners and their customer base,
without precedent, but we are confident that completing our initial
white label agreement will provide a template for similar
partnerships in Italy, the UK and other territories.
United Kingdom
Our first IM transaction using traditional funding in the UK
represented a key milestone, providing proof of concept in the
market, a tangible track record and a template for IMs being
managed within an existing floating charge facility, confirming the
ability to work alongside existing financing arrangements as a
commercial facility . Since the announcement of this transaction,
momentum has increased, and we feel confident in our stated goal of
securing white label and self-funding agreements. Origination in
the UK has also been gathering pace and we have a strong growing
pipeline of prospective clients. The triggers which prompt
businesses to contact us have also broadened and we are seeing a
growing number of businesses affected by supply chain issues and
climate related impacts seeking to offset increased costs. In the
UK, the next milestones will be aligning long-term funding
partnerships and White Label alliances.
Outlook
In the coming months Supply@ME will look to finalise its first
White Label Partnership in Italy, implement the security token
funding route and secure the backing of international Inventory
Funders. These three initiatives will form the basis of the next
phase of growth for our business, as we target the Group's revenue
growth and opening the scale-up momentum. The new CH Trading Hub
will provide the backbone for these initiatives and future
transactions, providing a new layer of long-term certainty for
Inventory Funders and corporates. This is a formative period for
the business, and we are confident in our ability to deliver
against these stated objectives to ultimately deliver greater value
for our clients, investors and shareholders.
Financial review
6 months 6 months Movement
to to
30 June 30 June
2023 2022 Unaudited
Unaudited Unaudited
GBP000 GBP000 GBP000
----------- ----------- -----------
Continuing operations
Revenue from continuing operations 77 - 77
Operating loss from continuing
operations before impairment charges (1,981) (1,963) (18)
Impairment charges (349) (151) (198)
----------- ----------- -----------
Operating loss from continuing
operations (2,330) (2,114) (216)
Finance costs (22) (1,466) 1,444
----------- ----------- -----------
Loss before tax from continuing
operations (2,352) (3,580) 1,228
Income tax (24) - (24)
----------- ----------- -----------
Loss after tax from continuing
operations (2,376) (3,580) 1,204
Loss from discontinued operations (185) (2,610) 2,425
----------- ----------- -----------
Total loss for the year (2,561) (6,190) 3,629
=========== =========== ===========
Movement
Pence Pence Pence
Total loss per share ( " EPS "
) (0.0046) (0.0162) 0.0116
=========== =========== ===========
The Group's unaudited condensed consolidated interim financial
statements for the six-month period ended 30 June 2023 ( " H1 2023
" ) have been prepared in line with International Accounting
Standard IAS 34 ( " Interim Financial Reporting " ). The TradeFlow
operations continued to be classified as discontinued operations
and assets held for resale in line with the requirements of IFRS 5
( " Non-current Assets Held for Sale and Discontinued Operations "
) from 1 January 2023 until the date of completion of the TradeFlow
Restructuring, being 30 June 2023. The prior period income
statement has been restated to aid comparability in line with the
standard.
As shown in the financial summary above, the TradeFlow
operations contributed a loss of GBP185,000 (inclusive of the gain
of GBP718,000 recognised in connection with the TradeFlow
Restructuring) in H1 2023.
Revenue from continuing operations
6 months 6 months Movement
to to
30 June 30 June
2023 2022 Unaudited
Unaudited Unaudited
GBP000 GBP000 GBP000
----------- ----------- -----------
Revenue
Due Diligence fees 40 - 40
Inventory Monetisation fees 37 - 37
----------- ----------- -----------
Total revenue from continuing
operations 77 - 77
=========== =========== ===========
The table above provides a break down of the Group's revenue
from Inventory Monetisation activities during H1 2023. Revenue is
recognised in accordance with IFRS 15 ( " Revenue from Contracts
with Customers " ) and more details on the Group's revenue
recognition policies can be found in the note 2 to the Group's
condensed consolidated financial statements for the year ended 31
December 2022 (the " 2022 Annual Report " ) .
During H1 2023, the Group recognised GBP77,000 ( H1 2022 : nil)
of Inventory Monetisation revenue, which it split 52% related to
due diligence fees, and the remaining 48% relating to Inventory
Monetisation fees.
In line with IFRS 15 ( " Revenue from Contracts with Customers "
) the Group recognised the due diligence revenues when the due
diligence services have been delivered and the Group's performance
obligation has been satisfied. During H1 2023, the Group has
continued to carry out, and charge for due diligence activities,
and the GBP40,000 recognised as revenue reflects the value of those
due diligence activities completed during H1 2023.
Following the announcement of the first Italian IM transactions
during 2022 and H1 2023, which were facilitated using the Group's
Platform, the Group recognised Inventory Monetisation fees of
GBP37,000. These fees related to the following activities:
1) Origination fees - the origination of the contracts between
the client company wishing to have their inventory monetised and
the independent Stock (trading) Company that purchased the
inventory from the client company. In line with IFRS 15 ( " Revenue
from Contracts with Customers " ) the Group recognised these
revenues at the point in time they are due to be received from the
client;
2) IM Platform usage fees - usage of the Group's IM Platform,
under a Software as a Service ( " SaaS " ) contract, by the
independent Stock (trading) Company to facilitate the purchase of
the inventory from the client company. In line with IFRS 15 ( "
Revenue from Contracts with Customers " ) the Group recognised
these revenues over the time period they related to; and
3) IM service fees - the support and administration activities,
such as the monitoring of the inventory purchased, that the Group
performs in connection with the use of the Group's IM Platform. In
line with IFRS 15 ("Revenue from Contracts with Customers") the
Group recognised these revenues over the time period they related
to.
These revenues are expected to grow in future accounting periods
in line with expected growth in both the number of IM transactions
that are facilitated using the Group's IM Platform and, the quantum
of inventory monetised by the independent Stock (trading) Companies
per transaction, increases.
Operating loss from continuing operations before impairment
charges
During H1 2023, the Group was focused on securing the binding
commercial agreements in terms of the first IM transactions to use
traditional funding in both Italy and the UK, the latter of these
being announced in early July 2023. In conjunction with this,
efforts have also been directed to building and continually
reevaluating the Group's Inventory Monetisation pipeline following
the announcement of the inaugural IM transactions. In addition,
progress has made in terms of the Group's White-Label initiative,
and in terms of securing new sources of inventory funding. Further
details of this progress has been set out earlier in this
announcement.
The Group recorded an operating loss from continuing operations
before impairment charges for H1 2023 of GBP1,981,000 (H1 2022:
GBP1,963,000 loss). There have been two main changes in the
components to this figures that largely offset each other
including:
* an increase in professional and legal fees in H1 2023
as the Group undertook several different corporate
activities such as the TradeFlow Restructuring, the
financing and equity subscription that was announced
in conjunction with the 2022 Annual Report, and the
regulatory requirement to keep the prospectus that
the Company issued in October 2022 updated for any
significant changes to the business. In addition, the
Group are continuing to invest into improving the
functionality and enhancing the performance of the IM
Platform, and certain of those costs did not meet the
criteria for capitalisation under IAS 38 ( "
Intangible Assets " ). As such, these costs have been
expensed during H1 2023. An example of such costs
includes those related to early-stage planning and
research activities; and
* these increases were then offset by an increase to
other operating income during H1 2023 as a result of
a settlement agreement reached with an existing
supplier to reduce the total amount payable by the
Group in exchange for payment of a lower agreed
amount by a specific date. The difference in the
previous amount owed and the agreed final settlement
amount resulted in a gain recognised in the income
statement of GBP376,000 in H1 2023.
Impairment charges from continuing operations
6 months 6 months
to to
30 June 2023 30 June
Unaudited 2022
Unaudited
GBP000 GBP000
-------------- -----------
Impairment charges from continuing operations 349 151
-------------- -----------
349 151
============== ===========
The impairment charges from continuing operations of GBP349,000
recognised during H1 2023 relate to the impairment of the Group's
internally developed IM platform as at 30 June 2023 in line with
the requirements of IAS 36 ( " Impairment of Assets " ). This
followed the conclusion that indicators of impairment were present,
which included the losses continued to be generated by the assets
held by the Group's Italian operating subsidiaries. In line with
the going concern statement, set out in note 4 to the unaudited
condensed consolidated interim financial statements, there is
currently a material uncertainty with respect to both the future
timing and growth rates of the forecast cash flows arising from the
use of the internally developed IM Platform intangible asset. As
such, the Directors have prudently decided to continue to impair
the full carrying amount of this asset of GBP349,000 as at 30 June
2023.
Discontinued Operations
The revenue and operating loss of the TradeFlow operations for
the period from 1 January 2023 through to the date on which the
TradeFlow Restructuring was completed, being 30 June 2023, are
shown in the table below. As detailed above, the TradeFlow
operations have been classified as discontinued operations and
assets held for resale in line with the requirements of IFRS 5 ( "
Non-current Assets Held for Sale and Discontinued Operations " ).
The comparatives show the revenue and operating loss of the
TradeFlow operations for H1 2022.
6 months 6 months
to to
30 June 2023 30 June
Unaudited 2022 Unaudited
GBP000 GBP000
-------------- ----------------
Revenue from discontinued operations 684 209
Operating loss from discontinued operations
before acquisition relation costs, impairment
charges and costs/(gains) relating to
the restructuring of the TradeFlow ownership (329) (555)
Amortisation of intangible assets arising
on acquisition (442) (406)
Acquisition related earn-out payments - (747)
Impairment charges - (765)
Foreign currency translation loss reclassified
to other comprehensive income (62) -
Gain arising on the restructuring of
the TradeFlow operations 718 -
-------------- ----------------
Operating loss from discontinued operations (115) (2,473)
============== ================
TradeFlow's investment advisory revenue arose from investment
advisory services provided in TradeFlow's capacity as investment
advisor to its well-established USD fund and its growing EUR fund.
In line with IFRS 15 ( " Revenue from Contracts with Customers " )
these revenues were recognised when the investment advisory
services have been delivered and TradeFlow's performance obligation
has been satisfied.
Further details of the costs recognised in H1 2023 set out in
the table above are detailed below:
* amortisation of intangible assets arising on
acquisition of GBP442,000. These costs related to the
intangible assets recognised by the Group in
connection with the TradeFlow acquisition, which had
an initial fair value of GBP6,888,000. The GBP442,000
represents the amortisation charge arising on these
assets for the six month period from 1 January 2023
through to the date on which the TradeFlow
Restructuring was completed, being 30 June 2023;
* foreign currency translation loss reclassified to
other comprehensive income of GBP62,000. This
represents the cumulative foreign currency
translation reserve created on consolidation in
respect of the TradeFlow operations. This is
reclassified to income statement at 30 June 2023 due
to TradeFlow no longer being consolidated by the
Group from this date ; and
* the gain arising on the restructuring of the
TradeFlow operations of GBP718,000. On the 30 June
2023, the net assets of TradeFlow (representing a
value of GBP1,634,000 at 30 June 2023) are no longer
consolidated by the Group, and instead the value of
the new 19% investment of GBP352,000 was recognised
on the balance sheet, together with the GBP2,000,000
remaining cash consideration to be received. The
difference between these items resulted in a gain
arising on the restructuring of the TradeFlow
operations recorded in the unaudited condensed
consolidated interim income statement of GBP718,000.
As shown above there were no additional acquisition related
earn-out costs recognised during H1 2023 which reflected the fact
that as part of the TradeFlow Restructuring all future potential
earn-out payments were offset against the initial cash
consideration value.
Additionally, following the finalisation of the TradeFlow
Restructuring on 30 June 2023, the assets and liabilities of
TradeFlow, including the intangible assets arising as part of the
original TradeFlow acquisition in July 2021 , are no longer
consolidated by the Group. As such no further impairment charges
relating to the discontinued operations were recognised during H1
2023. Instead, a calculation was undertaken to calculate any gain
or loss arising on as a result of the change in ownership structure
of the TradeFlow operations. The details of this calculation set
out in below and in further detail can be found in note 21 to
unaudited condensed consolidated interim financial statements for
the six-month period ended 30 June 2023.
6 months to
30 June 2023
Unaudited
GBP '000
--------------
Accounting fair value of the 81% ownership
of the TradeFlow operations disposed of by
the Group 2,000
Accounting fair value of 19% ownership of the
TradeFlow operations retained by the Group 352
--------------
2,352
--------------
Less:
Accounting fair value of net assets disposed
of by the Group (1,634)
--------------
Gain arising on the restructuring of the TradeFlow
ownership 718
==============
New equity funding
On 28 April 2023, the Company and Venus Capital entered into a
new equity subscription agreement, pursuant to which Venus Capital
committed to subscribe for 4,500,000,000 new ordinary shares (the "
Subscription Shares " ) at GBP0.0005 per Subscription Share (the "
Subscription Agreement " ) over two separate tranches, both of
which took place in May 2023. The total gross proceeds received by
the Group in relation to this Subscription Agreement was
GBP2,250,0000 or GBP2,137,500 net of the GBP112,500 commission that
was charged be Venus Capital in connection with the subscription of
the Subscription Shares. An additional GBP112,500 was paid to Venus
Capital in respect of agreed costs and expenses incurred by Venus
Capital in connection with the Subscription Agreement.
The Subscription Agreement required new warrants to be issued to
Venus Capital at a ratio of one warrant for every two Subscription
Shares issued. This resulted in an obligation for the Group to
issue 2,250,000,000 new warrants to Venus Capital ( " New Venus
Warrants " ) which existed at 30 June 2023. The New Venus Warrants
are each exercisable into one new ordinary share at a price equal
to GBP0.00065 pence per share up to a final exercise date of 31
December 2026. As at 30 June 2023, the obligation to issue these
share warrants to Venus Capital has been recognised within equity
as " warrants to be issued " within the share-based payment
reserve. These share warrants had a total fair value of
GBP1,717,000. As at 30 June 2023, all of these share warrants
remain outstanding.
The total share issue costs incurred in connection with the
Subscription Agreement during H1 2023 were GBP1,972,000 including
GBP1,717,000 relating to the fair value of the warrants issued,
GBP225,000 relating the commission and other fees charged by Venus
Capital and GBP30,000 of other share issue costs. This has been
accounted for as a GBP1,972,000 reduction to share premium during
H1 2023 given there was sufficient share premium created on the
issue of the Subscription Shares.
New debt financing
On the 28 April 2023, the Company and The AvantGarde Group S.p.A
("TAG"), the Group's major shareholder, entered into a fixed term
unsecured working capital loan agreement (the "TAG Unsecured
Working Capital facility"). This agreement was subsequently amended
on 30 June 2023 in conjunction with the TradeFlow Restructuring.
Under the amended TAG Unsecured Working Capital facility, TAG shall
provide, subject to customary restrictions, a facility of up to
GBP800,000 to cover the Company's interim working capital and
growth needs.
The due date for repayment by the Company of amounts (if any)
drawn under the TAG Unsecured Working Capital facility is 1
February 2028. Any sums drawn under the TAG Unsecured Working
Capital facility will attract a non-compounding interest rate of
10% per annum, and any principal amount (excluding accrued
interest) outstanding on 1 February 2028 will attract a compounding
interest rate of 15% per annum thereafter. Interest will be due to
be paid annually on 31 March of each relevant calendar year.
On 30 June 2023, the Company issued a draw down notice to TAG
under the amended TAG Unsecured Working Facility for the full
GBP800,000 available. As at 30 June 2023, no funds had been
received from TAG in respect of this facility, however subsequent
to 30 June 2023, and prior to the release of these unaudited
condensed consolidated interim financial statements, TAG had
provided GBP245,000 of the GBP800,000 that had been drawn down by
the Company.
Cash flow
The Group decreased its net cash balance by GBP465,000 (H1 2022:
GBP797,000 decrease) due to a combination of the following cash
inflows and outflows:
* cash inflow of GBP2,018,000, net of commission and
other share issue costs, received from the issue of
new ordinary shares during H1 2023 under the
Subscription Agreement, and from existing warrant
holders who chose to convert their warrants (which
had been issued in issued in conjunction with the
open offer completed during 2022), during H1 2023;
and
* cash inflows from long-term borrowing of GBP372,000,
net of repayments and other finance costs,
predominantly due to the new long-term borrowings
secured by TradeFlow during the six-month period
prior to the completion of the TradeFlow
Restructuring.
These net cash inflows were then offset by the following
items:
* net outflows from operating activities of
GBP2,143,000 (H1 2022: GBP2,095,000 net outflow);
* increased investment in the Group's IM Platform of
GBP388,000 (H1 2022: GBP164,000); and
* removal of the opening cash balance of the TradeFlow
operations of GBP324,000 to reflect the fact that the
TradeFlow Restructuring was completed on 30 June 2023
and the TradeFlow assets and liabilities are no
longer consolidated by the Group at the period end.
6 months to 6 months
30 June 2023 to
Unaudited 30 June
2022 Unaudited
GBP000 GBP000
-------------- ----------------
Net cash flow from operating activities (2,143) (2,095)
Net cash flow from investing activities (712) (187)
Net cash flow from financing activities 2,390 1,485
-------------- ----------------
Net increase in cash and cash equivalents (465) (797)
Foreign exchange differences to cash
and cash equivalents on consolidation (19) (25)
Cash and cash equivalents at 1 January 581 1,727
-------------- ----------------
Cash and cash equivalents as at 30
June 97 905
============== ================
Net liabilities
As at 30 June 2023 net liabilities were GBP2,108,000 (31
December 2022: net liabilities of GBP2,025,000).
The largely stable net liability position at 30 June 2023
compared to 31 December 2022 is due to the following:
* the addition of the new assets created as a result of
the TradeFlow Restructuring including the
GBP2,000,000 outstanding cash consideration
receivable by the Company from TAG, following TAG's
assumption of the receivable from the buyers of
TradeFlow on 30 June 2023, and the GBP352,000 new
investment balance accounting for the Group's
remaining 19% ownership of TradeFlow. Further details
on these new assets can be found in notes 3, 13 and
21 to the unaudited condensed consolidated interim
financial statements for the six-month period ended
30 June 2023.
This increase in assets compared to 31 December 2022 was then
offset by:
* the removal of the assets and liabilities relating to
TradeFlow from the Group's consolidated balance sheet
at 30 June 2023 to reflect the fact that the
TradeFlow Restructuring was completed on this date.
The value of the net asset relating to TradeFlow that
were consolidated as at 31 December 2022 was
GBP2,283,000; and
* a small increase in other working capital items
primarily due to the overall net cash outflows from
operations.
Going Concern
The Board's assessment of going concern and the key
considerations thereto are set out in the note 4 to the unaudited
condensed consolidated interim financial statements for the
six-month period ended 30 June 2023 .
Related Parties
Note 22 to the unaudited condensed consolidated interim
financial statements for the six-month period ended 30 June 2023
contains details of the Group's related parties.
Subsequent events
Note 23 to the unaudited condensed consolidated interim
financial statements for the six-month period ended 30 June 2023
contains details of all subsequent events.
Directors' Responsibility Statement
The Directors are responsible for preparing the unaudited
condensed consolidated interim financial statements in accordance
with applicable law and regulations. A list of current directors is
maintained on the Group's website:
https://www.supplymecapital.com.
The Directors confirm that, to the best of their knowledge, the
unaudited condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 ("Interim Financial
Reporting"), as issued by the International Accounting Standards
Board as contained in UK - adopted International Financial
Reporting Standards, and give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company,
or the undertakings included in the consolidation as a whole as
required by DTR 4.2.4 R of the FCA's Disclosure Guidance and
Transparency Rules ("DTRs").
The Directors further confirm that the unaudited condensed
consolidated interim financial statements include a fair review of
the information required by DTR 4.2.7R and DTR 4.2.8R.
In accordance with the DTR Rule 4.2.9(2)R, the Directors confirm
that these unaudited interim condensed consolidated financial
statements have not been audited or reviewed by auditors pursuant
to the Financial Reporting Council guidance on Review of Interim
Financial Information.
The Directors have shared all the relevant working papers with
their advisers.
By Order of the Board
Alessandro Zamboni
Chief Executive Officer
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE 6 MONTH PERIODED 30 JUNE 2023
6 months 6 months to
to 30 June 2022
30 June 2023
Unaudited Unaudited
Notes GBP '000 GBP '000
------------- -------------
Continuing operations
Revenue 5 77 -
Cost of sales 7 (185) (183)
------------- -------------
Gross loss (108) (183)
Administrative expenses 7 (2,258) (1,769)
Other operating income / (costs) 8 385 (11)
Operating loss from continuing
operations before impairment charges (1,981) (1,963)
Impairment charges 12 (349) (151)
Operating loss from continuing
loss (2,330) (2,114)
Finance costs 6 (22) (1,466)
Loss before tax from continuing
operations (2,352) (3,580)
Taxation 9 (24) -
Loss for the period from continuing
operations (2,376) (3,580)
------------- -------------
Discontinuing operations
Loss for the period from discontinuing
operations 21 (185) (2,610)
------------- -------------
Total loss for the period (2,561) (6,190)
Other comprehensive income
Exchange differences on translating
foreign operations 415 (257)
Total comprehensive loss for the
period (2,146) (6,447)
============= =============
Loss per share Pence Pence
------------- -------------
Basic and diluted loss per share
- continuing operations 11 (0.0043) (0.0094)
Basic and diluted loss per share
- discontinued operations 11 (0.0003) (0.0068)
------------- -------------
Basic and diluted loss per share
- total 11 (0.0046) (0.0162)
============= =============
The above unaudited condensed consolidated statement of
comprehensive income should be read in conjunction with the
accompanying notes.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
30 June 2023 31 December
Unaudited 2022
Audited
Notes GBP '000 GBP '000
------------- ------------
Non-current assets
Intangible assets and goodwill 12 - -
Tangible assets 5 7
Investment 21 352 -
Other non-current assets 19 19
Total non-current assets 376 26
Current assets
Trade and other receivables 13 933 1,219
Receivable from related party 13 2,000 -
Cash and cash equivalents 97 257
------------- ------------
3,030 1,476
------------- ------------
Assets of disposal group held
for sale 21 - 6,844
------------- ------------
Total current assets 3,030 8,320
------------- ------------
Total assets 3,406 8,346
Current liabilities
Trade and other payables 14 4,335 4,587
Liabilities of disposal group
held for sale 21 - 4,561
------------- ------------
Total current liabilities 4,335 9,148
------------- ------------
Net current liabilities (1,305) (828)
Non-current liabilities
Long-term borrowings 15 741 748
Provisions 16 431 468
Deferred tax liabilities 7 7
Total non-current liabilities 1,179 1,223
Net liabilities (2,108) (2,025)
============= ============
Equity attributable to owners
of the parent
Share capital 17 5,988 5,897
Share premium 25,348 25,269
Share-based payment reserve 20 7,949 5,871
Other reserves (10,998) (11,413)
Retained losses (30,395) (27,649)
------------- ------------
Total equity (2,108) (2,025)
============= ============
The above unaudited condensed consolidated statement of
financial position should be read in conjunction with the
accompanying notes.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTH PERIODED 30 JUNE 2022
Share-based Merger Reverse Foreign
Share Share Other payment relief takeover currency Retained
capital premium reserves* reserve reserve* reserve* reserve* earnings Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
--------- ---------- --------- ----------- --------- --------- ------------ --------- --------
As at 1
January 2022 5,486 18,171 21 2,018 226,905 (237,835) 18 (16,209) (1,425)
Loss for the
6-month
period - - - - - - - (6,190) (6,190)
Forex
retranslation
difference - - - - - - (257) - (257)
Loss for the
period and
total
comprehensive
income 5,486 18,171 21 2,018 226,905 (237,835) (239) (22,399) (7,872)
Issue of
warrants - - - 180 - - - - 180
Warrants to be
issued - - - 3,074 - - - - 3,074
Issuance of
new ordinary
shares 95 2,922 - - - - - - 3,017
Share issue
costs - (1,593) - - - - - (1,591) (3,184)
Credit to
equity for
acquisition
related
earn-out
payments - - - 747 - - - - 747
As 30 June
2022 5,581 19,500 21 6,019 226,905 (237,835) (239) (23,990) (4,038)
========= ========== ========= =========== ========= ========= ============ ========= ========
*The "other reserves" balance in the unaudited condensed
consolidated statement of financial position represents an
aggregate of other reserves, the merger relief reserve, the reverse
takeover reserve and the foreign currency reserve.
The above unaudited condensed consolidated statement of changes
in equity should be read in conjunction with the accompany
notes.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTH PERIODED 30 JUNE 2023
Share-based Merger Reverse Foreign
Share Share Other payment relief takeover currency Retained
capital premium reserves* reserve reserve* reserve* reserve* earnings Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
---------- ---------- ---------- ----------- --------- --------- --------- ---------- --------
As at 1
January 2023 5,897 25,269 37 5,871 226,905 (237,834) (521) (27,649) (2,025)
Loss for the
6-month
period - - - - - - - (2,561) (2,561)
Forex
retranslation
difference - - - - - - 415 - 415
Loss for the
period and
total
comprehensive
income 5,897 25,269 37 5,871 226,905 (237,834) (106) (30,210) (4,171)
Credit to
equity for
issue of
warrants - - - 1,717 - - - - 1,717
Exercise of
Open Offer
warrants 1 23 - (29) - - - 29 24
Issuance of
new shares 90 2,160 - - - - - - 2,250
Increase in
fair value of
previously
issued
warrants - (132) - 346 - - - (214) -
Share issue
costs - (1,972) - - - - - - (1,972)
Equity settled
employee
share-based
payment
schemes - - - 44 - - - - 44
As 30 June
2023 5,988 25,348 37 7,949 226,905 (237,834) (106) (30,395) (2,108)
========== ========== ========== =========== ========= ========= ========= ========== ========
*The "other reserves" balance in the unaudited condensed
consolidated statement of financial position represents an
aggregate of other reserves, the merger relief reserve, the reverse
takeover reserve and the foreign currency reserve.
The above unaudited condensed consolidated statement of changes
in equity should be read in conjunction with the accompany
notes.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE
6 MONTH PERIODED 30 JUNE 2023
6 months to 6 months to
30 June 2023 30 June 2022
Unaudited Unaudited
GBP '000 GBP '000
------------- -------------
Cash flows from operating activities
Loss before interest and tax from continuing
operations (2,330) (2,114)
Loss before interest and tax from discontinued
operations (115) (2,473)
------------- -------------
Total loss for the period before interest
and tax (2,445) (4,587)
Adjustments for non-cash acquisition
related costs and impairment charge
Acquisition related earn-outs - 747
Amortisation of intangible assets arising
on acquisition 442 406
Adjustment for impairment charge
Impairment charges 349 916
Adjustments for non-cash costs related
to the disposal of the discontinued
operations
Foreign currency translation reserve
reclassified to other comprehensive
income 62 -
Gain arising on restructuring of discontinued
operations (718) -
------------- -------------
135 2,069
Other non-cash adjustments 86 10
Other depreciation and amortisation 43 16
(Decrease) / increase in provisions (21) 3
Decrease in accrued income 5 1
Decrease in trade and other receivables 426 27
(Decrease) / increase in trade and
other payables (572) 407
Other decreases in net working capital 224 229
------------- -------------
Cash flows from operations (2,119) (1,825)
Interest paid in cash (24) (2)
Income taxes paid in respect of prior
period amounts owing - (268)
------------- -------------
Net cash flows from operating activities (2,143) (2,095)
------------- -------------
Cash flows from investing activities
Purchase of tangible assets - (4)
Purchase of intangible assets (388) (164)
Increase in non-current assets - (19)
Cash outflow on disposal of discontinued
operations (324) -
------------- -------------
Net cash flows from investing activities (712) (187)
------------- -------------
Cash flows from financing activities
Net cash inflow from new long-term
borrowings 405 3,050
Cash repayment of other long-term borrowings (33) (1,685)
Cash inflow from issue of new ordinary
shares 2,274 1,660
Other finance costs paid in cash (1) (183)
Share issue costs paid in cash (255) -
Cash repayment of loan notes and convertible
loan notes - (1,357)
Cash flows from financing activities 2,390 1,485
Net movement in cash and cash equivalents (465) (797)
Foreign exchange differences to cash
and cash equivalents on consolidation (19) (25)
Cash and cash equivalents as at 1 January 581 1,727
Cash and cash equivalents at the end
of the period 97 905
============= =============
The above unaudited condensed consolidated statement of cash
flows should be read in conjunction with the accompanying notes
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS FOR THE 6 MONTH PERIODED 30 JUNE 2023
1 Company information
Supply@ME Capital plc (the " Company " ) is a public limited
company incorporated in England and Wales. The address of its
registered office 27/28 Eastcastle Street, London, W1W 8DH, United
Kingdom. Supply@ME Capital's ordinary shares are admitted to
listing on the standard segment of the Official List of the
Financial Conduct Authority and to trading on the main market for
listed securities of the London Stock Exchange plc.
These unaudited condensed consolidated interim financial
statements of the Company and its subsidiaries (the " Group " )
have been approved for issue by the board of directors of the
Company (the " Board " ) on 28 September 2023.
2 Basis of preparation
Accounting convention
These unaudited interim financial statements for the half-year
reporting period ended 30 June 2023 has been prepared in accordance
with Accounting Standard IAS 34 ("Interim Financial Reporting"
).
The interim report does not include all the notes of the type
normally included in annual unaudited financial statements.
Accordingly, this report is to be read in conjunction with the
annual report and accounts for the year ended 31 December 2022 (the
" 2022 Annual Report " ) and any public announcements made by the
Company during the interim reporting period.
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period
with the exception of the estimation of income tax (refer to note 9
for further details).
New and amended standards adopted by the group
No new or amended standards became applicable for the current
reporting period that impacted the Group. The Group did not have to
change its accounting policies or make retrospective adjustments as
a result of adopting any new or amended standards in the current
interim reporting period.
3 Significant changes in the current reporting period
Below provides a summary of the significant changes that
occurred during the six month period ended 30 June 2023.
New Equity Subscription Agreement
On 28 April 2023, the Company and Venus Capital S.A. ("Venus
Capital") entered into a new equity subscription agreement,
pursuant to which Venus Capital committed to subscribe for
4,500,000,000 new Ordinary Shares (the "Subscription Shares") at
GBP0.0005 per Subscription Share (the "Subscription Agreement").
The issue of the Subscription Shares was made over two tranches (in
line with the Subscription Agreement) as set out below:
* an initial tranche of 3,375,000,000 Subscription
Shares for gross proceeds of GBP1,687,500 (or
GBP1,603,125 net of a 5% commission chargeable by
Venus Capital). This tranche of Subscription Shares
were admitted to a Standard Listing and to trading on
the Main Market on 5 May 2023; and
* a second tranche of 1,125,000,000 Subscription Shares
for proceeds of up to GBP562,500 gross (or up to
GBP534,375 net a 5% commission chargeable by Venus
Capital). This tranche of Subscription Shares were
admitted to a Standard Listing and to trading on the
Main Market on 30 May 2023.
In addition to the GBP112,500 of commission chargeable by Venus
Capital (as set out above):
* GBP112,500 was paid to Venus Capital in respect of
agreed costs and expenses incurred by Venus Capital
in connection with the Subscription Agreement; and
* New warrants were required to be issued to Venus
Capital at a ratio of one warrant for every two
Subscription Shares issued under the Subscription
Agreement. This resulted in an obligation for the
Group to issue 2,250,000,000 new warrants to Venus
Capital ("New Venus Warrants") which existed at 30
June 2023. The New Venus Warrants are each
exercisable into one new ordinary share at a price
equal to 0.065 pence per share up to a final exercise
date of 31 December 2026. As at 30 June 2023, the
obligation to issue these share warrants to Venus
Capital has been recognised within equity as
"warrants to be issued" within the share-based
payment reserve.
The fees referred to above were agreed through the commission
and fee letter signed with Venus Capital and the new warrant
instrument agreement, both of which were also dated 28 April
2023.
In connection with the above, the final exercise date of the
existing 8,175,000,000 warrants issued to Venus Capital during 2022
in connection with the Capital Enhancement Plan was extended from
31 December 2025 for 12 months to 31 December 2026, through a deed
of amendment to the existing warrant instruments dated 28 April
2023.
As at 30 June 2023, the Group had a total of 10,425,000,000
warrants outstanding with Venus Capital, including 8,175,000,000
previously issued to Venus Capital during 2022 and 2,250,000,000 to
be issued to Venus Capital as at 30 June 2023. During the six-month
period ended 30 June 2023, no warrants held by Venus Capital have
been converted.
Extension to the expiry date of the warrants issued in
connection with the Open Offer carried out on 17 August 2022
On 22 July 2022, the Group announced the Open Offer, giving
existing shareholders the opportunity to subscribe for up to
641,710,082 new ordinary shares in the Group on the basis of one
Open Offer share for every 66 existing ordinary shares held at an
offer price of 0.05 pence per Open Offer share. The Open Offer
closed on 17 August 2022 and on 18 August 2022, the Group announced
it would allot and issue 641,710,082 new ordinary shares to those
qualifying shareholders and that this would raise GBP320,855 gross
(and GBP269,855 net of fees and expenses) for the Group.
In addition to the new ordinary share that were issued, the
Group also issued 320,855,008 warrants to the qualifying
shareholders on the basis of one warrant for every two ordinary
shares received as a result of the Open Offer (the " Open Offer
Warrants "). These warrants were able to be exercised at any time
up to 31 December 2025 and have an exercise price of 0.065 pence
per warrant.
In line with the extension to the expiry date of the existing
8,175,000,000 warrants held by Venus Capital, the shareholders who
participated in the Open Offer were asked if they would like to
vote to extend the expiry date of the Open Offer Warrants from 31
December 2025 by 12 months to 31 December 2026. This resolution was
successfully passed at the Group's 2023 Annual General Meeting, and
a deed of amendment to the existing Open Offer warrant instrument
was signed, on 23 June 2023. As at 30 June 2023, the Group had
235,751,597 Open Offer Warrants outstanding. During the six month
period ended 30 June 2023, 35,595,411 Open Offer Warrants were
converted into new ordinary shares raising GBP23,137 for the
Group.
The AvantGarde Group S.p.A ( "TAG") unsecured Working Capital
loan agreement
On the 28 April 2023, the Company and TAG, the Group's major
shareholder, entered into a fixed term unsecured working capital
loan agreement (the "TAG Unsecured Working Capital facility").
Under the TAG Unsecured Working Capital facility, TAG shall
provide, subject to customary restrictions, a facility of up to
GBP2,800,000, in tranches up to 31 January 2024, to cover the
Company's interim working capital and growth needs.
The due date for repayment by the Company of amounts (if any)
drawn under the TAG Unsecured Working Capital facility is 1
February 2028. Any sums drawn under the TAG Unsecured Working
Capital facility will attract a non-compounding interest rate of
10% per annum, and any principal amount (excluding accrued
interest) outstanding on 1 February 2028 will attract a compounding
interest rate of 15% per annum thereafter. Interest will be due to
be paid annually on 31 March of each relevant calendar year.
TradeFlow Restructuring
On 30 June 2023 the Company announced that had entered into
relevant commercial agreement to restructure the ownership of
TradeFlow Capital Management Pte. Limited (" TradeFlow ") (the
"TradeFlow Restructuring") to better serve the needs of the Group's
client companies and funders of both businesses, and to create
value for the Company's shareholders by eliminating any perception
of conflicts of interest between the two businesses and providing
both businesses with greater commercial opportunities through the
clear differentiation of responsibilities of the individual
entities.
In the months prior to the finalisation of the TradeFlow
Restructuring, the Board noted an evolution in the regulation of
the fund management industry. The Monetary Authority of Singapore,
Singapore's financial regulator, has approved that TradeFlow should
separate its licensed fund management activities from the rest of
the TradeFlow business. In light of these market developments, the
Company and TradeFlow have mutually agreed that it is in the best
interests of Group's shareholders to separate the Platform (fintech
business) from the fund management activities (regulated business),
in order to clarify the Group's market position and improve the
growth prospects for both businesses.
The key highlights of the TradeFlow Restructuring are set out
below:
* The Group reduced its ownership in TradeFlow from
100% to 19% by selling 81% of the issued share
capital in TradeFlow to Tom James and John Collis
(the "Buyers"), creating a clear separation between
Group's inventory monetisation (" IM ") fintech
Platform (the "Platform") and TradeFlow's regulated
fund management business.
* This separation is aimed at removing any potential or
perceived future conflicts of interest between the
two businesses and associated regulatory and
commercial hurdles, which will in turn improve the
growth prospects of both businesses.
* The consideration for the Group's 81% stake in
TradeFlow was GBP14,386,100 (the "Cash Quantum") of
which GBP12,386,100 was netted off against potential
future amounts owed by the Group to the Buyers under
the terms of an earn-out letter relating to the
original acquisition of TradeFlow dated 1 July 2021
(the "TradeFlow Acquisition").
* TAG assumed the obligation of the Buyers to pay the
Company the remaining GBP2,000,000 of the Cash
Quantum (the "TAG Amount") by way of a novation. The
TAG Amount will be repaid by TAG to SYME in multiple
tranches, with the final tranche being payable by 31
January 2024. In consideration for assuming the
GBP2,000,000 obligation of the Buyers, TAG acquired
1,026,525,520 existing ordinary shares of nominal
value GBP0.00002 each in the capital of the Company
from the Buyers.
* The TAG Amount was offset against the current
obligations of TAG under TAG Unsecured Working
Capital facility, of which further details are set
out above. The amendment to the TAG Unsecured Working
Capital facility was agreed on 30 June 2023 and this
reduced the obligations under the TAG Unsecured
Working Capital facility to up to GBP800,000.
* The acquisition of the 1,026,525,520 existing
Ordinary Shares by TAG from the Buyers did not create
any dilution to existing Shareholders and the deemed
price per Ordinary Share to be acquired from the
Buyers was approximately 0.195 pence, approximately
50% above the closing price on 29 June 2023 of 0.13
pence per ordinary share.
* Additionally, TradeFlow entered into a three-year
white-label licence agreement with Supply@ME
Technologies S.r.l., a wholly owned subsidiary of the
Group, with respect to use of the Platform, on a
non-exclusive basis and limited to the Asia-Pacific
("APAC") region, for a total consideration of
GBP1,000,000 payable over a three-year period.
* The finalisation of the TradeFlow Restructuring
commercial agreements on the 30 June 2023 cancelled
any obligations on the Group that arose when the
Buyers provided written notice to the Board, on 24
March 2023, of their intention to exercise their
rights to buy back 100% of the share capital of
TradeFlow.
The accounting for the TradeFlow Restructuring has been
reflected in the unaudited interim financial statements for the six
months ended 30 June 2023. The gain arising on the restructuring of
the TradeFlow operations recorded in the unaudited condensed
consolidated statement of comprehensive income was GBP718,000, and
the value of the retained 19% investment in TradeFlow has been
valued at GBP352,000 as at 30 June 2023. The TradeFlow operations
contributed a loss of GBP185,000 (inclusive of the gain arising on
the restructuring of the TradeFlow operations referred to above) in
the current interim period ended 30 June 2023. Refer to note 21 to
these interim financial statements for further details.
Settlement of outstanding debt with a significant creditor
On 2 May 2023, the Group entered into a settlement agreement
with an existing creditor of Supply@Me Srl, a wholly owned
subsidiary of the Group. This settlement agreement reduced the
total amount that was owed by the Group, to this supplier, in
exchange for payment of the new agreed amount by a specific date.
The total amount owed to this specific creditor prior to the
settlement agreement being signed was EUR1,130,250. This amount was
reduced to EUR700,000 as a result of the negotiations proceeding
the signing of the settlement agreement. This resulted in a gain of
EUR420,250 or GBP376,000 which has been recorded as other operating
income in the condensed consolidated statement of comprehensive
income for the six months ended 30 June 2023.
4 Going Concern
At the 30 June 2023 the Group had cash and cash equivalents from
continuing operations of GBP97,000 (31 December 2022: GBP257,000
cash and cash equivalents from continuing operations, GBP324,000
cash and cash equivalents from discontinued operations) and net
consolidated current liabilities of GBP1,305,000 (31 December 2022:
GBP828,000). The Group has posted a total comprehensive loss for
the six-month period ended 30 June 2023 of GBP2,146,000 (six-month
period ended 30 June 2022: total comprehensive loss GBP6,447,000)
and retained losses were GBP30,395,000 as at 30 June 2023 (31
December 2022: losses GBP27,649,000).
During the six-month period the Company continued to source
additional funding with the primary aim of allowing it to meet its
working capital and growth needs as it focuses on scaling up the
Group's business model and the continued investment into the
Group's Platform. In sourcing this new funding, the focus has been
on creating a more stable source of Group funding. These new
sources of funding were announced in conjunction with the issue of
the 2022 Annual Report on 28 April 2023 and included:
* the Subscription Agreement with Venus Capital for the
issue of the Subscription Shares which raised gross
proceeds of GBP2,250,000 during H1 2023; and
* the TAG Unsecured Working Capital facility, which was
then amended on 30 June 2023 in conjunction with the
finalisation of the TradeFlow Restructuring. On 30
June 2023, the Company issued a draw down notice to
TAG under the amended TAG Unsecured Working Facility
for the full GBP800,000 available. As at 30 June
2023, no funds had been received from TAG in respect
of this facility. As set out in note 23, subsequent
to 30 June 2023, and prior to the release of these
interim financial statements, TAG had provided an
amount of GBP245,000 in relation to the GBP800,000
drawn down by the Company on the 30 June 2023 under
the amended TAG Unsecured Working Capital facility.
Further details of these two sources of funding, including the
amendment made to the TAG Unsecured Working Capital facility as
part of the TradeFlow Restructuring on 30 June 2023, are set out in
note 3 to these condensed consolidated interim financial
statements.
In addition following the 30 June 2023, the Company has been
continuing to explore additional options of funding to support the
Group while a positive revenue track record is established. As at
the date of issue of these interim financial statements, the
Company also announced the binding commitment in respect of a top
up unsecured shareholder loan agreement with TAG, dated 28
September 2023 ( " TAG Top-Up Shareholder Loan Agreement " ).
Details of this include:
* The ability of the Company to draw down up to
GBP3.5million in monthly instalments over the period
to 30 June 2025;
* On a monthly basis the Board will assess (acting in
good faith and in its sole and absolute discretion)
if the Group's projected cash balance on the last
business day of the coming calendar month will be
less than GBP250,000 following the Group's scheduled
balance of receipts and payments for the next month
by reference to, inter alia, the Group's contracted
receivables, revenues and payables due for receipt or
payment in the next month, the Group's contracted
fixed operating expenditure and/or capital
expenditure due for payment in the next month, the
cash inflows in the next month arising from any
warrants that have been contractually exercised and
any projected unrestricted cash amounts resulting
from any contractually agreed alternative equity,
debt or hybrid financing (including, but not limited
to, pursuant to a pre-emptive offering of ordinary
shares and a non-pre-emptive offering of ordinary
shares) for such month;
* If the above assessment results in the Group's
projected cash balance on the last business day of
the coming calendar month being less than GBP250,000,
the Company may draw down an amount under the TAG
Top-Up Shareholder Loan Agreement which is no greater
than the GBP amount to ensure that the Group's bank
balances in the coming month shall be equal to
GBP250,000;
* Repayment of any sum drawn down under the TAG Top-Up
Shareholder Loan Agreement will be due five calendar
years (calculated on the basis of a year of 360 days)
from the date which funds are received by the Company
subject to the relevant draw down request; and
* Any sums drawn down by the Company under the TAG Top
Up Unsecured Shareholder Loan will attract a
non-compounding interest rate of 10% per annum, and
any principal amount (excluding accrued interest)
outstanding on a relevant due date shall attract a
compounding rate of 15% per annum thereafter.
Interest will be due to be paid annually on 31 March
of each relevant calendar year.
Taking into account the factors above and in order to consider
their assessment of the Group as a going concern, the Directors
have reviewed the forecast cashflows for the next 12 months. The
cashflow forecasts take into account that the Group meets its day
to day working capital requirement through its cash resources. The
Directors have prepared the forecast using their best estimates,
information and judgements at this time, including the outstanding
funding contracted to be receivable from the amended TAG Unsecured
Working Capital and the TAG Top-Up Shareholder Loan Agreement, and
the GBP1.5million still be receivable in connection with the
TradeFlow Restructuring. The Directors have also considered the
expected cashflows arising from due diligence fees and fees
projected to be received from the use of the Group's innovative
Platform to facilitate inventory monetisation transactions.
Despite the facts outlined above, there is currently an absence
of a historical track record relating to multiple inventory
monetisation transactions being facilitated by the Group's Platform
and the Group being cash flow positive. As such the Directors have
prudently identified uncertainty in the cash flow model. This
uncertainty arises with respect to both the future timing and
growth rates of the forecast cashflows arising from the Group's
inventory monetisation revenue streams. In this regard, if these
future revenues are not secured as the Directors envisage, it is
possible that the Group will have a shortfall in cash and require
additional funding during the forecast period. In addition, certain
cashflows in relation to the funding agreements noted above have
not yet been fully received. These amounts have been factored into
the cash flow forecasts in line with contractual commitments
received from the counterparties. As such there is a risk that
these cash flows might not be received or might not reach the Group
in the time frame expected despite the various contractual
commitments in place.
On the basis of the factors identified in the above paragraph,
the Directors believe there are material uncertainties which may
cast significant doubt upon the entities ability to continue as a
going concern.
The Directors do however remain confident in the business model
and believe the Group could be managed in a way to allow it to meet
its ongoing commitments and obligations through mitigating actions
including cost saving measures and securing alternative sources of
funding should this be required. This includes the application by
certain of the Company's subsidiaries to access specialised loans
for SME businesses provided by Italian commercial banks with the
support of government guarantees, which will allow the Group to
access a lower cost of capital.
As such the Directors consider it appropriate to prepare these
interim condensed consolidated financial statements on a going
concern basis, taking into account the material uncertainties noted
above, and have not included the adjustments that would result if
the Company and Group were unable to continue as a going
concern.
5 Revenue and operating segments
IFRS 8 ("Operating segments") requires the Group's operating
segments to be established on the basis of the components of the
Group that are evaluated regularly by the chief operating decision
maker, which has been determined to be the Board of Directors. At
this early stage of development, the Group's structure and internal
reporting are continually developing. Prior to the acquisition of
TradeFlow on 1 July 2021, the Board of Directors considered that
the Group operated in a single business segment of due diligence
and all activities were undertaken in Italy.
Following the acquisition of TradeFlow, the Board of Directors
managed the Group as two operating segments being inventory
monetisation (largely comprising the Group's Supply@ME
subsidiaries) and investment advisory (comprising the TradeFlow
operations), alongside the head office costs (largely comprising
the Company). To date the inventory monetisation segment has been
focused on the development of the IM platform, the provision of due
diligence services and the facilitation of the initial IM
transactions that took place during 2022 and to date during
2023.
During the second half of 2022, the management team and the
Board of Directors of the Company began work in respect of the
TradeFlow Restructuring, and on 24 March 2023 the Company made an
announcement regarding the 100% buy back option that had been
exercised by the TradeFlow directors. As a result, the TradeFlow
operations have been classified as a discontinued operation under
IFRS 5 ("Non-current assets held for sale and discontinued
operations") for the purposes of the consolidated annual financial
statement for the year ended 31 December 2022 and these condensed
consolidated interim financial statements. Further to the above,
the TradeFlow Restructuring transaction was finalised on 30 June
2023 resulting in the Group reducing its ownership in TradeFlow
from 100% to 19% through the disposal of 81% of the issued share
capital in TradeFlow to the Buyers.
As such, the Group has reverted back to a single segment from
its continuing operations for the current interim period ended 30
June 2023, being inventory monetisation, alongside the head office
costs (largely compromising the Company). This split has been shown
below alongside the comparative from the prior interim period which
has not been restated.
The key metrics assessed by the Board of Directors include
revenue and adjusted operating profit (before acquisition related
costs and impairment charges) which are presented below. Revenue is
presented by basis of IFRS 15 ("Revenue from Contracts") revenue
recognition and by service line.
Consolidated
Inventory Monetisation Head office Group
Unaudited Unaudited Unaudited
Six months to 30 June 2023 GBP'000 GBP'000 GBP'000
---------------------- ----------- -------------------
Revenue from continuing
operations
Due Diligence fees 40 - 40
Inventory monetisation fees 37 - 37
---------------------- ----------- -------------------
Revenue from continuing
operations 77 - 77
====================== =========== ===================
Operating loss from continuing
operations impairment charges (489) (1,492) (1,981)
====================== =========== ===================
As at 30 June 2023
Balance sheet
Assets 852 2,554 3,406
Liabilities (4,332) (1,182) (5,514)
---------------------- ----------- -------------------
Net assets /(liabilities) (3,480) 1,372 (2,108)
====================== =========== ===================
All the Group's revenue from due diligence fees is recognised at
a point in time. Of the revenue generated from inventory
monetisation fees, GBP11,000 is generated from origination fees
which is recognised at a point in time, and the remaining GBP26,000
is generated from usage of the Group's IM Platform and services
provided by the Group in connection with the IM transaction. This
GBP26,000 of inventory monetisation fees is recognised over time
and the amount recognised in the current financial period relates
to the performance obligations satisfised during the six-month
period ended 30 June 2023.
Geographical analysis
The Group's inventory monetisation operation is currently
predominately located in Europe, while the investment advisory
operations (classified as a discontinued operation) were
predominately located in Singapore.
Comparative segmental reporting
Inventory Investment Consolidated
Monetisation Advisory Head office Group
Unaudited Unaudited Unaudited Unaudited
Six months to 30 June GBP'000 GBP'000 GBP'000 GBP'000
2022
------------- ---------- ----------- ------------
Revenue
Due Diligence fees - - - -
Investment Advisory fees - 209 - 209
------------- ---------- ----------- ------------
Revenue by operating
segment - 209 - 209
============= ========== =========== ============
Operating loss before
acquisition related costs
and impairment charges (286) (584) (1,648) (2,518)
============= ========== =========== ============
As at 30 June 2022
Balance sheet
Assets 347 993 6,917 8,257
Liabilities (4,023) (3,279) (4,993) (12,295)
------------- ---------- ----------- ------------
Net assets /(liabilities) (3,676) (2,286) 1,924 (4,038)
============= ========== =========== ============
6 Finance costs from continuing operations
6 months 6 months
to to
30 June 2023 30 June 2022
Unaudited Unaudited
GBP '000 GBP '000
------------- -------------
Interest expense - loan notes/
convertible loan notes - 1,464
Interest expense - long-term borrowings 21 2
Other interest expense 1 -
Total finance costs 22 1,466
============= =============
7 Operating loss from continuing operations
The Group's operating loss from continuing operations before
impairment charges has been arrived at after charging:
6 months 6 months
to to
30 June 2023 30 June 2022
Unaudited Unaudited
GBP '000 GBP '000
------------- -------------
Amortisation of internally developed
IM platform 39 13
Depreciation 2 2
Staff costs 912 1,001
Professional and legal fees 1,065 771
Contractor costs 183 120
Insurance 46 59
Training and recruitment costs 2 6
Long-term incentive plan ("LTIP") 44 -
In addition to the above, the Group incurred the following costs
from continuing operations relating to impairment charges as
detailed below:
6 months 6 months
to to
30 June 30 June
2023 2022
Unaudited Unaudited
GBP '000 GBP '000
---------- ----------
Impairment charges (note 12) 349 151
---------- ----------
Total impairment charges 349 151
========== ==========
The following acquisition related costs, impairment charges,
and costs/(gains) relating to the restructuring of the TradeFlow
ownership, have been recognised in the discontinued operations:
6 months 6 months
to to
30 June 30 June
2023 2022
Unaudited Unaudited
GBP '000 GBP '000
---------- ----------
Amortisation of intangible assets arising
on acquisition (note 21) 442 406
Acquisition related earn-out payments - 747
Impairment charges - 765
Foreign currency translation gain reclassified
to other comprehensive income 62 -
Gain arising on the restructuring of the
TradeFlow ownership (note 21) (718) -
---------- ----------
(214) 1,918
========== ==========
8 Other operating income from continuing operations
6 months 6 months
to to
30 June 30 June
2023 2022
Unaudited Unaudited
GBP '000 GBP '000
---------- ----------
Gain arising on settlement of outstanding
creditor balance 376 -
Interest receivable on outstanding receivable
balance 9 -
Other operating costs - (11)
---------- ----------
Total other operating income from continuing
operations 385 (11)
========== ==========
The gain arising on settlement of outstanding creditor balance
relates to the settlement agreement, dated 2 May 2023, with an
existing creditor of the Group. This settlement agreement reduced
the total amount that was owed by the Group, to this supplier, in
exchange for payment of the new agreed amount by a specific date.
The total amount owed to this specific creditor prior to the
settlement agreement being signed was EUR1,130,250. This amount was
reduced to EUR700,000 as a result of the negotiations proceeding
the signing of the settlement agreement. This resulted in a
difference of EUR420,250 or GBP376,000 which has been recorded as
other operating income in the condensed consolidated income
statement of the Group for the six months ended 30 June 2023.
9 Taxation from continuing operations
Income tax expense for the period to 30 June 2023 primarily
represents a tax charge of GBP21,000 arising in respect of the gain
on settlement of outstanding creditor balance as described in note
8 above, as well as the interest charged on income taxes during the
six-month period ended 30 June 2023 in line with the IAS 12 ( "
Income Taxes " ).
To date any accumulated tax losses resulting from net losses in
the condensed consolidated financial statement have not been
recognised in the balance sheet given the Group does not have a
track record of generating profits against which these accumulated
losses could be offset.
10 Dividends
During the six-month period ended 30 June 2023 the Group did not
pay a dividend (six months to 30 June 2022: no dividend).
The Directors do not foresee a dividend being payable in the
next financial year as the Group will be concentrating on growing
its market share and enhancing its technology and capabilities.
11 Earnings / (loss) per share
The calculation of the basic earnings/(loss) per share ( " EPS "
) is based on the loss for the six-month period of GBP2,561,000
(2022 - loss GBP6,190,000) and on a weighted average number of
ordinary shares in issue of 55,136,008,130 (2022: 38,271,981,611).
The basic EPS is (0.0046) pence (2022: (0.0162)).
The calculation of the basic EPS from continuing operations is
based on the loss for the six-month period from continuing
operations of GBP2,376,000 (2022 - loss GBP3,580,000) and on a
weighted average number of ordinary shares in issue of
55,136,008,130 (2022: 38,271,981,611). The basic EPS from
continuing operations is (0.0043) pence (2022 - (0.0094)
pence).
The calculation of the basic EPS from discontinued operations is
based on the loss for the six-month period from discontinued
operations of GBP185,000 (2022 - loss GBP2,610,000) and on a
weighted average number of ordinary shares in issue of
55,136,008,130 (2022: 38,271,981,611). The basic EPS from
discontinued operations is (0.0003) pence (2022 - (0.0068)
pence).
The Company has share warrants and employee share scheme options
in issue as at 30 June 2023, which would dilute the earnings per
share if or when they are exercised in the future. A summary of
these is set out below and further detail of these share warrants
and employee share options can be found in note 20.
30 June 2023 30 June 2022
Unaudited Unaudited
No. No.
-------------- -------------
Warrants and employee share
options
Share warrants - issued 9,372,584,030 785,683,276
Share warrants - to be issued 2,250,000,000 5,086,149,157
Long-term incentive plan ("LTIP")
options 1,195,831,529 -
Acquisition related earn-out
share-based payments - 1,282,550,632
Total 12,818,415,559 7,154,383,065
============== =============
No dilution per share was calculated for either period in the
table above as with the reported loss they are all
anti-dilutive.
12 Intangible assets
Internally
Customer developed
Relationships Brand CTRM Software AI Software Goodwill platform Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------- ------------- ----------- -------- ---------- -------
Cost or valuation
At 1 January
2022 4,829 205 1,429 425 2,199 2,544 11,631
Additions - - - - - 164 164
-------------- ------- ------------- ----------- -------- ---------- -------
At 30 June 2022 4,829 205 1,429 425 2,199 2,708 11,795
Amortisation
At 1 January
2022 186 20 143 43 - 771 1,163
Charge for the
period 193 21 148 44 - 13 419
-------------- ------- ------------- ----------- -------- ---------- -------
At 30 June 2022 379 41 291 87 - 784 1,582
Impairment
At 1 January
2022 - - - - 800 1,773 2,573
Impairment charges - - - - 765 151 916
At 30 June 2022 - - - - 1,565 1,924 3,489
Net book value
At 30 June 2022
(Unaudited) 4,450 164 1,138 338 634 - 6,724
============== ======= ============= =========== ======== ========== =======
Cost or valuation
At 1 January
2023 - - - - - 3,669 3,669
Additions - - - - - 388 388
-------------- ------- ------------- ----------- -------- ---------- -------
At 30 June 2023 - - - - - 4,057 4,057
Amortisation
At 1 January
2023 - - - - - 818 818
Charge for the
period - - - - - 39 39
-------------- ------- ------------- ----------- -------- ---------- -------
At 30 June 2023 - - - - - 857 857
Impairment
At 1 January
2023 - - - - - 2,851 2,851
Impairment charges - - - - - 349 349
-------------- ------- ------------- ----------- -------- ---------- -------
At 30 June 2023 - - - - - 3,200 3,200
Net book value
At 30 June 2023
(Unaudited) - - - - - - -
============== ======= ============= =========== ======== ========== =======
The following intangible assets arose on the acquisition of
TradeFlow during the year ended 31 December 2021; Customer
relationships, Brand, Commodity Trade Risk Management ( " CTRM " )
software, Artificial Intelligence and back-office ( " AI " )
software and Goodwill. The carrying value of these assets at the
date of acquisition is shown in the table above. As at 31 December
2022, the TradeFlow operations were reclassified as discontinued
operations and as such the net book value of the intangible assets
relating to the TradeFlow operations have been reclassified to
assets of the disposal group held for sale at this date. On 30 June
2023, the Group completed the TradeFlow Restructuring and as such
the assets and liabilities of TradeFlow, including the intangible
assets referred to above, are no longer consolidated by the Group
as of 30 June 2023. Further details are set out in note 21.
Impairment assessment - Internally developed IM Platform
The Directors considered the continued current period losses of
the Group's Italian subsidiary, to which the Internally developed
IM platform relates, and the full impairment of this intangible
asset in the prior year, as impairment indicators and therefore, in
accordance to IAS 36 ("Impairment of Assets"), considered if at 30
June 2023 this intangible asset required further impairment in
relation to the additions made during the period, or if some so the
prior impairment charges could be reversed.
The full going concern statement, set out in note 4, noted there
is currently an absence of a historical recurring track record
relating to inventory monetisation transactions being facilitated
by the Group's Platform, the generation of the full range of fees
from the use of its Platform from more than a limited number of
inventory monetisation transactions, and the Group being cash flow
positive. As such the Directors have prudently identified a
material uncertainty in relation to the going concern statement.
The Directors have also concluded that these uncertainties also
apply to the discounted cash flow model used in this impairment
test also. In particular, there is uncertainty that arises with
respect to both the future timing and growth rates of the forecast
discounted cash flows arising from the use of the Internally
developed IM Platform intangible asset.
As such, the Directors have prudently decided to continue to
impair the full carrying amount of this asset as 30 June 2023. This
impairment loss may subsequently be reversed and if so, the
carrying amount of the asset will be increased to the revised
estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
investment in prior years.
Impairment assessment - TradeFlow
The finalisation of the TradeFlow Restructuring occurred on 30
June 2023 and as a result from this date the assets and liabilities
of TradeFlow, including the intangible assets acquired in
connection with the acquisition of TradeFlow in July 2021, are no
longer consolidated by the Group. As such the Group did not
recognise any additional impairment charges with respect to the
TradeFlow goodwill and other acquired intangible assets during the
six-month period ended 30 June 2023. The details of the calculation
of the gain arising on the restructuring of the TradeFlow
operations recognised in these condensed consolidated interim
financial statements can be found in note 21.
The impairment charges recognised in the prior periods resulted
from impairment tests carried out by the Directors at previous
balance sheet dates. These tests were required in accordance with
IAS 36 ( " Impairment of Assets " ) given the Directors had
identified indicators of impairment of the TradeFlow Cash
Generating Unit ( " CGU " ) at the respective prior balance sheet
dates.
13 Trade and other receivables
30 June 2023 31 December
Unaudited 2022
Audited
GBP '000 GBP '000
------------ -----------
Trade receivables 14 7
Receivable from related party 2,000 -
Other receivables 908 1,179
Prepayments 11 33
2,933 1,219
============ ===========
The receivable from related party represents the GBP2,000,000
due from the Group's major shareholder, TAG, that arose on the 30
June 2023 as a result of TAG assuming the obligation, by way of a
debt novation deed, of the Buyers (in the TradeFlow Restructuring
transaction) to pay the Company the remaining GBP2,000,000 due
under the share purchase agreement. This receivable from TAG will
be repaid by TAG in multiple tranches, with the final tranche being
payable by 31 January 2024. As the final repayment date is within
12 months of the balance sheet date, this receivable has been
classified as a current asset. As set out in note 23, subsequent to
30 June 2023, and prior to the release of these interim financial
statements, TAG had paid the first GBP500,000 to the Company in
respect of the outstanding GBP2,000,000 receivable as at 30 June
2023.
14 Trade and other payables
30 June 2023 31 December
Unaudited 2022
Audited
GBP '000 GBP '000
------------ -----------
Trade payables 1,715 2,209
Other payables 748 747
Current portion of long-term borrowings 106 158
Social security and other taxes 1,456 977
Accruals 263 402
Contract liabilities 47 94
4,335 4,587
============ ===========
15 Long-term Borrowings
30 June 31 December
2023 2022
Unaudited Audited
GBP '000 GBP '000
---------- -----------
Bank borrowings (non-current portion) 741 748
---------- -----------
741 748
========== ===========
On 13 October 2022, the Company announced that its subsidiary,
Supply@ME Technologies S.r.l, had entered into a new long-term loan
facility with Banco BPM S.p.A (the "Banco BPM Facility"). The
obligations of Supply@ME Technologies S.r.l under the Banco BPM
Facility are guaranteed by the Company. The key commercial terms of
the Banco BPM Facility include:
a. EUR1 million in principal amount;
b. 275 basis points over Euribor interest rate; and
c. a five-year repayment term (the final payment to be made on
11 October 2027), including an initial six months of interest only
repayments, followed by 54 months of combined principal and
interest repayments.
Fees totalling EUR52,000 were incurred in connection with the
arrangement of the Banco BPM Facility. These costs have been
capitalised and will be spread over the term of the Banco BPM
Facility. The amount include in the table above represents the
non-current portion of the Banco BPM Facility. The current portion
is set out in note 14 above.
16 Provisions
Provision Provision
Post-employment for risks for VAT
benefits and charges and penalties Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------ -------------- -------
At 31 December 2022 (Audited) 38 85 345 468
Fx translation adjustment (2) (2) (11) (15)
--------------- ------------ -------------- -------
Carrying amount at 1 January
2023 36 83 334 453
Released to profit and loss - (15) - (15)
Provided for during the
period 3 - - 3
Paid at the end of the employment
relationship (10) - - (10)
--------------- ------------ -------------- -------
At 30 June 2023 (Unaudited) 29 68 334 431
=============== ============ ============== =======
Post-employment benefits
Post-employment benefits include severance pay and liabilities
relating to future commitments to be disbursed to employees based
on their permanence in the company. This entirely relates to the
Italian subsidiary where severance indemnities are due to each
employee at the end of the employment relationship. Post-employment
benefits relating to severance indemnities are calculated by
estimating the amount of the future benefit that employees have
accrued in the current period and in previous years using actuarial
techniques. The calculation is carried out by an independent
actuary using the "Projected Unit Credit Method".
Provision for risks and charges
Provision for risks and charges includes the estimated amounts
of penalties for payment delays referring the tax payables recorded
in the Italian subsidiary financial statements which, at the
closing date, are overdue.
Provision for VAT and penalties
In advance of the Group's first monetisation transaction, a
number of advance payments have been received by the Group's
Italian subsidiary from potential client companies in accordance
with agreed contractual terms. These payments have been recognised
as revenue in accordance with local accounting rules. These advance
payments, for which an invoice has not yet been issued, have been
made exclusive of VAT. As at 30 June 2023, the Group has included a
provision relating to a potential VAT liability, including
penalties, in respect of these advance payments of GBP195,000 (31
December 2022: GBP201,000).
At the point in the future when the associated monetisation
transaction takes place, the potential VAT liability will be
settled by the Group. At this same point in time, the Directors
expect to be able to recover the VAT from the client companies as
invoices in respect of the monetisation transactions are issued.
The timing of these future monetisation transactions currently
remains uncertain and as such no corresponding VAT receivable has
been recognised as at 30 June 2023, however there is a contingent
asset of GBP138,000 as at 30 June 2023 (31 December 2022:
GBP143,000) in respect of this.
An additional amount of GBP144,000 was added to the provision
during the second half of 2022 to reflect the fact that the Italian
intercompany invoice was issued late and this balance reflects
potential VAT penalties that may arise due to the timing of the
invoice. This balance remains provided for at 30 June 2023, however
has been revalued to GBP139,000 as at 30 June 2023.
From time to time, during the course of business, the Group
maybe subject to disputes which may give rise to claims. The Group
will defend such claims vigorously and provision for such matters
are made when costs relating to defending and concluding such
matters can be measured reliably. There were no cases outstanding
as at 30 June 2023 that meet the criteria for a provision to be
recognised.
17 Share capital
Allotted, called up and fully paid shares
30 June 2023 31 December 2022
Unaudited Audited
No. 000 GBP '000 No. 000 GBP '000
---------- -------- ---------- --------
Ordinary shares of GBP0.00002
each 61,157,163 1,223 56,621,568 1,132
Deferred shares of GBP0.04
each 63,084 2,523 63,084 2,523
2018 deferred shares of GBP0.01000
each 224,194 2,242 224,194 2,242
---------- -------- ---------- --------
Total 61,444,441 5,988 56,908,846 5,897
========== ======== ========== ========
New shares allotted during the interim period to 30 June
2023
New ordinary shares issued to Venus Capital in connection with
Equity Subscription Agreement
On the 28 April 2023, the Company and Venus Capital entered into
a new equity subscription agreement, pursuant to which Venus
Capital committed to subscribe for 4,500,000,000 new ordinary
shares at GBP0.0005 per share. The issue of these new ordinary
shares to Venus Capital was made over two tranches as set out
below:
* an initial tranche of 3,375,000,000 new ordinary
shares for gross proceeds of GBP1,687,500 (or
GBP1,603,125 net of a 5% commission chargeable by
Venus Capital). This tranche of new ordinary shares
were admitted to a Standard Listing and to trading on
the Main Market on 5 May 2023; and
* a second tranche of 1,125,000,000 new ordinary shares
for proceeds of up to GBP562,500 gross (or up to
GBP534,375 net a 5% commission chargeable by Venus
Capital). This tranche of new ordinary shares were
admitted to a Standard Listing and to trading on the
Main Market on 30 May 2023.
New ordinary shares issued to fulfil the conversion of Open
Offer warrants
Further to the issue of new ordinary shares on the 18 August
2022 as a result of the Open Offer, the Company also issued
320,855,008 warrants to certain qualifying shareholders who
participated in its open offer (the "Open Offer Warrants").
Following the issue of the Open Offer Warrants, certain holders
have elected to exercise their Open Offer Warrants and this
resulted in the following share issues during the six-month period
ended 30 June 2023:
* On 11 January 2023, the Company issued 67,471 of new
ordinary shares as an Open Offer Warrant conversion.
* On 31 January 2023, the Company issued 1,800,019 of
new ordinary shares as an Open Offer Warrant
conversion.
* On 3 March 2023, the Company issued 494,481 of new
ordinary shares as an Open Offer Warrant conversion.
* On 5 May 2023, the Company issued 227 of new ordinary
shares as an Open Offer Warrant conversion.
* On 24 May 2023, the Company issued 1,145,518 of new
ordinary shares as an Open Offer Warrant conversion.
* On 6 June 2023, the Company issued 19,337,713 of new
ordinary shares as an Open Offer Warrant conversion.
* On 14 June 2023, the Company issued 12,749,982 of new
ordinary shares as an Open Offer Warrant conversion.
Rights, preferences and restrictions
Ordinary shares have the following rights, preferences, and
restrictions:
The ordinary shares carry rights to participate in dividends and
distributions declared by the Company and each share carries the
right to one vote at any general meeting. There are no rights of
redemption attaching to the ordinary shares.
Deferred shares have the following rights, preferences, and
restrictions:
The deferred shares carry no rights to receive any dividend or
distribution and carry no rights to vote at any general meeting. On
a return of capital, the Deferred shareholders are entitled to
receive the amount paid up on them after the Ordinary shareholders
have received GBP100,000,000 in respect of each share held by them.
The Company may purchase all or any of the Deferred shares at an
appropriate consideration of GBP1.
2018 Deferred shares have the following rights, preferences, and
restrictions:
The deferred shares carry no rights to receive any dividend or
distribution and carry no rights to vote at any general
meeting.
Reconciliation of allotted, called up and fully paid shares
As at 30 June 2023
No. 000 GBP 000
----------- -------
As at 1 January 2023 (Audited) 56,908,846 5,897
New ordinary shares issued to Venus
Capital in connection with Equity Subscription
Agreement dated 28 April 2023 4,500,000 90
New ordinary shares issued to fulfil
the conversion of Open Offer Warrants 35,595 1
As at 30 June 2023 (Unaudited) 61,444,441 5,988
=========== =======
18 Financial instruments
Financial assets at amortised cost
Carrying value Fair value
30 June 31 December 30 June 31 December
2023 2022 2023 2022
Unaudited Audited Unaudited Audited
GBP'000 GBP'000 GBP'000 GBP'000
---------- ----------- ---------- -----------
Cash and cash equivalents 97 257 97 257
Trade receivables 14 7 14 7
Receivable from related
party 2,000 - 2,000 -
Other receivables 908 1,179 908 1,179
---------- ----------- ---------- -----------
3,019 1,443 3,019 1,443
========== =========== ========== ===========
Valuation methods and assumptions :
The directors believe due to their short term nature, the fair
value approximates to the carrying amount.
Financial liabilities at amortised cost
Carrying value Fair value
30 June 31 December 30 June 31 December
2023 2022 2023 2022
Unaudited Audited Unaudited Audited
GBP'000 GBP'000 GBP'000 GBP'000
---------- ----------- ---------- -----------
Long-term borrowings 847 906 847 906
Trade payables 1,715 2,209 1,715 2,209
Other payables 748 747 748 747
3,310 3,862 3,310 3,862
========== =========== ========== ===========
Valuation methods and assumptions:
The directors believe that the fair value of all financial
liabilities at amortised cost approximate to their carrying
values.
The Group has no derivative financial instruments as at 30 June
2023 (31 December 2022: nil)
Valuation methods and assumptions:
Further information relating to the valuation of the derivative
financial instruments is available in note 23 of the annual
financial statements for the year ended 31 December 2022.
19 Financial risk management
Note 23 to the annual financial statements for the year ended 31
December 2022 include the Group's objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and its exposure
to interest rate risk, credit risk, foreign exchange risk and
liquidity risk.
20 Share-based payments
Share warrants issued to Mercator
During 2021 the Group entered into a funding facility with
Mercator which included the Group issuing loan notes in exchange
for funding. These loan notes were linked to a convertible loan
note facility, which was able to be used should the Group elect not
to repay any of the interest or principal relating to the loan
notes in cash. Both the loan note and convertible loan note
agreements required share warrants to be issued representing 20% of
the face value of any loan notes or convertible loans issued. The
warrants have a term of 3 years from issue and an exercise price of
130% of the lowest closing VWAP over the ten trading days
immediately preceding the issue of the warrants. Under the terms of
amendment agreement signed with Mercator dated 26 April 2022, no
further warrants were required to be issued on the monthly
repayments due following April 2022.
The total number of share warrants issued during the year ended
31 December 2022 was 439,040,922, which together with the total of
522,791,511 issued during the year ended 31 December 2021 takes the
total number of share warrants issued to Mercator as at 30 June
2023 to 961,832,433 (31 December 2022: 961,832,433). Details of the
outstanding share warrants issued to Mercator are set out in the
table below. There have been no movement in these share warrants
during the six month period ended 30 June 2023.
Date of issue Number of warrants Exercise price Expiry date
outstanding at 30
June 2023
No.
--------------------- ----------------------- ------------------- ------------------------
1 October 2021 443,726,030 GBP0.00316 1 October 2024
1 November 2021 29,197,856 GBP0.00314 1 November 2024
1 December 2021 49,867,625 GBP0.00184 1 December 2024
4 January 2022 77,763,767 GBP0.00174 4 January 2025
2 February 2022 79,179,799 GBP0.00171 2 February 2025
4 March 2022 105,948,198 GBP0.00128 4 March 2025
10 June 2022 176,149,158 GBP0.00085 10 June 2025
-----------------------
Total 961,832,433
=======================
The total fair value of the above share warrants issued to
Mercator has been fully expensed in the prior periods, including
GBP236,000 in the six-month period ended 30 June 2022. No further
costs have been recognised in the current interim period ended 30
June 2023, and none of these warrants have been converted during
the same period.
Share warrants issued to Venus Capital under Capital Enhancement
Plan
On the 27 April 2022, the Group announced it had entered into a
subscription agreement with Venus Capital in connection with the
Capital Enhancement Plan. The subscription agreement specified that
the Group was required to issue one warrant for every two shares
issued in connection with the mandatory tranches of the new shares
issues. This was a total of 3,425,000,000 share warrants. The
subscription agreement specified that the Group was required to
issue one warrant for every five shares issued in connection with
the optional tranches of the new shares issues. This was a total of
1,500,000,000 share warrants. Additionally, an amount of
3,250,000,000 share warrants were issued to Venus Capital in
connection with the signing of the subscription agreement on 26
April 2022. As such the Group issued a total of 8,175,000,000 share
warrants to Venus Capital during the year ended 31 December 2022,
and as at the 30 June 2023, these all remain outstanding. The
initial terms of the warrants specified that they could be
exercised at any time up to 31 December 2025 and have an exercise
price of 0.065 pence per warrant.
As these share warrants were issued as a cost of issuing new
ordinary shares to Venus Capital they fall into of scope of IFRS 2
("Share-based payments"). The total fair value of the above share
warrants issued to Venus Capital under the Capital Enhancement Plan
was GBP4,795,000 and this amount has been fully recognised during
2022.
Share warrants issued to retail shareholders under the Open
Offer
On 22 July 2022, the Group announced the Open Offer, giving
existing shareholders the opportunity to subscribe for up to
641,710,082 new ordinary share in the Group on the basis of one
Open Offer share for every 66 existing ordinary shares held at an
offer price of 0.05 pence per Open Offer share. The Open Offer
closed on 17 August 2022 and on 18 August 2022, the Group announced
it would allot and issue 641,710,082 new ordinary shares to those
qualifying shareholders and that this would raise GBP320,855 gross
(and GBP269,855 net of fees and expenses) for the Group.
In addition to the new ordinary share that were issued, the
Group also issued 320,855,008 warrants to the qualifying
shareholders on the basis of one warrant for every two ordinary
shares received as a result of the Open Offer. The initial terms of
the warrants specified that they could be exercised at any time up
to 31 December 2025 and have an exercise price of 0.065 pence per
warrant.
As these share warrants were issued as a cost of issuing the new
Open Offer ordinary shares they fall into of scope of IFRS 2
("Share-based payments"). The total fair value of the above share
warrants to be issued in connection with the Open Offer was
GBP261,000 and this amount has been fully recognised during
2022.
Subsequent to the issue of the Open Offer warrants, and prior to
30 June 2023, an amount of 85,103,411 (31 December 2022:
49,508,000) of these warrants have been converted in exchange for
new ordinary shares and as at 30 June 2023 there is a balance of
235,751,597 Open Offer warrants which remained outstanding. On the
exercise of the Open Offer warrants, the fair value amount is
reclassified from the share-based payment reserve to retained
losses as set out in the Groups condensed consolidated statement of
changes in equity for the six months ended 30 June 2023.
Share warrants issued to Venus Capital under April 2023 Equity
Subscription Agreement
On the 28 April 2023, the Company announced it had and entered
into a new subscription agreement with Venus Capital, pursuant to
which Venus Capital committed to subscribe for 4,500,000,000 new
ordinary shares over two tranches as set out below:
* an initial tranche of 3,375,000,000 new ordinary
shares were admitted to a Standard Listing and to
trading on the Main Market on 5 May 2023; and
* a second tranche of 1,125,000,000 new ordinary shares
were admitted to a Standard Listing and to trading on
the Main Market on 30 May 2023.
Under the new subscription agreement, new warrants are required
to be issued to Venus Capital at a ratio of one warrant for every
two subscription shares issued under the new subscription
agreement. This resulted in an obligation for the Group to issue
2,250,000,000 new warrants to Venus ("New Venus Warrants") which
existed at 30 June 2023. These new warrants are each exercisable
into one new ordinary share at a price equal to 0.065 pence per
share up to a final exercise date of 31 December 2026.
As these share warrants were issued as a cost of issuing new
ordinary shares to Venus Capital they fall into of scope of IFRS 2
("Share-based payments"). As such, the Directors were required to
determine the fair value of the equity-settled share-based payments
at the date on which they were granted. The fair value was
determined using a Black-Sholes model which required certain
judgements to be made in determining the most appropriate inputs to
be used. The key judgemental point was the expected volatility rate
of the Company's share price over the relevant period prior to the
grant of the warrants. The assumption applied in the model for the
warrants to be issued to Venus Capital ranged from of 88%. This was
based on the actual volatility of the Company's shares over the
historical period from March 2020 (the date of the reverse take
over) to the valuation date.
The total fair value of the above new share warrants issued to
be Venus Capital under the April 2023 Equity Subscription Agreement
was GBP1,717,000 and this amount has been fully recognised during
the six-month period ended 30 June 2023. Given this amount directly
related to the cost of issuing new ordinary shares to Venus
Capital, the total amount of GBP1,717,000 have been offset against
the share premium balance in accordance with IAS 32 ("Financial
Instruments"). This amount was offset against the related share
premium that was created in connection with the relevant issue of
ordinary share to Venus Capital.
Extension to the expiry date of the warrants issued in
connection with the Open Offer carried out on 17 August 2022 and
the warrants issued to Venus Capital during 2022
In connection with the new equity subscription agreement that
was signed with Venus Capital on 28 April 2023, the final exercise
date of the existing 8,175,000,000 warrants issued to Venus Capital
during 2022, under the Capital Enhancement Plan, were agreed to be
extended from 31 December 2025 for 12 months to 31 December 2026,
through a deed of amendment to the existing warrant instruments.
This deed of amendment was also dated 26 April 2023.
In line with the extension to the expiry date of the existing
8,175,000,000 warrants held by Venus Capital, the shareholders who
participated in the Open Offer during 2022 were asked if they would
like to vote to extend the expiry date of the warrants issued
during the Open Offer from 31 December 2025 by 12 months to 31
December 2026. This resolution was successfully passed at the 2023
Annual General Meeting, and a deed of amendment to the existing
warrant instrument was signed, on 23 June 2023.
As outlined above, both of these warrants had been valued
previously in line with IFRS 2 ("Share-based payments"). The
modification to the expiry date has therefore also been valued in
line with IFRS 2 with the change in fair value calculated as the
difference between the fair value of the modified equity instrument
and that of the original equity instrument, both of which are
estimated a the date of the modification being 28 April 2023 for
the relevant warrants held by Venus Capital, and 23 June 2023 for
this warrants issued in connection with the Open Offer.
The change in the fair value due to the extension of the expiry
date on those warrants still outstanding at 30 June 2023 was
GBP346,000. Given this amount directly related to the cost of
issuing new
Ordinary shares in the past to Venus Capital or under the Open
Offer, the amount of GBP132,000 has been offset against the share
premium balance in accordance with IAS 32 ("Financial
Instruments"). This amount was offset against the related share
premium that was created in connection with issue of the relevant
Venus Capital warrants / Open Offer share issue. The remaining fair
value amount of GBP214,000 has been recognised in retained
losses.
A summary of the share warrants outstanding as at 31 December
2022 is detailed in the table below:
Number of Number of warrants
warrants outstanding outstanding
at 30 June at 31 December
2023 2022
No. No.
Unaudited Audited
--------------------- ------------------
Share warrants issued to Mercator 961,832,433 961,832,433
Share warrants issued to Venus Capital 8,175,000,000 8,175,000,000
Share warrants issued to retail shareholders 235,751,597 271,347,008
Share warrants to be issued to Venus
Capital 2,250,000,000 -
Total 11,622,584,030 9,408,179,441
===================== ==================
A summary of the fair value of the share warrants recorded
during the period are detailed in the table below:
6 months to 6 months
30 June 2023 to
Unaudited 30 June 2022
Unaudited
GBP'000 GBP'000
------------- -------------
Share warrants issued to Mercator - 236
Share warrants issued to Venus - 3,019
Share warrants issued to retail shareholders - -
Share warrants to be issued to Venus
Capital 1,717 -
Change in fair value due to extension
of expiry date of existing share warrants
issued to Venus Capital and retail shareholders
in prior periods 346 -
Total 2,063 3,255
============= =============
Employee share scheme awards
October 2022 Employee share scheme
On 31 October 2022, the Group awarded an long-term incentive
plan ("LTIP") conditional on performance conditions to certain
employees, being the achievement of specified Total Shareholder
Return ("TSR") (market condition) performance, as well as continued
employment. The TSR performance relates to a three-year period over
the 2022, 2023 and 2024 financial years and the required TSR
performance is set out in the table below with the adjusted share
price measurement period being the average closing mid-market price
of a share price over a three-month period ending on the last
dealing day of the performance period.
Adjusted share price per Percentage of TSR award
share vesting
------------------------- -----------------------
Below 0.6945 pence 0%
Equal to 0.6945 pence 25%
1 penny or greater 100%
Vesting is on a straight-line basis between target levels. In
addition to the satisfaction of the TSR performance condition, the
Group's Remuneration Committee must also be satisfied that the
potential level of vesting of the LTIP is appropriate in all
circumstances.
The vesting date of these share awards is 31 October 2025, and
the continued employment covers up until this date. The share
awards issued to the Chief Executive Officer are subject to an
additional two years holding period following the vesting date.
For those share schemes with market related vesting conditions,
the fair value is determined using the Monte Carlo model at the
grant date. The total share-based payment charge recognised in the
condensed consolidated income statement for the six month period
ended 30 June 2023 was GBP33,000 (the six months to 30 June 2022:
nil). As all social security charges with respect to the share
awards will be the responsibility of the employee, no expense has
been recognised by the Group in respect of these charges.
The following table summarised the movements in the number in
share awards issued by the Company:
2023 2022
No. No.
-------------- ------
Outstanding at 1 January (audited) 874,783,094 -
Conditionally awarded in period - -
Exercised during the period - -
Forfeited or expired in period (22,500,000) -
-------------- ------
Outstanding at 30 June (unaudited) 852,283,094 -
Exercisable at 30 June (unaudited) - -
============== ======
May 2023 Employee share scheme
On 19 May 2023, the Group awarded its second LTIP conditional on
performance conditions to certain employees, being the achievement
on continued employment, the achievement of performance conditions
relating to the specified Total Shareholder Return ("TSR") (market
condition) performance (50%) and the specific GBP amount of
inventory monetised (non-market condition) (50%). Each of the
performance conditions relate to a three-year period over the 2023,
2024 and 2025 financial years and the required performance is as
follows:
* with respect to the TSR element the adjusted share
price measurement period is the average closing
mid-market price of the share price over a
three-month period ending on the last dealing day of
the performance period, being 31 December 2025. If
the average share price during the measurement period
is 0.15p then 25% of the aware will vest, and this
increases on a straight-line basis to 0.3p for 100%
of vesting; and
* with respect to the GBP amount of inventory monetised,
the measurement period is by the end of the
performance period, being 31 December 2025. 25% of
the award will vest if GBP300m of inventory is
monetised (in aggregate) over the three-year
performance period, increasing on a straight line to
100% of the award to vest if GBP400m of inventory is
monetised (in aggregate) over the same three year
performance period. For the award to vest the Group's
Remuneration Committee must also be satisfied that
the inventory was monetised on acceptable commercial
terms.
As with the October 2022 LTIP award in addition to the
satisfaction of the performance conditions set out above, the
Group's Remuneration Committee must also be satisfied that the
potential level of vesting of the LTIP is appropriate in all
circumstances.
The vesting date of these share awards is 19 May 2026, and the
continued employment covers up until this date. The share awards
issued to the Chief Executive Officer are subject to an additional
two years holding period following the vesting date.
For those share schemes with market related vesting conditions,
the fair value is determined using the Monte Carlo model at the
grant date. The total share-based payment charge recognised in the
condensed consolidated income statement for the six month period
ended 30 June 2023 was GBP11,000 (H1 2022: nil). As all social
security charges with respect to the share awards will be the
responsibility of the employee, no expense has been recognised by
the Group in respect of these charges.
The following table summarised the movements in the number in
share awards issued by the Company:
2023 2022
No. No.
------------- ------
Outstanding at 1 January (audited) - -
Conditionally awarded in period 343,548,435 -
Exercised during the period - -
Forfeited or expired in period - -
------------------------------------ ------------- ------
Outstanding at 30 June (unaudited) 343,548,435 -
Exercisable at 30 June (unaudited) - -
==================================== ============= ======
Acquisition related earn-out payments
The terms of the TradeFlow acquisition completed in July 2021
included related earn-out payments that, which together with the
initial cash payment and issue of equity, form the total legal
consideration agreed between the parties.
This acquisition related earn-out payments are determined by
reference to pre-determined revenue milestone targets in each of
the 2021, 2022 and 2023 financial years. These payments may be
forfeited by the selling shareholders should they, in certain
circumstances, no longer remain employed prior to the end of each
earn-out period. As such, under the IFRS Interpretations
Committee's interpretation of paragraph B55 of IFRS 3 ("Business
Combinations"), the fair value of these earn-out payments have been
accounted as a charge to the income statement (as deemed
remuneration) rather than as consideration. The terms of the
agreements also allow this acquisition related earn-out payments to
be settled in either cash or equity at the discretion of the
Company. As it is the Company's intention to settle these payments
in equity, they were previously fair valued at the grant date in
line with IFRS 2 ("Share-based payments").
In connection with the TradeFlow Restructuring that was
completed on the 30 June 2023, any future potential earn-out
payments were offset against the initial cash consideration amount
and as such, no further acquisition related earn-out amounts were
recognised during the current interim period for the six months
ended 30 June 2023.
The expense recognised in the income statement in the
comparative interim period for the six months ended 30 June 2022
was GBP747,000, which represented the estimated fair value of the
earn-out payments based on managements judgements at that time.
21 Discontinued operations and TradeFlow Restructuring
During the second half of 2022, the Board of Directors of the
Company began the process of the TradeFlow Restructuring, and as
such in the financial statements for the year ended 31 December
2022, it was considered that the TradeFlow operations meet the
criteria to be classified as held for sale at the balance sheet
date in accordance with IFRS 5 ("Non-current Assets Held for Sale
and Discontinued Operations"). This is due to the fact that as at
this date the details of the TradeFlow Restructuring had all been
agreed in principle between the parties and was expected to be
completed post year-end. As a result the TradeFlow operations were
available for immediate sale in its present condition and it was
highly probably that that sale would be completed at 31 December
2022. With the classification as discontinued operations, the
TradeFlow operations have been excluded from the segmental
reporting note (note 5).
Subsequently, on 30 June 2023 the Company announced that had
entered into relevant binding commercial agreements to complete the
TradeFlow Restructuring. Further details as to the rationale for
the restructuring of the TradeFlow ownership can be found in note 3
above. The TradeFlow Restructuring resulted in the Group reducing
its ownership in TradeFlow from 100% to 19% by selling 81% of the
issued share capital in TradeFlow to the Buyers. The consideration
for the Group's 81% stake in TradeFlow was GBP14,386,100 of which
GBP12,386,100 was netted off against potential future amounts owed
by the Group to the Buyers under the terms of an earn-out letter
relating to the original acquisition of TradeFlow in July 2021.
This resulted in a remaining GBP2,000,000 consideration to be
receivable by the Group. On the 30 June 2023, the Group's major
shareholder, TAG, assumed the obligation of the Buyers to pay the
Company the remaining GBP2,000,000 by way of a debt novation deed.
The GBP2,000,000 will be repaid by TAG to SYME in multiple
tranches, with the final tranche being payable by 31 January 2024.
In consideration for assuming the GBP2,000,000 obligation of the
Buyers, TAG acquired 1,026,525,520 existing ordinary shares of
nominal value GBP0.00002 each in the capital of the Company from
the Buyers.
The accounting for the TradeFlow Restructuring has been
reflected in the interim financial statements for the six months
ended 30 June 2023. During the period from 1 January 2023 and up
until the date of completion of the TradeFlow Restructuing, being
30 June 2023, the TradeFlow operations continued to meet the
criteria to be classified as held for sale in accordance with IFRS
5 ("Non-current Assets Held for Sale and Discontinued Operations").
The TradeFlow operations contributed a loss of GBP185,000
(inclusive of the gain arising on the restructuring of the
TradeFlow operations referred to below) in the current interim
period ended 30 June 2023.
On the 30 June 2023, the assets and liabilities of TradeFlow,
including the intangible assets acquired on the acquisition of
TradeFlow in July 2021, are no longer consolidated by the Group,
and instead the value of the new 19% investment of GBP352,000 was
recognised on the balance sheet, together with the GBP2,000,000
remaining consideration to be received from TAG. The difference
between these items resulted in a gain arising on the restructuring
of the TradeFlow operations recorded in the unaudited condensed
consolidated interim financial statements of GBP718,000.
Consistent with the full interim financial statements, the
financial information of the TradeFlow operations for the six-month
period ended 30 June 2023 is unaudited. An audit of this financial
information will be conducted as part of the preparation of the
annual financial statements for the year end 31 December 2023.
The results of the TradeFlow operations for the period are
presented below:
6 months to 6 months to
30 June 2023* 30 June 2022
Unaudited Unaudited
GBP '000 GBP '000
------------------ -----------------
Revenue 684 209
Administrative expenses (1,037) (775)
Other operating income 24 11
Operating loss before acquisition
related costs, impairment charges
and costs/(gains) relating to the
restructuring of the TradeFlow ownership (329) (555)
----------------------------------------------- ------------------ -----------------
Amortisation of intangible assets (442) (406)
Acquisition related earn-out - (747)
Impairment - (765)
Foreign currency translation loss
reclassified to other comprehensive
income (62) -
Gain arising on restructuring of TradeFlow
ownership 718 -
----------------------------------------------- ------------------ -----------------
Operating loss (115) (2,473)
------------------ -----------------
Finance costs (145) (206)
------------------ -----------------
Loss before tax (260) (2,679)
Deferred tax credit 75 69
------------------ -----------------
Loss for the period (185) (2,610)
================== =================
*Represents the results for the six-month period prior to the
finalisation of the TradeFlow Restructuring on 30 June 2023.
The net cash flows from the TradeFlow operations were as
follows:
6 months to 6 months to
30 June 2023* 30 June 2022
Unaudited Unaudited
GBP '000 GBP '000
-------------- -------------
Net cash flow from operating activities (405) (1,305)
Net cash flow from investing activities - (1)
Net cash flow from financing activities 405 2,111
-------------- -------------
Net cash outflow - 805
============== =============
*Represents the cash flows for the six-month period prior to the
finalisation of the TradeFlow Restructuring on 30 June 2023.
The calculation of the gain arising on the restructuring of the
TradeFlow ownership is shown below:
6 months to 6 months to
30 June 2023 30 June 2022
Unaudited Unaudited
GBP '000 GBP '000
------------- -------------
Accounting fair value of the 81% ownership
of the TradeFlow operations disposed
of by the Group 2,000 -
Accounting fair value of 19% ownership
of the TradeFlow operations retained
by the Group 352 -
------------- -------------
2,352
Less:
Accounting fair value of net assets
disposed of by the Group (1,634) -
------------- -------------
Gain arising on the restructuring
of the TradeFlow ownership 718 -
============= =============
The value of the 19% ownership of the TradeFlow operations
retained by the Company was calculated with reference to the
specifics set out in the TradeFlow Restructuring share purchase
agreement dated 30 June 2023 (the " TradeFlow SPA " ). These
specifics included:
a. The TradeFlow SPA set out the total legal consideration
for the 81% of the TradeFlow business and required an cash
amount of GBP2,000,000 to be payable to the Company by the
Buyers as a result of the TradeFlow Restructuring;
b. Based on the amount agreed in a) above, the estimated accounting
fair value of 100% of the TradeFlow operations is assumed
to be GBP2,469,000; and
c. Based on the numbers set out in a) and b) above, the fair
value of the 19% investment in TradeFlow retained by the Company
as at 30 June 2023 is GBP469,000. Management then applied
a discount of 25% to this fair value to take account of the
fact that the Group no longer controls TradeFlow operations.
This discount applied is a management judgement that will
continue to be reassessed at each reporting date.
The major classes of assets and liabilities of the TradeFlow
operations as at 31 December 2022 and 30 June 2023, immediately
prior to the finalisation of the TradeFlow Restructuring, are shown
below:
30 June 2023* 31 December
2022
Unaudited
GBP000 Audited
GBP000
------------- -----------
Assets
Intangible assets 5,841 6,283
Tangible assets 2 4
Trade and other receivables 174 101
Contract assets 119 132
Cash and cash equivalents 305 324
------------- -----------
Assets of disposal group held for
sale 6,441 6,844
Liabilities
Trade and other payables 482 430
Long-term borrowings 3,440 3,171
Deferred tax liability 885 960
------------- -----------
Liabilities of disposal group held
for sale 4,807 4,561
Net assets 1,634 2,283
============= ===========
*Represents the assets and liabilities of the TradeFlow
operations as at 30 June 2023 immediately prior to the finalisation
of the TradeFlow Restructuring.
TradeFlow loan-term borrowings
On 1 April 2022, TradeFlow settled the outstanding unsecured
loan notes earlier than the original maturity date of 23 October
2023. This involved the settlement of the principal amount of
USD$1,700,000, the additional redemption premium cost of USD
$300,000 and accrued interest of USD $100,000. These loan-term
borrowings were replaced by a second long-term loan facility, with
the same third party, for USD $3,800,000, which has a maturity date
of 31 March 2026. The replacement long-term borrowings bears a
simple fixed interest rate of 7.9% per annum and has an additional
redemption premium cost of USD$200,000 which is payable at the time
the principal is repaid. In accordance with IFRS 9 ( " Financial
Instruments " ) the second long-term loan facility resulted in a
substantial modification to the previous loan note facility.
Both the unsecured loan notes and the new loan facility include
an redemption premium cost which is payable together with the
settlement of the principal amount of the facility. This redemption
premium cost is recognised over the expected life of the facility
using the effective interest rate method. Due to the early
settlement of the unsecured loan notes this resulted in the
unrecognised portion of the redemption premium cost being
accelerated. This contributed an additional finance cost of
GBP122,000 during the six-month period ended 30 June 2022.
On 22 May 2023, TradeFlow signed an additional loan agreement
with the same third party as the loan agreement signed on 1 April
2022. This new loan agreement was for USD $500,000, which has a
maturity date of 31 March 2026. The new long-term borrowings bears
a simple fixed interest rate of 7.9% per annum and has an
additional redemption premium cost of USD$50,000 which is payable
at the time the principal is repaid. As with the existing long-term
borrowings, the redemption premium cost is recognised over the
expected life of the facility using the effective interest rate
method.
22 Related party transactions
During the six-month period to 30 June 2023, the following are
treated as related parties:
Alessandro Zamboni
Alessandro Zamboni is the Chief Executive Officer of the Group
and is also the sole director of The AvantGarde Group S.p.A as well
as holding numerous directorships across companies including
RegTech Open Project plc. Both of these entities are related
parties due the following transactions that took place over the
current or prior interim periods.
Alessandro Zamboni and The AvantGarde Group S.p.A ( " TAG " )
and its subsidiaries
Alessandro Zamboni is the CEO of the Group and is also the sole
director of The AvantGarde Group S.p.A. As at 30 June 2023 TAG
current holds 24.03% of the Company's total ordinary shares in
issued in Supply@ ME Capital plc (as at 31 December 2022:
22.5%).
Following the reverse takeover in March 2020, the Group entered
into a Master Service Agreement with TAG in respect of certain
shared service to be provided to the Group. During the six month
period ended 30 June 2023, the Group incurred expenses of GBP25,000
(period ended 30 June 2022: GBP26,000) to TAG in respect of this
agreement.
During the six month period ended 30 June 2023, the Group also
incurred costs of GBP8,000 from TAG (period ended 30 June 2022:
nil) in relation certain ICT services provided.
As at 30 June 2023 there is an outstanding amount owed by the
Group of GBP16,000 to TAG in relation to the services outlined
above (30 June 2022: nil).
The TAG Group includes other companies which the Group had
entered into transactions with such as the Future of Fintech Srl.
Alessandro Zamboni is also the sole director of both this company.
As at 30 June 2023 there is an outstanding amount owed to the Group
of GBP6,000 from Future of Fintech in relation to severance pay
accrued by former employees which has been transferred to the Group
by the related party (30 June 2022: GBP6,000).
TAG and TradeFlow Restrucutring
As set out in notes 3,13 and 21 above, on 30 June 2023, TAG
assumed the remaining GBP2,000,000 consideration arising from the
TradeFlow Restructuring, to be receivable by the Group from the
Buyers, by way of a debt novation deed. The GBP2,000,000 will be
repaid by TAG to SYME in multiple tranches, with the final tranche
being payable by 31 January 2024. As at 30 June 2023 the full
GBP2,000,000 receivable was outstanding (30 June 2022: nil). As set
out in note 23, subsequent to 30 June 2023, and prior to the
release of these interim financial statements, TAG had paid the
first GBP500,000 to the Company in respect of the outstanding
GBP2,000,000 receivable as at 30 June 2023.
TAG Unsecured Working Facility
As set out in note 3 above, on the 28 April 2023, the Company
and TAG entered into a fixed term unsecured working capital loan
agreement (the "TAG Unsecured Working Capital facility"). Under the
TAG Unsecured Working Capital facility, TAG shall provide, subject
to customary restrictions, a facility of up to GBP2,800,000, in
tranches up to 31 January 2024, to cover the Company's interim
working capital and growth needs. In conjunction with the TradeFlow
Restructuring, which was completed on 30 June 2023, the
GBP2,000,000 receivable by the Company that was assumed by TAG from
the Buyers, was offset against the current obligations of TAG under
TAG Unsecured Working Capital facility, of which further details
are set out above. The amendment to the TAG Unsecured Working
Capital facility was agreed on 30 June 2023 and this reduced the
obligations to the Company under the TAG Unsecured Working Capital
facility to up to GBP800,000.
The due date for repayment by the Company of amounts (if any)
drawn under the TAG Unsecured Working Capital facility is 1
February 2028. Any sums drawn under the TAG Unsecured Working
Capital facility will attract a non-compounding interest rate of
10% per annum, and any principal amount (excluding accrued
interest) outstanding on 1 February 2028 will attract a compounding
interest rate of 15% per annum thereafter. Interest will be due to
be paid annually on 31 March of each relevant calendar year.
On 30 June 2023, the Company issued a draw down notice to TAG
under the amended TAG Unsecured Working Facility for the full
GBP800,000 available. As at 30 June 2023, no funds had been
received from TAG in respect of this facility. As set out in note
23, subsequent to 30 June 2023, and prior to the release of these
interim financial statements, TAG had provided an amount of
GBP245,000 in relation to the GBP800,000 drawn down by the Company
on the 30 June 2023 under the amended TAG Unsecured Working Capital
facility.
RegTech Open Project ( " RTOP " ) S.p.A and RegTech Open Project
plc ( " RTOP plc ")
RTOP plc is a regulatory technology company focussed on the
development of an integrated risk management platform for Banks,
Insurance Companies and Large Corporations. Alessandro Zamboni is a
non-executive director of RTOP plc and Albert Ganyushin is the
Chair of the board of directors of RTOP plc. TAG also is the
majority ultimate beneficial shareholder of RTOP plc. Prior to RTOP
plc's listing of its ordinary shares on the standard segment of the
Official List of the Financial Conduct Authority and to trading on
the main market for listed securities of London Stock Exchange plc
in August 2023, the operations of this RTOP plc were run through
RTOP S.p.A and Alessandro Zamboni was the sole director of RTOP
S.p.A.
In July 2022, the Company entered into an agreement with RegTech
Open Project S.p.A, pursuant to which RTOP S.p.A was engaged to
build and create a number of modules for the Company, including
"data factory" (i.e., data ingestion and business rule
application), and, during the year ended 31 December 2022,
GBP270,000 has been paid by the Company to RTOP S.p.A pursuant to
that agreement. As at 31 December 2022 there is an outstanding
amount accrued by the Group of GBP58,000 to RTOP S.p.A in relation
to this specific agreement.
During the six month period ended 30 June 2023, no further
activities were undertaken with RTOP S.p.A, with the exception of
the payment of the amounts that had been accrued at 31 December
2022. As such no amounts were outstanding with RTOP S.p.A at 30
June 2023 (30 June 2022: nil).
As part of RTOP Plc's listing onto the main market of the London
Stock Exchange in August 2023, the contract referred to above was
novated to RTOP plc.
TradeFlow Capital Management Pte. Ltd. ( " TradeFlow " )
On 30 June 2023, the TradeFlow entered into a three-year
white-label licence agreement with Supply@ME Technologies S.r.l., a
wholly owned subsidiary of the Group, with respect to use of the
Platform, on a non-exclusive basis and limited to the Asia-Pacific
(" APAC ") region, for a total consideration of GBP1,000,000
payable over a three-year period. As at 30 June 2023, no amounts
have been billed in respect of this contract.
Eight Capital Partners Plc
David Bull, an Independent Non-Executive Director and audit
committee chair was the CEO of Eight Capital Partners Plc from 22
June 2021 until 12 August 2022. Following the reverse takeover in
March 2020, the Company entered into a Master Service Agreement
with Eight Capital Partners Plc in respect of certain shared
service to be provided to the Group. This agreement was terminated
in early 2022 and as such there were no expenses in respect of this
agreement with Eight Capital Partners Plc were incurred during the
six-month period ended 30 June 2023 (six-month period ended 30 June
2022: GBP3,000).
23 Events occurring after the reporting period
Shares issued post 30 June 2023 relating to Open Offer Warrant
Conversions
* On 5 July 2023, the Company announced the exercise of
9,150,232 Open Offer Warrants by certain Qualifying
Shareholders, and the issue of 9,150,232 Open Offer
Warrant Shares.
* On 17 August 2023, the Company announced the exercise
of 8,676,602 Open Offer Warrants by certain
Qualifying Shareholders, and the issue of 8,676,602
Open Offer Warrant Shares.
* On 12 September 2023, the Company announced the
exercise of 2,390,091 Open Offer Warrants by certain
Qualifying Shareholders, and the issue of 2,390,091
Open Offer Warrant Shares.
* On 26 September 2023, the Company announced the
exercise of 2,245,089 Open Offer Warrants by certain
Qualifying Shareholders, and the issue of 2,245,089
Open Offer Warrant Shares.
TAG and TradeFlow Restrucutring
Subsequent to 30 June 2023, and prior to the release of these
interim financial statements, TAG had paid the first GBP500,000 to
the Company in respect of the outstanding GBP2,000,000 receivable
as at 30 June 2023.
Pursuant to the Debt Novation Deed that was signed in connection
with the TradeFlow Restructuring and TAG assuming the GBP2,000,000
debt to the Company from the Buyers, TAG agreed with the Company to
settle the TAG Amount in three tranches: GBP500,000 on 30 June 2023
(which, as at the as referred to above, has been paid to the
Company by TAG); GBP1,000,000 on 30 September 2023; and GBP500,000
on 31 January 2024.
On 28 September 2023, the Company and TAG entered into an
English law governed side letter agreement ("Side Letter
Agreement"), cast as a deed, in relation to the outstanding TAG
Amount, pursuant to which TAG agreed to pay to the Company
GBP1,000,000 on 31 October 2023, and GBP500,000 on 31 January
2024.
In signing the Side Letter Agreement, TAG has agreed to pay a
15% per annum compounding rate of interest on the GBP1,000,000 of
principal amount of the TAG Amount for the period of 30 September
2023 to 31 October 2023, and shall incur a 15% per annum
compounding rate of interest on any outstanding principal amount of
the TAG Amount following the agreed payment dates.
TAG Unsecured Working Facility
Subsequent to 30 June 2023, and prior to the release of these
interim financial statements, TAG provided an amount of GBP245,000
in relation to the funds drawn down by the Company, being
GBP800,000, on the 30 June 2023 under the amended TAG Unsecured
Working Capital facility.
Top-Up Shareholder Loan Agreement
On 28 September 2023, the Company and TAG entered into an
English law governed top-up unsecured shareholder loan agreement
(the "Top-Up Shareholder Loan Agreement"), pursuant to which TAG
agreed to provide the Company with a further facility of up to
GBP3,500,000 to cover the Company's working capital and growth
needs up to 30 June 2025 (the "Top-Up Facility").
Details of this Top-Up Facility are set out below:
* The Company has the ability to draw down up to GBP3.5
million in monthly instalments over the period to 30
June 2025;
* On a monthly basis the Board will assess (acting in
good faith and in its sole and absolute discretion)
if the Group's projected cash balance on the last
business day of the coming calendar month will be
less than GBP250,000 following the Group's scheduled
balance of receipts and payments for the next month
by reference to, inter alia, the Group's contracted
receivables, revenues and payables due for receipt or
payment in the next month, the Group's contracted
fixed operating expenditure and/or capital
expenditure due for payment in the next month, the
cash inflows in the next month arising from any
warrants that have been contractually exercised and
any projected unrestricted cash amounts resulting
from any contractually agreed alternative equity,
debt or hybrid financing (including, but not limited
to, pursuant to a pre-emptive offering of ordinary
shares and a non-pre-emptive offering of ordinary
shares) for such month;
* If the above assessment results in the Group's
projected cash balance on the last business day of
the coming calendar month being less than GBP250,000,
the Company may draw down an amount under the TAG
Top-Up Shareholder Loan Agreement which is no greater
than the GBP amount to ensure that the Group's bank
balances in the coming month shall be equal to
GBP250,000;
* Repayment of any sum drawn down under the TAG Top-Up
Shareholder Loan Agreement will be due five calendar
years (calculated on the basis of a year of 360 days)
from the date which funds are received by the Company
subject to the relevant draw down request;
* Any sums drawn down by the Company under the TAG Top
Up Unsecured Shareholder Loan will attract a
non-compounding interest rate of 10% per annum, and
any principal amount (excluding accrued interest)
outstanding on a relevant due date shall attract a
compounding rate of 15% per annum thereafter.
Interest will be due to be paid annually on 31 March
of each relevant calendar year.
Cautionary Statement
These Interim Results have been prepared in accordance with the
requirements of English Company Law and the liabilities of the
Directors in connection with these Interim Results shall be subject
to the limitations and restrictions provided by such law.
These Interim Results are prepared for and addressed only to the
Group's shareholders as a whole and to no other person. The Group,
its Directors, employees, agents, or advisers do not accept or
assume responsibility to any other person to whom these Interim
Results are shown or into whose hands it may come, and any such
responsibility or liability is expressly disclaimed.
These Interim Results contain forward looking statements, which
are unavoidably subject to risk and uncertainty because they relate
to events and depend upon circumstances that will occur in the
future. It is believed that the expectations set out in these
forward-looking statements are reasonable, but they may be affected
by a wide range of variables which could cause future outcomes to
differ from those foreseen. All statements in these Interim Results
are based upon information known to the Group at the date of this
report. Except as required by law, the Group undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
APPIX 2 - ENTRY INTO TOP-UP SHAREHOLDER LOAN AGREEMENT AND SIDE
LETTER AGREEMENT
Top-Up Shareholder Loan Agreement
On 28 September 2023, the Company and TAG entered into an
English law governed Top-Up Shareholder Loan Agreement, pursuant to
which TAG shall provide, subject to customary restrictions, the
Top-Up Loan Facility of up to GBP3,500,000 to cover the Company's
working capital and growth needs up to 30 June 2025.
The Company may draw down on the Top-Up Facility on a monthly
basis if the Board assess (acting in good faith and in its sole and
absolute discretion) that the Group's projected cash balance on the
last Business Day of the coming calendar month will be less than
GBP250,000 following the Group's scheduled balance of receipts and
payments for the next month by reference to, inter alia, the
Group's contracted receivables, revenues and payables due for
receipt or payment in the next month, the Group's contracted fixed
operating expenditure and/or capital expenditure due for payment in
the next month, the cash inflows in the next month arising from any
Warrants that have been contractually exercised and any projected
unrestricted cash amounts resulting from any contractually agreed
alternative equity, debt or hybrid financing (including, but not
limited to, pursuant to a pre-emptive offering of Ordinary Shares
and a non-pre-emptive offering of Ordinary Shares) for such month.
In such circumstances, the Company may draw down an amount of the
Top-Up Facility which is no greater than the GBP amount to ensure
that the Group's bank balances in the coming month shall be equal
to GBP250,000.
The due date for repayment by the Company of each respective
amount (if any) drawn under the Top-Up Shareholder Loan Agreement
shall be five calendar years (calculated on the basis of a year of
360 days) from the day on which the funds are received by the
Company subject to the relevant drawn down request. Any sums drawn
under the Top-Up Shareholder Loan Agreement shall attract a
non-compounding interest rate of 10% per annum, and any principal
amount (excluding accrued interest) outstanding on the relevant due
date shall attract a compounding interest rate of 15% per annum
thereafter.
Pursuant to the Top-Up Shareholder Loan Agreement, the Company
gave certain customary warranties and undertakings to TAG, and TAG
gave certain customary warranties to the Company.
Side Letter Agreement
As disclosed in the Secondary Supplementary Prospectus published
on 30 June 2023, the Company entered into an English law governed
share purchase agreement with the Buyers on 30 June 2023, pursuant
to which, the Company sold 81% of the issued share capital of
TradeFlow Capital Management Pte. Limited . The GBP2,000,000 TAG
Amoun t (as defined in the Second Supplementary Prospectus) was
novated from the Buyers to TAG on the terms of an English law
governed Debt Novation Deed entered into between the Company, the
Buyers and TAG on 30 June 2023. Pursuant to the Debt Novation Deed,
TAG agreed with the Company to settle the TAG Amount in three
tranches: GBP500,000 on 30 June 2023 (which, as at the date of this
announcement, has been paid to the Company by TAG); GBP1,000,000 on
30 September 2023; and GBP500,000 on 31 January 2024. On 28
September 2023, the Company and TAG entered into an English law
governed Side Letter Agreement, cast as a deed, in relation to the
outstanding TAG Amount, pursuant to which TAG agreed to pay to the
Company GBP1,000,000 on 31 October 2023, and GBP500,000 on 31
January 2024.
TAG has agreed to pay a 15% compounding rate of interest on the
GBP1,000,000 of principal amount of the TAG Amount for the period
of 30 September 2023 to 31 October 2023, and shall incur a 15%
compounding rate of interest on any outstanding principal amount of
the TAG Amount following the agreed payment dates.
The entry by (i) the Company and TAG into the Top-Up Shareholder
Loan Agreement and (ii) the Company and TAG into the Side Letter
Agreement each constituted a material related party transaction for
the purposes of DTR 7.3 and were, accordingly, voted upon by the
independent Directors (excluding Alessandro Zamboni, who, in each
case, constituted a "related party" (as such term is defined in
IFRS)), and such independent Directors consider each such material
related party transaction in respect of the Top-Up Shareholder Loan
Agreement and the Side Letter Agreement to be fair and reasonable
from the perspective of the Company and its Shareholders who are
not a related party.
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END
IR FFFLFAFITFIV
(END) Dow Jones Newswires
September 29, 2023 02:00 ET (06:00 GMT)
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