REG - Supply@ME Capital - Unaudited interim results
30/09/2024 15:00
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RNS Number : 2943G Supply@ME Capital PLC 30 September 2024
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
(AMENDMENT) (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.
30 September 2024
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 2024 and extension
to the draw down period under the Top-Up Shareholder Loan Agreement
SYME, the fintech business which provides an innovative fintech platform (the
"Platform") for use by manufacturing and trading companies to access Inventory
Monetisation© ("IM") solutions enabling their businesses to generate
cashflow, announces its unaudited results for the six months ended 30 June
2024 ("H1 2024") and entry into a deed of amendment to the Top-Up Shareholder
Loan Agreement which extends the final draw date from 30 June 2025 through to
31 December 2025 ("Extension Deed of Amendment") - details of which are set
out in Appendices 1 and 2 to this announcement, respectively.
Financial summary from the H1 2024 interim results:
· Group operating loss from continuing operations of £1.4 million in H1
2024 compared to £2.3 million in the six months ended 30 June 2023 ("H1
2023").
· This reduction of £0.9 million in the operating loss is due to a
significant focus on cost saving efforts by the Company which largely
commenced in the second half of 2023, together with a lower level of corporate
activities than took place during H1 2023.
· New equity funding executed during May 2024 resulted in gross proceeds
received of £1.6 million.
· The AvantGarde Group S.p.A ("TAG") has continued to make progress with
payments to the Group in connection with the amounts owed in line with the
various contractual funding arrangements in place between itself and the
Company. During H1 2024, a total of £1.2 million was received by the Group
from TAG demonstrating TAG's continued performance against its contractual
commitments to the Group, albeit on a delayed basis.
Operational Highlights
· The client company pipeline KPI has increased from £330.7 million as
at 19 April 2024 to £391.0 million as at 20 September 2024, this represents
the potential value of warehoused goods inventory to be monetised rather than
pipeline revenue expected to be earned by the Group.
· £124.0 million (32%) of the current pipeline KPI number as at 20
September 2024 is supported by signed letters of interest or term sheets, this
compares to 9% of the pipeline number reported at 19 April 2024.
· Growth of the pipeline KPI has been focused on Italian client
companies, which comprise 97% of the above pipeline KPI number reported at 20
September 2024.
· Progress has been made in increasing the efficiency and client
experience of our due diligence processes, particularly for those clients with
'generic goods' (finished goods, which these client companies purchase and
resell as part of their business model).
· The monitoring and reporting capabilities of the Group have been
developed through improvements made to the monitoring module and the strategic
alliance with p-Chip Corporation ("p-Chip").
· Tools to manage and monitor the processes supporting the trading of
inventory using the Supply@ME Platform have also been developed.
· Discussions have commenced with the Italian neo banking group with
regard to a programme of plain-vanilla inventory financing transactions using
the Supply@ME Platform, in addition to continued consideration of the delivery
of Inventory Monetisation transactions as previously announced on 29 April
2024.
· The roll out of the security token framework is currently on hold,
awaiting further interest from inventory funders interested in digital assets.
This is due to the high costs associated with the launch of this type of
funding framework .
· Supply@ME, Banco BPM S.p.A ("BBPM") and the existing client of BBPM
(being a leading producer of the famous Italian cheeses within the agrifood
supply chain) ("WL Client Company") continue to work closely together towards
the delivery of the White-Label transaction announced on 3 January 2024.
Delays have occurred whilst the parties collaborate to propose a scalable
solution in relation to the remarketing framework. This framework is required
to mitigate against the risk of unsold inventory that could potentially arise
from IM transactions with client companies within the agrifood supply chains.
· There have been a number of team changes to date during 2024 which are
outlined below.
Summary of H1 2024 financial results
The below unaudited financial summary is taken of the Group's condensed
consolidated financial statements for the six month period ended 30 June 2024.
The numbers in this summary and the financial review section (included in
Appendix 1 to this announcement) have been rounded to the nearest million or
thousand as appropriate.
Unaudited consolidated financial summary:
6 months to 30 June 2024 6 months to 30 June 2023
Unaudited Unaudited
£m £m
Continuing operations
Revenue from continuing operations 0.1 0.1
Adjusted operating loss(1) from continuing operations (1.3) (2.0)
Operating loss from continuing operations (1.4) (2.3)
Loss from continuing operations (1.4) (2.4)
Loss from discontinued operations(2) - (0.2)
Total loss for the period (1.4) (2.6)
As at 30 June As at 31 December 2023
2024 Audited
Unaudited £m
£m
Total assets 2.1 2.2
Net liabilities (2.8) (3.8)
(1 )Adjusted operating loss is the operating (loss) from continuing
operations before impairment charges and fair value adjustments.
(2) The discontinued operations reported in the comparative interim six month
period ended 30 June 2023 relates to the operations of the TradeFlow Capital
Management Pte. Ltd. ("TradeFlow") and its subsidiaries (the "TradeFlow
Group"). The disposal of 81% of the TradeFlow operations (the "TradeFlow
Restructuring") was completed on 30 June 2023.
Operational Pipeline KPI
As at 20 September 2024 As at 19 April
Unaudited 2024
Unaudited
Warehoused Goods monetisation pipeline £391.0m £330.7m
Percentage of the pipeline figure reported above which is supported by a
signed letter of interest or a signed term sheet
32% 9%
Percentage of the pipeline figure contributed by the single largest potential
client
21% 57%
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. 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 the most practical date possible
prior to the issue of this interim report (being 20 September 2024). 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 the Extension Deed of Amendment
On 28 September 2023, the Company and TAG entered into an English law governed
top-up unsecured shareholder loan agreement, pursuant to which TAG (an entity
ultimately beneficially wholly-owned and controlled by Alessandro Zamboni,
Chief Executive Officer of the Company) agreed to provide the Company with a
further facility of up to £3,500,000 to cover the Company's working capital
and growth needs up to 30 June 2025 (the "Top-Up Shareholder Loan Agreement").
On 30 September 2024, the Company and TAG entered into an English law governed
deed of amendment, which extended the final draw date under the Top-Up
Shareholder Loan Agreement from 30 June 2025 to 31 December 2025 (the
"Extension Deed of Amendment").
The entry by the Company and TAG into the Extension Deed of Amendment
constituted a material related party transaction for the purposes of DTR 7.3
and was, accordingly, voted upon by the independent Directors (excluding
Alessandro Zamboni, who, constituted a "related party" (as such term is
defined in IFRS)), and the independent Directors consider the material related
party transaction in respect of the Extension Deed of Amendment 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:
"Over the last six months the team has focused on improving processes,
particularly those that have been the focus of discussions with potential
inventory funders, for example monitoring and tracking of inventory once it
has been monetised and ensuring the operational resilience of the Platform.
The alliance with p-Chip is a concrete example. These evolutions will help the
business move forward in developing a business line of pure technology which
can be offered to banks who wish to provide inventory-based financial products
to their clients. The increases to the pipeline KPI number, has been driven
largely from Italian client companies and this continues to demonstrate that
there is a need for off-balance sheet facilities, in particular for
capital-intensive supply chains. I am looking forward to the completion of the
first White-Label transaction which will improve the confidence of our various
stakeholders in our innovative IM model, and will create the basis for stable
partnerships with commercial and investment banks".
- 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
Alessandro Zamboni, CEO, Supply@ME Capital plc, investors@supplymecapital.com
(mailto:investors@supplymecapital.com)
APPENDIX 1 - CEO REPORT AND INTERIM FINANCIAL STATEMENTS
Chief Executive's report
Delivery Model and Platform Updates
Supply@ME provides its innovative fintech Platform for use by manufacturing
and trading companies to access IM solutions enabling their businesses to
generate cashflow without incurring debt. This is achieved by their existing
eligible inventory being added to the Platform and then monetised via purchase
by an independent stock (trading) company, who are in turn is funded by a
third party inventory funders ("IM Transactions").
The Group, through its subsidiaries, provides the following pre and post
inventory monetisation services from which it generates revenues:
· Pre-Inventory Monetisation activities carried out directly with the
client company wishing to have their inventory monetised, including due
diligence in respect of the client company itself and its potential eligible
inventory, and origination of the IM contracts between the client companies
and the relevant independent stock company; and
· Post-Inventory Monetisation activities carried out directly with the
relevant independent stock company including the usage of the Supply@ME
Platform under a Software as a Service ("SaaS") contract and the support and
administration activities such as the monitoring, controlling, and reporting
on the inventory monetised.
The elements of the model can be flexed and adapted based on the requirements
of the inventory funders, particularly in the case of White-Label partners.
For example the level of due diligence required on a particular client company
may vary if it is already a client of a White-Label inventory funder, or they
may not require the use of a stock company in a particular structure, in which
case some of the post-inventory monetisation fees (such as the SaaS license
fee) may be charged directly to the White-Label inventory funder rather than
to the relevant independent stock company.
Pre-Inventory Monetisation Activities
During the first half of 2024, the Supply@ME team have been focused on
increasing the efficiency and client experience of our due diligence
processes. Inventory assessment of a company with generic goods, once the
client company has shared all required data, can now be delivered
significantly faster than previously due to process refinements. This has been
achieved through using the unique abilities of Supply@ME to analyse a client
company's business, and inventory, in a more efficient and targeted manner, to
meet the requirements of the Inventory Monetisation business model.
As outlined in the 2023 Annual Report and Accounts, generic goods as
referenced here are finished goods which client companies purchase and resell
as part of their business model.
Post Inventory Monetisation Activities
Post Inventory monetisation activities within the Supply@ME business model
have also been improved to date during 2024. This has been achieved by the
build out of Group's monitoring and reporting capabilities through the
development of the monitoring module, the scoping and building out of the
formal workflow associated with the trading of inventory using the Platform,
and the formation of the strategic alliance with p-Chip 1 (#_ftn1) which was
announced by the Company on 21 May 2024.
The monitoring module is capable of digesting and conducting automated
multi-dimension analysis of the inventory data exported from the client
company's Enterprise Resource Planning ("ERP") system to allow for comparison
to Key Performance Indicators ("KPIs") and Key Risk Indicators ("KRIs"). These
KPIs and KRIs are identified by the Group's internal monitoring team using the
in-depth knowledge of the client's business model and the eligible inventory
items gained during the due diligence process. Additionally, the KPIs &
KRIs are agreed with the director of the independent stock company to ensure
any specific requirement of the inventory funder are also fulfilled. The
overall goal of monitoring activities is to enable Supply@ME to provide data
to the stock company director and the inventory funder, if applicable, to make
data driven decisions on a monthly basis with respect to the items of
inventory already monetised and which the client company may request to be
monetised in the future. The Platform is able to provide this data at a
detailed level, for example, at the individual stock keeping unit ("SKU")
level of inventory.
Another focus during the first half of 2024 is the development of tools to
manage and monitor the Supply@ME processes supporting trading of inventory
using the Platform. This includes workflows related to the step-by-step
processes to deliver the inventory monetisation trading processes. These
processes are automated (where possible) to reduce human error and encompass
the required tasks to deliver our unique trading services.
Additionally, following the announcement made on 21 May 2024, the Company
continues to work with p-Chip to formalise and finalise a strategic alliance
aimed at establishing a framework for collaboration between the parties to
study the integration of the respective technologies. p-Chip is an innovative
identity solutions Company based in Chicago, specialising in the development
and application of micro transponder technology for tracking physical products
and materials.
The agreement between the two companies aims to deliver, through the
co-development of ad hoc intellectual property:
- the integration of p-Chip's indexing platform (hardware and
software) with Supply@ME processes and systems;
- the development of several use cases, pilot programmes and
go-to-market strategies.
The combination of p-Chip's technology with the Platform will further
strengthen the role of Supply@ME, as the Platform and inventory service
provider within the Inventory Monetisation transactions, by further developing
the ability to monitor and inspect, with improved accuracy and new anti-fraud
enhancements, each inventory item monetised.
Business Lines Update
Open Market Inventory Monetisation
Open Market IM transactions are those originated by the Group from its
internal pipeline and which are funded by the independent stock company
through use of funds from third party investors.
On 29 April 2024, the Company announced that it had entered into an agreement
with Société Financière Européenne S.A. ("SFE") and an Italian neo banking
group aimed at deploying an Inventory Monetisation programme. In particular,
the Italian neo banking group, through its investment banking division, acting
as arranger and, following the necessary internal approvals, was expected to
fund the senior notes and part of the junior notes issued by securitisation
special purpose entities formed directly by the bank. Progress has been made
regarding the analysis of the IM model and how the securitisation vehicle can
fund the programme.
The Italian neo banking group has recently also commenced discussions with the
Group regarding first prioritising a programme of plain-vanilla inventory
financing transactions using the Supply@ME Platform. This proposal has been
made by the banking group considering the expected increase in appetite of
some Italian corporates regarding inventory-backed financing facilities that
will leverage the Italian legislation pegno non possessorio (the "PNP
Regulation"). By taking advantage of this expected increase in demand, the aim
is to speed up the first transactions by the neo banking group using the
Platform. Following this, the volumes (including both the number of
transactions and value of inventory) would be expected to scale and the bank
also plans to evaluate the possibility to promote this unique inventory
financing facility via their digital marketplaces.
In parallel, the neo banking group will continue to work with Supply@Me with
regard to deploying an IM transaction programme as outlined in the RNS of 29
April 2024, however they have recently indicated a preference to prioritise
the programme of plain-vanilla inventory financing activities as set out
above. More details will be provided in due course.
Additionally, to date during 2024 there has been an increase in funders
interested in discussing the potential of leveraging Supply@ME's unique
business model to access the relatively untapped asset of inventory. Momentum
with these potential inventory funders is supported by the structures and
processes established by Supply@ME in particular around the Company's ability
to effectively identify and monitor inventory suitable for the requirements of
specific inventory funders. Progress in turning this increased interest into
formal commitments is taking time due to this being an innovative and a new
asset class. Despite this, Supply@ME perceives confidence from potential
inventory funders to be growing, albeit that most new inventory funders are
interested to first test the inventory monetisation process with an initial
single-name transaction or by funding an initial small portfolio with just a
few client companies that meet their requirements.
Digital Assets & Tokenisation
On the 5 April 2024 the Company advised the market of the commitment achieved
from an asset manager specialised in digital assets to subscribe the first
tranche of an overall security token issuance to a value of USD$5 million. The
intent being to structure a security token framework with the CH Trading Hub,
owned by SFE, which will allow a first security token issuance up to USD$100
million to be subscribed in tranches, largely by institutional investors who
are active in the digital asset markets.
Research since this announcement has highlighted that the digital asset market
is still in its infancy, with global governance protocols still being
developed and regulations evolving. This currently leads to high costs
associated with the launch of any new product. As such, at this stage further
commitments and subscription to the targeted security token above the initial
USD$5 million, are required to further develop this business line and ensure
its profitability for all parties involved. The Group will provide further
updates as they become available.
White Label
The Group's first White-Label IM agreement with BBPM was announced by the
Company on 3 January 2024. The commitment provided by BBPM is to fund an
initial IM transaction with an inventory value to be monetised up to
€10million of the WL Client Company.
Supply@ME, BBPM and the WL Client Company are still working towards delivery
of this programme. The time since the agreement has been signed has been
focused on ensuring a sustainable and scalable remarketing solution for the
above transaction and, more extensively, to establish a scalable IM product
considering the important demand for off balance sheet working capital
facilities requested by the capital intensive agrifood supply chain. The
establishment of the remarketer for this specific transaction has taken longer
than anticipated due to the desire to establish a remarketer relationship with
a cheese producer of a similar credit worthiness as the client company.
The Client Company Origination Update
In the 2023 Annual Report and Accounts the pipeline KPI figure was £330.7m as
at 19 April 2024, noting that within this number there is one single client
that accounts for approximately 57% of the total pipeline. This pipeline KPI
represents the potential value of warehoused goods inventory to be monetised
rather than pipeline revenue expected to be earned by the Group. As such, it
provides an indicator of the level of demand for the Group's warehoused goods
monetisation services.
It was also outlined in the 2023 Annual Report and Accounts and the funding
update of 28 February 2024, that the Group has been conducting a full review
of its pipeline and is progressing with requesting a formal letter of interest
("LOI") from each client company in its pipeline for which there is currently
not a signed term sheet in place. This process has commenced in order to allow
the Group to focus on those client companies within its pipeline who have
signed one of these two documents and to demonstrate a level of commitment
from both sides to move forwards with the onboarding process. As at 19 April
2024 approximately 9% of the £330.7m pipeline figures was supported by either
signed term sheets or the new signed letter of interest.
For the purpose of this interim report both comparisons will be shared. The
total pipeline KPI figure as at 20 September 2024 is £391.0m, this pipeline
is comprised of 25 different client companies and it is worthy of note that
the single client referenced above now comprises 21% of the total pipeline as
at 20 September 2024. The client companies making up the total pipeline KPI
figure come from a variety of different industries.
Of the total pipeline KPI number £124.0 million (32%) of the inventory is
supported by either a letter of interest or signed term sheet. This
demonstrates client companies progressing through the Supply@ME process
towards either the signing of a term sheet, commencement of the due diligence
process and finally Inventory Monetisation. Consideration should be given to
the fact that throughout the sales and onboarding process there maybe reasons
client companies do not continue in the process and/or the volume of eligible
inventory reduces. For example, they may be unable to supply the detail of ERP
inventory data required to support the level of analysis underpinning the
Supply@ME due diligence service or, once this ERP data is supplied and
analysed, the volume of eligible inventory SKUs may reduce hence decreasing
the value of inventory in the Supply@ME pipeline in relation to this client
company.
Italy
During the first half of 2024, the main focus of client company origination
has continued to be Italy. The eco-system of originator's who look to support
their clients with funding solutions is being further developed, especially
given the relationships the Company is developing with inventory funders and
the preferences they are expressing for client companies with specific types
of inventory. Over time this will be further honed and developed.
This focus on Italy is demonstrated by £381.1 million, (97%) of the overall
pipeline KPI figure and 100% of the LOIs and term sheets signed, is inventory
from Italian companies, as at 20 September 2024. There is breadth to the
inventory types and business models within these client companies. As outlined
in the 2023 Annual Report and Accounts there are a number of client company
business models which are targets for the Supply@ME model.
Generic Goods: Client companies who trade finished goods, so purchase and
resell specific goods.
Orders Based Model: Client companies who create or manufacture products "to
order".
Maturing Goods: Client companies with goods that mature over time and whose
price appreciates or gathers wealth as they mature, typically in the agri-food
sector such as cheese, wine or cured meats.
Manufacturing: Where a client company takes raw materials and transforms them
into finished goods, Supply@ME has developed a methodology to identify
eligible items that includes both the raw materials (before transformation)
and the finished goods (after transformation).
UK
The focus on Italy as outlined above has impacted on the value of the UK
pipeline. This focus has partly been driven by the interest demonstrated by
inventory funders with whom the Company is discussing the model, and balancing
their preferences in terms of client companies to fund with the constraints
Supply@ME has around costs. As such, the Group has needed to be strategic and
specific in its focus. As such, the UK pipeline as at 20 September 2024
currently comprises of less than 1% of the overall pipeline number.
The ability for Supply@ME to deliver in the UK has been advanced through
development of the UK compliant standard legal framework and the establishment
of the UK based stock company.
Once a larger amount of the Italian pipeline has been monetised, it is
anticipated that interest from UK based companies will increase.
Rest of Europe
The Group is able to deliver Inventory Monetisation transaction in France,
facilitated through development of the French compliant standard legal
framework and the establishment of a French based stock company. Of the
overall pipeline KPI number as at 20 September 2024, £8.4 million (2%) of the
inventory to be monetised is in France. When there is an inventory funder
identified with appetite for this exposure, client company and the associated
return, focus will return to progressing with this client.
As opportunities to expand into other areas of Europe arise, Supply@Me will
consider setting up the necessary frameworks to allow the IM model to be used
in other European jurisdictions.
Team changes
During the first half of 2024 there has been a reduction in the Group's
overall cost base, some of which has been supported by reduced staff costs.
The departure of Nicola Bonini, previous Group Head of Origination, in January
2024 has led to an increase in the prioritisation of generating a strong
sustainable client base in Italy, given this is where the members of our sales
and marketing team are currently based. A greater focus has been placed on the
originator eco-system and support of an external contractor to build the
pipeline, which assists in the cash constrained environment as originators are
rewarded on a commission basis.
Stuart Nelson has retired on 30 September 2024. His responsibilities as Head
of Enterprise Risk Management have been redistributed within the Leadership
Team. This includes the other members of the Leadership Team taking
responsibility for risk in their respective specialist areas, with the risk
being assessed and reviewed regularly, including changes to risk levels, along
with current and potential mitigants.
On 30 September 2024, Enrico Camerinelli will depart the board of directors of
the Company (the "Board"). Enrico has been a valuable Non-Executive Director
since March 2020 and departs the Board in order to be free to pursue other
interests and opportunities. The Board does not intend to replace Enrico at
this time in view of maintaining control over costs and considering that after
Enrico's departure the Board will still consist of a majority of independent
directors. An additional change made to the governance procedures of the
Company is Alexandra Galligan joining the Disclosure Committee as a result of
feedback from shareholders at the 2023 Annual General Meeting.
Corporate Funding
Details of the progress of the TAG funding and new equity funding received
during the six month period 30 June 2024 can be found in the Financial Review
section of this interim report.
Outlook
The goal for the Group is to start generating a greater level of consistent
revenue flow. In the coming months, Supply@ME will look to finalise the first
transaction with BBPM aligned to the White-Label go to market strategy. The
discussions with the Italian neo banking group with regard to initial
inventory financing transactions being delivered using the Supply@ME Platform
will continue with the aim of further progress with this banking group during
the remainder of 2024. It is expected that the Italian client company pipeline
will start to be serviced through the increased interest of inventory funders
set out above.
Financial review
6 months to 6 months to Movement
30 June 2024 30 June 2023 Unaudited
Unaudited Unaudited
£000 £000 £000
Continuing operations
Revenue from continuing operations 39 77 (38)
Operating loss from continuing operations before impairment charges and fair (1,339) (1,981) 642
value adjustments
Fair value adjustment to investments (47) - (47)
Impairment charges (31) (349) 318
Operating loss from continuing operations (1,417) (2,330) 913
Finance costs (51) (22) (29)
Loss before tax from continuing operations (1,468) (2,352) 884
Income tax 97 (24) 121
Loss after tax from continuing operations (1,371) (2,376) 1,005
Discontinuing operations
Loss from discontinued operations - (185) 185
Total loss for the year (1,371) (2,561) 1,190
6 months to 6 months to Movement
30 June 2024 30 June 2023
Unaudited Unaudited
Pence Pence Pence
Total basic and diluted loss per share ("EPS") (0.0022) (0.0046) 0.0024
The Group's unaudited condensed consolidated interim financial statements for
the six month period ended 30 June 2024 ("H1 2024") have been prepared in line
with International Accounting Standard IAS 34 ("Interim Financial Reporting").
In the comparative period for the six month ended 30 June 2023 ("H1 2023"),
the operations of TradeFlow Capital Management Pte. Limited ("TradeFlow")
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 disposal of the Company's 81% stake in the ownership of
TradeFlow (the "TradeFlow Restructuring"), being 30 June 2023.
Revenue from continuing operations
6 months to 6 months to Movement
30 June 2024 30 June 2023 Unaudited
Unaudited Unaudited
£000 £000 £000
Revenue
Due Diligence fees 13 40 (27)
Inventory Monetisation fees 26 37 (11)
Total revenue from continuing operations 39 77 (38)
The table above provides a break down of the Group's revenue from Inventory
Monetisation activities during H1 2024. 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
consolidated financial statements for the year ended 31 December 2023 (the
"2023 Annual Report").
During H1 2024, the Group recognised £39,000 (H1 2023: £77,000) of Inventory
Monetisation revenue, which it split 33% (H1 2023: 52%) related to due
diligence fees, and the remaining 67% (H1 2023: 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 2024, the Group has continued to carry out, and charge for due
diligence activities, and the £13,000 recognised as revenue reflects the
value of those due diligence activities completed during H1 2024 (H1 2023:
£40,000).
Following the announcement of the first Italian IM transactions during 2022
and 2023, which were facilitated using the Group's Platform, the Group
recognised Inventory Monetisation fees of £26,000 during H1 2024 (H1 2023:
£26,000). These fees related to the following activities:
1) 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
2) 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.
There were no origination fees recognised during H1 2024 (H1 2023: £11,000
which were also included in the Inventory Monetisation fee category in the
table above).
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 and fair
value adjustments
During H1 2024, the Group has continued to focus on improving the processes
and workflows required for due diligence, monitoring and reporting of the
inventory monetised over the Platform, as well as to support the sale and
purchase of the inventory using the Platform. A significant amount of time and
effort has also been spent in discussions and collaborations with BBPM and the
WL Client Company in order to finalise the framework needed to deliver the
Group's first White-Label IM transaction and wider White-Label go-to-market
strategy. In addition, the Group has been working with a number of different
potential inventory funders who have shown interest in the Group's business
model and to gain a detailed understanding / explore options for funding this
new asset class. These activities have been set out in more detail within the
Chief Executive's report section of this interim report.
The Group recorded an operating loss from continuing operations before
impairment charges and fair value adjustments for H1 2024 of £1,339,000 (H1
2023: £1,981,000 loss). The major contributing factors that resulted in the
reduction of the operating loss from continuing operations before impairment
charges and fair value adjustments of £642,000 are described below:
· an aggregate decrease in the loss from gross profit and administration
expenses of £893,000 from £1,473,000 recognised in H1 2024, compared to
£2,366,000 recognised in the H1 2023. This decrease largely resulted from
focused cost saving efforts that were implemented during 2023, in particular
in the second half of the year when the Group experienced cash flow pressures
as a result of delayed contractual funding amounts due to the Group. In
particular:
- the professional and legal fees reduced by £766,000 during H1 2024
compared to H1 2023 as management made an effort to bring certain activities
in house, together with the fact that there were less corporate activities
undertaken compared to the same period in 2023, which saw the completion of
the TradeFlow Restructuring on 30 June 2023, fund raising activities, and the
issue of two supplementary prospectus during the first half of 2023;
- staff costs reduced by £40,000 during H1 2024 compared to H1 2023
as certain staff members who left during the period were not replaced; and
- contractor costs reduced by £153,000 in H1 2024 compared to H1 2023
as the Group ended certain agreements with contractors during the second half
of 2023 as the specific activities that were being worked on came to an end.
- When the Group has sufficient cash balances in the future,
management will look to increase some of the above costs again in order to
support and drive growth and expansion.
- The decreases set out above were partially higher interest and
penalty costs incurred across the Group due to late payments being made as a
result of the delayed revenue generation and contractual funding being
received by the Group.
· A decrease of £251,000 in other operating income recognised during H1
2024 of £134,000 compared to £385,000 recognised in H1 2023. The explanation
for this decrease is set out as follows:
- The majority of the H1 2023 other operating income arose 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 £376,000 in this period. There was no similar balance recorded
in H1 2024; and
- Instead, the other operating income recognised in H1 2024 related to
£134,000 of interest income accrued from late payments received from TAG in
respect of the various contractual funding arrangements currently in place
with the Group. These funding arrangements with TAG are set out in more detail
in notes 3 and 24 to the interim financial statements that form part of this
interim report.
Impairment charges and fair value adjustments from continuing operations
6 months to 6 months to
30 June 2024 30 June 2023
Unaudited Unaudited
£000 £000
Impairment charges 31 349
Fair value adjustments to investments 47 -
78 349
The impairment charges from continuing operations of £31,000 recognised
during H1 2024 (H1 2023: £349,000) relate to the impairment of the Group's
internally developed IM platform as at 30 June 2024 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 that
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 for the six
month period ended 30 June 2024, 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 £31,000 as at 30 June 2024 (31 December
2023: £349,000). The reduction in the impairment charges in H1 2024 compared
to H1 2023, is consistent with the general cost control being exercised by the
Group, particularly since the second half of 2023, and the fact that no
contractual frameworks for new geographical regions have needed to be
developed during the first six months of 2024 together with the standard
Italian contractual framework now being in a more stable state.
The fair value adjustment to the investment in TradeFlow of £47,000
recognised during H1 2024 (H1 2023: £nil) reflects the worsening of the net
liability position of TradeFlow from 31 December 2023 to 30 June 2024, being
the date at which the last fair value adjustment was recorded, and the current
period end balance sheet date of 30 June 2024. The quantum of the fair value
adjustment has been determined with reference to the change in value of the
net liabilities of TradeFlow between these two dates.
Taxation
The income tax credit of £97,000 recognised in H1 2024 represents a Research
& Development Tax Credit claimed by the Company under the UK SME tax
credit scheme during the first half of 2024, but which was received in cash
post 30 June 2024. This tax credit related to the financial year ended 31
December 2022 and the related claim was submitted and finalised in the six
month period ended 30 June 2024. The Company is in the process of assessing a
further claim related to the financial year ended 31 December 2023, however,
as this is yet to be finalised and submitted the impact has not been
recognised in these interim financial statements for the six month period
ended 30 June 2024.
The income tax expense for the period ended 30 June 2023 primarily represents
a tax charge of £21,000 arising in respect of the gain on settlement of
outstanding creditor balance that has been referred to above.
Discontinued Operations included in H1 2023
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") in the comparative six month period ended 30 June 2023. Following
the date of completion of the TradeFlow Restructuring, being 30 June 2023, the
Company's ownership in TradeFlow reduced from 100% to 19%. As a result, from
this date, the results of the TradeFlow operations are no longer included
within the Group's consolidated financial income statement and the assets and
liabilities of TradeFlow, including the intangible assets acquired on the
acquisition of TradeFlow in July 2021, are no longer included with the
consolidated assets and liabilities of the Group.
Instead, following 30 June 2023, the fair value of the remaining 19% ownership
in TradeFlow is recognised as an investment in the Group's balance sheet. As
at 30 June 2024, this remaining investment in TradeFlow had a fair value of
£237,000 (31 December 2023: £284,000). This decrease of £47,000 has been
detailed above.
Details of the results and net cash flows from the TradeFlow operations which
were included in the comparative six month period ended 30 June 2023 are set
out in detail in note 26 to the 2023 Annual Report and Accounts. Details of
the profit on disposal of the 81% of TradeFlow as at 30 June 2023 are set
out in note 22 to the condensed consolidated interim financial statements for
the six month period ended 30 June 2024.
Contractual funding facilities agreed with TAG
During H1 2024, TAG continued to perform against its contractual funding
commitments to the Group, albeit on a delayed basis. A total of £1,220,000
was received by the Group from TAG during H1 2024 including:
· The remaining £550,000 that was due to the Company in respect of the
TAG unsecured working capital facility that was initially agreed on 28 April
2023, and subsequently amended on 30 June 2023 (H1 2023: £nil). Following
this, the full amount of £800,000, that had been drawn down by the Company
during 2023, had been fulfilled by TAG. This facility was repaid by the
Company in March 2024, through the issue of 1,500,000,000 new ordinary shares
issued to TAG in exchange for the repayment of the principal amount due. These
new ordinary shares issued had a fixed subscription price of 0.053 pence per
share; and
· Amounts totalling £670,000 that were due to the Company in respect of
the £2,000,000 receivable that was assumed by TAG as a result of the
TradeFlow Restructuring completed on 30 June 2023 (H1 2023: £nil). Of this
amount, £570,000 was received in cash and the remaining £100,000 was
received by way of offset against amounts owed by the Group to TAG including
an amount of £58,000 that had been accrued as at 31 December 2023. It should
be noted that the amounts offset were based on the total invoice amount
including VAT, compared to the amounts accrued and recognised as expenses
which exclude VAT.
It should be noted that late payment interest is also still due to be paid by
TAG. The total late payment interest due from TAG which was outstanding as at
30 June 2024 was £136,000.
The delays in the payments due to the Group from TAG has continued to put cash
flow pressures on the Group to date during 2024. The Board is continuing to
closely monitor the payments received from TAG and the representations made to
them by TAG, via Alessandro Zamboni. These representations include information
as to the expected timing of the continued future fulfilment of the amounts
due to the Group from TAG under the contractual funding commitments currently
in place, and the actions that TAG itself is putting in place to allow them to
demonstrate their ongoing commitment to support the Company and to provide the
contractual payments. The delayed contractual payments resulted from TAG
experiencing delays in receiving expected funding.
New Equity Subscription Agreement
In addition to the TAG funding outlined above, on 14 May 2024, the Company
entered into a new equity subscription agreement with a UK investment firm,
pursuant to which the UK investment firm committed to subscribe for
9,000,000,000 new ordinary shares of nominal value £0.00002 each (the
"Subscription Shares"), on behalf of its private clients, at 0.01725 pence per
Subscription Share (the "New Equity Subscription Agreement"). The issue of the
Subscription Shares raised gross proceeds of £1,552,500 (or £1,428,300 net
of an 8% commission charge). These Subscription Shares were admitted to
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 on 28 May 2024.
Cash flow
The Group increased its net cash balance (prior to any foreign exchange
differences on consolidation) by £399,000 during H1 2024 (H1 2023: £465,000
decrease) due to a combination of the following cash inflows and outflows:
· cash inflow of £1,429,000, net of commission, during H1 2024 as
receipts from the issue of new ordinary shares during H1 2024 under the New
Equity Subscription Agreement referred to above;
· inflows of £670,000 during H1 2024 from TAG in relation to the
repayment of the outstanding cash consideration that was due, and which had
been assumed by TAG, as a result of the TradeFlow Restructuring; and
· cash inflows from long-term borrowing £447,000, net of repayments,
predominantly due to amounts received under the amended TAG unsecured working
capital facility agreed during 2023, less the cash repayments made during H1
2024 in relation to the other long-term bank borrowings held by the Group.
These net cash inflows were then offset by the following items:
· net outflows from operating activities of £2,132,000 (H1 2023:
£2,143,000 net outflow); and
· net outflows due to net movements in non-current assets of £15,000
during H1 2024, being the increased investment in the Group's IM Platform of
£34,000 (H1 2023: £388,000) offset by the write off of other non-current
assets of £19,000 (H1 2023: £nil);
6 months to 6 months to
30 June 2024 Unaudited 30 June 2023 Unaudited
£000 £000
Net cash flows from operating activities (2,132) (2,143)
Net cash flows from investing activities 655 (712)
Net cash flows from financing activities 1,876 2,390
Net movement in cash and cash equivalents 399 (465)
Foreign exchange differences to cash and cash equivalents on consolidation - (19)
Cash and cash equivalents at 1 January 5 581
Cash and cash equivalents as at 30 June 404 97
Net liabilities
As at 30 June 2024 net liabilities were £2,792,000 (31 December 2023: net
liabilities of £3,807,000).
The £1,015,000 decrease in net liability position at 30 June 2024 compared to
31 December 2023 is due to the following:
· the increase in cash and cash equivalents of £399,000 during H1 2024
as a result for the factors referred to in the cash flow section above;
· an increase in the trade and other receivables of £138,000 as at 30
June 2024. The largest single movement related to the £97,000 Research &
Development Tax Credit claimed by the Company under the UK SME tax credit
scheme during the first half of 2024, but which was received in cash post 30
June 2024;
· a decrease in trade and other payables of £730,000 as at 30 June
2024, largely as a result of an effort to settle a number of the balances
outstanding at 31 December 2023 using the cash inflows received during H1
2024; and
· A decrease in long-term borrowings of £370,000 as at 30 June 2024,
due to the repayment of the TAG unsecured working capital facility during H1
2024, the balance of which was £250,000 as at 31 December 2023, and the
continued repayment of the long-term loan facility in place with Banco BPM
S.p.A via the Group's subsidiary, Supply@ME Technologies S.r.l.
These increases in assets / decreases in liabilities compared to 31 December
2023 were then offset by:
· the decrease in the receivable from related party of £563,000 as at
30 June 2024 compared by 31 December 2023, largely due to the repayments
totalling £670,000 received from TAG during H1 2024 in relation to the
outstanding cash consideration that was due, and which had been assumed by
TAG, as a result of the TradeFlow Restructuring. This was partially offset by
the increase in interest receivable from TAG as a result of continued late
payments against the contractually agreed payment dates;
· the decrease in the fair value of the remaining 19% investment in
TradeFlow of £47,000 as at 30 June 2024. This fair value adjustment reflects
the worsening of the net liability position of TradeFlow from 31 December 2023
to 30 June 2024; and
· other small movements which net to an overall increase in net
liabilities of £12,000 as at 30 June 2024.
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 2024.
Related Parties
Note 24 to the unaudited condensed consolidated interim financial statements
for the six month period ended 30 June 2024 contains details of the Group's
related parties.
Subsequent events
Note 25 to the unaudited condensed consolidated interim financial statements
for the six month period ended 30 June 2024 contains details of all material
subsequent events post 30 June 2024.
Principal Risks and Uncertainties
Principal risks and uncertainties which could have a material impact on the
long-term performance of the Company and its subsidiaries were set out in the
Annual Report and Accounts for the year ending 31 December 2023 and remain
valid at the date of this report.
The impact, likelihood, vulnerability and speed of onset of each risk is
regularly reviewed, scored and ranked. The results of this assessment of
current risks and changes are then reported to and discussed at the Audit
Committee and reported to the Board, who have ultimate responsibility in this
area.
The risks and uncertainties at the date of this report where the impact
continues to be assessed as 'major' and the likelihood of the event occurring
is assessed as either 'possible', 'likely' or 'frequent' were:
Strategic Risk
Future development and strategy
It has been assessed that there is no change to the classification of this
risk since the 2023 Annual Report and Accounts. As the business model becomes
more established it is expected that this risk will reduce. Since the 2023
Annual Report and Accounts there has been continued interest in the IM model
from both client companies seeking novel working capital solutions and
inventory funders interested in a new asset class.
Inventory funding Risk
It has been assessed there is no change to the classification of this risk
since the 2023 Annual Report and Accounts. Funders interested in providing
capital for inventory monetisation transactions is crucial to the Supply@ME's
business model. Despite there being no concrete announcements in this area the
team are in conversations with multiple inventory funders as outlined
elsewhere in this interim report.
Financial Risk
Group funding risk
The ability for the Company to continue to fund its operations whilst on its
journey to break even and beyond remains a key risk, and a risk which it is
viewed has increased since the 2023 Annual Report and Accounts. Required
increases in revenue flow are not yet present and there have been significant
delays in the flow of funding from the TAG contractual funding facilities that
are currently in place. In addition, the current share price makes it more
challenging to find meaningful and prudent funding options for the Group at
this time.
Additionally, it has also been assessed that the following risks have
increased in either their likelihood of occurrence or their potential impact
on the business since the publication of the 2023 Annual Report and Accounts:
Commercial legal risk and corporate legal and regulatory risk have both
increased due to the cost constrained environment that the Group is currently
operating within, leading to reduced use of external lawyers. Once the funding
position of the Company improves this risk is expected to reduce again.
Talent and diversity risk has increased, there have been some senior
departures to date during 2024 which have been outlined in the Team Changes
section of this interim report above. Also, the cost constrained environment
is impacting the tools available to reward and retain the current employees.
However, this view is slightly tempered with the level of commitment to the
Group of the remaining team and an increase in engagement scores in the most
recent employee engagement survey.
It is considered that business continuity risk has reduced due to a
significant amount of work conducted in this area during H1 2024.
Directors Responsibility Statement
The Directors are responsible for preparing the unaudited condensed
consolidated interim financial statements for the six month period ended 30
June 2024 in accordance with applicable law and regulations. 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 4.2.4R 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 namely:
· an indication of important events that have occurred during the six
month period ended 30 June 2024 and their impact on the condensed consolidated
interim financial statements for this period, and a description of the
principal risks and uncertainties for the remaining six months of the
financial year; and
· material related party transactions in the six month period ended 30
June 2024 and any material changes in the related party transactions described
in the last annual report
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 current directors are listed below all of whom were directors during the
whole of the period, except as noted:
Albert Ganyushin
Alessandro Zamboni
Alexandra Galligan
David Bull
Enrico Camerinelli (resigned 30 September 2024)
By Order of the Board
Alessandro Zamboni
Chief Executive Officer
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 6
MONTH PERIOD ENDED 30 JUNE 2024
6 months to 6 months to
30 June 2024 30 June 2023
Unaudited Unaudited
Notes £ '000 £ '000
Continuing operations
Revenue 5 39 77
Cost of sales 7 (232) (185)
Gross loss (193) (108)
Administrative expenses 7 (1,280) (2,258)
Other operating income 8 134 385
Operating loss from continuing operations before impairment charges and fair (1,339) (1,981)
value adjustments
Impairment charges 12 (31) (349)
Fair value adjustments to investments 23 (47) -
Operating loss from continuing operations (1,417) (2,330)
Finance costs 6 (51) (22)
Loss before tax from continuing operations (1,468) (2,352)
Taxation 9 97 (24)
Loss for the period from continuing operations (1,371) (2,376)
Discontinuing operations
Loss for the period from discontinuing operations 22 - (185)
Total loss for the period (1,371) (2,561)
Other comprehensive income
Exchange differences on translating foreign operations 142 415
Total comprehensive loss for the period (1,229) (2,146)
Loss per share Pence Pence
Basic and diluted loss per share - continuing operations (0.0022)
11 (0.0043)
Basic and diluted loss per share - discontinued operations -
11 (0.0003)
Basic and diluted loss per share - total 11 (0.0022) (0.0046)
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 2024
30 June 2024 31 December 2023
Unaudited Audited
Notes £ '000 £ '000
Non-current assets
Intangible assets and goodwill 12 - -
Investment 23 237 284
Property, plant and equipment 1 3
Other non-current assets - 19
Total non-current assets 238 306
Current assets
Trade and other receivables 13 1,164 1,026
Cash and cash equivalents 404 5
Receivable from related party 14 284 847
Total current assets 1,852 1,878
Total assets 2,090 2,184
Current liabilities
Trade and other payables 15 3,839 4,569
Total current liabilities 3,839 4,569
Net current liabilities (1,987) (2,691)
Non-current liabilities
Long-term borrowings 16 470 840
Provisions 17 568 575
Deferred tax liabilities 5 7
Total non-current liabilities 1,043 1,422
Net liabilities (2,792) (3,807)
Equity attributable to owners of the parent
Share capital 18 6,199 5,989
Share premium 27,363 25,396
Share-based payment reserve 21 8,036 7,969
Other reserves (10,906) (11,048)
Retained losses (33,484) (32,113)
Total equity (2,792) (3,807)
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 PERIOD ENDED 30 JUNE 2023
Share capital Share premium Other reserves* Share-based payment reserve Merger relief reserve* Reverse takeover reserve* Foreign currency reserve* Retained earnings Total
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '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
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) -
Costs incurred in connection with the issuance of new ordinary shares - (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 CHANGES IN EQUITY FOR THE 6
MONTH PERIOD ENDED 30 JUNE 2024
Share capital Share premium Other reserves* Share-based payment reserve Merger relief reserve* Reverse takeover reserve* Foreign currency reserve* Retained earnings Total
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000
As at 1 January 2024 5,989 25,396 36 7,969 226,905 (237,834) (155) (32,113) (3,807)
Loss for the 6-month period - - - - - - - (1,371) (1,371)
Forex retranslation difference - - - - - - 142 - 142
5,989 25,396 36 7,969 226,905 (237,834) (13) (33,484) (5,036)
Credit to equity for issue of warrants - - - 52 - - - - 52
Exercise of Open Offer warrants - - - - - - - - -
Issuance of new shares 210 2,143 - - - - - - 2,353
Costs incurred in connection with the issuance of new ordinary shares - (176) - - - - - - (176)
Equity settled employee share-based payment schemes - - - 15 - - - - 15
As 30 June 2024 6,199 27,363 36 8,036 226,905 (237,834) (13) (33,484) (2,792)
*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
PERIOD ENDED 30 JUNE 2024
6 months to 6 months to
30 June 2024 30 June 2023
Unaudited Unaudited
£ '000 £ '000
Cash flows from operating activities
Loss before interest and tax from continuing operations (1,417) (2,330)
Loss before interest and tax from discontinued operations - (115)
Total loss for the period before interest and tax (1,417) (2,445)
Adjustments for non-cash acquisition related costs
Amortisation of intangible assets arising on acquisition - 442
Adjustment for impairment charge
Impairment charges 31 349
Adjustment for fair value on investments
Fair value adjustments to investments 47 -
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)
78 135
Other non-cash adjustments 69 86
Other depreciation and amortisation 5 43
Increase /(decrease) in provisions 7 (21)
(Increase)/decrease in accrued income (2) 5
(Increase)/decrease in trade and other receivables (51) 426
(Decrease) in trade and other payables (661) (572)
Other (increases) / decreases in net working capital (107) 224
Cash flows from operations (2,079) (2,119)
Interest paid (53) (24)
Net cash flows from operating activities (2,132) (2,143)
Cash flows from investing activities
Purchase of intangible assets (34) (388)
Other movements in non-current assets 19 -
Consideration received from related party on disposal of discontinued 670 -
operations
Cash outflow on disposal of discontinued operations - (324)
Net cash flows from investing activities 655 (712)
Cash flows from financing activities
Net cash inflow from new long-term borrowings 550 405
Cash repayment of existing long-term borrowings (103) (33)
Cash inflow from issue of new ordinary shares 1,553 2,274
Other finance costs paid in cash - (1)
Share issue costs paid in cash (124) (255)
Cash flows from financing activities 1,876 2,390
Net movement in cash and cash equivalents 399 (465)
Foreign exchange differences to cash and cash equivalents on consolidation - (19)
Cash and cash equivalents as at 1 January 5 581
Cash and cash equivalents at the end of the period 404 97
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 PERIOD ENDED 30 JUNE 2024
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.
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 30 September 2024.
2 Basis of preparation
Accounting convention
These unaudited condensed consolidated interim financial statements for the
six month reporting period ended 30 June 2024 have been prepared in accordance
with Accounting Standard IAS 34 ("Interim Financial Reporting") as contained
in UK-adopted International Accounting Standards.
The interim report does not include all the notes of the type normally
included in annual audited financial statements. Accordingly, this report is
to be read in conjunction with the annual report and accounts for the year
ended 31 December 2023 (the "2023 Annual Report"), which was prepared in
accordance with UK-adopted International Accounting Standards, 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.
The preparation of the interim financial statements requires management to
make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates, and will seldom
equal the estimated results. In preparing these interim financial statements,
the significant judgements made by management in applying the Group's
accounting policies were the same as those that applied to the 2023 Annual
Report.
New and amended standards adopted by the group
No new or amended standards became applicable that have a significant impact
on the Group's interim condensed consolidated financial statements for the six
month period ended 30 June 2024. 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 and events that occurred
during the six month period ended 30 June 2024.
New Equity Subscription Agreement
On 14 May 2024, the Company entered into a new equity subscription agreement
with a UK investment firm, pursuant to which the UK investment firm committed
to subscribe for 9,000,000,000 new ordinary shares of nominal value £0.00002
each (the "Subscription Shares"), on behalf of its private clients, at 0.01725
pence per Subscription Share (the "New Equity Subscription Agreement"). The
issue of the Subscription Shares raised gross proceeds of £1,552,500 (or
£1,428,300 net of 8% commission charged). These Subscription Shares were
admitted to 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 on 28 May 2024.
In addition to the commission charged on the issue on the Subscription Shares,
450,000,000 new warrants were required to be issued under the New Equity
Subscription Agreement (the "New Warrants"). The New Warrants are each
exercisable into one new ordinary share at a price equal to 0.01725 pence each
up to a final exercise date of 28 May 2029.
As at 30 June 2024, the Group had a total of 450,000,000 warrants remaining
outstanding as there had been no conversion of the New Warrants into new
ordinary shares between the date of issue and 30 June 2024.
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 committed to provide, subject to customary restrictions, a
facility of up to £2,800,000, in tranches up to 31 January 2024, to cover the
Company's interim working capital and growth needs. Following this, in
conjunction with the disposal of the 81% stake in ownership of TradeFlow
Capital Management Pte. Limited ("TradeFlow") (the "TradeFlow Restructuring"),
which was completed on 30 June 2023, the £2,000,000 receivable by the Company
that was assumed by TAG from the Buyers, was offset against the obligations of
TAG under TAG Unsecured Working Capital facility. The amendment to the TAG
Unsecured Working Capital facility was agreed on 30 June 2023 and this reduced
the obligations to fund the Company under the TAG Unsecured Working Capital
facility to up to £800,000 (the "amended TAG Unsecured Working Capital
facility").
On 30 June 2023, the Company issued a draw down notice to TAG under the
amended TAG Unsecured Working Capital facility for the full £800,000
available. As at 31 December 2023, £250,000 had been received from TAG in
respect of this facility, and during the current interim six month period
ended 30 June 2024, the remaining £550,000 was received from TAG.
Subsequent to TAG satisfying the full amount of £800,000 drawn down by the
Company under the amended TAG Unsecured Working Capital facility, the Company
and TAG signed a second deed of amendment agreement dated 26 March 2024, which
allowed the full outstanding amount of the amended TAG Unsecured Working
Capital facility to be extinguished by the issue of 1,500,000,000 new ordinary
shares of nominal value £0.00002 each, which were issued to TAG on 28 March
2024. These new ordinary shares issued had a fixed subscription price of 0.053
pence per share.
The sums drawn under the amended TAG Unsecured Working Capital facility
attracted a non-compounding interest rate of 10% per annum. The interest
payable by the Company to TAG as at 26 March 2024 was £20,000 and this was
settled on 26 March 2024 through the offset of interest receivable by the
Company from TAG under the other contractual funding arrangements currently in
place with TAG.
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 £3,500,000 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 in the 2023 Annual Report.
During the six month period ended 30 June 2024 the Company issued draw down
notices to TAG for an aggregate amount of £1,073,000, bringing the total
amount drawn down under the Top-Up Shareholder Loan Agreement to £2,042,000
as at 30 June 2024 (31 December 2023: amount drawn down of £969,000). The
total amount drawn remained unpaid as at 30 June 2024, and no amounts have
been received prior to the release of these interim financial statements.
In addition, on 30 September 2024, the Company and TAG entered into an English
law governed deed of amendment, which extended the final date that the Company
is able to issue a draw down notice under the Top-Up Shareholder Loan
Agreement from 30 June 2025 to 31 December 2025 (the "Extension Deed of
Amendment").
The Company has been charging a late fee calculated at a compounding rate of
15% per annum on any amounts that have been drawn down by the Company but not
received by the relevant due date, in accordance with the contractual
arrangements. As a result of the late payment by TAG of the amounts drawn
down, the Group recognised interest income of £111,000 in the six month
period ended 30 June 2024 in relation to the Top-Up Shareholder Loan
Agreement.
TAG and TradeFlow Restrucutring
As set out above, on 30 June 2023, TAG assumed the remaining £2,000,000
consideration arising from the TradeFlow Restructuring, to be receivable by
the Group from the Buyers, by way of a debt novation deed (the "Deed of
Novation"). The £2,000,000 was to be repaid by TAG to SYME in multiple
tranches, with the final tranche being payable by 31 January 2024. As at 30
June 2024 an amount of £102,000 remained outstanding under the Deed of
Novation (31 December 2023: outstanding amount of £772,000).
The total payment of the £1,898,000 received prior to 30 June 2024 (including
£1,228,000 received during 2023 and £670,000 received during the first half
of 2024), was paid through a split of £1,341,000 in cash, £421,000 by way of
formal debt novation agreements with specific suppliers whereby the debt held
by the Group was novated to TAG with no recourse to the Group, and £136,000
by way of offset against amounts owed by the Group to TAG.
As set out in note 25, subsequent to 30 June 2024 and prior to release of
these interim financial statements TAG has repaid a further £24,000 under the
Deed of Novation through offsets against invoiced amounts owed by the Group to
TAG.
The Company has been charging a late fee to TAG in terms of overdue payments
of this particular receivable balance, and this late fee is calculated at a
compounding rate of 15% per annum on any amounts of the instalments not
transferred to the Company by the relevant due date, in accordance with the
contractual arrangements. During the six month period ended 30 June 2024, the
Group recognised £23,000 of interest income in relation to the late payments
by TAG in respect of this particular receivable balance.
4 Going Concern
At the 30 June 2024 the Group had cash and cash equivalents of £404,000 (31
December 2023: £5,000 cash and cash equivalents) and consolidated net current
liabilities of £1,987,000 (31 December 2023: £2,691,000). The Group has
posted a total loss for the six month period ended 30 June 2024 of £1,371,000
(for the six month period ended 30 June 2023: total loss £2,561,000) and the
retained losses were £33,484,000 as at 30 June 2024 (31 December 2023:
retained losses £32,113,000).
During the six month period ended 30 June 2024 the Company continued to source
additional funding with the primary aim of allowing it to meet its ongoing
working capital requirements as it seeks to deploy an increasing number of IM
transactions. In sourcing this new funding, the Company has also sought to
improve the Company's overall capitalisation by raising the additional funding
through a new subscription of equity, details of which have been set out in
note 3 above.
In addition, the Company and its Board has continued to work closely with TAG
to ensure delivery against the contractual funding commitments that were
agreed during 2023, albeit on a delayed basis. Details of these contractual
commitments, being a) the amended TAG Unsecured Working Capital facility, b)
the Top-Up Shareholder Loan Agreement and c) the Deed of Novation, and of the
amounts received from TAG, totalling £1,220,000, during the six month period
ended 30 June 2024 can be found in note 3 above and also in note 24 to these
condensed consolidated interim financial statements.
The Board believe that the continued delivery of funds from TAG demonstrates
the ongoing commitment from TAG to support the Group and to provide the funds
due under its contractual commitments with the Company, albeit on a delayed
payment schedule. The Board is continuing to closely monitor the payments
received from TAG and the representations made to them by TAG, via Alessandro
Zamboni. These representations include information as to the expected timing
of the continued future fulfilment of the amounts due to the Group from TAG
under the contractual funding commitments currently in place, and the actions
that TAG itself is putting in place to allow them to demonstrate their ongoing
commitment to support the Company and to provide the contractual payments. The
delayed contractual payments resulted from TAG experiencing delays in
receiving expected funding.
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 from approval of these condensed
consolidated interim financial statements. The cashflow forecasts take into
account that the Group meets its day to day working capital requirement
through its available and committed cash resources. The Directors have
prepared the forecast using their best estimates, information and judgements
at this time, including the receipt of any outstanding contractual funding
amounts to be received from TAG under the TAG Top-Up Shareholder Loan
Agreement and the Extension Deed of Amendment.
The Directors have also considered the expected cashflows arising from the use
of the Group's innovative Platform to facilitate inventory monetisation
transactions. This reflects the fact that the Directors expect the Group to
continue to prove the concept of its business model and to fully
operationalise in the near future.
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 multiple 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, the cash inflows from the TAG
Top-Up Shareholder Loan Agreement 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 and/or the latest
updates from TAG. 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
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.
As such the Directors consider it appropriate to prepare these interim
unaudited 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.
For the current and comparative six month periods ended 30 June 2024 and 30
June 2023 respectively, the Board considered that the Group has operated in a
single business segment from its continuing operations, being Inventory
Monetisation, alongside the head office costs (largely compromising the
Company). This follows the classification of the TradeFlow operations as being
discontinued 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 through to 30 June 2023, which was the
point in time that the TradeFlow Restructuring was completed. Further details
of the discontinued operations and the TradeFlow Restructuring can be found in
note 22 to these unaudited condensed consolidated interim financial
statements.
The key metrics assessed by the Board include revenue and operating loss from
continuing operations before impairment charges and fair value adjustments
which are presented below. Revenue is presented on basis of IFRS 15 ("Revenue
from Contracts") revenue recognition and by service line.
Inventory Monetisation Head office Consolidated Group - continuing operations
Unaudited Unaudited Unaudited
Six months to 30 June 2024 £'000 £'000 £'000
Revenue from continuing operations
Due Diligence fees 13 - 13
Inventory monetisation fees 26 - 26
Revenue from continuing operations 39 - 39
Operating loss from continuing operations before impairment charges and fair (481) (858) (1,339)
value adjustments
Inventory Monetisation Head office Consolidated Group - continuing operations
Unaudited Unaudited Unaudited
As at 30 June 2024 £'000 £'000 £'000
Balance sheet
Assets 1,083 1,007 2,090
Liabilities (3,842) (1,040) (4,882)
Net (liabilities) (2,759) (33) (2,792)
All the Group's revenue from due diligence fees is recognised at a point in
time. All of the revenue generated from inventory monetisation fees in the six
month period ended 30 June 2024 is generated from usage of the Group's IM
Platform and services provided by the Group in connection with the IM
transaction. The £26,000 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
2024.
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 for the six
months ended 30 June 2023.
Comparative segmental reporting
Inventory Monetisation Head office Consolidated Group - continuing operations
Unaudited Unaudited Unaudited
Six months to 30 June 2023 £'000 £'000 £'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 before impairment charges
(489) (1,492) (1,981)
Inventory Monetisation Head office Consolidated Group - continuing operations
Unaudited Unaudited Unaudited
As at 30 June 2023 £'000 £'000 £'000
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, £11,000 is
generated from origination fees which is recognised at a point in time, and
the remaining £26,000 is generated from usage of the Group's IM Platform and
services provided by the Group in connection with the IM transaction. This
£26,000 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.
Inventory Monetisation Head office Consolidated Group - continuing operations
Audited Audited Audited
As at 31 December 2023 £ 000 £ 000 £ 000
Balance sheet
Assets 971 1,213 2,184
Liabilities (4,321) (1,670) (5,991)
Net (liabilities) (3,350) (457) (3,807)
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 for the six
month period ended 30 June 2023.
6 Finance costs from continuing operations
6 months to 6 months to 30 June 2023 Unaudited
30 June 2024
Unaudited
£ '000 £ '000
Interest expense - long-term borrowings 42 21
Other interest expense 9 1
Total finance costs 51 22
Included with the interest expense related to long-term borrowings is an
amount of £13,000 (six month period ended 30 June 2023: £nil) accrued in
relation to the TAG Unsecured Working Capital facility.
7 Operating loss from continuing operations
The Group's operating loss from continuing operations before impairment
charges and fair value adjustments has been arrived at after charging:
6 months to 6 months to
30 June 2024 30 June 2023
Unaudited Unaudited
£ '000 £ '000
Amortisation of internally developed IM platform 3 39
Depreciation 2 2
Staff costs 872 912
Professional and legal fees 299 1,065
Contractor costs 30 183
Insurance 48 46
Training and recruitment costs 3 2
Long-term incentive plan ("LTIP") 15 44
In addition to the above, the Group incurred the following costs from
continuing operations relating to impairment charges and fair value
adjustments as detailed below:
6 months to 6 months to
30 June 2024 30 June 2023
Unaudited Unaudited
£ '000 £ '000
Impairment charges (note 12) 31 349
Fair value adjustments to investments (note 23) 47 -
Total impairment charges and fair value adjustments 78 349
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 during the comparative six month period ended
30 June 2023:
6 months to 6 months to
30 June 2024 30 June 2023
Unaudited Unaudited
£ '000 £ '000
Amortisation of intangible assets arising on acquisition - 442
Foreign currency translation gain reclassified to other comprehensive - 62
income
Profit on disposal of 81% of TradeFlow - (718)
- (214)
8 Other operating income from continuing operations
6 months to 6 months to
30 June 2024 30 June 2023
Unaudited Unaudited
£ '000 £ '000
Interest income 134 9
Gain arising on settlement of outstanding creditor balance - 376
Total other operating income from continuing operations 134 385
The interest income of £134,000 recognised in the current six month period
ended 30 June 2024 relates to interest accrued as receivable from TAG as a
result of the late payments received in connection with the TAG Top-Up
Shareholder Loan Agreement and the Deed of Novation.
The interest income of £9,000 recognised in the comparative six month period
ended 30 June 2023 related to late payment interest accrued as receivable from
a third party. The £376,000 gain arising on settlement of outstanding
creditor balance recognised in the six month period ended 30 June 2023 related
to a settlement agreement reached with an existing creditor. Further details
of this amount can be found in note 5 of the 2023 Annual Report.
9 Taxation from continuing operations
The income tax credit of £97,000 recognised for the six month period ended 30
June 2024 represents a Research & Development Tax Credit claimed by the
Company under the UK SME tax credit scheme. This tax credit related to the
financial year ended 31 December 2022 and the related claim was submitted and
finalised in the six month period ended 30 June 2024, with the cash being
received post the period end. The Company is in the process of assessing a
further claim related to the financial year ended 31 December 2023, however,
as this is yet to be finalised and submitted the impact has not been
recognised in these interim financial statements for the six month period
ended 30 June 2024.
The income tax expense for the period ended 30 June 2023 primarily represents
a tax charge of £21,000 arising in respect of the gain on settlement of
outstanding creditor balance as described in note 8 above.
To date any accumulated tax losses resulting from net losses generated have
not been recognised in the statement of financial position 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 2024 the Group did not pay a
dividend (six month period ended 30 June 2023: 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 £1,371,000 (H1 2023 - loss £2,561,000) and
on a weighted average number of ordinary shares in issue of 63,638,729,365 (H1
2023: 55,136,008,130). The basic EPS is (0.0022) pence (H1 2023: (0.0046)).
The calculation of the basic EPS from continuing operations is based on the
loss for the six month period from continuing operations of £1,371,000 (H1
2023 - loss £2,376,000) and on a weighted average number of ordinary shares
in issue of 63,638,729,365 (H1 2023: 55,136,008,130). The basic EPS from
continuing operations is (0.0022) pence (H1 2023 - (0.0043) pence).
The calculation of the basic EPS from discontinued operations is based on the
loss for the six month period from discontinued operations of £nil (H1 2023 -
loss £185,000) and on a weighted average number of ordinary shares in issue
of 63,638,729,365 (H1 2023: 55,136,008,130). The basic EPS from discontinued
operations is nil pence (H1 2023 - (0.0003) pence).
The Company has share warrants and employee share scheme options in issue as
at 30 June 2024, which would dilute the EPS 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 21.
30 June 2024 30 June 2023
Unaudited Unaudited
No. No.
Warrants and employee share options
Share warrants - issued 9,747,605,235 9,372,584,030
Share warrants - to be issued 2,250,000,000 2,250,000,000
Long-term incentive plan ("LTIP") options 1,075,128,404 1,195,831,529
Total 13,072,733,639 12,818,415,559
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 developed IM platform
£'000
Cost or valuation
At 1 January 2023 3,669
Additions 388
At 30 June 2023 4,057
Amortisation
At 1 January 2023 818
Charge for the period 39
At 30 June 2023 857
Impairment
At 1 January 2023 2,851
Impairment charges 349
At 30 June 2023 3,200
Net book value
At 30 June 2023 (Unaudited) -
Cost or valuation
At 1 January 2024 4,127
Additions 34
At 30 June 2024 4,161
Amortisation
At 1 January 2024 892
Charge for the period 3
At 30 June 2024 895
Impairment
At 1 January 2024 3,235
Impairment charges 31
At 30 June 2024 3,266
Net book value
At 30 June 2024 (Unaudited) -
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 years, as impairment
indicators and therefore, in accordance to IAS 36 ("Impairment of Assets"),
considered if at 30 June 2024 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 to these unaudited
condensed consolidated interim financial statements, 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 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 decided to continue to impair the full carrying
amount of this asset as at 30 June 2024. 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.
13 Trade and other receivables
30 June 2024 31 December 2023
Unaudited Audited
£ '000 £ '000
Trade receivables 26 15
Other receivables 1,108 976
Prepayments 30 35
Total trade and other receivables 1,164 1,026
14 Receivable from related party
30 June 2024 31 December 2023
Unaudited Audited
£ '000 £ '000
Receivable from related party 102 772
Interest receivable from related party 136 22
Other related party receivable 46 53
Receivables from related party 284 847
Receivable from related party
This balance represents the amount receivable from TAG under the Deed of
Novation which created the obligation for TAG to settle the £2,000,000 cash
payment that was due from the buyers to the Company as a result of the sale of
the 81% majority stake in TradeFlow.
Total payments of £1,898,000 received prior to 30 June 2024 (including
£1,228,000 received during 2023 and £670,000 received during the first half
of 2024), was paid through a split of £1,341,000 in cash, £421,000 by way of
formal debt novation agreements with specific suppliers whereby the debt held
by the Group was novated to TAG with no recourse to the Group, and £136,000
by way of offset against amounts owed by the Group to TAG
As set out in note 25, subsequent to 30 June 2024 and prior to release of
these interim financial statements TAG has repaid a further £24,000 under the
Deed of Novation through offsets against invoiced amounts owed by the Group to
TAG.
Interest receivable from related party
This represents the interest that is receivable from TAG relating to the late
payments under both the TAG Top-Up Shareholder Loan Agreement and the Deed of
Novation. These interest amounts have been calculated at a compounding rate of
15% per annum on the individual overdue amounts. As at 30 June 2024, the full
amount of this interest receivable from the related party remained
outstanding.
Other related party receivable
In relation to the Group debt that was formally novated to TAG in lieu of a
cash payment under the Deed of Novation, as at 30 June 2024, the Group held an
amount receivable from TAG for the value of £46,000 (31 December 2023:
£53,000). This primarily related to withholding tax amounts on certain
"proforma" invoices that had been novated, as the supplier invoice settled by
TAG was net of the withholding tax amount and such remains due from TAG to the
Group as at 30 June 2024.
15 Trade and other payables
30 June 2024 31 December 2023
Unaudited Audited
£ '000 £ '000
Trade payables 872 1,314
Other payables 739 943
Current portion of long-term bank borrowings 192 192
Social security and other payroll taxes 1,798 1,566
Accruals 193 488
Contract liabilities 45 59
Accrued interest payable to related party - 7
Total trade and other payables 3,839 4,569
16 Long-term Borrowings
30 June 2024 31 December 2023
Unaudited Audited
£ '000 £ '000
Non-current portion of long-term bank borrowings 470 590
Working capital loan due to TAG - 250
Total long-term borrowings 470 840
Non-current portion of long-term bank borrowings
During 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. €1 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 €52,000 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 15 above.
Working capital loan due to TAG
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 committed to provide, subject to customary restrictions, a
facility of up to £2,800,000, in tranches up to 31 January 2024, to cover the
Company's interim working capital and growth needs.
Following this, in conjunction with the TradeFlow Restructuring, which was
completed on 30 June 2023, the £2,000,000 receivable by the Company that was
assumed by TAG from the buyers, was offset against the obligations of TAG
under TAG Unsecured Working Capital facility. 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 £800,000 (the "amended TAG Unsecured Working Capital
facility").
On 30 June 2023, the Company issued a draw down notice to TAG under the
amended TAG Unsecured Working Capital facility for the full £800,000
available. As at 31 December 2023, £250,000 had been received from TAG in
respect of this facility, and during the six month period ended 30 June 2024,
the remaining £550,000 was received from TAG.
Subsequent to TAG satisfying the full amount of £800,000 drawn down by the
Company under the amended TAG Unsecured Working Capital facility, the Company
and TAG signed a second deed of amendment agreement dated 26 March 2024, which
allowed the full outstanding amount of the amended TAG Unsecured Working
Capital facility to be extinguished by the issue of 1,500,000,000 new ordinary
shares of nominal value £0.00002 each, which were issued to TAG on 28 March
2024. These new ordinary shares issued had a fixed subscription price of 0.053
pence per share.
17 Provisions
Post-employment benefits Provision for risks and charges Provision for VAT and penalties Total
£'000 £'000 £'000 £'000
At 31 December 2023 (Audited) 44 194 337 575
Fx translation adjustment - (5) (8) (13)
Carrying amount at 1 January 2024 44 189 329 562
Released to profit and loss - - - -
Provided for during the period 9 - - 9
Paid at the end of the employment relationship (3) - - (3)
At 30 June 2024 (Unaudited) 50 189 329 568
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 in connection with the tax and social security payables
recorded in the Italian subsidiary financial statements which, at the period
end 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 2024, the Group has included a
provision relating to a potential VAT liability, including penalties, in
respect of these advance payments of £191,000 (31 December 2023: £196,000).
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 £137,000 as at 30
June 2024 (31 December 2023: £140,000) in respect of this.
An additional amount of £144,000 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
2024, however has been revalued to £138,000 as at 30 June 2024 (31 December
2023: revalued to £141,000).
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 2024 that meet the criteria for a provision to
be recognised.
18 Share capital
Allotted, called up and fully paid shares
30 June 2024 31 December 2023
Unaudited Audited
No. 000 £ '000 No. 000 £ '000
Ordinary shares of £0.00002 each 71,732,142 1,434 61,232,096 1,224
Deferred shares of £0.04000 each 63,084 2,523 63,084 2,523
2018 deferred shares of £0.01000 each 224,194 2,242 224,194 2,242
Total 72,019,420 6,199 61,519,374 5,989
New shares allotted during the six month period ended 30 June 2024
New ordinary shares issued to TAG in connection with the settlement of the TAG
Unsecured Working Capital facility
Subsequent to TAG satisfying the full amount of £800,000 drawn down by the
Company under the amended TAG Unsecured Working Capital facility, the Company
and TAG signed a second deed of amendment agreement dated 26 March 2024, which
allowed the full outstanding amount of the amended TAG Unsecured Working
Capital facility to be extinguished by the issue of 1,500,000,000 new ordinary
shares of nominal value £0.00002 each, which were issued to TAG on 28 March
2024. These new ordinary shares issued had a fixed subscription price of 0.053
pence per share.
New ordinary shares issued in connection with New Equity Subscription
Agreement
On 14 May 2024, the Company entered into a new equity subscription agreement
with a UK investment firm, pursuant to which the UK investment firm committed
to subscribe for 9,000,000,000 new ordinary shares of nominal value £0.00002
each (the "Subscription Shares"), on behalf of its private clients, at 0.01725
pence per Subscription Share. The issue of the Subscription Shares was made
for gross proceeds of £1,552,500 (or £1,428,300 net of a 8% commission
charged). These Subscription Shares were admitted to 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 on 28 May 2024.
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 a
total of 45,827 new ordinary shares being issued during the six month period
to 30 June 2024 in relation to 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 £100,000,000 in respect of each
share held by them. The Company may purchase all or any of the Deferred shares
at an appropriate consideration of £1.
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 2024
No. 000 £ 000
As at 1 January 2024 (Audited) 61,519,374 5,989
New ordinary shares issued to TAG in connection with the settlement of TAG 1,500,000 30
Working Capital facility
New ordinary shares issued in connection with the New Equity Subscription 9,000,000 180
Agreement dated 14 May 2024
New ordinary shares issued to fulfil the conversion of Open Offer 46 -
Warrants during the period
As at 30 June 2024 (Unaudited) 72,019,420 6,199
19 Financial instruments
Financial assets at amortised cost
Carrying value Fair value
30 June 2024 31 December 2023 30 June 2024 31 December 2023
Unaudited Audited Unaudited Audited
£'000 £'000 £'000 £'000
Cash and cash equivalents 404 5 404 5
Trade receivables 26 15 26 15
Receivable from related party 284 847 284 847
Other receivables 1,101 974 1,101 974
1,815 1,841 1,815 1,841
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 2024 31 December 2023 30 June 2024 31 December 2023
Unaudited Audited Unaudited Audited
£'000 £'000 £'000 £'000
Long-term borrowings 662 1,032 662 1,032
Trade payables 872 1,314 872 1,314
Other payables 739 943 739 943
2,273 3,289 2,273 3,289
Valuation methods and assumptions:
The directors believe that the fair value approximate to their carrying
values.
The Group has no derivative financial instruments as at 30 June 2024 (31
December 2023: £nil) .
20 Financial risk management
Note 22 to the 2023 Annual Report includes 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.
21 Share-based payments
Share warrants issued in connection with the New Equity Subscription Agreement
As set out in note 3 to these interim condensed consolidated financial
statements, on the 14 May 2024, the Company announced it had and entered into
the New Equity Subscription Agreement with a UK investment firm, pursuant to
which the UK investment firm committed to subscribe for 9,000,000,000
Subscription Shares. Under the New Equity Subscription Agreement, new warrants
were required to be issued to the UK investment firm at a ratio of one warrant
for every twenty subscription shares issued under the New Equity Subscription
Agreement. This resulted in an obligation for the Group to issue 450,000,000
new warrants to the UK investment firm ("New Warrants") which existed at 30
June 2024. These New Warrants are each exercisable into one new ordinary share
at a price equal to 0.01725 pence per share up to a final exercise date of 28
May 2029.
As these share warrants were issued as a cost of issuing new ordinary shares
to the UK investment firm 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 volatility rate assumption applied in the model for the New
Warrants was 82.5%. 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 New Warrants was £52,000 and this amount has been
fully recognised during the six month period ended 30 June 2024. Given this
amount directly related to the cost of issuing new ordinary shares to the UK
investment firm, the total amount of £52,000 was offset against the share
premium balance specifically created in connection with the relevant issue of
Subscription Shares in accordance with IAS 32 ("Financial Instruments").
Share warrants issued to Mercator
During 2021 the Group entered into a funding facility with Mercator Capital
Management Fund LP ("Mercator") which required share warrants to be issued
representing 20% of the face value of any loan notes or convertible loans
issued in connection with this facility. These 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. Further
details of this funding facility can be found in the notes 17 and 24 to the
2023 Annual Report.
The total number of share warrants issued under the arrangement with Mercator
during the years ended 31 December 2021 and 2022 was 961,832,433 (the
"Mercator Warrants"). Details of the outstanding Mercator Warrants are set out
in the table below. There have been no movement in these Mercator Warrants
during the six month period ended 30 June 2024, however as announced by the
Company on 23 November 2023 and further on 28 March 2024 the Company approved
the transfer of Mercator Warrants from Mercator to independent third-party
purchasers.
Date of issue Number of warrants outstanding at 30 June 2024 Exercise price Expiry date
Unaudited
No.
1 October 2021 443,726,031 £0.00316 1 October 2024
1 November 2021 29,197,856 £0.00314 1 November 2024
1 December 2021 49,867,625 £0.00184 1 December 2024
4 January 2022 77,763,767 £0.00174 4 January 2025
2 February 2022 79,179,799 £0.00171 2 February 2025
4 March 2022 105,948,198 £0.00128 4 March 2025
10 June 2022 176,149,158 £0.00085 10 June 2025
Total 961,832,433
The total fair value of the above Mercator Warrants has been fully expensed in
the prior periods. No further costs have been recognised in the six month
period ended 30 June 2024 (six months ended 30 June 2023: £nil), and none of
these warrants have been converted during the current interim period (six
months ended 30 June 2023: nil converted).
Share warrants issued to Venus Capital under 2022 Capital Enhancement
Plan
On the 27 April 2022, the Group announced it had entered into a subscription
agreement with Venus Capital S.A ("Venus Capital"). Under the terms of this
subscription agreement 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 2024, 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, however this
expiry date was extended to 31 December 2026 through a deed of amendment dated
26 April 2023.
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")
and the total fair value of these was fully recognised during 2022. No further
costs have been recognised in the six month period ended 30 June 2024 (six
months ended 30 June 2023: £nil).
Share warrants issued to retail shareholders under the Open Offer
On 22 July 2022, the Group announced an Open Offer, giving existing
shareholders the opportunity to subscribe for up to 641,710,082 new ordinary
shares in the Group. Following the closing of the Open Offer, on 18 August
2022, the Group announced it would allot and issue 641,710,082 new ordinary
shares to those qualifying shareholders.
In addition, 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, however this expiry date
was extended to 31 December 2026 through a deed of amendment dated 26 April
2023.
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") and
the total fair value of these was fully recognised during 2022. No further
costs have been recognised in the six month period ended 30 June 2024 (six
months ended 30 June 2023: £nil).
Subsequent to the issue of the Open Offer warrants, and prior to 30 June 2024,
a cumulative amount of 160,082,206 (31 December 2023:160,036,379) of these
warrants have been converted in exchange for new ordinary shares and as at 30
June 2024 there is a balance of 160,772,802 (31 December 2023: 160,818,629)
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 in the relevant period in the Groups
statement of changes in equity.
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 details of which are set out in note
15 to the 2023 Annual Report. Under this subscription agreement, 2,250,000,000
new warrants were required to be issued to Venus Capital ("New Venus
Warrants"). This resulted in an obligation for the Group to issue the New
Venus Warrants which existed at 30 June 2024. These 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 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 total fair value of the New Venus Warrants was £1,717,000 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 £1,717,000 was offset against the share
premium balance during the financial year ended 31 December 2023 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. No further amounts have been recognised
in the six month period ended 30 June 2024.
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
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 was
also valued in line with IFRS 2. The change in the fair value due to the
extension of the expiry date on those warrants still outstanding at the time
of modification of £346,000 was fully recognised during the six month period
ended 30 June 2023.
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 £132,000
was offset against the share premium balance in accordance with IAS 32
("Financial Instruments") and the remaining fair value amount of £214,000 was
recognised in retained losses during the six month period ended 30 June 2023.
No further amounts have been recognised in the six month period ended 30 June
2024.
Further details can be found in the notes 24 to the 2023 Annual Report.
A summary of the share warrants outstanding as at 30 June 2024 is detailed in
the table below:
Number of warrants outstanding at 30 June 2024 Number of warrants outstanding at 31 December 2023
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 to be issued to Venus Capital 2,250,000,000 2,250,000,000
Share warrants issued to retail shareholders 160,772,802 160,818,629
Share warrants issued in connection with May 2024 New Equity Subscription 450,000,000 -
Agreement
Total 11,997,605,235 11,547,651,062
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 to
30 June 2024 30 June 2023
Unaudited Unaudited
£'000 £'000
Share warrants to be issued to Venus Capital - 1,717
Increase in fair value of outstanding warrants issued to Venus Capital and - 346
retail shareholders as a result of expiry date extension
Share warrants issued in connection with New Equity Subscription Agreement 52 -
dated May 2024
Total 52 2,063
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. Full details of these October
2022 share awards including the targets, vesting period and determination of
the fair value at grant date can be found in note 24 to the 2023 Annual
Report.
These awards will be equity-settled by award of ordinary shares. The total
share-based payment charge recognised in the condensed consolidated statement
of comprehensive income for the six month period ended 30 June 2024 in
relation to the October 2022 employee share scheme options is £29,000 (six
month period ended 30 June 2023: £33,000). 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.
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 £300m 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 £400m of inventory is monetised (in
aggregate) over the same three year performance period.
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. For those share
schemes with non-market vesting conditions, the fair value is determined using
the Black Scholes model at the grant date. The additional holding period
applicable to the share awards issued to the Chief Executive Officer have been
valued using the Finnerty model. Further details of the inputs to the models
used for these May 2023 share awards be found in note 24 to the 2023 Annual
Report.
These awards will be equity-settled by award of ordinary shares. The total
share-based payment amount recognised consolidated statement of comprehensive
income for the six month period to 30 June 2024 in relation to the May 2023
employee share scheme options was a credit of £14,000 (six month period ended
30 June 2023: a debit of £11,000). 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.
In calculating the credit recognised in comprehensive income for the current
interim period, the Board made the judgement that the Inventory Monetisation
target of the May 2023 LTIPs was highly unlikely to be met by the end of the
performance period, and as such a true up adjustment was required to ensure
the cumulative amounts charged to comprehensive income since grant date
reflected this judgement. This resulted in a credit of £14,000 to
comprehensive income for the six month period to 30 June 2024.
22 Discontinued operations and TradeFlow Restructuring
During the second half of 2022, the Board 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") for the first time. 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. The rationale behind the completion of the TradeFlow
Restructuring is 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 provide both businesses with greater commercial opportunities
through the clear differentiation of responsibilities of the individual
entities.
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 £14,386,100 of which £12,386,100 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 £2,000,000 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 £2,000,000 by way
of the Debt Novation Deed. The £2,000,000 was to be repaid by TAG to SYME in
multiple tranches, with the final tranche being payable by 31 January 2024. In
consideration for assuming the £2,000,000 obligation of the Buyers, TAG
acquired 1,026,525,520 existing ordinary shares of nominal value £0.00002
each in the capital of the Company from the Buyers.
The accounting for the TradeFlow Restructuring was reflected in the
comparative condensed consolidated financial statements for the six month
period ended 30 June 2023 and in note 26 of the 2023 Annual Report. During the
period from 1 January 2023 and up until the date of completion of the
TradeFlow Restructuring, 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 £185,000 (inclusive of the
profit on disposal of 81% of TradeFlow referred to below) in the period from 1
January 2023 to 30 June 2023.
From 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 fair value of the remaining
19% investment of £352,000 was recognised on the balance sheet, together with
the outstanding consideration to be received from TAG as at 30 June 2023. The
difference between these items resulted in profit on disposal of 81% of
TradeFlow recorded in the condensed consolidated financial statements for the
six month period ended 30 June 2023 of £718,000.
The results, and net cash flows, from the TradeFlow operations which were
included in the comparative six month period ended 30 June 2023 are set out in
detail in note 26 to the 2023 Annual Report.
The calculation of the profit on disposal of the 81% of as at 30 June 2023 is
shown below:
6 months to
30 June 2023
£ '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)
Profit on disposal of 81% of TradeFlow 718
In relation to the items set out in the table above, further details regarding
the calculation of the fair value of the 19% ownership of the TradeFlow
operations retained by the Group, and the major classes of assets and
liabilities of the TradeFlow operations as at 30 June 2023, immediately prior
to the finalisation of the TradeFlow Restructuring, are set out in detail in
notes 27 and 26 to the 2023 Annual Report.
23 Investments
The fair value of the 19% investment in the equity instruments of TradeFlow
was initially recorded at 30 June 2023 having regard to the accounting
consideration received for the disposal of 81% of the Groups holding in
TradeFlow as adjusted for an appropriate discount for loss of control. Further
details of this calculation are included within note 26 to the 2023 Annual
Report.
At the 31 December 2023, a fair value adjustment of £68,000 was recorded on
the basis of the movement in TradeFlow's net liabilities between 30 June 2023
and 31 December 2023. During the six month period ended 30 June 2023, an
additional fair value adjustment of £47,000 was recorded following the same
basis of the movement in TradeFlow's net liabilities between 31 December 2023,
and the balance sheet date, being 30 June 2024.
24 Related party transactions
During the six month period to 30 June 2024, 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 ("TAG") as well as holding
numerous directorships across companies including RegTech Open Project plc.
TAG and the Group's operating subsidiaries
Alessandro Zamboni is the CEO of the Group and is also the sole director of
TAG. As at 30 June 2024 TAG held 22.58% of the total ordinary shares in issued
in Supply@ME Capital plc (as at 31 December 2023: 24.00%).
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 2024, the Group
incurred expenses of £23,000 (six month period ended 30 June 2023: £25,000)
to TAG in respect of this agreement. Additionally, during the six month
period ended 30 June 2024, the Group also incurred costs of £13,000 from TAG
(six month period ended 30 June 2023: £8,000) in relation certain ICT
services provided.
As at 30 June 2024 there is an outstanding amount owed by the Group of
£11,000 to TAG in relation to the services outlined above (31 December 2023:
outstanding amount owed to TAG of £58,000).
TAG and TradeFlow Restrucutring
As set out in notes 3, 14 and 22 of these interim condensed consolidation
financial statements, on 30 June 2023, TAG assumed the remaining £2,000,000
consideration arising from the TradeFlow Restructuring, to be receivable by
the Group, from the buyers of TradeFlow, by way of a debt novation deed ("Deed
of Novation"). The £2,000,000 was to be repaid by TAG to the Company in
multiple tranches, with the final tranche being payable by 31 January 2024. As
at 30 June 2024 an amount of £102,000 remained outstanding (31 December 2023:
£772,000).
The cumulative payment of £1,898,000 received prior to 30 June 2024
(including £1,228,000 received during 2023 and £670,000 received during the
first half of 2024), was paid through a split of £1,341,000 in cash,
£421,000 by way of formal debt novation agreements with specific suppliers
whereby the debt held by the Group was novated to TAG with no recourse to the
Group, and £136,000 by way of offset against amounts owed by the Group to
TAG.
As set out in note 25, subsequent to 30 June 2024 and prior to release of
these interim financial statements TAG has repaid a further £24,000 under the
Deed of Novation through offsets against invoiced amounts owed by the Group to
TAG.
In relation to the Group debt that was novated to TAG in lieu of a cash
payment, as at 30 June 2024 the Group held an amount receivable from TAG on
its balance sheet for the value of £46,000 (31 December 2023: £53,000). This
primarily related to withholding tax amounts on certain "proforma" invoices
that had been novated, as the supplier invoice settled by TAG was net of the
withholding tax amount and such remains due from TAG to the Group as at 30
June 2024.
The Company has been charging a late fee to TAG in terms of overdue payments
of this particular receivable balance, and this late fee is calculated at a
compounding rate of 15% per annum on any amounts of the instalments not
transferred to the Company by the relevant due date. During the six month
period ended 30 June 2024, the Group recognised £23,000 of interest income
(six month period ended 30 June 2023: £nil) in relation to the late payments
by TAG of this particular receivable balance. As at 30 June 2024, a combined
amount of £136,000 of late payment interest remained outstanding from TAG (31
December 2023: £22,000).
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 was to provide, subject to customary restrictions, a facility of up to
£2,800,000, 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 £2,000,000 receivable
by the Company that was assumed by TAG, was offset against the current
obligations of TAG under TAG Unsecured Working Capital facility. 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 £800,000.
Subsequent to TAG satisfying the full amount of £800,000 drawn down by the
Company under the amended TAG Unsecured Working Capital facility, on 26 March
2024, the Company and TAG signed a second deed of amendment agreement, which
allowed the full outstanding amount of the amended TAG Unsecured Working
Capital facility to be extinguished by the issue of 1,500,000,000 new ordinary
shares of nominal value £0.00002 each which were issued to TAG on 28 March
2024. These new ordinary shares issued had a fixed subscription price of 0.053
pence per share.
At the time of settlement an amount of £20,000 in interest was due to TAG in
respect of the Working Capital facility. This was agreed to be offset against
the interest receivable due from TAG in relation to late payment of Top-Up
Shareholder Loan Agreement and Deed of Novation.
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 £3,500,000 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 £3.5 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 £250,000
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
£250,000, 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
£250,000;
· 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.
During the six month period ended to 30 June 2024 the Company issued draw down
notices to TAG for an aggregate amount of £1,073,000, bringing the total
amount drawn down under the Top-Up Shareholder Loan Agreement to £2,042,000
(31 December 2023: amount drawn down of £969,000). The total amount drawn
remained unpaid as at 30 June 2024, and no amounts have been received prior to
the release of these interim financial statements.
As a result of the late payment of the amounts drawn down by TAG, the Group
recognised an interest income of £111,000 in the six month period ended 30
June 2024 (six month period ended 30 June 2023: £nil). As set out above, as
at 30 June 2024, a combined amount of £136,000 of late payment interest
remained outstanding from TAG (31 December 2023: £22,000).
TradeFlow Capital Management Pte. Ltd. ("TradeFlow")
On 30 June 2023, 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 region, for a total consideration of £1,000,000
payable over a three-year period. As at 31 December 2023, no amounts had been
billed in respect of this contract, and no revenues have been recognised as
the two parties had been undergoing discussions regarding the point in time
when the access to the Platform would be activated.
During the current six month period ended 30 June 2024, TradeFlow have
provided a termination notice to the Supply@ME Technologies S.r.l. in respect
of the this contract. The Board are currently evaluating the cost / benefit
analysis of challenging this notice of termination, including the likely
recoverability of amounts should any challenge be successful in the future. As
such, during the six month period ended 30 June 2024, no amounts have been
billed in respect of this contract, and no revenues have been recognised.
SFE Société Financière Européenne SA
Commencing in 2023, the Group 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 (the "the CH Trading Hub") which has
replaced the Cayman-based global inventory fund ("GIF"), previously advised by
TradeFlow Capital Management Pte. Ltd. The CH Trading Hub, owned by Société
Financière Européenne S.A. ("SFE"), has assumed control of the independent
stock companies from the GIF and will purchase / set up additional stock
companies in order to manage the overall trading businesses using the Platform
and the associated services provided by the Group.
Alessandro Zamboni, the CEO of SYME Group, has, along with a number of other
investors, a personal non-controlling interest in SFE. During the year ended
31 December 2023, no transactions were directly entered into between the Group
and SFE. During the six month period ended 30 June 2024, this also continued
to be the case, however it is noted that:
· in early January 2024, both the Group and SFE where parties to the
term sheet that was signed with respect to the commitment for the first
White-Label transaction;
· in late April 2024, both the Group and SFE where parties to an
agreement that was signed with an Italian neo banking group to launch an
Inventory Monetisation programme; and
· SFE now owns the Stock Company that has monetised the inventory from
the first two IM transactions that have been facilitated over the Group's
Platform.
25 Events occurring after the reporting period
Shares issued post 30 June 2024 relating to Open Offer Warrant Conversions
On 9 July 2024, the Company announced the exercise of 8,869 Open Offer
Warrants by certain Qualifying Shareholders, and the issue of 8,869 Open Offer
Warrant Shares.
TAG and TradeFlow Restrucutring
Subsequent to 30 June 2024 and prior to release of these interim financial
statements TAG has repaid a further £24,000 under the Deed of Novation
through offsets against invoiced amounts owed by the Group to TAG.
Top-Up Shareholder Loan Agreement
Subsequent to 30 June 2024, and prior to the release of these interim
financial statements no payments have been received by the Company from TAG.
During this same period, the Company issued no further draw down notices to
TAG.
In addition, on 30 September 2024, the Company and TAG entered into an English
law governed deed of amendment, which extended the final date that the Company
is able to issue a draw down notice under the Top-Up Shareholder Loan
Agreement from 30 June 2025 to 31 December 2025 (the "Extension Deed of
Amendment").
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.
APPENDIX 2 - ENTRY INTO EXTENSION DEED OF AMENDMENT
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 £3,500,000 to
cover the Company's working capital and growth needs up to 30 June 2025
("Top-Up Shareholder Loan Agreement").
The Company may draw down under the Top-Up Shareholder Loan Agreement 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 £250,000
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 under the 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 £250,000.
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.
Additionally, a late payment fee shall be calculated at a compounding rate of
15% per annum on any amounts that have been drawn down by the Company under
the Top-Up Shareholder Loan Agreement but not received by the relevant due
date.
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.
On 30 September 2024, the Company and TAG entered into an English law governed
deed of amendment, which extended the final date that the Company is able to
issue a draw down notice under the Top-Up Shareholder Loan Agreement from 30
June 2025 to 31 December 2025 (the "Extension Deed of Amendment").
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