TIDMSYME
RNS Number : 1319B
Supply @ME Capital PLC
29 September 2022
29 September 2022
Supply@ME Capital plc
(the "Company" or "SYME"
and together with its operating subsidiaries, the "Group")
Unaudited interim results for the six months ended 30 June
2022
SYME, the fintech business which provides an innovative fintech
platform (the "Platform") for use by manufacturing and trading
companies to access Inventory Monetisation(c) ("IM") solutions
enabling their businesses to generate cashflow, announces its
unaudited results for the six months ended 30 June 2022:
Highlights
-- Operating loss before acquisition related costs and
impairment charges of GBP2.52m (2021: GBP1.46m) primarily as a
result of increased headcount, higher cost base due to the
acquisition of TradeFlow Capital Management Pte. Limited
("TradeFlow") in July 2021, and continued investment in operations
to satisfy Inventory Funders requirements.
-- Revenue of GBP0.2m fully generated by the investment advisory
segment (2021: GBP0.3m fully generated by the inventory
monetisation segment).
-- Good progress in the Group's Operational KPIs including:
- Growth in the warehoused goods monetisation pipeline to
GBP329.8m as at 23 September 2022; and
- I ncrease in the Asset Under Management ("AUM") referred to
the Funds advised by TradeFlow (+75% in 6 months).
-- Following the execution of the inaugural IM transaction post
30 June 2022, the Group expects to start the process of building a
track record of financial performance, from its inventory
monetisation segment, as it delivers new IM transactions and
completes due diligence activities.
Financial summary
6 months to 30 June 6 months to 30
2022 June 2021 Unaudited
Unaudited GBP000
GBP000
Total revenue 209 271
-------------------- ---------------------
Operating loss before acquisition
related costs and impairment
charges (2,518) (1,462)
-------------------- ---------------------
Loss before tax (6,259) (1,693)
-------------------- ---------------------
Loss per share (pence) (0.02) (0.01)
-------------------- ---------------------
As at 30 June 2022 31 December 2021
Unaudited Audited
GBP000 GBP000
Total assets 8,257 10,535
-------------------- ---------------------
Net liabilities (4,038) (1,425)
-------------------- ---------------------
The unaudited interim results for the period ended 30 June 2021
do not incorporate the acquisition by the Company of TradeFlow,
which completed in July 2021.
Alessandro Zamboni, CEO, Supply@ME Capital plc , said:
"The Group's focus so far this year has been on securing the
first binding commitment to deploy our inaugural IM transaction,
and it's fair to say that the numbers don't tell the full
story.
The SYME board believes that the first IM transaction de-risks
the investments made by our existing shareholder base, creates a
clearer path to profitability, and advances our equity story, such
that the door is now open for institutional investors to consider
SYME as an attractive investment opportunity.
Additionally, the inventory "in-transit" business model operated
by the Group's subsidiary, TradeFlow, has successfully navigated
the risks and uncertainties of the external environment, proving
the resilience of Funds advised.
The SYME team continues to work tirelessly to manage and develop
our pipeline of corporate clients, and engage with potential
third-party Inventory Funders that have expressed an interest in
the IM asset class, through the Group's innovative Platform.
We are excited about the future for the Group following the
successful execution of our first IM transaction, and look forward
to providing further business updates to the market in due
course."
Enquiries
Investors & analysts
Alessandro Zamboni, CEO, Supply@ME Capital plc,
investors@supplymecapital.com
Paul Vann, Walbrook PR Limited, +44 (0)20 7933 8780;
paul.vann@walbrookpr.com
Media:
Nicole Louis, MHP, Nicole.Louis@mhpc .com
Legal advisers
Orrick, Herrington & Sutcliffe (UK) LLP
Notes
SYME and its operating subsidiaries provide its Platform for use
by manufacturing and trading companies to access inventory trade
solutions enabling their businesses to generate cashflow, via a
non-credit approach and without incurring debt. This is achieved by
their existing eligible inventory being added to the Platform and
then monetised via purchase by third party Inventory Funders. The
inventory to be monetised can include warehouse goods waiting to be
sold to end-customers or goods/commodities that are part of a
typical import/export transaction. SYME announced in August 2021
the launch of a global Inventory Monetisation programme which will
be focused on both inventory in transit monetisation and warehoused
goods monetisation. This programme will be focused on creditworthy
companies and not those in distress or otherwise seeking to
monetise illiquid inventories.
SUPPLY@ME CAPITAL PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 6 MONTH PERIODED 30 JUNE 2022
Chief Executive's Report
Business model summary
Supply@ME Capital PLC (the "Company" or "SYME") and its
operating subsidiaries (together, the "Group") provide its
innovative fintech platform (the "Platform") for use by
manufacturing and trading companies to access Inventory
Monetisation(c) ("IM") solutions enabling their businesses to
generate cashflow, via a non-credit approach and without incurring
debt. This is achieved by their existing eligible inventory being
added to the Platform and then monetised via purchase by third
party Inventory Funders ("IM Transactions"). The inventory to be
monetised can include warehoused goods waiting to be sold to
end-customers or goods that are part of a typical import/export
transaction. SYME announced in August 2021 the launch of a global
IM programme which will be focused on both inventory in transit
monetisation and warehoused goods monetisation. This programme will
be focused on creditworthy companies and not those in distress or
otherwise seeking to monetise illiquid inventories.
The Business Model Canvas: a unique Inventory Monetisation
business model
The Group's Business Model Canvas ("BMC") envisages the unique
value proposition to be "IM specialists", promoting, via a
dedicated regulated structure (see below), an innovative service
model which allows corporates (our clients) across the globe to
improve their IM activities, freeing up extra-value from the goods
handled. Hence, this value proposition includes the objective of
the Group to be inventory analysis tech-champions for both
in-transit and warehoused goods, supporting the investments in IM
Transactions, through the Platform (as specified below).
The Group's BMC considers, within its journey, a key player: the
Inventory Funders. By providing, a dedicated, regulated structure
aimed at aligning each IM Transaction with corporates, we believe
that Inventory Funders are now seeing the investment as a new 'real
asset' asset class, complex but investable, considering the
projected risk/reward profile. Our prospective Inventory Funders
are typically investors with appetite for a new asset class or
alternative investment opportunities, such as debt and credit
funds, hedge funds or asset-based lenders.
The IM Transactions are delivered - through a global programme
sponsored by the Company - via segregated, regulated alternative
'real asset' funds which use fund administration services provided
by APEX Group [1] .
As of today, the Group's global inventory programme has four
funds (segregated portfolios, or each, an "SP"):
-- In-transit goods transactions:
o CEMP - US Dollar (USD) Trade Flow Fund SP (in-transit
transactions denominated in USD);
o CEMP - Euro (EUR) Trade Flow Fund SP (in-transit transactions
denominated in EUR).
-- Warehoused goods transactions [2] :
o Global Inventory Fund 1 SP (transactions regulated by the
Italian law);
o Global Inventory Fund 2 SP (transactions regulated by the law
of England & Wales and UK tax law).
The other key partners are, effectively, the rest of the
eco-system supporting the execution of each IM Transaction
(in-transit & warehoused goods). We see an important role for
Commercial Banks, considering the potential interest of these type
of banks in our White-label proposition (where the bank uses the
Platform to deliver inventory-backed financial products, studied
and developed by themselves, directly to their clients).
The Platform: the key role of the data ingestion and services
and the new Web3 route
The Platform comprises, among the two offerings "in-transit
goods" and "warehoused goods" monetisation, a unique combination of
software modules, exponential technology components (such as
Artificial Intelligence ("AI"), Internet of Things and Blockchain),
dedicated legal and accounting frameworks and business rules/
methodologies delivered via a hybrid ICT architecture.
Specifically, the ICT architecture adopts two cloud environments
(Microsoft Azure for warehoused goods monetisation and Amazon Web
Services for the in-transit model delivered by TradeFlow) plus an
external integration with distributed ledger frameworks.
The Platform's roadmap envisages that data sources have a key
role for the Platform, triggering the value-added service provided
by the Group (whether inventory data analysis or IM provided by the
Fund). Accordingly, data ingestion services have a critical role in
the overall Platform operations and, with reference to the offering
of the Group, these cover the key function requested by banks which
want to work with SYME via the White-label route.
On 28 June 2022, the Group announced the execution of a
strategic alliance agreement (the "VeChain Agreement") with the
VeChain Foundation ("VeChain"), a blockchain enterprise service
provider focused on supply chain and sustainability, to fund the
first inaugural IM transaction and kick off the "Web3" [3]
stream.
The objective of the VeChain Agreement is to create a
sustainable Web3 environment that will allow direct participation
in the IM journey combining traditional finance with the blockchain
space, linking the digital assets community to the real economy.
SYME aims to build up an "IM Platform 3.0" with an expected roadmap
of Web3 features, including the issuance of NFTs, digital ownership
and B2B marketplaces, decentralised finance (DEFI) and, overall, a
governance protocol.
The Revenue Model
The Group has clarified and fine-tuned its overall business
model, which is now clearly focused on the pure FinTech element of
the business, being the Group's Platform and its supporting
infrastructure, including exponential technology components, the
legal and accounting framework and structured business rules/
methodologies. In this respect, the Platform has, by definition, an
intrinsic value and accordingly can also be used by other operators
(such as banks or other debt funders) to improve inventory backed
or based facilities. The Company considers it to be an enabler of
each transaction. For this reason, the Group officially launched
its White-label initiative at the end of August 2020, invested
further time in upgrading ICT architecture, selected and started
new tech streams, while leveraging and understanding the components
used by TradeFlow within its TradeFlow+ system.
The Group also continued to refine the BMC and the revenue model
through discussion with potential IM funders over the past year, in
particular regarding the introduction of an equity (first loss)
line in the capital structure of each IM transaction. This was
addressed with the launch of the Fund compartments, which can work
as an equity provider and/or on a standalone basis (for example,
the Fund also have the option to directly deliver an IM
transaction). The Fund leverages the existing fund structuring
arrangements and track record of TradeFlow providing a further
synergy following the Company's acquisition of the Singapore-based
business in July 2021.
As such, the Group is now focused on establishing and growing
the following active, and future, revenue streams:
-- "Captive" IM platform servicing ("C.IM"): revenue generated
through the use of the Platform to facilitate IM transactions
performed by the Fund and its IM funders. This revenue is generated
by the Group's operating subsidiaries. Revenue is expected to be
earned in relation to the following activities:
o origination and due diligence (pre-IM); and
o monitoring, controlling and reporting (post-IM).
When fully delivered, this stream is expected to generate
revenues of approximately 1-3% of the gross value of the
inventories monetised.
-- "White-label" IM platform servicing ("WL.IM"): revenue to be
generated through the use of the Platform by third parties who
choose to employ the self-funding model. When delivered, this
stream is expected to generate recurring software-as-a-service
revenues of approximately 0.5-1.5% of the value of each IM
transaction (the amount of funding provided).
-- Investment Advisory ("IA"): the revenue stream currently
being generated by TradeFlow in its capacity as investment advisor
to its well-established funds, as well as its anticipated role as
investment advisor to the Fund going forward. This stream is
expected to generate recurring revenues of approximately 1.25% of
Assets Under Management ("AUM") for which TradeFlow acts as an
investment advisor. Additionally, TradeFlow could receive a further
performance incentive fee of up to 15% of the profits generated by
the Fund, based on performance.
Update on the Group's Operational KPIs
Summary
Operational KPIs 2022 (unaudited) 2021 (unaudited)
Warehoused goods monetisation pipeline GBP329.8 m GBP164.8 m
The pipeline KPI represents the current (as at 23 September (as at 24
potential value of warehoused goods 2022) May 2022)
rather than pipeline revenue expected
to be earned by the Group. As such,
this provides a good indicator of
the level of customer interest and
demand for the Group's current and
future warehoused goods monetisation
services. The pipeline represents
the value as at 23 September 2022
(being the practicable date prior
to the issue of the unaudited interim
financial statements).
--------------------- -----------------
Operational KPIs 2022 2021
(unaudited) (unaudited)
--------------------- -----------------
In-transit monetisation 75% (H1 22) 4% ( FY 2021)
Net growth in AUM 17% (in Q1 2022)
--------------------- -----------------
Warehoused Goods monetisation
Client company origination
Origination of client companies with inventory suitable for
Inventory Monetisation continued steadily in our core focus regions
of Italy and the United Kingdom. Pipeline of client companies grew
from GBP164.8m as at 24 May 2022 to GBP329.8m as at 23 September
2022. The need for inventory solutions with a quality platform and
backend from day one is driving significant opportunities for
client company origination and for self-funding/ White-label
opportunities with global banks.
We are also diligently working on building quality portfolios of
client companies to attract additional Inventory Funders.
As we on-board new client customers and increase our pipeline of
Inventory Funders, we expect the due diligence revenue to
significantly improve. In addition, we are still not fully
utilising our PR, marketing and events campaigns which are expected
to significantly raise awareness of the Platform and SYME
capabilities to address a growing need in the global market.
Italy
The Group's origination team works with a select panel of
originators and local business introducers. There is a strong
pipeline of opportunities in Italy. We expect to see the flow of
originated client companies to increase following the announcement
of the first Inventory Monetisation and as we renew contracts with
existing and new originators.
United Kingdom
Origination in the UK has significantly grown with client
companies originated through the strong relationships held with a
wide eco-system of introducers. There are a number of opportunities
now available to deploy in Q4 2022 and Q1/Q2 2023. In 2023 we will
continue to engage with the current eco-system of originators and
leverage of the first IM transactions as client companies gain
confidence in the platform.
Middle East and North Africa (MENA)
While business in Europe continues to be our core focus,
progress was made on a number of fronts to lay the groundwork for
future IM transactions in MENA jurisdictions, including the UAE,
supported by a select panel of local partners and brokers in the
region.
United States
The set up of the US go to market strategy continues to be built
upon the SYME' partnership with Anthony Brown of The Trade
Advisory. Mr Brown is providing strategic advice to our Executive
Directors in relation to seizing the unique opportunity to develop
the Inventory Monetisation service in the United States and also
exploring potential strategic alliances with vertical software
providers on inventory data analytics/ inventory optimisation.
Inventory funding routes
We continue to attract a selection of high-quality prospective
global funders, including banks and asset-based lenders.
The Group had hoped the initial IM transactions would be further
progressed by 30 June 2022. However, due to the innovative nature
of our model and the calibre of the Inventory Funders we are in
discussions with, the Group requires time to complete the robust
due diligence procedures of such Inventory Funders.
Additionally, each Inventory Funder has its own specific
requirements and appetites for clients and inventory they are
prepared to fund. Our origination team is working diligently to
align client company inventories with the investment appetites of
our strong panel of prospective Inventory Funders.
Italy
We continue to be in discussion with a number of local Italian
banks and Inventory Funders who could have appetite for the
existing pipeline.
In addition, discussions are at an advanced phase with potential
funders of White-label agreements. In this regard, the new
regulation on pegno non possessorio (as previously indicated by the
Company, a new digital pledge framework over the inventory and, in
general, all the assets of a borrower) is expected to be the
trigger to finalise the White-label alliances. It's anticipated
that this new regulation will be published by the end of the
current year.
Separately, in order to allow cross-border asset managers to
invest in IM transactions, following the expiration on 30 June 2022
of the extraordinary Covid measure "Garanzia Italia", the Company
continues to work closely with the Italian Government's SACE
Guarantee, in order to develop a bespoke guarantee covering the
risk that the Stock Company will not be able to repay the loans (or
notes) provided by the Inventory Funders.
Activities are ongoing with respect to the promotion of capital
funding for the Global Inventory Fund 2 SP. These activities are
currently being managed by Devonshire Warwick Capital LLP [4] .
United Kingdom
As mentioned in the Group's Annual Report and Accounts for the
year ended 31 December 2021, we undertook an increased programme of
marketing activity in the UK, which raised significant awareness
among potential client companies and Inventory Funders. Originators
include asset-based lenders, banks, accountants, advisors and other
asset-based platforms.
This increase in originators is a testament to the strength of
the proposition we are building and the confidence of the
prospective funders, which include large global banks and major
accountancy firms.
This has resulted in a number of on-going conversations with
Inventory Funders for both single name transactions and portfolios
of client companies for both Inventory Monetisation and
self-funding/ White-label.
Across both the UK and Italian markets, capital raise promotion
activities are continuing for the Global Inventory Fund 2 SP. These
activities are currently being managed by Devonshire Warwick
Capital LLP [5] .
MENA
We continue to work alongside the Shariah fund arranger Intesa
Sanpaolo-Reyl [6] to structure the funding route for our
Shariah-compliant IM platform in the Middle East. In this regard,
discussions are underway with reference to the opportunity to
launch a dedicated Fund or to deploy Over-The-Counter, single-name,
transactions. In parallel, we leveraged our partnership with I-MASS
LLC to explore further inventory funding alliances in the UAE,
including with a local new challenger bank. Additionally, the
Company is involved in a White-label tender by a bank operating in
Saudi Arabia.
United States
Leveraging our ongoing partnership with Anthony Brown and
consulting company Epicirean Brands and The Trade Advisory, we
continue to discuss with specific potential Inventory Funders and
White-label partners how to structure the first IM transaction in
US.
The Company also engaged a "Big 4" firm to conduct a dedicated
assessment regarding the application of the Inventory Monetisation
framework under the US GAAP.
While we see a number of opportunities in this region our
intention is to concentrate, for now, on the core markets.
In-transit monetisation
TradeFlow has continued to focus on three key areas of activity
during the six month period ended 30 June 2022. These are fund
management, Fintech software as a service (SaaS) development and
strategic developments in technology/ fund management, and
alliances with Port operators and Logistics partners who share our
digitalisation vision.
In respect of the fund management business, its relationship
with the International Chamber of Commerce (ICC) continues to
progress and it remains on track to launch an ICC endorsed fund to
support SME trade in 2022. In the last few months, TradeFlow
management has worked together with the Group in the execution of
the first IM transaction. The existing TradeFlow Fund covering
in-transit cargo transactions are on track to make target returns
for its investors.
TradeFlow's partnership with the Singapore Institute of
Technology continues to progress with its Research project contract
to develop an AI system for enhanced predictive analytics around
logistics and shipping. This contract commenced as planned in Q1
2022 and will continue into 2023.
TradeFlow's operational KPIs continue to be met and the growth
of its AUM in H1 2022 was 75%. This follows Q1 2022 growth figure
for AUM of 17% and the half year total represents a continued
strong endorsement of the Investment Advisory strategy. TradeFlow
management expect AUM growth to continue in line with its predicted
amounts over H2 2022 and into 2023.
Future prospects
Following the announcement made by the Company in the RNS of 12
September 2022 regarding the execution of the inaugural IM
transaction, the Group is now focussed on the completion of further
IM deals, as well as leveraging the traditional funding routes.
As outlined in the Group's previous announcements, the VeChain
Agreement envisages a second phase of IM transactions and
developments. As such, the Group has already started to explore
opportunities to work together with the most mature decentralised
finance frameworks available in the market. Discussions are
currently underway with specific protocols. Additionally, it is
expected that phase 2 of the VeChain Agreement implementation could
also involve further investors, part of the VeChain community,
unlocking further features of the VeChainThor blockchain
services.
The plans described above, together with the development of the
White-label business line, require further investment in
technology. For this reason, the Company, in line with the aims of
its capital enhancement plan announced in the RNS of 27 April 2022
(the "Capital Enhancement Plan"), is working to secure lower cost
and more traditional bank credit facilities to support some or all
of the funding needs required to execute the Group's Platform
roadmap.
Finally, the announcement of the inaugural IM transaction leads
the way for the Group, as it delivers new IM transactions, to build
a track record of financial performance underpinning the management
of the Group's strategy. In this regard the Company intends to
evaluate, with the support of external corporate brokers and
advisers, how to communicate updated revenue guidance to the
market, once the factors outside of our control have stabilised,
thereby reducing the risk of specific objectives and milestones not
being achieved, due to external volatility.
Overall, as outlined in the BMC shown in the Annual Report and
Accounts for the year ended 31 December 2021, the Group will
continue to work on its market positioning as inventory data &
tech specialists, which we regard as our core capability and
competitive advantage, to deliver IM transactions in multiple
jurisdictions, boosting the confidence among current and future
potential Inventory Funders.
Financial review
6 months 6 months Movement
to 30 June to 30 June
2022 2021
(unaudited) (unaudited)
GBP m GBP m GBPm
Revenue 0.2 0.3 (0.1)
Operating loss before acquisition
related costs and impairment charges (2.5) (1.5) (1.0)
Acquisition related costs and impairments
charges (2.1) - (2.1)
-------------- -------------- ----------
Operating (loss) (4.6) (1.5) (3.1)
Finance costs (1.7) (0.2) (1.5)
-------------- -------------- ----------
(Loss) before tax (6.3) (1.7) (4.6)
Income tax 0.1 (0.2) 0.3
-------------- -------------- ----------
(Loss) for the year (6.2) (1.9) (4.3)
============== ============== ==========
Pence Pence
Earnings per share (EPS) (0.02) (0.01)
============== ============== ==========
Revenue by segment
6 months 6 months Movement
to 30 June to 30 June
2022 2021
(unaudited) (unaudited)
GBP m GBP m GBPm
Revenue
Inventory Monetisation - 0.3 (0.3)
Investment Advisory 0.2 - 0.2
-------------- -------------- ----------
Revenue by operating segment 0.2 0.3 (0.1)
============== ============== ==========
Revenue by service line 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 Groups
Annual Report and Accounts for the year ended 31 December 2021.
Inventory Monetisation
For the period ended 30 June 2022, the Group recognised GBPnil
(period ended 30 June 2021: GBP0.3m) of Inventory Monetisation
revenue. In line with IFRS 15 ("Revenue from Contracts with
Customers") the Group recognised these revenues when the due
diligence services have been delivered and the Group's performance
obligation has been satisfied. During the current interim period,
the Group has continued to carry out, and charged for due diligence
activities, however as at 30 June 2022 these activities were still
in the process of being fully delivered to the relevant client
companies.
The reduction of GBP0.3m in the inventory monetisation revenue
during the period end 30 June 2022 is primarily the result of the
majority of the Group's efforts being focused on finalisation of
the strategic alliance with VeChain, alongside the efforts required
to identify the most suitable client company to participate in the
inaugural IM transaction and to flex the established processes and
procedures to meet the requirement of the VeChain Agreement.
Of the GBP0.3m of inventory monetisation revenue recognised in
the prior six month period, GBP0.2m related to an origination
contract entered into with related party, 1AF2 S.r.l. In connection
with this contract, 1AF2 S.r.l contracted with the Group to perform
due diligences on those companies that it had originated for the
Group.
Investment Advisory
Investment advisory revenue arises from investment advisory
services provided by the Group's wholly owned subsidiary,
TradeFlow, in its capacity as investment advisor to its
well-established USD fund and its growing EUR fund. As TradeFlow
was not owned by the Group during the prior six month period ending
30 June 2021, no such revenues were recognised.
In line with IFRS 15 ("Revenue from Contracts with Customers")
the Group recognised these revenues when the investment advisory
services have been delivered and the Group's performance obligation
has been satisfied.
Geographical revenue breakdown
The Group's inventory monetisation operations were predominately
located in Italy during the current six month period ended 30 June
2022, while the investment advisory operations are predominately
located in Singapore.
Operating loss before acquisition related costs and impairment
charges
In line with the activities carried out in FY21, the first half
of 2022 saw the Group continue to focus on refining and developing
the business model, with significant amount of time and effort
having been spent on the recently achieved milestones of securing a
strategic alliance agreement with VeChain and finalising the
contractual commitment package to deploy the inaugural IM
transaction. Given the Group's innovative IM Platform and business
model, the execution of both these commitments required discussions
and negotiations that ran longer than the Company had originally
expected.
The Group recorded an operating loss before acquisition related
costs and impairment charges during the six month period ended 30
June 2022 of GBP2.5m (period ended 30 June 2021: GBP1.5m loss).
This increase is largely due to an increase in staff and contractor
costs of GBP1.0m as the Group built out both its leadership,
business operation and finance teams and, as the Group focused on
developing evolutions of its ICT architecture during the second
half of 2021 and the first half of 2022. Additionally, the Group
acquired TradeFlow in July 2021 and therefore the prior period
comparative figures do not contain any costs relating the TradeFlow
business.
The investment in staff and contractor costs are expected to
give the Group a strong foundation as it enters the next stage of
development.
Acquisition related costs and impairment charges
6 months 6 months
to 30 June to 30 June
2022 2021
(unaudited) (unaudited)
GBP m GBP m
Amortisation of intangible assets arising
on acquisitions 0.4 -
Acquisition related earn-outs 0.8 -
Impairment charges 0.9 -
-------------- --------------
2.1 -
============== ==============
The acquisition related costs that have arisen in H1 22 are the
result of the TradeFlow acquisition that was completed in July
2021. This has bee accounted for as a business combination in
accordance with IFRS 3 ("Business Combination") and further details
of this accounting can be found in the Group's 2021 Annual Report
and Accounts. The following acquisition related costs have been
accounted for in the six month period ended 30 June 2022:
- Amortisation of intangible assets arising on acquisition of
GBP0.4m. These costs related to the intangible assets recognised by
the Group in connection with the TradeFlow acquisition, which had
an initial fair value of GBP6.9m. The GBP0.4m represents the
amortisation charge arising on these assets for the six month
period to 30 June 2022; and
- Acquisition related earn-out costs of GBP0.8m. Elements of the
consideration payable for the TradeFlow acquisition require
post-acquisition service obligations to be performed by the
earn-out shareholders over a three-year period. While these legally
form part of the consideration costs under IFRS 3 ("Business
Combinations"), they must be accounting for as deemed remuneration
through the statement of comprehensive income. The GBP0.8m
recognised for the six month period ended 30 June 2022 represents
the proportion of the total fair value of the future earn out
payments that are linked to the services provided during this
period.
The impairment charges of GBP0.9m recognised in the six month
period ended 30 June 2022 have arisen due to the following two
factors:
- Firstly, in connection with the initial TradeFlow goodwill
recognised. As at 30 June 2022, management carried out an
impairment test in line with IAS 36 ("Impairment of Assets") on the
TradeFlow Cash Generated Unit ("CGU"). This followed the conclusion
that indicators of impairment were present, including under
performance against forecast for the H1 22 period. In carrying out
this test, the Directors applied what they consider to be
reasonable assumptions concerning reductions to forecast revenue
levels, increases to the operating loss / decreases to the
operating profit, and the weighted average cost of capital ("WACC")
used as the discount rate. The result of this impairment test was
that the recoverable amount of the TradeFlow CGU was determined to
be lower than the net invested capital value held on the balance
sheet at 30 June 2022 by GBP0.8m and as such an impairment charge
has been recognised for this amount; and
- Secondly, in connection with the Group's internally developed
IM platform. As at 30 June 2022, management carried out an
impairment test in line with IAS 36 ("Impairment of Assets") on
this intangible asset. This followed the conclusion that indicators
of impairment were present, including the prior year and current
period losses being generated by the Group's Italian operating
subsidiary, to which the asset relates. In carrying out this test,
the Directors considered discounted cash flows and a weighted
average cost of capital ("WACC") as the discount rate. Under this
methodology the recoverable amount of the investment did not
require an impairment to be made. However, as noted in the going
concern statement, set out in note 2 to the interim financial
statements, there is currently a material uncertainty with respect
to both the future timing and growth rates of the forecast
discounted cash flows arising from the use of the internally
developed IM Platform intangible asset. As such, the Directors have
prudently decided to impair the full carrying amount of this asset
of GBP0.1m as at 30 June 2022.
Group Funding Facilities utilised during the year
Capital Enhancement Plan
On 27 April 2022, the Company announced its Capital Enhancement
Plan pursuant to which it would enter into a subscription agreement
with Venus Capital S.A ("Venus") and undertake an open offer to
existing shareholders, in order to raise up to GBP7.5m in new
equity capital. This new equity capital will enable the Company, at
its election, to settle the outstanding loan notes and convertible
loan notes with Mercator Capital Management Fund LP ("Mercator") in
cash rather than by the conversion of the convertible loan notes
held into new ordinary shares. During the six month interim period
ended 30 June 2022, the Company issued a total of 3,320,000,000 new
ordinary shares to Venus in line with the first two mandatory
tranches outlined in the subscription agreement. This raised a
total of GBP1.7m.
In connection with the Capital Enhancement Plan, the Company
also executed a convertible loan note agreement with Venus, under
which the Company, at its discretion, could issue to Venus
convertible loan notes up to GBP1.95m in aggregate principal
amount. These convertible loan notes were split up to GBP0.45m for
the purposes of covering the fees associated with the Venus
subscription and convertible loan note agreements, and up to
GBP1.5m covering a working capital funding facility. As at 30 June
2022, the Company had the obligation to issue the GBP0.2m of
convertible loans to Venus in connection with the fees incurred on
the first two new ordinary share issues described above, and the
prepaid debt arrangement fee relating to the working capital loan
note facility. This obligation has been recognised as at 30 June
2022.
The subscription agreement with Venus also required the Company
to issue one warrant to Venus for every two shares issued in
connection with the first two new ordinary share issues to Venus
during the six month period ended 30 June 2022. This resulted in a
total of 1,660,000,000 share warrants to be issued. Additionally,
an amount of 3,250,000,000 share warrants were to be issued to
Venus in connection with the signing of the subscription agreement
on 26 April 2022. While these share warrants were issued on the 19
July 2022, following the approval of additional share headroom at
the AGM held on 30 June 2022, the fair value of these warrants,
being GBP3.0m has been accounted for during the six month period
ended 30 June 2022 given the obligation to issue these arose prior
to the end of the period.
As set out above, the total share issues costs incurred during
the six month period 30 June 2022 in respect of the Capital
Enhancement Plan was GBP3.2m. This has been accounted for as a
GBP1.6m reduction to share premium and a GBP1.6mreduction to
retaining earnings during the current period. The reduction to
share premium amount has been limited to the increase to share
premium recorded during the same period in respect of the first two
mandatory tranche shares issues.
Mercator funding facilities
During the period the Group continued to make monthly repayments
under the loan note facility entered into with Mercator Capital
Management LP ("Mercator") on 29 September 2021. The Mercator loan
note facility had a term of 12 months and required monthly
repayments to be made either in cash or via the issue of a
convertible loan note at the Company's discretion.
During the six months ended 30 June 2022, all but one repayment,
being a total of GBP3.4m, was settled through the issue of
convertible loan notes to Mercator, with the remaining repayment of
GBP0.6m being settled in cash.
The movement in loan note liability to Mercator during the
current financial period are set out in the table below:
Mercator loan
notes
(unaudited)
GBPm
Loan note liability at 1 January 2022 5.7
Less monthly repayments made via issue of convertible
loan notes (3.4)
Less cash monthly repayments (0.6)
Amortisation of finance costs 0.9
Loan note liability at 30 June 2022 2.6
==============
In connection with the drawdown of the Mercator loan note
facility during 2021, the Company also issued share warrants
representing 20% of the total amounts drawn down. The fair value of
these warrants was capitalised at the time of issue and this,
together with the other capitalised finance costs relating to the
loan note facility, and are being recognised over the term of the
loan notes using the effective interest rate method. The total of
these finance costs recognised in the current six month interim
period ended 30 June 2022 is GBP0.9m.
Following the issue of GBP3.4m of convertible loan notes to
Mercator in lieu of cash repayments during the six month period
ended 30 June 2022, GBP1.5m remained outstanding as at 30 June
2022, following:
a) the conversion of GBP1.4m in principal amount of convertible
loan notes into new ordinary shares during the six month period
ended 30 June 2022; and
b) a repayment in cash of GBP0.6m in principal amount of
convertible loan notes during the six month period ended 30 June
2022.
The movement in convertible loan note liability to Mercator
during the current financial period are set out in the table
below:
Mercator convertible
loan notes
(unaudited)
GBPm
Convertible loan note liability at 1 January -
2022
Monthly loan note repayments made via issue
of convertible loan notes 3.4
Financial costs satisfied via the issue of
convertible loan notes 0.1
Less convertible loan notes converted into
ordinary shares (1.4)
Less convertible loan notes repaid in cash (0.6)
---------------------
Convertible loan note liability at 30 June
2022 1.5
=====================
The Mercator convertible loan notes do not have any interest
costs in addition to that of the Mercator loan notes, but finance
costs of GBP0.5m were recognised during the current financial year
as a result of:
-- Additional commitment fees and late payment interest charges
of GBP0.3m, or which GBP0.2m was paid in cash and the remaining
GBP0.1m was settled through the issue of convertible loan notes;
and
-- The fair value of the warrants of GBP0.2m issued in
connection with the convertible loan notes.
Both costs have been fully recognised in the income statement
during the six month period ended 30 June 2022 given the liability
to which they relate has been extinguished by 30 June 2022. This
amount, together with the finance costs of GBP0.9m in respect of
the loan notes, resulted in a total finance costs of GBP1.4m in
respect of the Mercator funding facilities during the six month
period ended 30 June 2022.
It should be noted that to assist with the key objective of the
Capital Enhancement Plan, the Company and Mercator signed an
amendment agreement on 26 April 2022. This agreement stipulated
that following the April monthly loan note repayment, the Company
would no longer have the obligation to issue further warrants to
Mercator in connection with the convertible loan note facility.
Trade Flow long term borrowings
On the 1 April 2022, TradeFlow entered into a new long term loan
facility with its existing finance provider, and in connection with
this, chose to settle its existing unsecured loan note facility
ahead of its maturity date on the 23 October 2022. The key terms of
the new long term loan facility are set out below;
- A principal amount of US$3.8m;
- A maturity date of 31 March 2026;
- An additional redemption premium cost of US$0.2m which is
payable at the time the principal is repaid; and
- A simple interest at a fixed rate of 7.9% per annum.
Finance costs recognised during the six month period ended
relating to TradeFlow long term borrowings totals GBP0.1m and
relates to accrued monthly interest amounts and the recognition of
the redemption premium costs over the expected life of the loan
using the effective interest rate method. The early settlement of
the existing unsecured loan note facility accounted for additional
finance costs of GBP0.1m being recognised during the current six
month period relating to the acceleration of the redemption premium
cost due on repayment of the principal of the existing loan note
facility.
Cashflow
The group decreased its net cash balance by GBP0.8m (period
ended 30 June 2021: GBP3.6m increase) due to proceeds from the
Capital Enhancement Plan share issues of GBP1.6m and net proceeds
from the TradeFlow long term borrowing refinancing of GBP1.4m,
offset by the following items:
-- Repayments made on the Mercator loan note and convertible
loan note facilities of GBP1.6m, including GBP1.4m of principal
amounts and GBP0.2m of additional interest charges;
-- Net outflows from operating activities of GBP2.1m (period
ended 30 June 2021: GBP0.8m net outflow) as the Group's operating
expenses increased primarily due to growing headcount and spend on
IT contractor specialists; and
-- Increased investment in the Group's IM Platform of GBP0.1m
(period ended 30 June 2021: GBP0.5m).
6 months
6 months to to 30 June
30 June 2022 2021
(unaudited) (unaudited)
GBP m GBP m
Net cash flow from operating activities (2.1) (0.8)
Cash flows from investing activities (0.2) (0.5)
Cash flows from financing activities 1.5 5.0
-------------- --------------
Net increase in cash and cash equivalents (0.8) 3.7
Cash and cash equivalents at 1 January
2022 1.7 0.5
-------------- --------------
Cash and cash equivalents as at 30
June 0.9 4.2
============== ==============
Net liabilities
As at 30 June 2022 net liabilities were GBP4.0m (31 December
2021: net liabilities of GBP1.4m). The GBP2.6m increase in net
liabilities reflects:
-- A decrease in the Group's intangible assets and goodwill of
GBP1.2m due to amortisation of GBP0.4m and impairment charges of
GBP0.9m during the six month period ended 30 June 2022. This was
slightly offset by additions to the Group's IM Platform of GBP0.1m
during the period;
-- A decrease in amounts outstanding under the Mercator loan
note and convertible loan facilities of GBP1.6m in aggregate. This
is due to the GBP1.4m repayments in respect of the loan note and
convertible loan note facilities being made in cash, along with the
conversion of an additional GBP1.4m of convertible loan notes into
new ordinary shares during the period. These movements are offset
by additional amortised interest of GBP0.9m and additional interest
costs cover through the issues of convertible loan notes to
Mercator of GBP0.1m;
-- An increase in long terms borrowings of GBP1.8m largely due
to the increase in TradeFlow long term borrowing following the
refinancing during the current interim period ended 30 June 2022;
and
-- A GBP1.3m decrease in working capital primarily due to the
overall net cash outflows from operations.
Going Concern
The Board's assessment of going concern and the key
considerations thereto are set out in the note 4 to the unaudited
interim financial statements for the year ended 30 June 2022.
Related Parties
Note 21 of the to the unaudited interim financial statements for
the year ended 30 June 2022 contains details of the Group's related
parties.
Subsequent events
Note 22 of the to the unaudited interim financial statements for
the year ended 30 June 2022 contains of the subsequent events
following 30 June 2022.
Directors' Responsibility Statement
The Directors are responsible for preparing the unaudited
interim financial statements in accordance with applicable law and
regulations. A list of current directors is maintained on the
Group's website: https://www.supplymecapital.com.
The Directors confirm that, to the best of their knowledge, the
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 accounting standards, and give a true and
fair view of the assets, liabilities, financial position and profit
or loss of the Company, or the undertakings included in the
consolidation as a whole as required by DTR 4.2.4 R.
The Directors further confirm that the interim financial
statements include a fair review of the information required by DTR
4.2.7R and DTR 4.2.8R.
In accordance with the FSA's Disclosure and Transparency Rule
4.2.9(2), the Directors confirm that these interim condensed
consolidated financial statements have not been audited or reviewed
by auditors pursuant to the Auditing Practices Board guidance on
Review of Interim Financial Information.
The Directors have shared all the relevant working papers with
their advisers.
By Order of the Board
Alessandro Zamboni
Chief Executive Officer
SUPPLY@ME CAPITAL PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE 6 MONTH PERIODED 30 JUNE 2022
6 months 6 months to
to 30 June 2021
30 June
2022
Unaudited Unaudited
Notes GBP '000 GBP '000
Revenue 5 209 271
Cost of sales (183) (402)
Gross profit / (loss) 26 (131)
Administrative expenses 7 (2,544) (1,331)
Operating loss before acquisition
related costs and impairment charges (2,518) (1,462)
Transaction costs - (39)
Amortisation of intangible assets
arising on acquisition 11 (406) -
Acquisition related earn-out payments 20 (747) -
Impairment charges 11 (916) -
Operating loss (4,587) (1,501)
Finance costs 6 (1,672) (192)
Loss before tax (6,259) (1,693)
Taxation 8 69 (196)
Loss for the period (6,190) (1,889)
=========== ===========================
Other comprehensive income
Foreign operations FX translation (257) (21)
Total comprehensive profit / (loss)
for the period (6,447) (1,910)
=========== ===========================
Loss per share (pence) 10 (0.02) (0.01)
The above condensed consolidated statement of comprehensive
income should be read in conjunction with the accompanying
notes.
SUPPLY@ME CAPITAL PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
30 June 2022 31 December
Unaudited 2021
Audited
Notes GBP '000 GBP '000
Non-current assets
Intangible assets and goodwill 11 6,724 7,895
Tangible assets 16 17
Other non-current assets 19 -
Total non-current assets 6,759 7,912
Current assets
Trade and other receivables 12 593 896
Cash and cash equivalents 905 1,727
--------------- --------------
Total current assets 1,498 2,623
--------------- --------------
Total assets 8,257 10,535
Current liabilities
Trade and other payables 13 3,699 3,500
Loan notes 14 2,562 5,732
Convertible loan notes 15 1,502 -
--------------- --------------
Total current liabilities 7,763 9,232
--------------- --------------
Net current assets/(liabilities) (6,265) (6,609)
Non-current liabilities
Long-term borrowings 14 3,159 1,284
Provisions 16 337 340
Deferred tax liabilities 1,036 1,104
Total non-current liabilities 4,532 2,728
Net liabilities (4,038) (1,425)
=============== ==============
Equity attributable to owners of
the parent
Share capital 17 5,581 5,486
Share premium 19,500 18,171
Share-based payment reserve 20 6,019 2,018
Other reserves (11,148) (10,891)
Retained losses (23,990) (16,209)
--------------- --------------
Total equity (4,038) (1,425)
=============== ==============
The above condensed consolidated statement of financial position
should be read in conjunction with the accompanying notes.
SUPPLY@ME CAPITAL PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE 6 MONTH PERIODED 30 JUNE 2021
Merger Reverse Foreign
Share Share Other relief takeover currency Retained
capital premium reserves reserve reserve reserves earnings Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
As at 1
January 2021 5,420 11,820 4 223,832 (237,835) 13 (3,706) (452)
Forex
retranslation
difference - - - - - - 62 62
As at 1
January 2021
post forex
translation 5,420 11,820 4 223,832 (237,835) 13 (3,644) (390)
Loss for the 6
month period - - - - - - (1,889) (1,889)
Forex
retranslation
difference - - - - - (21) - (21)
----------- ------------ ----------- ----------- ----------- ----------- ----------- ---------
Total
comprehensive
loss for the
period - - - - - (21) (1,889) (1,910)
Legal reserve
movement - - 15 - - - - 15
As at 30 June
2021 5,420 11,820 19 223,832 (237,835) (8) (5,533) (2,285)
=========== ============ =========== =========== =========== =========== =========== =========
SUPPLY@ME CAPITAL PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE 6 MONTH PERIODED 30 JUNE 2022
Share-based Merger Reverse Foreign
Share Share Other payment relief takeover currency Retained
capital premium reserves reserve reserve reserve reserves earnings Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
As at 1
January 2022 5,486 18,171 21 2,018 226,905 (237,835) 18 (16,209) (1,425)
Loss for the 6
month period - - - - - - - (6,190) (6,190)
Forex
retranslation
difference - - - - - - (257) - (257)
Loss for the
period and
total
comprehensive
income 5,486 18,171 21 2,018 226,905 (237,835) (239) (22,399) (7,872)
Issue of
warrants - - - 180 - - - - 180
Warrants to be
issued - - - 3,074 - - - - 3,074
Issuance of
new ordinary
shares 95 2,922 - - - - - - 3,017
Share issue
costs - (1,593) - - - - - (1,591) (3,184)
Credit to
equity for
acquisition
related
earn-out
payments - - - 747 - - - - 747
As 30 June
2022 5,581 19,500 21 6,019 226,905 (237,835) (239) (23,990) (4,038)
========= ========= ========= ============ ========= ========== ========= ========= =========
The above condensed consolidated statement of changes in equity
should be read in conjunction with the accompany notes.
SUPPLY@ME CAPITAL PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 6 MONTH PERIODED 30 JUNE 2022
6 months 6 months
to to
30 June 30 June
2022 2021
Unaudited Unaudited
GBP '000 GBP '000
Cash flows from operating activities
Operating loss (4,587) (1,501)
Adjustments for non-cash acquisition
related costs and impairment charge
Acquisition related earn outs 747 -
Amortisation of intangible assets arising 406 -
on acquisition
Impairment charges 916 -
----------- -----------
2,069 -
Other non-cash adjustments 10 (1)
Amortisation and depreciation 16 179
Increase in provisions 3 3
Decrease in accrued income 1 -
Decrease in trade receivables 27 526
Increase in trade payables 407 116
Other decreases / (increases) in net
working capital 229 (139)
----------- -----------
Cash flows from operations (1,825) (817)
Finance costs paid in cash (2) (2)
Income taxes paid in respect of prior (268) -
year amounts owing
----------- -----------
Net cash flows from operating activities (2,095) (819)
Cash flows from investing activities
Purchase of tangible assets (4) (3)
Purchase of intangible assets (164) (529)
Increase in non-current assets (19) -
----------- -----------
Cash flows from investing activities (187) (532)
Cash flows from financing activities
Cash inflow from convertible loan notes - 5,000
Inflow from new long term borrowings 3,050 -
Repayment of previous long term borrowings (1,685)
Cash inflow from issue of new ordinary 1,660 -
shares
Cash repayment of loan notes and convertible
loan notes (1,357) -
Other finance costs paid in cash (183) -
Cash flows from financing activities 1,485 5,000
Net movement in cash and cash equivalents (797) 3,649
Foreign exchange differences to cash (25) -
and cash equivalents on consolidation
Cash and cash equivalents as at 1 January 1,727 552
Cash and cash equivalents as at 30
June 905 4,201
=========== ===========
The above unaudited condensed consolidated statement of cash
flows should be read in conjunction with the accompanying notes
SUPPLY@ME CAPITAL PLC
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS
FOR THE 6 MONTH PERIODED 30 JUNE 2022
1. Company information
Supply@ME Capital plc 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 shares are listed on the London Stock Exchange.
The unaudited Interim Financial Statements have been approved
for issue by the Board of Directors on 28 September 2022.
2. Basis of preparation
Accounting convention
This unaudited interim financial report for the half-year
reporting period ended 30 June 2022 has been prepared in accordance
with Accounting Standard IAS 34 Interim Financial Reporting.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report and
accounts for the year ended 31 December 2021 (the "2021 Annual
Report") and any public announcements made by Supply@ME Capital Plc
during the interim reporting period.
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period
with the exception of the estimation of income tax (refer to note 8
for further details).
New and amended standards adopted by the group
No new or amended standards became applicable for the current
reporting period that impacted the Group. The Group did not have to
change its accounting policies or make retrospective adjustments as
a result of adopting any new or amended standards in the current
interim reporting period
3. Significant changes in the current reporting period
Below provides a summary of the significant changes that
occurred during the six month period ended 30 June 2022.
Capital Enhancement Plan
On 27 April 2022, the Company announced its Capital Enhancement
Plan pursuant to which it would enter into a subscription agreement
with Venus Capital S.A ("Venus") and undertake an open offer to
existing shareholders, in order to raise up to GBP7,500,000 in new
equity capital (the "Capital Enhancement Plan"). This new equity
capital will enable the Company, at its election, to settle the
outstanding loan notes and convertible loan notes with Mercator
Capital Management Fund LP ("Mercator") in cash rather than by the
conversion of the convertible loan notes into new ordinary shares.
During the six month interim period ended 30 June 2022, the
following share issues were made to Venus in line with subscription
agreement dated 26 April 2022:
-- On 26 April 2022, the Company drew down the first mandatory
tranche with Venus, as set out in the subscription agreement dated
26 April 2022, which comprised the issue of 2,770,000,000 new
ordinary share at a price of 0.05 pence. This raised GBP1,385,000
and the new ordinary shares were admitted to trading on the Main
Market on 28 April 2022; and
On 10 May 2022, the Company drew down the second mandatory
tranche with Venus, as set out in the subscription agreement dated
26 April 2022, which comprised the issue of 550,000,000 new
ordinary shares at a price of 0.05 pence. This raised GBP275,000
and the new ordinary shares were admitted to a Standard Listing and
to trading on the Main Market on 11 May 2022.
In connection with the Capital Enhancement Plan, the Company
also executed a convertible loan note agreement with Venus, under
which the Company, at its discretion, could issue to Venus
convertible loan notes up to GBP1,950,000 in aggregate principal
amount. These convertible loan notes were split into two tranches
being:
1) The Tranche A Venus convertible loan notes which could be
issued by the Company to cover the fees associated with the Venus
subscription and convertible loan agreements: and
2) The Tranche B Venus convertible loan notes which could be
issued by the Company to receive a working capital facility of up
to GBP1,500,000.
As at 30 June 2022, the Company had the obligation to issue the
following convertible loan notes to Venus:
1) GBP166,000 of Tranche A Venus convertible loan notes in
relation to the fees incurred for the two share issues referred to
above. This amount has been recorded within trade and other
payables as at 30 June 2022 and offset against the share premium in
accordance with IAS 32 ("Financial Instruments"); and
2) GBP75,000 of Tranche A Venus convertible loan notes in
relation to the fees incurred for the arrangement of the working
capital facility with Venus. The GBP75,000 has been recorded within
trade and other payables as at 30 June 2022 and was also recorded
as a prepaid debt arrangement fee given no amounts under the
working capital facility had been drawn down at 30 June 2022.
Both the convertible loan notes outlined in 1 and 2 above were
issued by the Company to Venus on 19 July 2022. These convertible
loan notes are repayable in shares with a maturity date of 31
December 2025 and incur a 10% per annual interest rate.
The subscription agreement with Venus also required the Company
to issue one warrant to Venus for every two shares issued in
connection with the first and second mandatory tranches share
issues referred to above. This was a total of 1,660,000,000 share
warrants. Additionally, an amount of 3,250,000,000 share warrants
were to be issued to Venus in connection with the signing of the
subscription agreement on 26 April 2022. As such the Company had
the obligation to issue a total of 4,910,000,000 share warrants to
Venus as at 30 June 2022. These were issued on the 19 July 2022
following the approval of additional share headroom at the AGM held
on 30 June 2022. As at 30 June 2022, the obligation to issue these
share warrants to Venus has been recognised within equity as
warrants to be issued within the share based payment reserve.
Mercator funding arrangements
On 29 September 2021, the Company announced it had entered a
loan note facility with Mercator. The key terms of these loan notes
can be found in Note 14 to these interim financial statements. As
at 31 December 2021, the loan note liability was GBP5,732,000.
To assist with the key objective of the Capital Enhancement
Plan, which was to enable the Company, at its election, to settle
the outstanding Mercator loan notes and convertible loan notes in
cash rather than by the conversion into new ordinary shares of the
Company, the Company and Mercator signed an amendment agreement on
26 April 2022.
During the six month interim period ended 30 June 2022, the
Group continued to repay the Mercator loan note liability on a
monthly basis as follows:
-- The January, February and March monthly repayments of
GBP678,000 were settled through the issue of convertible loan
notes, in lieu of cash repayments, to Mercator.
-- The April monthly repayment was paid in cash on 10 June 2022,
in accordance with the amendment agreement referred to above. This
was for an amount of GBP678,000, plus an additional late payment
interest charge of GBP73,000.
-- The May and June monthly payments were settled together on
the 10 June 2022 through the issue of convertible loan notes to the
value of GBP1,502,000, in lieu of cash repayments, to Mercator.
This combined repayment was in accordance with the amendment
agreement and incurred additional late payment interest charges of
GBP146,000.
Pursuant to the original Mercator funding agreements, each of
the January, February and March convertible loan note issues, also
triggered the issue of share warrants to Mercator. The total share
warrants issued during the six month period ended 30 June 2022 in
connection with these January, February and March convertible loan
note issues were 262,891,765. The fair value of each of these share
warrants has been recognised as finance costs and a share based
payment during the six month period ended 30 June 2022. The
amendment agreement with Mercator further agreed that the Company
was required to issue one further tranche of warrants in relation
to the cash payment made for the April monthly repayment. The
associated 176,149,157 warrants were issued to Mercator on 14 July
2022 following the approval of additional share headroom at the AGM
held on 30 June 2022. As at 30 June 2022, the obligation to issue
these share warrants to Venus has been recognised within equity as
warrants to be issued within the share based payment reserve.
Mercator convertible loan note settlement
Both the January and February convertible loan notes were
subsequently fully converted into new ordinary shares of the
Company. These conversions took place as detailed below:
-- On 13 January 2022, the Company issued and allotted
594,664,101 new ordinary shares to Mercator on conversion of
GBP678,000 of convertible loan notes that had been issued on 4
January 2022 by the Company in lieu of the January cash
repayment;
-- On 28 February 2022, the Company issued and allotted
489,787,922 new ordinary shares to Mercator on conversion of
GBP500,000 of convertible loan notes that had been issued on 2
February 2022 by the Company in lieu of the February cash
repayment; and
-- On 29 March 2022, the Company issued and allotted 316,446,349
new ordinary shares to Mercator on conversion of the remaining
GBP178,000 convertible loan notes that had been issued on 2
February 2022 by the Company in lieu of the February cash
repayment.
In addition to the share conversions outlined above, following
the execution of the amendment agreement with Mercator on the 26
April 2022, the Company repaid in cash the GBP678,000 outstanding
in relation to the convertible loan note issued by the Company on 4
March 2022, in lieu of the March cash repayment. This repayment was
made on 9 May 2022 and included an additional late payment interest
charge of 8%.
The May and June convertible loan notes of GBP1,502,000 remain
outstanding as at 30 June 2022.
New loan into TradeFlow Capital Management Pte. Limited
("TradeFlow")
On 1 April 2022, TradeFlow entered into a new loan agreement
with a third-party lender for US$3,800,000, with a maturity date of
31 March 2026. The new TradeFlow loan incurs simple interest at a
fixed rate of 7.9% per annum and has an additional redemption
premium of USD$200,000 which is payable at the time the principal
is repaid. The proceeds from the new TradeFlow loan was used to pay
down the existing outstanding unsecured loan notes of TradeFlow
which as at 31 December 2021 had a principal balance of
GBP1,263,000 (US$1,700,000), accrued interest of GBP77,000
(US$103,558) and amortised costs in respect of the redemption
premium costs (using the effective interest rate method) of
GBP84,000 (US$113,026) held on the balance sheet. The total amount
used to repay the existing loan notes was US$2,100,000 (being the
principal balance of US$1,700,000, total costs of issue of
US$300,000 and outstanding interest of US$100,000). The net amount
received in cash relating to the new TradeFlow loan was
US$1,700,000. The new loan agreement is with the same third-party
lender as the existing unsecured loan note provider.
4. Going Concern
At the 30 June 2022 the Group had cash balances of GBP905,000
(31 December 2021: GBP1,727,000) and net current liabilities of
GBP6,265,000 (31 December 2021: GBP6,609,000). The Group has posted
a loss for the period ended 30 June 2022 after tax of GBP6,190,000
(Period ended 30 June 2021: loss GBP1,889,000) and retained losses
were GBP23,990,000 (31 December 2021: losses GBP16,209,000).
The current liabilities as at 30 June 2022 of GBP7,763,000
included GBP2,562,000 relating to the outstanding balance of loan
notes which the Group issued on 29 September 2021 and GBP1,502,000
relating to outstanding convertible loan notes issued to make
certain repayments under the loan note facility. As outlined in the
note 22, following 30 June 2022, GBP1,200,000 of the loan note
balance has been repaid through the issue of new convertible loan
notes to Mercator, and an additional principal amount of GBP835,000
has been repaid in cash to Mercator. In addition, subsequent to 30
June 2022, the Company has drawn down the GBP1,500,000 working
capital facility from Venus by way of convertible loans, and has
issued further convertible loan notes to Venus of GBP115,000 in
terms of additional fees on subsequent share issues.
Subsequent to 30 June 2022 the convertible loan note liability
to Mercator has increased to GBP2,702,000, and the convertible loan
note liability to Venus has increased by a principal amount of
GBP1,115,000. The Company is currently executing the Capital
Enhancement Plan to enable the Company, at its election, to settle
the outstanding Mercator loan notes and convertible loan notes in
cash rather than by the conversion into new ordinary shares of the
Company. Additionally, the outstanding Venus convertible loan notes
are expected to be repaid via the conversion into new ordinary
shares.
The Capital Enhancement Plan referred to above was signed during
the current interim period on the 26 April 2022, and under this
plan the Company agreed a new equity funding facility with Venus,
to invest up to GBP7,500,000 in exchange for multiple tranches of
new ordinary shares to be issued by the Company over a period with
a long stop date of 31 December 2023. As at the date of the issue
of these unaudited interim financial statements, the Company had
raised a total of GBP3,131,000, with a further amount of up to
GBP4,365,000 to be raised.
Taking into account the factors above and in order to consider
their assessment of the Group as a going concern, the Directors
have reviewed the forecast cashflows for the next 12 months. The
cashflow forecasts take into account that the Group meets its day
to day working capital requirement through its cash resources and
are based on the enlarged Group, including TradeFlow. The Directors
have prepared the forecast using their best estimates, information
and judgement at this time, including the Capital Enhancement Plan
and loan note amendment announced on the 27 April 2022. The
Directors have also considered the expected cashflows arising from
TradeFlow's investment advisory services ("IA" revenue stream) as
well as from the use of the Group's innovative Platform to
facilitate inventory monetisation transactions ("C.IM" revenue
stream). This reflects the fact that the Directors expect the Group
to fully operationalise the business model in the future.
Despite the facts outlined above, there is currently an absence
of a historical track record relating to inventory monetisation
transactions being facilitated by the Group's Platform, the Group
generating the full range of fees from the use of its 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 revenue streams referred to above. In this regard, if
these future revenues are not secured as the Directors envisage, it
is possible that the Group will have a shortfall in cash and
require additional funding during the forecast period. In addition,
certain cashflows in relation to the financing transactions noted
above have not yet occurred and the issue of new ordinary shares
under the Capital Enhancement Plan is subject to the issue and
approval of a prospectus. On the basis of the above, the Directors
believe there are material uncertainties which may cast significant
doubt upon the entities ability to continue as a going concern.
The Directors do however remain confident in the business model
and believe the Group could be managed in a way to allow it to meet
its ongoing commitments and obligations through mitigating actions
including cost saving measures and securing alternative sources of
funding should this be required. This includes the application by
certain of the Company's subsidiaries to access specialised loans
for SME businesses provided by Italian commercial banks with the
support of government guarantees, which will allow the Group to
access a lower cost of capital; and the recent announcement of the
first inaugural inventory monetisation ("IM") being facilitated by
the Group over its IM Platform.
As such the Directors consider it appropriate to prepare these
annual consolidated interim 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 is continually developing. Prior to the acquisition of
TradeFlow on 1 July 2021, the Board considered that the Group
operated in a single business segment of due diligence and all
activities were undertaken in Italy.
Following the acquisition, the Board of Directors manage the
Group as two operating segments being inventory monetisation
(comprising the Group's Italian operating subsidiary) and
investment advisory (comprising the TradeFlow operations),
alongside the head office costs (comprising the Company). To date
the inventory monetisation segment has been focused on the
development of the IM Platform and the provision of due diligence
services.
The key metrics assessed by the Board of Directors include
revenue and adjusted operating profit (before acquisition related
costs and impairment charges) which is presented below. Revenue is
presented by basis of recognition and by service line, in
accordance with IFRS 15. As the business continues to grow, it is
expected that the operating segments may need to be monitored and
updated to reflect the needs and requirement of the chief operating
decision maker.
Inventory Investment Head Consolidated
Monetisation Advisory office Group
6 months to 30 June 2022 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Due Diligence - - - -
fees
Investment
Advisory fees - 209 - 209
------------------------ ---------------------- ------------------- ------------------------
Revenue by
operating
segment - 209 - 209
------------------------ ---------------------- ------------------- ------------------------
Operating loss
before
acquisition
related costs
and impairment
charges (286) (584) (1,648) (2,518)
As at 30 June
2022
Balance sheet
Assets 347 993 6,917 8,257
Liabilities (4,023) (3,279) (4,993) (12,295)
------------------------ ---------------------- ------------------- ------------------------
Net assets
/(liabilities) (3,676) (2,286) 1,924 (4,038)
------------------------ ---------------------- ------------------- ------------------------
6. Finance costs
6 months 6 months
to to
30 June 30 June
2022 2021
GBP '000 GBP '000
Interest expense - loan notes/ convertible
loan notes 1,464 192
Interest expense - long-term borrowings 208 -
Total finance costs 1,672 192
========= =========
On the 1 April 2022, TradeFlow entered into a new long term loan
facility, with a maturity date of 31 March 2026, and in connection
with this, chose to settle its existing unsecured loan note
facility ahead of its maturity date on the 23 October 2023. This
early settlement resulted in finance costs of GBP122,000 being
recognised during the current six month period relating to the
acceleration of the redemption premium cost due on repayment of the
principal of the existing loan note facility. The cost of the
redemption premium was previously being recognised over the
expected life of the loan note facility using the effective
interest rate method.
7. Operating loss before acquisition related costs and impairment charges
The Group's operating loss before acquisition related costs and
impairment charges for the six month period ended 30 June 2022 has
been arrived at after charging:
6 months 6 months
to to
30 June 30 June
2022 2021
GBP '000 GBP '000
Amortisation of internally developed
IM platform 13 178
Depreciation 2 1
Staff costs 1,190 455
Short-term lease costs 46 -
Professional and legal fees 812 719
Contractor costs 233 -
Insurance 59 76
Training and recruitment costs 7 53
8. Taxation
Income tax expense for the period to 30 June 2022 primarily
represents the movement in the deferred tax liabilities during the
six month period ended 30 June 2022.
To date any accumulated tax losses resulting from net losses in
the consolidated financial statement have not been recognised in
the balance sheet given the Group does not have a track record of
generating profits against which these accumulated losses could be
offset.
9. Dividends
During the half-year to 30 June 2022 the Group did not pay a
dividend (2021: 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.
10. Earnings / (loss) per share
The calculation of the Basic earnings per share (EPS) is based
on the loss for the period of GBP6,190,000 (2021 - loss
GBP1,889,000) and on a weighted average number of ordinary shares
in issue of 38,271,981,611 (2021: 27,118,800,563). The basic EPS
from continuing operations is (0.02) pence (2021: (0.01)). The
following share warrants and future acquisition related earn-out
payments to be issued in shares were in issue at the dates shown
below and if exercised, would dilute the earnings per share in the
future.
30 June 30 June
2022 2021
No. No.
Number of shares:
Share warrants - issued 785,683,276 11,363,636
Share warrants - to be issued 5,086,149,157 -
Acquisition related earn-out share 1,282,550,632 -
based payments
Total 7,154,383,065 11,363,636
============== ===========
No dilution per share was calculated for either period in the
table above as with the reported loss they are all
antidilutive.
11. Intangible assets
AI Goodwill Internally
Software developed
Customer CTRM IM
Relationships Brand Software platform Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or
valuation
At 1 January
2021 - - - - - 1,558 1,558
Additions - - - - - 529 529
------------------------- ------------------- -------------------- -------------------- -------------------- ---------------------- -------------------
At 30 June
2021 - - - - - 2,087 2,087
Depreciation
At 1 January
2021 - - - - - 379 379
Charge for
the
period - - - - - 176 176
------------------------- ------------------- -------------------- -------------------- -------------------- ---------------------- -------------------
At 30 June
2021 - - - - - 555 555
Net book
value
At 30 June
2021 - - - - - 1,532 1,532
========================= =================== ==================== ==================== ==================== ====================== ===================
Cost or
valuation
At 1 January
2022 4,829 205 1,429 425 2,199 2,544 11,631
Additions - - - - - 164 164
------------------------- ------------------- -------------------- -------------------- -------------------- ---------------------- -------------------
At 30 June
2022 4,829 205 1,429 425 2,199 2,708 11,795
Amortisation
At 1 January
2022 186 20 143 43 - 771 1,163
Charge for
the
period 193 21 148 44 - 13 419
------------------------- ------------------- -------------------- -------------------- -------------------- ---------------------- -------------------
At 30 June
2022 379 41 291 87 - 784 1,582
Impairment
At 1 January
2022 - - - - 800 1,773 2,573
Impairment
charges - - - - 765 151 916
------------------------- ------------------- -------------------- -------------------- -------------------- ---------------------- -------------------
At 30 June
2022 - - - - 1,565 1,924 3,489
Net book
value
At 30 June
2022 4,450 164 1,138 338 634 - 6,724
========================= =================== ==================== ==================== ==================== ====================== ===================
The following intangible assets arose on the acquisition of
TradeFlow during the year ended 31 December 2021; Customer
relationships, Brand, Commodity Trade Risk Management ("CTRM")
software, Artificial Intelligence and back-office ("AI") software
and Goodwill. The carrying value of these assets at the date of
acquisition is shown in the table above. Further details regarding
the accounting for the business combination can be found in the
2021 Annual report.
Impairment assessment - Internally developed IM Platform
As at 31 December 2021, the Directors performed an impairment
test on this asset. This followed the losses for the year ended 31
December 2021 of the Group's Italian subsidiary, to which the
Internally developed IM platform relates. These losses were
considered an impairment indicator in accordance with IAS 36
("Impairment of Assets").
Details of the impairment test referred to above can be found in
the 2021 Annual Report. While the recoverable amount of the IM
Platform was higher than its carrying amount as a result of the
impairment test, the Directors prudently decided to impair the full
carrying amount of this asset as at 31 December 2021. This took
account of the fact that the Group currently has an absence of a
historical 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
and the Group being cash flow positive. As such the Directors
concluded that there was an uncertainty around 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.
During the six month period ended 30 June 2022, the Group
continued to develop the IM Platform. As at 30 June 2022, the
Directors again looked for indicators of impairment and noted the
those that had been present at 31 December 2021, continued to exist
at 30 June 2022. Specifically, the Directors again concluded 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 prudently decided to impair the carrying
value of the IM Platform at 30 June 2022. This impairment loss may
subsequently be reversed and if so, the carrying amount of the
asset may be increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does no exceed
the carrying amount that would have been determined had no
impairment loss been recognised for the IM Platform asset in the
prior periods.
Impairment assessment - TradeFlow
As at 30 June 2022, the Directors looked for indicators of
impairment in order to determine if there was a need to carry out
an impairment test in accordance with IAS 36 ("Impairment of
Assets") on the TradeFlow Cash Generating Unit ("CGU") at this
date. Given that TradeFlow continued to under-perform against both
its revenue and operating loss forecasts for the six month ended 30
June 2022, the Directors considered this an indicator of impairment
as at 30 June 2022.
This IAS 36 ("Impairment of Asset") impairment test has been
carried out using an updated cash flow forecast that the TradeFlow
CGU is expected to generate during the period to FY25 in its
current conditions. This reforecast has been prepared by the
Directors of TradeFlow and factored in reduced revenues, higher
operating losses for the first two years of the reforecast and
lower operating profits for the remaining periods. The Directors
believe that the reforecast are based on a set of reasonable
assumption given the current expectations for TradeFlow's growth
and development in the future.
The Directors prudently applied a 25% discount rate in order to
be consistent with the approach followed at 31 December 2021
(further detailed of which can be in the 2021 Annual Report) and
also to be consistent with the independent purchase price
accounting exercise carried out in respect of the TradeFlow
acquisition. Using these assumptions, the recoverable amount has
been identified as the value in use, equal to the sum of the
discounted future cash flows (including a terminal value and
terminal value growth rates of 2.5%) that the TradeFlow CGU will be
able to generate according to management estimates in its current
condition. This recoverable amount of the TradeFlow CGU was
determined to be lower than its carrying amount on the balance
sheet at 31 December 2021 by GBP765,000.
As such, in accordance with IAS 36 ("Impairment of Assets"), an
impairment charge of GBP765,000 has been recognised against the
value of the goodwill initially recognised in line with IFRS 3
("Business Combinations"). This impairment charge has also been
recognised in the profit and loss in the current six month period
ended 30 June 2022.
12. Trade and other receivables
30 June 31 December
2022 2021
GBP '000 GBP '000
Trade receivables 11 13
Contract assets 61 84
Other receivables 393 727
Prepayments 53 72
Pre-paid debt issue costs 75 -
--------- ------------
593 896
========= ============
13. Trade and other payables
30 June 31 December
2022 2021
GBP '000 GBP '000
Trade payables 1,542 1,086
Other payables 526 588
Social security and other taxes 674 994
Accruals 322 437
Contract liabilities 394 395
Convertible loan notes to be issued 241 -
--------- ------------
3,699 3,500
========= ============
Other payables include any refunds that have been requested from
client companies in connection with the Group's older contracts
that allowed for this, but which are currently still to be paid at
30 June 2022.
Contract liabilities relate to those due diligence fees or
customer deposits (in relation to the Group's older contracts) that
have been paid by clients, but for which the corresponding
performance obligation has not yet been satisfied by the Group.
The convertible loan notes to be issued relates to the Tranche A
Venus convertible loan notes which the Company had the obligation
to issue at 30 June 2022 and which were issued to Venus on the 19
July 2022. Further details are set out in Note 3 above.
14. Loan notes and Long-term Borrowings
Loan notes
On 29 September 2021, the Company announced it had entered a
loan note facility with Mercator. The Mercator loan note facility
consisted of a short-term loan with the following key terms:
-- Initial draw down of GBP5 million, with a further GBP2
million available within 60 days subject to certain conditions
precedent which were subsequently met;
-- 12-month term, with an interest rate of 10%;
-- The principal and interest to be repaid on a monthly basis; and
-- Warrants will be issued representing 20% of both tranches.
The warrants will 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.
The loan note facility was linked to a convertible loan note
facility also entered into with Mercator, which was able be used
should the Company elect not to repay any of the interest or
principal relating to the loan notes in cash. The Mercator
convertible loan note facility was for the same aggregate value as
the loan facility including interest, being GBP7.7 million, and was
able to be drawn in tranches equal to the monthly loan repayments.
Further details of the Mercator convertible loan notes can be found
in note 15.
As set out in Note 3 above, to assist with the key objective of
the Capital Enhancement Plan, which was to enable the Company, at
its election, to settle the outstanding Mercator loan notes and
convertible loan notes in cash rather than by the conversion into
new ordinary shares of the Company, the Company and Mercator signed
an amendment agreement on 26 April 2022.
Pursuant to both the original agreement dated 29 September 2022
and the amendment agreement dated 26 April 2022, the Group repaid
the following monthly instalments of the loan note liability over
the six month period ended 30 June 2022:
-- The January, February and March monthly repayments of
GBP678,000 per month were settled through the issue of convertible
loan notes, in lieu of cash repayments, to Mercator.
-- The April monthly repayment was paid in cash on 10 June 2022,
in accordance with the amendment agreement referred to above. This
was for an amount of GBP678,000, plus an additional late payment
interest charge of GBP73,000.
-- The May and June monthly payments were settled together on
the 10 June 2022 through the issue of convertible loan notes to the
value of GBP1,502,000, in lieu of cash repayments, to Mercator.
This combined repayment was in accordance with the amendment
agreement and included additional late payment interest charges of
GBP146,000.
The payments in lieu of cash were made in order to allow the
Group to preserve cash for working capital requirements and to
facility further new strategic initiatives.
The loan notes were initially recorded at the proceeds received,
net of direct issue costs (including commitment fees, introducer
fees and the fair value of warrants issued to satisfy issue costs).
The finance charges, including direct issue costs, are accounted
for on an amortised cost basis using the effective interest method.
The effective interest rate applied was 47.5%. The additional late
payment interest charges have been recorded as finance costs in the
period in which they were incurred and have not been included in
the effective interest rate calculation.
The movement in loan notes during the current financial period
are set out in the table below:
GBP '000
Loan note liability at 1 January 2022 5,732
Less monthly repayments made via issue of
convertible loan notes (3,392)
Less cash monthly repayments (678)
Amortisation of finance costs during the period 900
---------
Loan note liability at 30 June 2022 2,562
=========
Long-Term Borrowings
30 June 31 December
2022 2021
GBP '000 GBP '000
Unsecured loan 3,137 1,263
Other bank borrowings 22 21
--------- ------------
3,159 1,284
========= ============
As set out in Note 3 above, on 1 April 2022, TradeFlow settled
the outstanding unsecured loan notes earlier than the original
maturity date of 23 October 2023. This involved the settlement of
the principal amount of USD$1,700,000, the additional redemption
premium cost of USD $300,000 and accrued interest of USD $100,000.
These loan term borrowings were replaced by a new long term loan
facility, with the same third party, for USD $3,800,000, which has
a maturity date of 31 March 2026. The new long term borrowings
bears a simple fixed interest rate of 7.9% per annum and has an
additional redemption premium cost of USD$200,000 which is payable
at the time the principal is repaid. In accordance with IFRS 9
("Financial Instruments") the new long term loan facility resulted
in a substantial modification to the previous loan note
facility.
Both the unsecured loan notes and the new loan facility include
an redemption premium cost which is payable together with the
settlement of the principal amount of the facility. This redemption
premium cost is recognised over the expected life of the facility
using the effective interest rate method. Due to the early
settlement of the unsecured loan notes this resulted in the
unrecognised portion of the redemption premium cost being
accelerated. This contributed an additional finance costs of
GBP122,000 during the six month period ended 30 June 2022.
As at 30 June 2022, the Group has recognised outstanding monthly
accrued interest on the new long term loan facility of GBP62,000
within trade and other payables. An additional amount of GBP10,000
relating to the amortisation of the redemption premium cost has
been recognised as part of the unsecured loan balance at 30 June
2022.
15. Convertible loan notes
The balance of the loan notes during the current financial
period are set out in the table below:
30 June 31 December
2022 2021
GBP '000 GBP '000
Convertible loan notes 1,502 -
--------- ------------
1,502 -
========= ============
As set out in Note 14 above, the loan note facility the Company
entered into with Mercator is linked to a convertible loan note
facility also with Mercator.
The Mercator convertible loan notes contain the following key
terms:
-- They were each to be issued at par value;
-- Each convertible loan note had a 12-month term, a conversion
price of 85% of the lowest 10 day closing VWAP prior to the issue
of the conversion notice and was able to be convertible at the
holders request;
-- Warrants are to be issued for 20% of each tranche. The
warrants will 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 request to issue a new tranche. Under the
terms of amendment agreement signed with Mercator dated 26 April
2022, no further warrants were required to be issued on the monthly
repayments due following April 2022.
During the interim period, the Group made the following loan
note repayments through the issue of convertible loan notes in
order to preserve cash for working capital requirements and to
facilitate further new strategic initiatives:
-- The January, February and March monthly repayments of
GBP678,000 per month were settled through the issue of convertible
loan notes, in lieu of cash repayments, to Mercator.
-- The May and June monthly payments were settled together on
the 10 June 2022 through the issue of convertible loan notes to the
value of GBP1,502,000, in lieu of cash repayments, to Mercator.
This combined repayment was in accordance with the amendment
agreement and included additional late payment interest charges of
GBP146,000.
During the six months ended 30 June 2022, both the January and
February convertible loan notes were subsequently fully converted
into new ordinary share of the Company. The details of these
conversions are set out in Note 3 above. In addition to these share
conversions, following the execution of the amendment agreement
with Mercator on the 26 April 2022, the Company repaid in cash the
GBP678,000 outstanding in relation to the convertible loan notes
issued by the Company on 4 March 2022, in lieu on the March cash
repayment. This cash repayment was made on 9 May 2022 and included
an additional late payment interest charge of 8% which was also
paid in cash.
As at 30 June 2022, the May and June convertible loan note
remains outstanding. The Directors have included these in current
liabilities due to the expectation that they will be converted or
settled within the next 12 month period.
The Mercator convertible loan notes did not have any interest
costs in addition to the loan notes but did have costs relating to
commitment fees and late payment interest charges of GBP255 ,000
and the fair value cost of GBP 236,000 associated with warrants.
Both costs have been recognised in the income statement in the
current interim period given the liability to which they relate has
been extinguished. Further details on the fair value of the
warrants is set out in note 20 .
The movement in convertible loan notes during the current
financial period are set out in the table below:
GBP '000
Convertible loan note liability at 1 January -
2022
Monthly loan note repayments made via issue
of convertible loan notes 3,392
Financial costs satisfied via the issue of
convertible loan notes 145
Less convertible loan notes converted into
ordinary shares (1,357)
Less convertible loan notes repaid in cash (678)
---------
Convertible loan note liability at 30 June
2022 1,502
=========
Historical convertible loan notes
In addition to the above, the Company also had the following
historical convertible loan notes and associated derivative
financial instruments which expired in October 2021 resulting in a
credit to the income statement in respect of the outstanding fair
value of GBP24,000 during the second half of 2021.
16. Provisions
Provision Provision
for risks for VAT
Post-employment and and
benefits charges penalties Total
GBP'000 GBP'000 GBP'000 GBP'000
At 31
December
2021 44 87 209 340
Fx
translation
adjustment 1 3 5 8
--------------------------- --------------------- --------------------- -------------------
Carrying
amount at 1
January
2022 45 90 214 348
Released to
profit and
loss - - (5) (5)
Provided for
in the
half-year 1 1 - 2
Payments (9) - - (8)
At 30 June
2022 37 91 209 337
=========================== ===================== ===================== ===================
Post-employment benefits
Post-employment benefits include severance pay and liabilities
relating to future commitments to be disbursed to employees based
on their permanence in the company. This entirely relates to the
Italian subsidiary where severance indemnities are due to each
employee at the end of the employment relationship. Post-employment
benefits relating to severance indemnities are calculated by
estimating the amount of the future benefit that employees have
accrued in the current period and in previous years using actuarial
techniques. The calculation is carried out by an independent
actuary using the "Projected Unit Credit Method".
Provision for risks and charges
Provision for risks and charges includes the estimated amounts
of penalties for payment delays referring the tax payables recorded
in the Italian subsidiary financial statements which, at the
closing date, are overdue.
Provision for VAT and penalties
In advance of the Group's first monetisation transaction, a
number of advance payments have been received by the Group's
Italian subsidiary from potential client companies in accordance
with agreed contractual terms. These payments have been recognised
as revenue in accordance with local accounting rules. These advance
payments, for which an invoice has not yet been issued, have been
made exclusive of VAT. As at 30 June 2022, the Group has included a
provision relating to a potential VAT liability, including
penalties, in respect of these advance payments of GBP209,000 (31
December 2021: GBP209,000). The small reduction during the current
interim period set out in the table above represents the fact that
a only a few payments have been refunded, at the customer's
request, and therefore the potential VAT liability has been
removed.
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 2022, however there is a contingent
asset of GBP149,000 as at 31 December 2021 (31 December 2021:
GBP149,000) in respect of this.
17. Share capital
Allotted, called up and fully paid shares
30 June 2022 31 December 2021
No. 000 GBP '000 No. 000 GBP '000
Ordinary
shares of
GBP0.00002
each 40,789,340 816 36,068,442 721
Deferred
shares of
GBP0.04
each 63,084 2,523 63,084 2,523
2018 deferred
shares of
GBP0.01000
each 224,194 2,242 224,194 2,242
---------------------- -------------------- ---------------------- --------------------
Total 41,076,618 5,581 36,355,720 5,486
====================== ==================== ====================== ====================
New shares allotted during the interim period to 30 June
2022
On 13 January 2022, the Company allotted 594,664,101 new
ordinary shares as a result of the conversion of GBP678,333 of the
convertible loan notes issued and subscribed by Mercator Group.
On 28 February 2022, the Company allotted 489,787,922 new
ordinary shares as a result of the conversion of GBP500,000 of the
convertible loan notes issued and subscribed by Mercator Group.
On 29 March 2022, the Company allotted 316,446,349 new ordinary
shares as a result of the conversion of GBP178,333 of the
convertible loan notes issued and subscribed by Mercator Group.
On 26 April 2022, the Company issued 2,770,000 of new ordinary
shares to Venus Capital in exchange for GBP1,385,000.
On 10 May 2022, the Company issued 550,000,000 of new ordinary
shares to Venus Capital in exchange for GBP275,000.
Rights, preferences and restrictions
Ordinary shares have the following rights, preferences, and
restrictions:
The Ordinary shares carry rights to participate in dividends and
distributions declared by the Company and each share carries the
right to one vote at any general meeting. There are no rights of
redemption attaching to the Ordinary shares.
Deferred shares have the following rights, preferences, and
restrictions:
The deferred shares carry no rights to receive any dividend or
distribution and carry no rights to vote at any general meeting. On
a return of capital, the Deferred shareholders are entitled to
receive the amount paid up on them after the Ordinary shareholders
have received GBP100,000,000 in respect of each share held by them.
The Company may purchase all or any of the Deferred shares at an
appropriate consideration of GBP1.
2018 Deferred shares have the following rights, preferences, and
restrictions:
The deferred shares carry no rights to receive any dividend or
distribution and carry no rights to vote at any general
meeting.
Reconciliation of allotted, called up and fully paid shares
As at 30 June 2022
No. 000 GBP 000
As at 1 January 2022 36,355,720 5,486
Shares issued on conversion of convertible
loan notes 1,400,898 28
Shares issued in relation to Capital
Enhancement Plan 3,320,000 67
As at 30 June 2022 41,076,618 5,581
=========== =======
18. Financial instruments
Financial assets at amortised cost
Carrying value Fair value
31 31
30 June December 30 June December
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Cash and
cash
equivalents 905 1,727 905 1,727
Trade
receivables 11 13 11 13
Other
receivables 582 727 582 727
---------------------- --------------------- ---------------------- ---------------------
1,498 2,467 1,498 2,467
====================== ===================== ====================== =====================
Valuation methods and assumptions:
The directors believe that the fair value of all financial
assets at amortised cost approximate to their carrying values.
Financial liabilities at amortised cost
Carrying value Fair value
31 31
30 June December 30 June December
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Long-term
borrowings 3,159 1,284 3,159 1,284
Trade
payables 1,542 1,086 1,542 1,086
Other
payables 2,157 588 2,157 588
Loan notes 2,562 5,732 2,562 5,732
Convertible
loan notes 1,502 - 1,502 -
---------------------- --------------------- ---------------------- ---------------------
10,922 8,690 10,922 8,690
====================== ===================== ====================== =====================
Valuation methods and assumptions:
The directors believe that the fair value of all financial
liabilities at amortised cost approximate to their carrying
values.
The Group has no derivative financial instruments as at 30 June
2022 (31 December 2021: nil)
Valuation methods and assumptions:
Further information relating to the valuation of the derivative
financial instruments is available in note 25 of the annual
financial statements for the year ended 31 December 2021.
19. Financial risk management
Note 25 to the annual financial statements for the year ended 31
December 2021 include the Group's objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and its exposure
to interest rate risk, credit risk, foreign exchange risk and
liquidity risk.
20. Share-based payments
Acquisition related earn-out payments
The terms of the TradeFlow acquisition included related earn-out
payments that, together with the initial cash payment and issue of
equity, form the total legal consideration agreed between the
parties.
This acquisition related earn-out payments are determined by
reference to pre-determined revenue milestone targets in each of
the 2021, 2022 and 2023 financial years. These payments may be
forfeited by the selling shareholders should they, in certain
circumstances, no longer remain employed prior to the end of each
earn-out period. As such, under the IFRS Interpretations
Committee's interpretation of paragraph B55 of IFRS 3 ("Business
Combinations"), the fair value of these earn-out payments have been
accounted as a charge to the income statement (as deemed
remuneration) rather than as consideration.
The terms of the agreements also allow this acquisition related
earn-out payments to be settled in either cash or equity at the
discretion of the Company. As it is the Company's current intention
to settle these payments in equity, they have been fair valued at
the grant date in line with IFRS 2 ("Share-based payments"). When
the Company settles the earn-out payment in shares, the number of
shares to be issued will be determined using the Volume Weighted
Average Price ("VWAP") over the 20 dealing days to the end of the
relevant financial year subject to a floor of 1p. In addition, the
number of shares will be enhanced by 50% if the VWAP is greater
than 1p. Finally, 50% of any earn-out shares may not be sold for 12
months following the award but are not contingent on continued
employment. As set out in Note 18, the 2021 earn out payment was
settled through the issue of new ordinary shares on the 18 July
2022.
Taking into account the factors above, the fair value of the
earn-out payments at grant date (being 1 July 2021) has been
estimated using a Monte Carlo simulation model. These earn-out
payments, to be settled by way of equity, have market conditions
associated with them including the future share price. As part of
the valuation, a further discount has been applied to the 50% which
are subject to lock in provisions, and this discount factor has
been calculated using a Finnerty model, being a variant of the
Black Scholes model.
The key judgemental assumptions associated with this valuation
have been detailed in the 2021 Annual Report. The models above have
assumed the non-market conditions surrounding these earn-out
payments / awards will be met and as such in future periods the
impact of the revision of the original estimates, if any, will be
recognised in the income statement such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to
equity reserves.
The expense recognised in the income statement in the current
interim period was GBP747,000.
Share warrants - Mercator
As explained in notes 14 and 15 to these interim financial
statements, the Company has entered into a funding facility with
Mercator which included the Company issuing loan notes in exchange
for funding. These loan notes linked to a convertible loan note
facility, which was able to be used should the Company elect not to
repay any of the interest or principal relating to the loan notes
in cash. Both the loan note and convertible loan note agreements
required share warrants to be issued representing 20% of the face
value of any loan notes or convertible loans issued. The warrants
issued to Mercator have a term of 3 years from issue and an
exercise price of 130% of the lowest closing VWAP over the ten
trading days immediately preceding the issue of the warrants. Under
the terms of amendment agreement signed with Mercator dated 26
April 2022, no further warrants were required to be issued on the
monthly repayments due following April 2022.
The total number of share warrants issued to Mercator during the
current interim period was 262,891,765. Additionally, the Company
had an obligation to issue a further 176,149,157 share warrants to
Mercator as at 30 June 2022 and these were issued following the
approval of additional share headroom at the AGM. As at 30 June
2022, the obligation to issue these share warrants to Venus has
been recognised in the interim financial statements.
As these share warrants were issued as a cost of securing the
funding facility they fall into of scope of IFRS 2 ("Share-based
payments"). As such, the Directors were required to determine the
fair value of the equity-settled share-based payments at the date
on which they were granted. The fair value was determined using a
Black-Sholes model which required certain judgements to be made in
determining the most appropriate inputs to be used. The key
judgemental point was the expected volatility rate of the Company's
share price over the relevant period prior to the grant of the
warrants. The assumption applied in the model for the warrants
issued, and to be issued, to Mercator during the current interim
period was a range of 88%-97%, depending of the grant date. This
was based on the actual volatility of the Company's shares over the
historical period from March 2020 (the date of the reverse take
over) to the valuation date.
The total fair value of the above share warrants issued during
the interim period, and to be issued as at 30 June 2022, to
Mercator was GBP236,000. This amount was fully in the income
statement in the current year given the specific liability to which
they relate has been extinguished. If the expected volatility rate
used in the Black Scholes modelling of these warrants was adjusted
by plus 10%, then the impact on the fair value in the interim
period would have been approximately GBP24,000 more. If the
expected volatility rate used in the Black Scholes modelling of
these warrants was adjusted by minus 10%, then the impact on the
fair value in the current interim period would have been
approximately GBP24,000 less.
Share warrants - Venus
As set out in Note 3, on the 27 April 2021, the Company entered
a subscription agreement with Venus in connection with the Capital
Enhancement Plan. The subscription agreement specified that the
Company was issue one warrant for every two shares issued in
connection with the first two ordinary share issues to Venus during
the six month period ended 30 June 2022. This was a total of
1,660,000,000 share warrants. Additionally, an amount of
3,250,000,000 share warrants were to be issued to Venus in
connection with the signing of the subscription agreement on 26
April 2022. As such the Company had the obligation to issue a total
of 4,910,000,000 share warrants to Venus as at 30 June 2022. These
were issued on the 19 July 2022 following the approval of
additional share headroom at the AGM. As at 30 June 2022, the
obligation to issue these share warrants to Venus has been
recognised in the interim financial statements. The warrants issued
to Venus can be exercised at any time up to 31 December 2025 and
have an exercise price of 0.065 pence per warrant.
As these share warrants were issued as a cost of issuing new
ordinary shares to Venus they fall into of scope of IFRS 2
("Share-based payments"). As such, the Directors were required to
determine the fair value of the equity-settled share-based payments
at the date on which they were granted. The fair value was
determined using a Black-Sholes model which required certain
judgements to be made in determining the most appropriate inputs to
be used. The key judgemental point was the expected volatility rate
of the Company's share price over the relevant period prior to the
grant of the warrants. The assumption applied in the model for the
warrants to be issued to Venus during the current interim period
was 88%. This was based on the actual volatility of the Company's
shares over the historical period from March 2020 (the date of the
reverse take over) to the valuation date.
The total fair value of the above share warrants to be issued to
Venus at 30 June 2022 is GBP3,019,000. Given this amount directly
related to the cost of issuing new ordinary shares to Venus, an
amounts of GBP1,428,000 has been offset against the share premium
balance as at 30 June 2022 in accordance with IAS 32 "Financial
Instruments". The amount offset is the entire share premium that
was created during the current interim period in connection with
the first two ordinary share issues to Venus outlined above. The
remaining fair value amount of GBP1,591,000 has been recognised in
retained earnings.
If the expected volatility rate used in the Black Scholes
modelling of these warrants was adjusted by plus 10%, then the
impact on the fair value in the current interim period would have
been approximately GBP183,000 more. If the expected volatility rate
used in the Black Scholes modelling of these warrants was adjusted
by minus 10%, then the impact on the fair value in the current
interim period would have been approximately GBP196,000 less.
21. Related party transactions
During the period to 30 June 2022, the following are treated as
related parties:
Alessandro Zamboni and The AvantGarde Group S.p.A ("TAG") and
its subsidiaries
Alessandro Zamboni is the CEO of the Group and is also the sole
director of The AvantGarde Group S.p.A As at 30 June 2022 TAG held
31.2% of the Company's total ordinary shares in issued in Supply@
ME Capital plc (as at 31 December 2021: 35.3%).
As announced in the RNS issued on 24 December 2020, 1AF2 S.r.l.
and TAG previously merged. Alessandro Zamboni was also a director
of 1AF2 S.r.l. During 2020, the Group entered into an origination
contract with 1AF2 S.r.l. in connection with the identification of
potential client companies. Under this origination contract it was
the related party's responsibility to carry out due diligence
services. However, given the Group already had this expertise they
chose to contract with the Group to perform the due diligence
services on their behalf.
This specific contract stipulated a fee to cover the performance
of due diligence services for a specific number of clients. This
fee was paid at the date the contract was signed. As such, the fees
received in advance were held on the balance sheet as deferred
income, and the revenue was recognised in line with the completion
of each of the due diligence reviews. During the period ended 30
June 2022, nil (period ended 30 June 2021 GBP167,000) of the
Group's revenue related to client companies originated by TAG
(previously 1AF2 S.r.l) as referred to above, and for which the
Group was contracted to carry out due diligence services. This
revenue was recognised in line with the Group's revenue recognition
policy set out in the 2021 Annual Report.
In addition to the above, 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 period ended 30 June 2022, the Group incurred
expenses of GBP26,000 (period ended 30 June 2022: GBP50,000) to TAG
in respect of this agreement.
The TAG Group includes other companies which the Group had
entered into transactions with. These companies include the Future
of Fintech Srl and RegTech Open Project S.p.A, a regulatory
technology company focussed on the development of an integrated
risk management platform for Banks, Insurance Companies and Large
Corporations. Alessandro Zamboni is also the sole director of both
these companies.
As at 30 June 2022 there is an outstanding amount owed to the
Group of GBP6,000 from Future of Fintech in relation to severance
pay accrued by former employees which has been transferred to the
Group by the related party (30 June 2021: nil).
Eight Capital Partners Plc
Dominic White, the previous Non-Executive Chairman, is a
director of Eight Capital Partners PLC, and David Bull, an
Independent Non-Executive Director and audit committee chair is
also a director of Eight Capital Partners PLC. Following the
reverse takeover in March 2020, the Company entered into a Master
Service Agreement with Eight Capital Partners Plc in respect of
certain shared service to be provided to the Group. Since the year
end the Master Service Agreement with Eight Capital Partners plc
has been terminated. During the period ended 30 June 2022 the Group
incurred expense of GBP3,000 in respect of this agreement with
Eight Capital Partners plc (period ended 30 June 2021:
GBP36,000)
22. Events occurring after the reporting period
Settlement of Mercator funding facility through the issue of
Mercator CLNs and cash repayments
Following the amendment agreement with Mercator signed on 26
April 2022 a proportion of the July, August and September monthly
loan note instalments were repaid partly in cash, with the
remaining proportion satisfied through the issue of convertible
loan notes to Mercator.
The following cash repayments have been made following 30 June
2022:
-- In respect of the July monthly loan note instalment, cash
repayment of GBP278,333 was made on 25 July 2022 and included an
additional interest charge in line with the amendment agreement
with Mercator;
-- In respect of the August monthly loan note instalment, a cash
repayment of GBP278,333 was made on 8 August 2022 and included an
additional interest charge in line with amendment agreement with
Mercator; and
-- In respect of the September monthly loan note instalment,
cash repayment of GBP278,333 was made on 5 September 2022 and
included an additional interest charge in line with the amendment
agreement with Mercator.
The following convertible loan notes have been issued following
30 June 2022:
-- In respect of the July monthly loan note instalment, the
Company issued GBP400,000 in principal amount of convertible loan
notes on 25 July 2022 to Mercator in lieu of a proportion of the
monthly cash repayments of both principal and interest accruing on
the outstanding Mercator loan notes facility.
-- In respect of the August monthly loan note instalment, the
Company issued GBP400,000 in principal amount of convertible loan
notes on 8 August 2022 to Mercator in lieu of a proportion of the
monthly cash repayments of both principal and interest accruing on
the outstanding Mercator loan notes facility.
-- In respect of the September monthly loan note instalment, the
Company issued GBP400,000 in principal amount of convertible loan
notes on 5 September 2022 to Mercator in lieu of a proportion of
the monthly cash repayments of both principal and interest accruing
on the outstanding Mercator loan notes facility.
Additionally on the 15 July 2022, the Company issued the
outstanding 176,149,157 warrants to Mercator.
Issue of and allotment of new Ordinary Shares, convertible loan
notes and warrants under the Capital Enhancement Plan
On 18 July 2022, the Company drew down the third Venus Mandatory
Tranche, which comprised an issue of 1,350,000,000 new ordinary
share to Venus raising GBP675,000. The resulting new ordinary
shares were admitted to a Standard Listing and to trading on the
Main Market on 19 July 2022. In connection with this share issue,
the Company issued additional Tranche A convertible loan notes of
GBP67,500 and 675,000,000 warrants to Venus under the terms of the
Capital Enhancement Plan agreements.
The fourth Venus Mandatory Tranche related to the agreement by
Venus to subscribe for any of the 641,710,082 new ordinary shares
offered under Open Offer that the Company announced on the 22 July
2022 which existing shareholders do not subscribe for. As the
existing shareholders subscribed for all 641,710,082 new ordinary
shares, the Company did not issue any new ordinary shares to Venus
in connection with the fourth Venus Mandatory Tranche.
On 5 September 2022, the Company drew down the fifth Venus
Mandatory Tranche, which comprised an issue of 950,000,000 new
ordinary share to Venus raising GBP475,000. The resulting new
ordinary shares were admitted to a Standard Listing and to trading
on the Main Market on 6 September 2022. In connection with this
share issue, the Company will issue additional Tranche A
convertible loan notes of GBP47,500 and has issued 475,000,000
warrants to Venus under the terms of the Capital Enhancement Plan
agreements.
On the 19 July 2022, the Company issued the outstanding
4,910,000,000 warrants to Venus.
Additionally, during the course of July and August, the Company
drew down a total of GBP1,500,000 Tranche B convertible loan notes
from Venus in the form of the working capital facility agree in
connection with the Capital Enhancement Plan.
Open Offer
On 22 July 2022, the Company announced the Open Offer, giving
existing shareholders the opportunity to subscribe for up to
641,710,082 new ordinary share in the Company on the basis of one
Open Offer share for every 66 existing ordinary shares held at an
offer price of 0.05 pence per Open Offer share.
The Open Offer closed on 17 August 2022 and on 18 August 2022,
the Company announced that the Open Offer was oversubscribed and it
would allot and issue 641,710,082 new ordinary shares to those
qualifying shareholders and that this would raise GBP320,855 gross
(and GBP269,855 net of fees and expenses) for the Company.
In addition to the new ordinary share that were issued, the
company also issued 320,855,008 warrants to the qualifying
shareholders on the basis of one warrant for every two ordinary
shares received as a result of the Open Offer.
The Open Offer new ordinary were admitted to a Standard Listing
and to trading on the Main Market on 22 August 2022, the associated
warrants were issued on the same date.
Subsequent to the issue of the open offer warrants, an amount of
14,730,794 have been converted in exchange for new ordinary shares
and as at the date of these interims there is a balance of
306,124,214 open offer warrants outstanding.
The Group's inaugural IM transaction
On 28 June 2022, the Company announced that it has signed a
strategic alliance with the VeChain to fund the Company's inaugural
IM transaction and kick off the "Web3" stream. Following this on 12
September 2022, the Company provided an update this transaction and
that the agreements relating to this transaction had been signed
with the client company.
Settlement of acquisition related earn-out payments relating to
the year ended 31 December 2021
On 18 July 2022, the Company announced the issuance of
106,762,760 new ordinary shares to each of Tom James and John
Collis in relation to settlement of acquisition related earn-out
payments for the year ended 31 December 2021. The share based
payment amount recognised as part of equity as at 30 June 2022 in
relation to the 2021 earn-out payment was GBP699,545.
Other corporate activities
On the 10 August 2022, Supply@Me S.r.l. sold one of it's 100%
owned subsidiaries, Supply@Me Stock Company 1 S.r.l. to Cayman
Emerging Manager Platform (3) SPC - Global Inventory Monetisation
Fund 1 S.P. for consideration of EUR1,000. Prior to the sale, Stock
Company 1 S.r.l. was a non trading entity.
On 9 September 2022, Supply@Me S.r.l. assigned the intellectual
property rights relating to the Groups IM Platform to Supply@Me
Technologies S.r.l, a 100% owned subsidiary of the Company
established on the 25 March 2022. As a result going forward, all
future development to the IM Platform will be carried out by
Supply@Me Technologies S.r.l. As both Supply@Me S.r.l and Supply@Me
Technologies are 100% owned subsidiaries of the Company, this was
an intra Group reassignment.
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.
[1] https://www.apexgroup.com/.
[2] As announced by the Company in the RNS of 6 August 2021.
[3] According to the Messari report "Crypto theses 2022",
"crypto, or the recently en vogue "Web3", is an unstoppable force
in the long-term". "Web3 is a good and all-encompassing term that
captures cryptocurrencies (digital gold & stablecoins), smart
contract computing (Layer 1-2 platforms), decentralized hardware
infrastructure (video, storage, sensors, etc), Non-Fungible Tokens
(digital ID & property rights), DeFi (financial services to
swap and collateralize web3 assets), the Metaverse (the digital
commons built in game-like environments), and community governance
(DAOs, or decentralized autonomous organizations)".
[4] https://dwcap.co.uk/.
[5] https://dwcap.co.uk/.
[6] https://www.reyl.com/en.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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