Supply@ME has proven its concept,
with a successful initial transaction
The business is now actively pursuing clear
opportunities for growth
Annual Report and Accounts 2022
We are now building on the
lessons learned, to realise
the opportunities presented
following the proof of concept,
and to grow the business.
Contents
Highlights
Chairman’s Statement
Chief Executive Officer’s Statement
Investment Case
How are we Different
Strategic Report
2
4
6
8
9
10 Business Model Canvas: Our Value Proposition
15 Our Platform
18 Key Strategic Priorities
25 Our Team
30 Engaging with our Stakeholders
32 Financial Review
38 Environmental, Social and Governance Review
40 Principle Risks and Uncertainties
Corporate Governance Report
44 Corporate Governance Introduction
45 Directors’ Infomation
50 Statement of Compliance with the QCA Corporate
Governance Code
54 Report of the Nominations Committee
58 Report of the Audit Committee
66 Directors’ Remuneration Report
87 Report of the Directors
Company registration number: 03936915
Financial Statements
94 Independent Auditor’s Report
100 Consolidated Statement of Comprehensive Income
101 Consolidated Statement of Financial Position
102 Consolidated Statement of Changes in Equity
103 Consolidated Statement of Changes in Cash Flows
105 Notes to the Consolidated Financial Statements
152 Company Statement of Financial Position
153 Company Statement of Changes in Equity
154 Notes to the Company Financial Statements
Information
174 Company Information
175 Glossary
Strategic
Report
1 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Highlights
While 2021 was the year in which the various components
that make up the Supply@ME Capital Plc (Supply@ME)
platform and model came together, 2022 was when
we proved the concept worked. We facilitated the first
inventory monetisation transaction and forged a partnership
that provides the funding to complete several more.
We overcame the hurdle that has held the business back,
namely, reluctance to finalise transactions with a platform
that did not have a clear track record. This applied to both
corporates and funders.
There is now momentum, we have a clear pipeline
of inventory to monetise in our core markets. Funder
discussions have become more focused and interest from
potential client companies has increased significantly.
Our platform has been enhanced and we have continued
to add additional expertise to our team. Our business
is now being tested and refined through the experiences
of third parties, both corporates and funders, and while
our processes will continue to be enhanced, this is no
longer the primary focus. We are now building on the
lessons learned, to realise the opportunities presented
following the proof of concept, and grow the business.
Progress will not always be as fast as we would like, but
it will now be more discernible to external stakeholders.
The investments we have made in our technology
and capabilities are beginning to generate clear returns.
While these have not yet been reflected in our financial
results, the rapid expansion of our pipeline is indicative
of the heightened interest in the services we offer.
Financial KPIs
Total revenue from continuing
operations
Adjusted operating (loss) from
continuing operations*
(Loss) before tax from continuing
operations
£0.1m
(£4.6m)
(£7.7m)
£0.3m in 2021
(£4.0m) in 2021
(£7.0m) in 2021
(Loss) from discontinued
operations
(£2.2m)
Total Group assets
Total Group net (liabilities)
£8.3m
(£2.0m)
(£5.1m) in 2021
£10.5 at 31 December 2021
(£1.4m) at 31 December 2021
*Adjusted operating loss from continuing operations is the operating loss from continuing operations before impairment charges.
2 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Operational KPIs
Warehoused goods monetisation pipeline at 21 April 2023
£374.6m
£164.8m at 24 May 2022
The pipeline KPI represents the current potential value
of warehoused goods inventory to be monetised rather
than pipeline revenue expected to be earned by the Group.
As such, this provides a good indicator of the level of
demand for the Group’s warehoused goods monetisation
services. This pipeline represents the value as at most
practical date possible prior to the issue of this annual
report (being 21 April 2023).
3 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Chairman’s Statement
Dear Shareholders,
I am proud to share my first statement as the Chair of
Supply@ME. I will start, as is tradition, by talking about why
I joined.
The vision Alessandro and his team have for Supply@ME
is compelling. When I started to get under the skin of the
issue which Supply@ME is committed to solving it seems
so simple yet, at least until this year, it has not been achieved
anywhere with any satisfaction. The problem is common
across every business that retains physical goods – historically,
inventory has been an unattractive asset to fund for financial
institutions. It has been perceived as high risk and liable to
fraud due to an inability to effectively monitor stock levels.
Traditional inventory financing options, which heavily discount
the value of inventory, are offered with multiple covenants,
or are linked to a receivables facility. This impacts businesses’
ability to generate cash flow until goods are sold. Supply@ME
sought to combine three elements to solve this long-standing
problem for businesses and enable them to unlock capital
trapped in unsold inventory:
> Use of advanced monitoring technology on a unit basis
gives financial institutions and other funders greater risk
transparency and as a result they can provide funding
at a more competitive level;
> Unique accounting, legal and technology framework
enables clients to sell eligible inventory as a true legal
sale transaction without incurring debt; and
> Unparalleled understanding of this market issue and
a drive to solve this common, but complex, problem
efficiently, with use of modern dedicated technology
resulting in an effective funding solution.
With a potential addressable market worth trillions, the
potential for Supply@ME was clear, the business just needed
to prove it.
The second, equally compelling reason, was the people
which the business has attracted. The calibre is impressive.
I felt that if anyone could provide a solution to a decades
old problem, it was the team Supply@ME has assembled.
They have built an experienced panel of Directors and
advisors in the appropriate areas of expertise, who each
have an acute focus on governance matters. Since I have
joined this process has continued.
The Board has been strengthened with the appointment
of Alexandra Galligan and we will continue to expand our
headcount to reflect the broadening needs of the business
and as more and more revenue streams come online.
John Collis and Tom James will be missed as Board members.
Yet a restructuring of our relationship with TradeFlow and
clear demarcation between the fund and fintech business
was essential and will enable both businesses to realise their
full potential.
I was fortunate to join in time to be a part of the key
moments for the business which have seen Supply@ME
transition to a new stage where it is positioned for scaling.
A key indication of this development was the signing of our
loan facility with Banco BPM. Enhancing our capital position
was a crucial stepping-stone in lowering the cost of capital
for the Group. As part of the broader plan to re-capitalise
the Company to lower the cost of capital and minimise
dilution to the shareholders, we have also completed equity
financing with Venus and repaid and closed the Mercator
facility during 2022.
Also announced on 28 April 2023, the Company has agreed
a new equity subscription agreement with gross proceeds
of up to £2.2m and has entered into an unsecured working
capital loan agreement with the AvantGarde Group S.p.A
(“TAG”) of up to £2.8m. Both these facilities are essential to
support the working capital and growth needs of the Group
over the coming months. The unsecured working capital
loan agreement with TAG represents a material related
party transaction for the purposes of the Disclosure and
Transparency Rules and as such the independent Directors
consider this transaction to be fair and reasonable from the
perspective of the Company and its Shareholders who are
not a related party.
4 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
2022 has been a year punctuated by milestones for
Supply@ME, which highlight the progress being made.
The first monetisation in Italy was crucial to providing
potential partners with the reassurance that this is a model
that works. This should now allow us to forge ahead with
the white-label proposition, providing banks and other
financial institutions with access to our technology and
platform for them to deploy with their customer bases.
Shareholders will, understandably, also want to see progress
in our financial performance. While this will not be immediately
visible, it will naturally follow the business developments that
have taken place this year. Supply@ME has made progress
in proving its concept, with a successful initial transaction,
and has learned from the challenges which all start-up
businesses face. The business is now actively pursuing clear
opportunities for growth, with the support and backing of
blue-chip global businesses.
Expansion in our core markets of Italy and the UK will continue
and we are now targeting the facilitation of monetisations
in our next tier of growth geographies. Success in 2023 will
be the strengthening of our core markets and the addition
of new territories. We will also judge ourselves on the
uptake of our white-label proposition and the completion
of agreements for its use.
I joined Supply@ME because it is an exciting, unique, fintech
start-up, led by an experienced and ambitious leadership
team, that opens up inventory as a new asset class and solves
a problem for businesses that would otherwise hinder
their growth. In the coming months, I believe we can
begin to shed our start-up tag. It is an exciting time
for Supply@ME and I am looking forward to the
challenges and opportunities to come as we scale.
Albert Ganyushin
Chairman
5 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Chief Executive Officer’s Statement
Dear Shareholders,
As the world learned to live with Covid-19, businesses will
have begun 2022 hoping that the worst was behind them.
Sadly, for many, this has not been the case.
Inflation and energy prices have meant that costs have
continued to rise. As ‘just in time’ has given way to the more
cautious ‘just in case’ stocking approach, hedging against
now common disruptions in supply chains, holding more
inventory means more costs. The value of what Supply@ME
offers has become even more pronounced. Any business
which holds non-perishable stock, from heavy manufacturing
and chemicals to high fashion and luxury goods, can improve
their cash flow and unlock much needed working capital.
In last year’s report, I talked about the lessons we had
learned. Many of these involved adjusting to the significantly
altered supply chain landscape and focusing on how we
could best support businesses. I am immensely proud that,
this year, our development reached a new stage, putting
what we learned into practice.
2022 has given us the ability to prove the Supply@ME
model. The importance of completing our first inventory
monetisation cannot be overstated. It opens the gates to
corporates globally. The time and effort invested in making
this first transaction a reality was enormous. I understand
that the delays have been frustrating for our shareholders,
and we share these frustrations. Supply@ME’s model
is highly innovative; it provides a much-needed solution
to a longstanding problem which has impeded the growth
of many businesses. However, encouraging uptake of any
innovation takes time.
While 2021 was a formative year for our business, much
of this year was spent educating our potential partners
and markets, significantly improving the understanding
and confidence in the service we offer. Our business and
proposition has grown every day. This progress is incremental
and cannot always be quantified or communicated in a
manner that would be perceptible to external stakeholders,
yet, when we take a step back, the milestones achieved
provide clear evidence of how far the business has come
and its potential in the months and years ahead.
The first and most obvious achievement was the inaugural
inventory monetisation using our Platform. We have refined
every aspect of our business processes to streamline
onboarding and monitoring. The monetisation of €1.6m
of inventory with funding from the VeChain Foundation
enabled us to put the Platform and our systems to the test.
The fact that this monetisation occurred with funds from
an NFT issuance is a testament to the agility and scalability
of our model.
As we observed in early 2023, it also opened a new source
of funding, cryptocurrencies, alongside more traditional
markets. Supply@ME was founded to help businesses
grow by providing access to its Platform in order to facilitate
funding to the monetisation of their inventory. We are now
doing this in Italy and over time will add more and more
countries and clients.
The problem Supply@ME solves is common across every
business that retains physical goods and, in time, we want
to provide the means for businesses globally to improve
their working capital positions by facilitating access to
funding based exclusively on the value of their inventory.
To achieve that goal, we needed to prove that the model
worked. VeChain and our initial client enabled us to do that.
Securing the wider partnership with the VeChain Foundation
was, arguably, as pivotal as our first inventory monetisation
transaction. This, combined with the work underway to
agree the first commitment by a consortium of European
Investors to fund a dedicated new transaction, completes
our initial phase of development. We have proven the offer
to client companies and secured the backing of funders
both traditional and non. This endorsement of our business
model has been crucial in developing further conversations
with potential funders. For Supply@ME to realise its ambitions,
we needed the ability to scale through a committed pool
of funders with appetites aligned to our growing pipeline
of potential client companies.
The impact that this progress has had on discussions with
potential corporate clients has been immense. They have
changed the tone of conversations with potential partners
and businesses can now see how the platform performs.
Supply@ME offers a significantly more cost-effective option
for businesses than traditional financing, without businesses
incurring debt. For corporates, it is not overstating to
say that it had appeared too good to be true. There was,
understandably, scepticism until they saw the process in
action. Those doubts have now been removed. Supply@ME
now has a clear trajectory aimed at working with stable
funders with an appetite to monetise the inventory of
businesses in the UK and Italy, with new geographies
expected to be added in the future.
6 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Our pipeline of corporates is more robust than ever and
with clear proof of concept in our initial target markets,
we are now primed to realise our business’ potential.
The first monetisation was made possible through the
Global Inventory Fund created with TradeFlow. Since
joining the Supply@ME Group, Tom James and John Collis
have been instrumental in the Group’s development
and I am grateful for their support. Changes in the fund
management industry and feedback from potential
funders highlighted the need to restructure the relationship
between the Supply@ME platform and TradeFlow.
This will benefit both businesses and enable us and
TradeFlow to realise our full potential.
Anyone who has followed Supply@ME will know that
management’s faith in our model has never wavered.
While the achievement of visible milestones has not always
been as swift as we would have liked, our progress is now
clear. I am truly grateful for the dedication of the Supply@ME
team, the support of our growing list of partners and
of our shareholders. We have never lost sight of the need
to create value and we will do everything we can to repay
the trust placed in us in 2023 and beyond.
Alessandro Zamboni
Chief Executive Officer
7 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Investment Case
Supply@ME has worked tirelessly to create a solution
that can capitalise on a growing market opportunity.
The business is now better placed than ever to do so,
with a concept that is proven following the execution
of the first inventory monetisation transaction. We are
committed to delivering shareholder value and ensuring
the shareholders benefit as the business scales.
1. Novel and innovative
solution
3. Scale of opportunity
and ability to grow
> We have created a novel solution for creditworthy
> At Supply@ME we have created a highly scalable,
companies to optimise inventory management and
improve cash flow.
> Our platform enables on-boarding of eligible clients
who then use the platform to facilitate a legal true-sale
transaction of eligible inventories with the ability to
request to repurchase as required, in order to release
value from their inventory and satisfy their working
capital needs.
> A data and analytics driven technology solution
embedded in the platform enables selection, monitoring
and management of eligible inventories on a unit basis
and provides the digital knowledge base for successful
funding transactions facilitated by the platform.
global business. We’ve built a team of subject matter
experts and our inventory analytics specialists are
able to manage complex due diligence processes,
using proprietary techniques.
> We have an exciting pipeline of monetisation
opportunities, which demonstrates the strong
level of demand for the Group’s warehoused goods
monetisation services.
4. Solid foundations
built
2. Clear gap in the
market
> Inventory financing is a very large market opportunity
worth trillions but it is also a naturally difficult one
for traditional banks to address due to information
asymmetry issues and complexity.
> This makes it an attractive market for a disruptive
fintech company aiming to use technology to solve the
problem of inventory funding and we are one of the
first movers in a market where the current funding
solutions are not fit for purpose.
> We have spent the time over the last five years investing
in the platform and solution, building solid foundations
from which to grow.
> This initial hard work and heavy lifting has now been
completed, positioning Supply@ME for future growth.
5. Concept proven and
multi market ready
> The small number of alternative, non-bank, funding
> With the completion of the inaugural Inventory
solutions focus predominantly on larger ticket investment
grade companies and do not rely on a technology
platform, which impedes their ability to access smaller
transactions and scale.
Monetisation transaction in September 2022, we now
have a fully proven concept and clear demonstration
that the model is working.
> With a transaction now completed in Italy, we are
ready to expand, with our White-Label proposition
providing banks and other financial institutions with
access to our technology and platform.
8 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
How we are Different
Supply@ME is disrupting the industry with its unique model.
Not only does it offer a new approach to businesses with
cash flow needs, but it is doing so at a much more competitive
rate than traditional lenders.
Outlined below are some of the ways in which Supply@ME
offers a more complete, flexible service, that reflects
client’s needs than traditional inventory funders or other
competitors.
Supply@ME
Traditional
inventory
funders
Other
competitors
Purely focused on inventory
Non-credit approach
Non-intrusive of other financing options
Legal true sale
Platform based
Supply chain resilience enabler
Quick initial yes or no
Initial amount subject to due diligence
Fixed due diligence fee and timescale
Revolving facility
Cross border
Event led independent valuations
Positive impact on key ratios
Tax deductible costs
With fewer drawbacks or restrictions
Linked to other facilities on the balance sheet
Debt facility
Interest payable
Security taken on Inventory or other assets
Covenants in place
Management accounts and borrowing base certificates
Use of funds pre-determined
Advance rate subject to Net Orderly Liquidation Value
Regular independent evaluations
ICT maturity required (to transfer data)
Inventory segregation (if required)
Inventory tracking (if required)
9 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
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Business Model Canvas: Our Value Proposition
Inventory funders
Client companies
Supply@ME creates a market
For existing and potential funders, we are opening up a new
asset class and offering access to an untapped alternative
to receivables, with strong returns. Corporates across the
globe are taking a multilayered approach to improving
their supply chain resilience. These steps have included
increasing inventory levels, with the incumbent cost of storing
this inventory also increasing. The impact on cash flow
and the demand for funding to alleviate this has never been
greater. There is now an abundance of highly profitable,
long-established manufacturing and trading businesses
which present an opportunity for investors, particularly
those comfortable with receivables, to generate strong
returns by underwriting their inventories via the Supply@ME
platform.
It offers diversification
Supply@ME offers investors further diversification through
an asset class which has limited correlation with other types
of securities. Real assets have historically exhibited a lower
correlation to a wide variety of investment alternatives,
with returns varying depending on the type of real asset.
The performance drivers for real assets are fundamentally
different from other types of securities. By expanding
into asset classes with lower correlations, such as the
warehoused goods in funded business’ inventories, investors
may benefit from greater diversification. Real assets have
also exhibited a greater ability to hedge inflation than
the broader equity and fixed income markets. Finally, real
assets typically offer stronger returns during periods when
inflation is rising.
And overcomes the fraud risk which has prevented
the growth of this asset class to date
Supply@ME’s proprietary technology enables real time
monitoring of stock levels and whereabouts, mitigating the
fraud risk which has prevented the development of this
asset class. Traditional financial institutions are not specialists
in inventory. Historically, the risk of fraud due to infrequent
and imprecise monitoring combined with the unattractive
prospect of disposing of unsold inventory has reduced
engagement with this asset, with lenders offering restrictive
terms and unattractive rates. However, the need for a
commercial facility for inventory is clear. Supply@ME has
developed systems and technology which remove the barriers
to entry and provide certainty and security for funders.
Supply@ME solves a problem for client companies
and facilitates growth
The problem which Supply@ME solves is common across
every business that retains physical goods – historically,
inventory has been an unattractive asset to fund for financial
institutions. It has been perceived as high risk and liable
to fraud due to the reasons stated above. Supply@ME
is providing a means for businesses globally to improve
their capital positions by providing access to funding based
exclusively on the value of their inventory. In turn, businesses
can deploy these funds to facilitate growth.
Flexible
Any business which retains physical goods can avail and
benefit. Supply@ME can fund a portion of a business’
inventory or the entirety. The process can be completed
and funds released within 40 days and a typical contract
lasts for three years across three annual sales cycles.
It is intended to offer funders certainty through seamless
integration with a business’ existing stock monitoring
systems, without creating friction or delaying processes
for the businesses which hold the stock. Furthermore,
Supply@ME’s sophisticated monitoring tools mean it does
not need to take physical ownership of any stock; stock
remains in the warehouse of the funded business.
Cost-effective
Supply@ME offers a significantly more cost-effective option
for businesses than traditional financing, without businesses
incurring debt. Traditional inventory financing options
heavily discount the value of the inventory, are offered with
multiple covenants, or are only available on receivables.
This has impacted businesses’ ability to generate cash flow
until goods are sold. The Supply@ME solution can offer
80-90% of the value of the stock with fewer conditions.
As a legal true sale of the inventory, Supply@ME’s solution
also means that businesses do not incur debt, further
improving their capital positions.
Straightforward
We have invested heavily in our inventory monitoring
technology to ensure that it plugs seamlessly into existing
systems and enhances monitoring. Traditional financial
institutions are not specialists in inventory. Historically,
the risk of fraud due to infrequent and imprecise monitoring
combined with the unattractive prospect of disposing of
unsold inventory has reduced engagement with this asset,
with lenders offering restrictive terms and unattractive rates.
However, the need for a commercial facility for inventory
is clear. Supply@ME has developed systems and technology
which remove the barriers to entry and provide certainty
and security for funders.
10 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
For shareholders
Supply@ME has proven its concept, with a successful
initial transaction, and has learned from the challenges
which all start-up businesses face. The business is now
actively pursuing clear opportunities for growth, with
the support and backing of global businesses.
The completion of the inaugural inventory monetisation
transaction was a watershed moment, providing irrefutable
proof of concept and removing the barrier which had
prevented many corporates from engaging. This prompted
a significant increase in interest, with many corporates
renewing engagement, particularly in the UK and Italy.
The business is now on a clear growth trajectory.
Supply@ME has first mover advantage,
few competitors in its target geographies,
and has spent several years familiarising
corporates in multiple sectors with how
the Supply@ME platform works. This has
enabled the business to build a pipeline of
client companies in multiple countries.
We have also attracted a highly experienced panel of
directors and advisors in the appropriate areas of expertise,
who each have an acute focus on governance matters.
As the business has grown and adapted, it has attracted
an increasingly high calibre of people – including Albert
Ganyushin (former Euronext and NYSE), Alexandra Galligan,
Amy Benning, Nicola Bonini, Mark Kavanagh, Stuart
Nelson and Alice Buxton – recognised experts in their
respective fields. Their experience has contributed
to our significant progress, providing market knowledge
and know how to the business.
11 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Business Model Canvas: Our Value Proposition
Country breakdown
Core markets
Future markets
Middle East and North Africa (MENA)
The focus of our pipeline, at the moment, is on European
markets. However, we continue to view the MENA region,
particularly the UAE as a key growth market in the longer
term. Following last year’s successful transaction between
TradeFlow and Cargoes Finance by DP World, we are in
discussion towards a first transaction in relation to the
core Supply@ME offering. Additionally, we remain in
contact with a bank operating in Saudi Arabia regarding
a white-label tender, though that has been delayed for
operational reasons due to the bank’s business priorities.
Finally, with the objective of prioritising the traditional
funding routes and optimising its capability plan, the
Company temporarily placed the Shariah project
on hold, waiting for the optimal time to go to market.
United States
The Company intends to conclude the project started with
a Big 4 consultancy firm aimed at conducting a dedicated
assessment regarding the application of the IM framework
under the US GAAP. We continue to work with Anthony
Brown, consulting company Epicirean Brands and
The Trade Advisory, to engage with potential Inventory
Funders and white-label partners on how best to structure
the first IM transaction in US.
Italy
As the awareness of our Inventory Monetisation Platform,
and its associated offer grows, following the inaugural
Italian transaction, there is increasing interest from larger
corporates, with greater levels of monetisable inventory.
Discussions have also been reignited from businesses,
which had first been introduced to Supply@ME before
the pandemic and with the success of our first Inventory
Monetisation (IM), have got back in contact. Our pipeline
of Italian corporates is growing and we are developing
the options to facilitate further IMs with VeChain and also
with traditional Inventory Funders.
The publication of the Pegno non Possessorio (the “PNP
Regulation”) in the Official Journal of the Italian Republic
in January is providing increased opportunities for our
self-funding and white-label business model. We also expect
the PNP Regulation will create further opportunity for
traditional Inventory Funders to invest in IM transactions
considering the proposed improvements to the legal
enforceability of guarantees over the inventory, through
the arrangement of self-funding and/or white-label
agreements, which leverage the Platform.
Client companies originated in Italy of GBP equivalent
£162.5m as at 21 April 2023 (43% of the current
pipeline)
United Kingdom
Origination in the UK has continued to grow with client
companies ready for on-boarding and progressing through
the due diligence process. Client companies have been
sourced through Supply@ME’s strong relationships held
with a global eco-system of introducers which have also
enabled the growth in a wider European portfolio of client
companies; including opportunities in France and Germany.
There are several larger ticket opportunities to monetise
inventory subject to the appropriate structure and funding
being in place. As the Company continues to onboard the
existing pipeline and build its track record, this will unlock
further related client company opportunities.
Client companies originated through the UK of GBP
equivalent £212.1m as at 21 April 2023 (57% of the
current pipeline)
12 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Revenue streams
During 2022 we have continued to enhance our business
model, with continued differentiation of the pure fintech
business (our Platform being our people and our software)
from the inventory funding structure. The Platform has, an
intrinsic value and can be used by other operators (such as
banks or other debt funders) to improve inventory backed
or based facilities. We consider it to be an enabler of each
transaction. We continue to focus on growing the following
active, and future, revenue streams from the Group's con-
tinuing operations:
C.IM
“Captive” inventory monetisation platform servicing (“C.IM”):
this is revenue generated through the use of the Platform to
facilitate inventory monetisation transactions performed by
the Global Inventory Funding route and its Inventory Funders.
This revenue is generated by the Group’s Supply@ME
operating subsidiaries. Revenue will be earned in relation
to the following activities:
> origination and due diligence (pre-inventory monetisation);
and
> monitoring, controlling and reporting (post-inventory
monetisation).
During the year ended 31 December 2022, the Group
recognised £0.1m of C.IM revenue relating to due diligence
fees, origination fees, IM Platform usage fees and IM service
fees. When fully delivered, this stream is expected to generate
revenues of approximately 1-3% of the gross value of the
inventories monetised (purchase price plus VAT).
WL.IM
“White-label” inventory monetisation platform servicing
(“WL.IM”): this is the 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
Inventory Monetisation transaction (the amount of funding
provided). No WL.IM revenue was recognised by the Group
during the year ended 31 December 2022.
Over the last two years of test marketing and exploration
it has become clear there is a need for any regulated asset
management structure involved in transactions to be separate
from the core Supply@ME business. This segregation
unlocks the opportunity to work with a broader range of
asset managers. It also leads to the conclusion that once
the TradeFlow buy back is complete the Investment Advisory
(“IA”) revenue stream will be discontinued.
Revenue model – platform revenue model mostly made of recurring (multi-annual) fees
C.IM Captive Monetisation
WL.IM White-label (Tech Only)
1. Funds directly
sponsored by Supply@ME
2. Special deals
3. Partnerships with banks
4. Token route
3. Commercial Banks
Regulated Funds
Includes Shariah route
Bespoke structures
Includes direct lending
Security token
NFT as collateral
Inventory
financing product
Fintech Platform
Digital on-boarding
and CRM/ Due
Diligence workflow
Data integration with the
Corporate and third-party
(including blockchain protocols)
Inventory
digital register
Key Risk Indicators
to monitor the assets
purchased/ pledged
Printable/
Regulatory reports
The Platform is managed by Supply@ME Technologies, a dedicated entity (fully owned by the Company)
focussed on the management of roadmap consisting in technology, accounting and legal framework
C.IM fees charged by
the Platform to either
the Segregated Stock
Trading Company
or the Client Company,
depending on the
activity
Segregated Stock
Trading Company
Client
Companies
WL.IM fees charged by the
Platform to the Bank
Client
Companies
Originated by Introducers or via
the Digital on-boarding or by
Banks/ ABLs (“self-funding” mode)
Directly Originated by Banks/ ABLs
13 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Business Model Canvas: Our Value Proposition
Special situations / deals
Supply@ME also recognises the importance of allowing
initial traditional Inventory Funders to build up a bespoke
funding structure on top of the stock companies (trading
companies which deliver the IM transactions by using
the Platform). This route can be built through dedicated
securitisation issuances or similar direct investing structures,
which are still being considered.
Direct partnerships with banks
Global and local banks have expressed an interest in using
the Platform to directly serve their clients. Supply@ME
has developed two alternative approaches for such banks,
including the “self-funding” model (where a bank will be able
to use the Platform, including the legal and accounting
framework provided by Supply@ME, to fund companies that
are already clients of such bank) or the “white-label” model
(where a bank will only use the technology components
of the Platform to fund directly such bank’s existing clients).
Token route
As per the RNS of 21 December 2022, the Company aims
to involve multiple liquidity providers to deploy new IM
transactions (including crypto asset managers and direct
investors through liquidity pools partnerships) in line with
the goals of Phase Two of the Strategic Agreement with
VeChain Foundation (“VeChain”). In this regard, Supply@ME
is compiling, from its global pipeline, a portfolio of potential
client companies with up to approximately US$50m of
inventory to be monetised across such portfolio. This reflects
the residual commitment of US$8.5m budgeted by VeChain
and, the objective to raise additional capital from the
VeChain community and other crypto/digital assets investors.
Supply@ME’s focus remains on maintaining, growing and
converting a pipeline of corporates with monetisable stock,
whilst attracting new Inventory Funders, starting with smaller
transactions, to build a track record, and then moving to
monetisations of larger values of inventory.
With the inaugural IM completed and others in process of
being arranged, the foundations of positive track record are
being laid by Supply@ME with the expectation that it would
become progressively easier to attract new Inventory Funders
to IM transactions. The appetite of Inventory Funders has
also driven the Supply@ME origination team to assess
potential IM amounts over GBP/EUR/USD 10m and, subject
to the appropriate structure and funding being in place,
there are a number of larger ticket opportunities at various
stages of discussion and included in the pipeline.
The market need for inventory solutions with a proven
technology platform and infrastructure from day one is
continuing to drive forward opportunities for Supply@ME’s
client company origination and for self-funding opportunities
with global and local banks. As client companies are
onboarded to the Platform this allows for the generation
of due diligence fees and, once the client companies have
signed binding IM agreements, origination fees.
Supply@ME has continued to work diligently to build quality
portfolios of client companies to attract additional Inventory
Funders. Leveraging the first IM transaction made in 2022,
Supply@ME, as the provider of the Platform and inventory
servicer, is now working on the following funding routes:
Inventory Funders via the Global Inventory Fund (“GIF”)
Replacing the Cayman-based structure serviced by APEX
Group, advised by TradeFlow, Supply@ME is evaluating
the option of sponsoring the creation of an independent
inventory trading business (consisting of a group of operating
stock companies across the targeted jurisdictions) and,
in the future, a European structure together with a market-
leading fund service provider and to build, progressively,
a multi-asset management model where the Group can
also cooperate with further European and UK authorised
asset managers.
14 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Our Platform
The Supply@ME platform is a unique bespoke set of
connected plug and play modules that allows Supply@ME
to offer innovative ways for:
Clients are then granted access to and trained on the
Trading module which allows important interactions
between the Client, Supply@ME (as inventory servicer), and
the Stock Company (owned by the Global Inventory Fund).
Prospective clients to propose inventory for
monetisation through the Due Diligence Module
which allows:
> Supply@ME to:
> Analyse and identify eligible inventory items
using purpose built workflows to drive due
diligence tasks
> Clear and transparent pipeline tracking
> Comprehension and insight into the inventory
associated risks
The Trading Module allows:
> Clients to upload inventory transactions via web
upload or an API connection to their ERP
> Automated inventory eligibility and other key
client parameter checks that allow the trade to
fully comply with the contractual obligations
> Production of e-signature contracts for signature
by the Stock Company and the Client, which legally
cements the transaction
> Tracking of activities using workflows and
> Secure exchange of data for clients and to
dashboards
various third parties
> Production of critical inputs into the Trading
and Monitoring modules
> Production of Due Diligence reports for
presentation to potential funders
> Supply@ME to represent clients to prospective
funders
> Supply@ME to offer signature of contracts
The Monitoring and Tracking Module allows:
> Stock Company to ingest periodic updates of
data from various sources including the client’s
ERP system
> Comparison of key data points to track for
inventory anomalies, including IoT data
> Tracking of inventory performance against
agreed KPIs
> Production of anomalies / KPI activities to be
remediated
> Tracking of remediation follow up including
independent inspections of inventories
> Ingestion of data into the Reporting module
The Reporting Module allows:
> Production of standard report packages
> Collaboration between parties for queries
> Production of regulatory reporting reports
15 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Our Platform
As explained above, the platform is built in a modular
format that allows for effortless white-labelling, where
an institution can deploy all or some of the modules
as required to suit their needs.
The platform is built in an MS Azure environment with
in-built cloud monitoring and security packages to ensure
all data controlled and processed is done so safely and
securely, and any potential data threat is easily detected
and remediated. The security package sits hand in hand
with Supply@ME’s bureau of policies surrounding data
protection and retention.
Client, investors, and other third parties can rest assured
that not only is their data safe, but also the above modules
make it so that they can easily achieve transparency on
inventories traded and held.
The key to Supply@ME’s platform is the scalability in
combination with its unique business model and legal
framework. The platform is able to carry out many
automated tasks keeping the staffing of the inventory
servicer lean.
Platform updates
In last year’s report we noted that our platform has an
intrinsic value. Over the past year, we have continued
to improve it to ensure that it is and will continue to be
best-in-class and that it has the capabilities to scale with
the business and diversification of our monetisation
portfolios, both in terms of geographies and industries.
The first and most visible progress has been in the
strength of our team. We have made key hires to enhance
our infrastructure, database, inventory and analysis
capabilities. We are proud both of the calibre of the
people whom we have attracted to our growing team
and what our increasingly multidisciplined team has
allowed us to achieve. Alongside our significantly enhanced
in-house team, we have also established vital partnerships
with the Software Factory and others which have enabled
us to positively revise our roadmap and the timeline for
enhancements. Improvements to the platform are often
incremental, but when compared with 12 months ago,
the progress has been immense.
The key areas of development can be broken down into
four categories:
Cloud
In last year’s report, we outlined our goal to have two
cloud environments: MS Azure for the monetisation
of warehoused goods and AWS for those in-transit.
As above, we now have a dedicated MS Azure cloud
environment which enables us to scale the business at
pace. It also allows for multi-tenancy, meaning that we
can provide current and prospective clients and partners
with multiple solutions from across our funding routes.
Data
Data and analysis are core to our business model and
what makes Supply@ME’s platform distinct. In 2021’s
annual report we acknowledged the critical role which
data ingestion services have in the platform’s operations
and their enhancement has been a core focus in 2022.
The Supply@ME Data Factory allows for the level of data
ingestion we have envisaged alongside API management
and the automated application of key business rules.
Finally, it has enabled us to create a unique inventory
data-lake to design & develop advanced inventory data
analytic metrics such as seasonality, obsolescence risk,
critical components, margin and sales trends, inventory
risk scores.
Security
Data is at the core of our business and as more and
more corporates trust us with their data, we are highly
cognisant of the need to protect this trust by constantly
evolving our security. We have worked diligently to
mitigate the threats posed to the business from cyber
risks and ICT compliance risks. We have continued to
improve our cloud security and application access, while
our monitoring and support services have been significantly
reinforced. We are now registered with the Information
Commissioners Office, under number ZB401287.
Web3
This year we also launched our first Web3 solution,
implementing a key Web3 partner transaction by adopting
the VeChain Thor blockchain protocol. Integrating the
technology to make Supply@ME’s Inventory Monetisation
platform ready for Web3 will help us to introduce inventory
as a new asset class to a broader range of investors.
It also means we are able to harness the developments
in this nascent sector at pace, including the ability to explore
the issuance of NFTs, participating in digital ownership
and business-to-business (B2B) marketplaces, decentralised
finance and tokenised governance protocol. Furthermore,
the registration of the inventory assets on the blockchain
give additional comfort to any inventory funders that the
assets funded are under their immutable ownership.
16 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Working with Zoosh
“
As a breakthrough ICT house and innovative software
technology factory, we at Zoosh are extremely excited
to bring to the table our Agile design and development
practices and related software product strategies to assist
Supply@ME with the acceleration of their disruptive
software platform evolution. Our team are stimulated
by the unique domain challenge, the innovative Supply@ME
product roadmap and the ultimate vision for this proposition.
We are working with Supply@ME to rapidly advance their
technological ambitions with the delivery of a scalable
white-label platform that is enriched with a best-in-class
user experience.
Zoosh
”
17 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Key Strategic Priorities
Our three Key Strategic Priorities as outlined in the
prospectus in March 2020 are:
1. Become the best fintech at Inventory Data Monitoring
2. Develop a “phygital” fintech funding strategy
3. Spread a highly scalable global business
Progress against these strategic priorities in 2022 are
detailed in the next pages.
18 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
1. Becoming the best Fintech Inventory
Data Monitoring Business
Priority
2022 Progress
Integrate platform
with bank accounts
Currently on hold
Supply@ME observed that the current API (Open Banking) ICT maturity environment is still
not sufficient to prepare integrations with bank accounts of corporate clients. On the other
hand, to target the same goal, Supply@ME enhanced its monitoring processes with reference
to potential integrations with corporate client’s information systems to gather data from
their businesses.
Due diligence/
onboarding
digitisation
Ongoing
The completion of the inaugural inventory monetisation has enabled us to further test and
refine our onboarding while our growing pipeline, which now spans an increasingly broad
spectrum of industries, places new and welcome challenges on our due diligence processes.
The introduction and refinement of our due diligence digital workflow allows us to have
greater oversight on pipeline activities and prioritisation. Following the evolvement and the
scalability of our offering, these changes will be incremental and aligned with geographic
or industry needs.
Enterprise Resource
Planning (ERP) fully
integrated
Ongoing
The data-ingestion cloud-based scalable component purchased and customised during
2022 will allow the Platform to integrate multiple-data sources (for example ERP, Warehouse
Management Systems, etc.), underpinning the management of an inventory analytics data
hub in line with Supply@ME’s strategic goals.
Internet of Things
(“IoT”) (smart cameras,
Radio Frequency
Identification RFID)
integration for
inventory off-site
monitoring
Remarketing
digital workplace
(e-marketplace where
remarketer can
monitor, and place
signed Inventory
purchase offers)
Ongoing
The data-ingestion cloud-based scalable component purchased and customised during
2022 aimed at monitoring data directly gathered from the information system of the
corporate clients, creates the basis to study future integrations with IoT-based smart
factory and/ or smart product initiatives developed by the most technology mature
corporate clients.
Ongoing
The remarketing activities represent a key requirement of the Inventory Monetisation model
since they mitigate the risk for the inventory funders to manage, directly or indirectly, the
disposal of any unsold goods and, from another perspective, improve the selling capabilities
of the over-all model to not only rely to the performance of the corporate clients.
In this regard, Supply@ME continues to work with inventory disposal specialists in order
to develop a standard framework, underpinning the remarketing phase. Additionally,
on 28 June 2022, Supply@ME announced the strategic alliance with VeChain Foundation
and the launch of the Web3 stream. Specifically, the phase 2 of the latter alliance has
an expected roadmap of Web3 features which includes, among things, the issuance
of Non-Fungible Tokens (“NFT”), digital ownership and B2B marketplaces.
19 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Key Strategic Priorities
2. Developing a multi-channel funding strategy
Priority
2022 Progress
Client Company –
strategy
Europe (including Italy)
The Group’s Marketing and Sales Team works with a select panel of originators and local
business introducers who continue to make introductions to high quality businesses.
As the awareness of IM grows, following the first IM transaction, Supply@ME is also seeing
‘larger ticket’ opportunities. The Group has built a strong pipeline in Italy and other European
jurisdictions to facilitate further IMs with VeChain in “Phase Two” and other traditional
Inventory Funders. Supply@ME is also seeing more opportunities for self-funding with local
banks across Europe and their client companies. For example, Supply@ME is currently
working with:
> an Italian bank and a Big 4 accountancy firm to secure an IM transaction with an IM value
of up to €10m, which involves an existing client of the relevant Italian bank; and
> a consortium of European investors for a securitisation issuance to fund an IM transaction
with an IM value of up to €5m, which will involve at least one Italian and one UK client company.
Furthermore, the Company believes the new PNP Regulation, will create further opportunity
for traditional Inventory Funders to invest in IM transactions in light of the proposed
improvements to the legal enforceability of guarantees over the inventory, through the
arrangement of self-funding and/or white-label agreements, which leverage the Platform.
United Kingdom
Origination in the UK has continued to grow, with client companies sourced through
Supply@ME’s strong relationships held with a wide eco-system of introducers which have
also enabled the growth in the European portfolio of client companies. There are several
large ticket opportunities to monetise subject to the appropriate structure and funding
being in place and as the Company continues to build its track record, this will unlock further
client company opportunities. Additionally, as stated above, Supply@ME is working with
a consortium of European investors for a securitisation issuance to fund an IM transaction
with an inventory monetisation value of up to €5m, which involves a first UK client company
and at least one Italian client company.
Middle East and North Africa (MENA)
Business opportunities in the UK and Europe continue to be Supply@ME’s core focus,
but progress is also being made for future IM transactions in the MENA region, particularly
in the United Arab Emirates, supported by a select panel of local partners and brokers.
More specifically, leveraging the partnership agreement signed in 2022 by TradeFlow and
Cargoes Finance (by DP World), Supply@ME started to work directly with DP World to structure
an IM transaction. As previously announced, the Company remains in discussions with
a bank operating in Saudi Arabia regarding the white-label tender, though that has been
delayed for operational reasons due to the bank’s business priorities. Finally, with the objective
of prioritising the traditional funding routes and optimising its capability plan, the Company
temporarily placed the Shariah project on hold, waiting for the optimal time-to-market.
United States
The Company intends to conclude the project started with a Big 4 consultancy firm aimed
at conducting a dedicated assessment regarding the application of the IM framework under
the US GAAP. In parallel, leveraging the partnership with Anthony Brown, consulting company
Epicirean Brands and The Trade Advisory, Supply@ME continues to engage with specific
potential Inventory Funders and white-label partners on how best to structure the first
IM transaction in US. As previously stated, while Supply@ME sees a number of opportunities
in the US, the Company’s current priority is to concentrate, for now, on its core markets.
20 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
3. Creating a highly scalable global business
Priority
2022 Progress
Funders
Supply@ME has continued to work diligently to build quality portfolios of client companies
to attract additional Inventory Funders. Leveraging the first IM transaction made in 2022,
Supply@ME, as the provider of the Platform and inventory servicer, is now working on the
following funding routes:
Inventory Funders via the Global Inventory Fund (“GIF”)
Replacing the Cayman-based structure serviced by APEX Group, advised by TradeFlow,
Supply@ME is evaluating the option of sponsoring the creation of an independent inventory
trading business (consisting of a group of operating stock companies across the targeted
jurisdictions) and, in the future, a European structure together with a market-leading fund
service provider and to build, progressively, a multi-asset management model where the
Group can also cooperate with further European and UK authorised asset managers.
Special situations / deals
Supply@ME also recognises the importance of allowing initial traditional Inventory Funders
to build up a bespoke funding structure on top of the stock companies (trading companies
which deliver the IM transactions by using the Platform). This route can be built through
dedicated securitisation issuances or similar direct investing structures, which are still being
considered.
Direct partnerships with banks
Global and local banks have expressed an interest in using the Platform to directly serve
their clients. Supply@ME has developed two alternative approaches for such banks, including
the “self-funding” model (where a bank will be able to use the Platform, including the legal
and accounting framework provided by Supply@ME, to fund companies that are already
clients of such bank) or the “white-label” model (where a bank will only use the technology
components of the Platform to fund directly such bank’s existing clients).
Token route
As per the RNS of 21 December 2022, the Company aims to involve multiple liquidity
providers to deploy new IM transactions (including crypto asset managers and direct
investors through liquidity pools partnerships) in line with the goals of Phase Two of the
Strategic Agreement with VeChain Foundation (“VeChain”). In this regard, Supply@ME
is compiling, from its global pipeline, a portfolio of potential client companies with up to
approximately US$50m of inventory to be monetised across such portfolio. This reflects
the residual commitment of US$8.5m budgeted by VeChain and, the objective to raise
additional capital from the VeChain community and other crypto/digital assets investors.
21 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Maintain a solid pipeline of targeted corporate clients
The solution which Supply@ME offers helps a range
of companies. The approach to attracting and targeting
companies on our target company list, in order to help solve
their potential cash flow issues, is still evolving. This will
help us to continue to build the corporate client pipeline.
In particular, the frequency of inventory turns and volume
of inventory to be monetised will be key considerations.
Key Strategic Priorities
For the first time, the Board would also like to share shorter
term goals for 2023 which will contribute to the Group’s
ability to achieve its long term aims articulated above.
Build a track record
The team are focused on establishing a solid track record
of inventory monetisations across Supply@ME’s initial core
markets of UK and Italy and expect to have a first portfolio
of transactions executed within the next six months, following
the publication of this report. The establishment of this
initial track record will allow the Group to build out its more
predictable recurring revenue base.
Expand the pool of Inventory Funders
The team are also committed to broadening the possible
inventory funding routes and ensuring we have the ability
to facilitate inventory monetisations with a range of different
funders. Part of this goal is to build funders understanding
of Supply@ME’s offering by clearly articulating its benefits
as a, largely, untapped asset class. As well as demonstrating
the corporate clients and their specific items of inventory
available to invest. A key element of this is the explanation
of the types of clients and inventory which will not pass our
Due Diligence processes to access the platform.
22 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
VeChain: Building a Track Record
The problem
Inventory has, historically, been viewed as an unattractive
investment for traditional funders. The risk of fraud due
to infrequent and imprecise monitoring, combined with
the prospect of disposing of unsold inventory has reduced
engagement with this asset, with lenders offering
restrictive terms and unattractive rates. Yet the need for
a commercial facility for inventory was clear; the stock
which businesses held, largely acted as a cash drain until
it was sold. The shift to “just in case” exacerbated the
issue. Businesses are now holding more stock with higher
incumbent costs. Yet, traditional funding models remain
restrictive and onerous. Supply@ME’s founding goal
was to change this dynamic, to develop a platform that
enables funders to confidently invest in inventory, thereby
unlocking a new, untapped real asset class while providing
a new model of accessing capital in the supply chain
for manufacturing and trading businesses. Proving this
concept required a visionary partner, who was willing
to embrace this goal and be the pioneer funder.
The solution
In 2022, Supply@ME and VeChain formed a strategic
partnership to complete the first inventory monetisation
using Non-Fungible Tokens (NFTs). The initial transaction
was worth EUR 1.6m and allowed enhanced cash flow and
better access to working capital for a client company which
builds industrial and specialised vehicles, manufacturing
in Italy, the USA and Africa.
Within a few months, the client completed its first ‘buy
back’, purchasing 100% of the initial monetised inventory
to put back into their manufacturing process at the
appropriate timing to fulfil their order pipeline to it’s end
customers.
This provides further evidence of the strength of the
Supply@ME proposition and its ability to model future
demand from client companies and provide greater
security for funders. During the period between initial
monetisation and the ‘buy back’ Supply@ME monitored
the inventory to ensure the client’s custodianship of the
inventory was in accordance with the contract.
Underpinned by blockchain technology, specifically
VeChainThor, the Supply@ME platform enables investors
to have real-time oversight of the inventories, which
remains untouched in the client’s (custodian’s) warehouses,
while providing a seamless touch free integration with
their existing systems for the clients. VeChainThor’s
technology also enables the clients to monitor stock levels
in real time reducing potential overstocking.
Following the successful completion of the first inventory
monetisation transaction, the next phase of the agreement
with VeChain will see the creation of an “Inventory
Monetisation Platform 3.0”, incorporating a suite of Web3
features. Phase Two is designed to facilitate additional
capital raising for IM transactions from the VeChain
community and other crypto/digital asset investors.
Supply@ME and VeChain Partnership will launch a liquidity
pool to fund a portfolio of potential Client Companies,
from within Supply@ME’s existing global pipeline, with up
to approximately US$ 50m of inventory to be monetised.
This will include a further EUR 8.4m in funding already
budgeted by VeChain. Once complete, crypto asset
managers and retail investors will have access to a new
digital asset class linked to the real economy and can
contribute to multiple monetisations.
The impact
In the words of VeChain’s CEO Sunny LU, “This partnership
brought to market a highly innovative solution which
employs emerging digital technologies to solve a decades
old problem for businesses globally. By deploying this,
VeChain and Supply@ME, together, can limit a need for
overproduction, promote sustainable global development,
improve cash flow for businesses and create a new digital
asset class which provides capital directly to the real
economy.”
It has provided the evidence which further funders
needed to begin to embrace this new asset class.
23 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Outfitting the Vehicles Sector
Enabling a business to win more government tenders
and invest in further Research and Development.
The problem
The solution
Specialist vehicles, from ambulances and fire engines
to mobile laboratories, civil defence and roads rescue
and public safety vehicles represent a capital-intensive
industry, requiring exceptional research and development
expenditure to keep pace with cutting edge technology,
procurement requirements and safety standards.
Supply@ME’s client has been a market leader in the
production of specialist civil and off-road vehicles for
over 30 years. Government tenders represent a key pillar
of their business revenue. The nature of these purchases
means that the business has significant warehousing
requirements for vehicles until an order is completed,
sometimes numbering hundreds of bespoke machines.
This invariably places a strain on cash flow.
Every day this capital is parked, literally, it is not being
deployed in research and development. Historically, the
business has turned to receivables financing to alleviate
some of this strain and to free up cash. However, the
nature of these facilities, focusing on providing a bridge
between delivery and payment, offers no solution for the
months while the full consignment of vehicles are being
produced, the parts assembled and a near complete fleet
idling in warehouses. Capital locked up in inventory is
not being spent on the necessary improvements to meet
a new tender, expand operations, employ more staff
or realise market opportunities.
The independent stock trading company purchased
through a commercial agreement a tranche of the
businesses inventory, with the client company receiving
funds to free up cash flow. This process has been designed
to be frictionless. The inventory stays parked where it
is. Production does not slow and orders are met, yet the
funds now exist to do more. Supply@ME as inventory
servicer selects the eligible inventory through its due
diligence process before proceeding to contracts and
Stock Company releasing the funds. It offers a rate
comparative with traditional financing facilities, with
the goal to complete new monetisations within 40 days.
The impact
The business received funds of Euro 1.6m, with the further
opportunity to monetise more inventory in the future,
providing them with the cash flow to invest significantly
into next generation research and development and
enabling them to compete for and win more governmental
mandates. It has improved the business’ balance sheet,
reducing inventory and improving working capital
management, whilst not taking on additional debt.
This provides a new opportunity for the business to enable
it to grow, supporting it to better to realise its full potential.
24 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Our Team
(excluding TradeFlow)
Permanent and fixed
term contractors
Day-rate contractors
19
3
Our team is based in
13 locations across three
European countries
Chief Executive Officer
Finance
Operations and
Due Diligence
Technology and Product
1
3
7
5
People
Risk
Sales and Marketing
Female
50%
4
Male
50%
1
1
Less than 1 year tenure
1 to 2 years tenure
2+ years tenure
5
8
9
25 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Our Leadership Team
1
4
2
5
3
26 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Mark Kavanagh
Group Head of Operations and Transformation (4)
Mark is an experienced Risk Leader with over 25 years
in Credit & Risk functions. Before joining Supply@ME,
Mark worked for Greensill Capital as Head of Product
Risk. Whilst there, he implemented accounts receivable
(AR) policies and procedures, installed an AR platform,
helped Greensill expand territorially, and trained the
Credit team on any new product offerings, acquisitions
and integrations. Prior to that, he worked for GE Working
Capital Solutions (the monetisation arm of General
Electric group) for 15 years, heading up their European
Credit Team, managing the auto scoring and decisioning
system, and ensuring processes were safe and efficient.
Mark joined Supply@ME in June 2021.
Nicola Bonini
Group Head of Origination (5)
Nicola has more than 20 years’ experience in balance
sheet lending and cash flow finance, gained during
her time at some of the UK’s most prominent banking
institutions. Previously, she was Vice President and Head
of Commercial Finance at Bank Leumi (UK) PLC, where
she managed a portfolio of companies with turnover
of up to £1bn. Before this, Nicola served as Executive
Director at Falcon Group UK, where she joined the newly
formed UK inventory finance team. Nicola has also held
senior, high-profile business development and relationship
management roles at major banks, including BNP Paribas,
The Royal Bank of Scotland and Bank of Scotland Corporate.
Nicola joined the team in September 2021 to take a leading
role in business development, client onboarding and
retention at Supply@ME.
Amy Benning
Chief Financial Officer (1)
Amy gained Chartered Accountancy qualifications in New
Zealand while working with KPMG on a range of clients
across various industry sectors. On moving to the United
Kingdom, Amy worked briefly with BP’s shipping arm, before
moving to PwC’s London Capital Markets Team where she
spent 12 years focusing on technical accounting, mergers
and acquisitions and initial public offerings for a wide
range of clients. In 2018, Amy moved to Alfa Financial
Software Holdings PLC, a UK main market listed company
and developer and provider of software for the automotive
leasing sector. As Finance Director, Amy was responsible
for the team which managed accounting, reporting
(internal & external), corporate governance, audit,
systems, process improvement, controls and transactional
accounting. Amy joined Supply@ME in June 2021.
Stuart Nelson
Group Head of Enterprise Risk Management (2)
Stuart is an experienced credit risk analyst, with global
experience of assessing the risk of financing solutions
across multiple asset classes. Having begun his career
at JPMorgan in the EMEA Emerging Markets Team in 2000,
he then spent almost two decades in leadership roles at
S&P Global Ratings. During his time at S&P, he managed
multiple teams across the European office network in
London, Milan, Frankfurt, Madrid and Paris, focusing on
the assessment of asset securitisation in all sectors, with
oversight of ratings on securities of more than €50bn
equivalent over that period. From 2015, he concentrated
his attention on the refinement and validation of risk
methodologies across a global spectrum of asset classes.
Stuart joined Supply@ME in 2020, where he monitors all
aspects of the risk and operational functions.
Alice Buxton
Chief People Officer (3)
Alice is a HR leader motivated to help businesses succeed
by creating environments which enable individuals, teams
and leaders to thrive. She has considerable experience
in the Financial Services and fintech industries. Prior to
joining Supply@ME she built the Global Talent function
at Greensill, helping the business grow its workforce from
250 to over 1200 in multiple jurisdictions in just over two
years. Previously she worked as an Executive Director
in Goldman Sachs Human Capital Management Division,
focusing on the EMEA Trading floor and Risk, Audit and
Compliance teams attracting and developing high potential
talent. Before this she worked in Talent Acquisition for
Ernst and Young’s London office, recruiting for their risk
and advisory business. Alice has a BSc in Psychology,
MSc in Human Resource Management and is a qualified
corporate and executive coach. Alice joined Supply@ME
in June 2021.
27 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Team Q&As
Maria Mingari
Senior Credit Analyst
Can you outline your career to date?
I joined Supply@ME in March 2020 after spending
23 years as a credit analyst, almost entirely with Cerved
Group, half of this working in business information
and the other half for Cerved Rating Agency, although
the company did change hands a number of times.
I worked across a range of areas relating to credit risk,
from analysing prospects to supporting the sales and
marketing of the business as it grew. My experience
covered the analysis of multiple companies and related
sectors from commodities to furniture and everything
in between and, over the course of my career, I have
encountered a vast array of businesses and their
operating models.
What attracted you to Supply@ME?
Alessandro contacted me in early 2020 and when I heard
about Supply@ME and what it aimed to do, I was sold. I
have seen first-hand how access to funding and availability
of credit is critical for many businesses; regardless of their
size and stage of development. What Alessandro outlined
was not only an innovative alternative finance tool, but
also non-traditional instruments, such as blockchain.
I saw the potential for this to change the market in terms
of access to credit and liquidity for potentially thousands
of businesses, not only in Italy, but globally. It was an
opportunity I didn’t want to miss.
Can you tell us about your role at Supply@ME?
As a Senior Credit Analyst, I oversee the various
onboarding stages for potential client companies working
closely with our sales and marketing teams both in Italy
and the UK. At the first analysis stage, we look at whether
we can support a prospect, whether the inventory they
holds meets the pre-determined criteria, or if there are
any factors that would rule it ineligible for monetisation,
for example, inventory such as perishable goods or those
governed by regulations, for example pharmaceuticals,
do not meet the pre-determined eligibility criteria.
Following on from this, the due diligence and onboarding
stage includes preliminary credit risk analysis, both
actual and forward looking, and analysis of the sector
within which the company operates, the market for their
inventories and the specific sales cycle.
These factors all allow us to gain a detailed understanding
of the specific business and to conclude on which inventory
items, if any, meet the eligibility criteria for monetisation.
The level of demand from our pipeline has increased
dramatically since our inaugural monetisation in 2022.
There has always been a steady level of interest, particularly
from small and medium sized businesses, however,
now we are seeing regular enquiries from some of Italy’s
largest manufacturers, alongside the SME enterprises
that make up the majority of the Italy’s current economic
structure. The levels of inventory which businesses are
looking to monetise has also increased over time.
What does the future look like from your perspective?
We have overcome the initial hurdles and the business
is now gaining traction in our core markets. Enquiries
from new potential client companies are coming in daily,
and the amount that businesses want to monetise
continues to increase. The problems which Supply@ME
solves are not exclusive to Italy or the UK. Businesses
across Europe can benefit, likewise for the US and Middle
East. The opportunity for Supply@ME geographically
provides an exciting future ahead. Continuing to improve
our technology availing more fully of Web 3.0 and
blockchain will also provide further opportunities for
growth. The business has achieved and evolved a lot
since I joined three years ago, and it is an exciting time
to be a part of the Supply@ME team.
28 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
What does the future look like from your perspective?
Our proposition for client companies is clear: to help them
improve their working capital positions. While there are
alternative funding options on the market, our digital
capabilities really are a brand new, novel solution. Supply
chain data does not always tell a clear story and sharing
that data externally is an even tougher challenge. So, the
inventory reporting capability we are building out will be
a unique element that really makes our platform unique.
One of my priorities this year is to advance the reporting
provision, to ensure we are collecting data from client
companies in the most efficient way and delivering
action-oriented insights based on companies’ data, which
will reinforce our position as the leading fintech for inventory
monetisation.
Angel Poyato
Head of Inventory Analysis Engine
Can you outline your career to date?
I joined Supply@ME in August 2022, having spent more
than a decade managing supply chain operations for various
international firms across Europe, Hong Kong and the US.
A large part of my work has focused on working with different
enterprise resource planning (ERP) software that helps
companies to understand their supply chains via data analysis.
My experience to date spans a range of supply chain
functions, from logistics and purchasing to auditing and
quality control, which means I have a first-hand insight into
the challenges clients of Supply@ME face when managing
their inventory – and how detailed data collection, analysis
and monitoring can pinpoint and overcome them.
What attracted you to Supply@ME?
Having worked across every function of supply chain
management, I thought I had seen the extent of what
ERP systems and data analysis could do. However, the
technological capabilities that sit behind the platform
Supply@ME is building are completely new. There are
no competitors in the market, which means there is
no blueprint for our solution. Our Platform is constantly
evolving and has already become more efficient since I
joined the business, and I find that really exciting. I was also
drawn by the opportunity to work with the experienced
management team already in place at Supply@ME.
Can you tell us about your role at Supply@ME?
As Head of Inventory Analysis Engine, my role is to manage
how we assess the risk of inventory. I like to think of it as
a control tower, where we are building a 360-degree view
of the risks of holding certain types of inventories and how
that might change over time. This process informs both
our due diligence processes internally, before we agree to
work with a company that has warehoused goods, and on
behalf of the investors who provide the funds for inventory
monetisation transactions. Once we have distilled the
appetites of potential inventory funders into inventory KPIs,
I use the supply chain and inventory data we collect to
report on that basis. Alongside managing these reporting
requirements, I work with our vendors and software
providers and developers to maintain and continue building
out Supply@ME’s proprietary inventory analysis engine.
29 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Engaging with our Stakeholders
Directors’ statement under section 172 (1)
The following disclosure forms the Directors’ statement
required under the Companies Act 2006 on how the Directors
have had regard to the matters set out in section 172 (1) (a)
to (f) in performing their duties. The Board recognises that
engagement with its stakeholders is fundamental to the
long-term success of the Group and considers the views
and interests of all key stakeholders in its decision-making.
Below is a summary of how the Board engaged with each
key stakeholder group during the year.
Our people
The Board recognises the critical importance of our growing
team – a motivated, committed, engaged workforce is essential
for the Group’s success.
The Executive Directors work closely and collaboratively
with our global team, having regular contact both formally
and informally. The Chief People Officer, Alice Buxton,
has developed a People Strategy, focused on growing the
businesses people capability to enable successful business
growth and cultivating an engaged and high performing
workforce. During 2022, an employee experience and
engagement survey was undertaken to assess the employee
experience at Supply@ME. The results demonstrated high
levels of trust in the organisation and also among colleagues,
with members of the team able to volunteer their views,
be listened to and have their ideas considered, which is
essential for an innovative growing business. The results
from the survey have helped to develop the people focused
goals for 2023, focusing on the retention, and internal growth
of individuals and teams for future success, demonstrating
Supply@ME’s commitment to this important group of
stakeholders. In 2022, Supply@ME also implemented its
Long-Term Incentive Plan with the goal of rewarding and
retaining specific employees for reaching goals that lead
to increased shareholder value. The Board will continue
to engage with our people to ensure areas of importance
are prioritised.
Our shareholders
The continued support of our shareholders is vital to the
long-term success of the business. We aim to engage with
our shareholders in line with the Group’s strategic objectives
and delivery of these, with the overall aim of delivering value
to all our stakeholders.
The Group continually seeks to improve its engagement
with shareholders, both private and institutional investors.
During 2022, assisted by the investor relations team, focus
has been placed on disseminating information to the market
in a timely manner, as well as monitoring and responding
to communications in the dedicated investor relations
inbox, where it is possible to respond, for shareholders
to be furnished with non-market sensitive information
and to receive responses to enquiries in a timely manner.
This is an evolutionary process and Supply@ME will continue
to augment its investor relations function to provide more
insights into the Company through regular engagement
and discourse. The business has also sought to outline
its business model canvas and ensure that our revenue
streams and the foundations for our business are clear
to external stakeholders and will update, via official regulated
channels, on these components as and when material
developments can be relayed.
During the year Supply@ME announced a Capital
Enhancement Plan (“CEP”) to provide additional commercial
and financial support during the next phase of the Group’s
development. As part of the CEP, In July Supply@ME gave
qualifying shareholders the opportunity to subscribe for
up to 641,710,082 open offer shares. The Company received
valid acceptances from qualifying shareholders in respect
of 369,122,494 open offer shares pursuant to the open
offer entitlements. In addition, the Company received
applications from qualifying shareholders under the excess
application facility in respect of 5,334,122,228 excess shares.
We regard the oversubscription of this facility as a positive
endorsement of the business and its potential.
30 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Corporate clients
Corporate clients, both current and prospective, are a crucial
stakeholder group for our business. Our platform is designed
to be simple, allowing an unobtrusive user experience.
We want our clients to become advocates for the business
and we are committed to working with them to refine the
onboarding, trading and monitoring processes. Through
continuous communication our client-facing teams can
build established relationships that ensure we understand
and meet their business needs. This includes receiving
regular feedback about our processes and product
solutions and enhancing them to ensure they are best
in class and continue to evolve as our customers business
and the commercial environment changes. Every piece
of feedback from prospective clients is also vital. We believe
wholeheartedly in our proposition, and every client we
onboard strengthens this belief. Ensuring that we reflect the
issues which potential clients face and that our proposition
is articulated appropriately is crucial to ensuring we realise
our potential.
Inventory funders and fund investors
Inventory Funders are essential to our business, and the
ecosystem we support as inventory servicers. We are focused
on creating a new asset class in which funders can confidently
invest in inventory. Where required we will evolve our
business model to ensure we are reflecting the feedback
and views of current and prospective funders, and regulators.
An example of this is the consideration being given to
sponsoring the creation of an independent inventory trading
business (consisting of a group of operating stock companies
across the targeted jurisdictions) and, in the future, a
European structure together with a market-leading fund
service provider. This over time will enable a multi-asset
management model where the Group can cooperate
with further European and UK authorised asset managers.
31 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Financial Review
2022 2021 Movement
£m £m £m
Continuing operations
Revenue from continuing operations 0.1 0.3 (0.2)
Operating loss from continuing operations before impairment charges (4.6) (4.0) (0.6)
Impairment charges (1.1) (1.8) 0.7
Operating (loss) from continuing operations (5.7) (5.8) 0.1
Finance costs (2.0) (1.2) (0.8)
(Loss) before tax from continuing operations (7.7) (7.0) (0.7)
Income tax – (0.4) 0.4
(Loss) after tax from continuing operations (7.7) (7.4) (0.3)
Loss from discontinued operations (2.2) (5.1) 2.9
Total loss for the year (9.9) (12.5) 2.6
2022 2021 Movement
Pence Pence Pence
Total earning/(loss) per share (EPS) (0.023) (0.037) 0.014
32 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
The Group’s consolidated financial statements for the year
ended 31 December 2022 (“FY22”) have been prepared in
line with International Financial Reporting Standards (“IFRS”).
Given the activities that commenced in the second half of 2022
with respect to the proposed restructuring the Company’s
ownership with TradeFlow (the “TradeFlow Restructuring”),
and the fact that as at 31 December 2022 agreement
in principle had been reached with respect to the specific
proposal in place at this time, the TradeFlow operations
have been classified as discontinued operations and assets
held for resale in line with the requirements of IFRS 5 (“Non-
current Assets Held for Sale and Discontinued Operations”).
The prior year income statement has been represented to
aid comparability in line with the standard.
Subsequent to the agreement in principle referred to
above, on 24 March 2023, the Company announced the
TradeFlow directors, being Tom James and John Collis,
provided written notice of their intention to exercise their
rights to buy back 100% of the share capital of TradeFlow
(the “Buy Back”), pursuant to certain earn-out arrangements
entered into in connection with the Company’s acquisition
of TradeFlow, the completion of which was announced
on 6 July 2021. As a result of the exercise of the Buy Back,
the details of the TradeFlow Restructure now need to be
renegotiated, and a new independent valuation of the
TradeFlow operations needs to be completed. As at the
date of these consolidated financial statements, these
activities had not been completed and were still ongoing.
Revenue from continuing operations
2022 2021 Movement
£000 £000 £000
Revenue
Due Diligence fees 102 279 (177)
Inventory Monetisation fees 36 – 36
Total revenue from
continuing operations 138 279 (141)
The table above provides a break down of the Group’s
revenue from inventory monetisation activities during the
current financial year. Revenue is recognised in accordance
with IFRS 15 (“Revenue from Contracts with Customers”)
and more details on the Group’s revenue recognition
policies can be found in the note 2 to the consolidated
financial statements.
During FY22, the Group recognised £0.1m (for the year
ended 31 December 2021 (“FY21”): £0.3m) of Inventory
Monetisation revenue, of which the majority related to due
diligence fees. 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 financial year, the Group has continued
to carry out, and charge for due diligence activities, and the
£0.1m recognised reflects the value of those due diligence
activities completed during FY22.
The reduction in the due diligence fees recognised during
FY22 is primarily the result of the majority of the Group’s
efforts in the first half of the year, being focused on the
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 requirements of the VeChain Agreement. This resulted
in no due diligence revenue being recognised in the first
half of 2022.
As a result of the completion of the of the inaugural IM
transaction, which was facilitated using the Group’s IM
Platform, new revenues were recognised for the first time
in respect of origination fees, IM Platform usage fees and IM
service fees. These fees related to the following activities:
1) Origination fees – the origination of the contracts
between the client company wishing to have their
inventory monetised and the independent stock (trading)
company that purchased the inventory from the client
company. In line with IFRS 15 (“Revenue from Contracts
with Customers”) the Group recognised these revenues
at the point in time they are due to be received from
the client.
2) IM Platform usage fees – usage of the Group’s IM
Platform, under a Software as a Service (“SaaS”) contract,
by the independent stock (trading) company to facilitate
the purchase of the inventory from the client company.
In line with IFRS 15 (“Revenue from Contracts with
Customers”) the Group recognised these revenues over
the time period they related to.
3) IM service fees – the support and administration activities,
such as the monitoring of the inventory purchased, that
the Group performs in connection with the use of the
Group’s IM Platform. In line with IFRS 15 (“Revenue from
Contracts with Customers”) the Group recognised these
revenues over the time period they related to.
While the new IM revenue items were not significant in terms
of value during FY22, the ability of the Group to successfully
facilitate the first IM transaction was a significant business
milestone.
33 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Financial Review
Operating loss from continuing operations
before impairment charges
During the year ended 31 December 2022 the Group
continued to focus on refining and developing the business
model, with significant amount of time and effort having
been spent on the 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 from continuing
operations before impairment charges for FY22 of £4.6m
(FY21: £4.0m loss). This increase is largely due to:
> An increase in staff and contractor costs of £0.9m in FY22
as the Group built out its leadership, business operations
and finance teams. The majority of the build out took
place during the second half of FY21 or early in FY22,
with the full year impact of the costs being seen for
the first time in FY22. Additionally, the Group focused
on developing its ICT architecture during 2022 with the
support of specific contractors. The investment in staff
and contractor costs is expected to give the Group
a strong foundation as it enters the next stage of
development and growth.
> An increase in professional and legal fees of £0.4m in
FY22 as the Group undertook the Capital Enhancement
Plan which required the preparation and publication
certain regulatory documents associated with the open
offer and share issues. Additionally, certain professional
and legal fees were incurred during the second half
of 2022 in respect of the TradeFlow Restructuring.
> These increases were offset by a decrease in the
amortisation of the internally developed IM Platform
of £0.3m following this being fully impaired as at
31 December 2021.
Impairment charges from continuing operations
2022 2021
£000 £000
Impairment charges from
continuing operations 1.1 1.8
1.1 1.8
The impairment charges of £1.1m recognised during FY22
from continuing operations relate to the impairment of the
Group’s internally developed IM platform at 31 December
2022 following an impairment test in line with IAS 36
(“Impairment of Assets”). This followed the conclusion that
indicators of impairment were present, which included the
prior and current year losses being generated by the assets
held by the Group’s Italian operating subsidiaries. In line
with the going concern statement, set out in note 2 to the
consolidated financial statements, there is currently a material
uncertainty with respect to both the future timing and
growth rates of the forecast cash flows arising from the
use of the internally developed IM Platform intangible asset.
As such, the Directors have prudently decided to continue
to impair the full carrying amount of this asset of £1.1m
as at 31 December 2022.
Discontinued Operations
The revenue and operating loss of the TradeFlow operations
for the year ended 31 December 2022 are shown in the table
below. It should be noted that as TradeFlow was acquired
by the Group in July 2021, the prior year figures include
the six months of results that were consolidated by the
Group, whereas the current year figures include a full year
of results.
2022 2021
Discontinued Operations £000 £000
Revenue from discontinued operations 629 259
Operating (loss) from discontinued operations before
acquisition relation costs and impairment charges (1,054) (438)
Transaction costs – (2,009)
Amortisation of intangible assets arising on acquisition (846) (391)
Acquisition related earn-out payments 710 (1,410)
Impairment charges (765) (800)
Operating (loss) from discontinued operations (1,955) (5,048)
34 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
TradeFlow’s investment advisory revenue arises from
investment advisory services provided in TradeFlow’s capacity
as investment advisor to its well-established USD fund and
its growing EUR fund. In line with IFRS 15 (“Revenue from
Contracts with Customers”) these revenues are recognised
when the investment advisory services have been delivered
and the Group’s performance obligation has been satisfied.
The acquisition related costs in FY22 arose in connection
with the TradeFlow acquisition that was completed in July
2021. Further details are set out below:
> Amortisation of intangible assets arising on acquisition
of £0.8m. These costs related to the intangible assets
recognised by the Group in connection with the
TradeFlow acquisition, which had an initial fair value
of £6.9m. The £0.8m represents the amortisation charge
arising on these assets for the year ended 31 December
2022; and
> Acquisition related earn-out costs of (£0.7m). 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 credit of £0.7m
recognised in the income statement for the year ended
31 December 2022 represents the reversal of amounts
previously recognised in the income statement in relation
to the FY22 and FY23 earn-out payments, slightly offset
by the additional amount in respect of the FY21 earn-out
payments recognised in the current financial year. The
reversal reflects the fact that the earn-out milestone targets
were not met in FY22 and managements expectation that
these targets will be met in 2023 is now remote.
The discontinued operations impairment charge relates to
the goodwill recognised on the TradeFlow acquisition. 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 first half of 2022.
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 £0.8m and as such an impairment
charge has been recognised for this amount.
An additional impairment assessment was carried out as
at 31 December 2022, however due to the classification
as discontinued operation, this assessment was carried out
in accordance with IFRS 5 (“Non-current Assets Held for Sale
and Discontinued Operations”).
This required management to consider the fair value of
the TradeFlow operations, being what would be the agreed
price between two market participants. As the details of the
Buy Back are still being considered and finalised as at the
date of these financial statements, management considered
the specifics set out in the TradeFlow Restructuring share
purchase agreement that had been agreed in principle
as at 31 December 2022. Taking this into consideration,
no additional impairment charges were recognised as at
31 December 2022.
Group Funding Facilities utilised during the year
Capital Enhancement Plan
During FY22, the Company entered into a subscription
agreement with Venus Capital S.A. (“Venus Capital”), which
raised £6.7m through the issue of new equity capital.
This new equity capital enabled the Company to settle the
outstanding loan notes and convertible loan notes with
Mercator Capital Management Fund LP (“Mercator”) in cash
rather than by the further conversion of the convertible
loan notes into new ordinary shares. During the year ended
31 December 2022, the Company issued a total of
14,350,000,000 new ordinary shares to Venus in line with
the mandatory and optional equity tranches outlined in
the subscription agreement.
In connection with the Capital Enhancement Plan, the
Company also executed a convertible loan note agreement
with Venus Capital, under which the Company, issued
to Venus Capital convertible loan notes worth £1.9m during
FY22. These convertible loan notes were split as £0.4m to
cover the fees associated with the Venus Capital subscription
and convertible loan note agreements, and £1.5m covering
a working capital funding facility which was received in cash
during the second half of FY22. As at 31 December 2022,
the full £1.9m of this convertible loan note liability had been
extinguished through the issue of 3,897,484,385 new ordinary
shares. The conversion to new ordinary shares was at a
fixed price of 0.05pence. The interest expense recognised
in respect of these convertible loan notes in FY22 was £0.1m.
The subscription agreement with Venus Capital also
required the Company to issue warrants in connection
with the equity share issues made under the Venus Capital
subscription agreements. During the year ended 31
December 2022 a total of 8,175,000,000 share warrants
were issued by the Company to Venus Capital. These share
warrants had a total fair value of £4.8m. As at 31 December
2022, all of these share warrants remain outstanding.
35 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Financial Review
The Capital Enhancement Plan also included the Open Offer
made by the Company to its existing retail shareholders
during the second half of 2022. The Open Offer provided
the ability for existing retail shareholder to purchase additional
new ordinary shares on the same conditions agreed with
Venus Capital. The Open Offer resulted in the issue of
641,710,082 new ordinary shares and raised £0.3m for
the Company. The Open Offer also required the issue
of warrants to the retail shareholders and during the year
ended 31 December 2022 a total of 320,855,008 share
warrants were issued by the Company to retail shareholders.
These share warrants had a total fair value of £0.3m.
As at 31 December 2022, a total of 271,347,008 share
warrants remained outstanding.
The total share issues costs incurred in connection with the
Capital Enhancement Plan during FY22 was £5.6m including
£5.1m relating to the fair value of the warrants issued, £0.4m
relating the fees charged by Venus Capital and £0.1m of other
share issue costs. This has been accounted for as a £4.0m
reduction to share premium and a £1.6m reduction to
retaining losses during FY22. The reduction to share premium
amount has been limited to the increase to share premium
recorded during the same period in respect of the various
equity issues making up the Capital Enhancement Plan.
Mercator funding facilities
Prior to the cash repayment of outstanding loan note and
convertible loan balance with Mercator Capital Management
LP (“Mercator”) following the execution of the Capital
Enhancement Plan, the Group continued to make monthly
repayments under the loan note facility through the issue
of a convertible loan note. The movement in loan note
liability to Mercator during the current financial year are set
out in the table below:
Mercator loan notes
£m
Loan note liability at 1 January 2022 5.7
Amortisation of finance costs during the
period (recognised in the income statement) 1.1
Less: settlements made via issue of
convertible loan notes (4.6)
Less: repayments made in cash (2.2)
Loan note liability at 31 December 2022 –
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
during FY22 is £1.1m.
Following the issue of £4.6m of convertible loan notes to
Mercator in lieu of cash repayments during the year, these
were subsequently settled as follows:
a) the conversion of £1.3m in principal amount of convertible
loan notes into 1,400,898,372 new ordinary shares; and
b) a repayment in cash of £3.4m in principal amount of
convertible loan notes.
The movement in convertible loan note liability to Mercator
during the current financial year are set out in the table below:
Mercator convertible loan notes
£m
Convertible loan note liability at 1 January 2022 –
Monthly loan note settlements made via
issue of convertible loan notes 4.6
Finance costs satisfied via the issue of
convertible loan notes 0.1
Less: convertible loan notes converted
into ordinary shares (1.3)
Less: convertible loan notes repaid in cash (3.4)
Convertible loan note liability
at 31 December 2022 –
The Mercator convertible loan notes do not have any interest
costs in addition to that of the Mercator loan notes, however
finance costs of £0.8m were recognised during the current
financial year as a result of:
> Additional commitment fees and late payment interest
charges of £0.5m, or which £0.4m was paid in cash and
the remaining £0.1m was settled through the issue of
convertible loan notes; and
> The fair value of the warrants of £0.2m issued in connection
with the convertible loan notes.
Both costs have been fully recognised in the income
statement during FY22 given the liability to which they relate
has been extinguished by 31 December 2022. This amount,
together with the finance costs of £1.1m in respect of the
Mercator loan notes, resulted in a total finance cost of £1.9m
in respect of the Mercator funding facilities during the year
ended 31 December 2022.
TradeFlow 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
> Interest at a fixed rate at a fixed rate of 7.9% per annum.
36 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Finance costs recognised during the year ended 31 December
2022 relating to TradeFlow long term borrowings total
£0.2m 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 £0.1m being recognised in relation to the acceleration
of the redemption premium cost due on repayment of the
principal of the existing loan note facility.
Other long term funding
On 13 October 2022, the Company announced that
its subsidiary, Supply@ME Technologies S.r.l, had entered
into a new long term loan facility with Banco BPM S.p.A
(the “Banco BPM Facility”). The obligations of Supply@ME
Technologies S.r.l under the Banco BPM Facility are
guaranteed by the Company. The key commercial terms
of the Banco BPM Facility include:
> €1m in principal amount;
> 275 basis points over Euribor interest rate; and
> a five-year repayment term (the final payment to be made
on 11 October 2027), including an initial six months
of interest only repayments, followed by 54 months
of combined principal and interest repayments.
The proceeds of this loan have been used to support
the continued investment into the Group’s IM Platform,
the ownership of which was transferred to Supply@ME
Technologies S.r.l prior to the execution of the Banco
BPM Facility.
Cash flow
The Group decreased its net cash balance by £1.1m (year
ended 31 December 2021: £1.1m increase) due to proceeds
from the Capital Enhancement Plan share issues of £7.0m,
the proceeds from the Venus Capital convertible loan notes
of £1.5m, and net proceeds from the TradeFlow and Banco
BPM Facility long term borrowing of £2.3m, offset by the
following items:
> Repayments made on the Mercator loan note and
2022 2021
£000 £000
Net cash flow from operating activities (4.5) (3.9)
Net cash flow from investing activities (1.2) (4.6)
Net cash flow from financing activities 4.6 9.6
Net increase in cash and
cash equivalents (1.1) 1.1
Cash and cash equivalents
at 1 January 2022 1.7 0.6
Cash and cash equivalents as
at 31 December 2022 0.6 1.7
Net liabilities
As at 31 December 2022 net liabilities were £2.0m (31
December 2021: net liabilities of £1.4m). The £0.6m increase
in net liabilities reflects:
> A decrease in the Group’s intangible assets and goodwill
of £1.5m due to amortisation of £0.9m and impairment
charges of £1.8m during the year ended 31 December
2022. This was offset by additions to the Group’s IM
Platform of £1.2m during the period;
> A decrease in amounts outstanding under the Mercator
loan note and convertible loan facilities of £5.7m in
aggregate. This is due to the settlement activities
described above;
> An increase in long terms borrowings of £2.6m, due
to a £1.8m increase in TradeFlow long term borrowing
following the loan refinancing, and an £0.8m increase in
borrowings as a result of the new Banco BPM Facility; and
> A £2.2m 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 Directors’ Report
and note 2 to the consolidated financial statements for the
year ended 31 December 2022.
convertible loan note facilities of £5.6m;
Related Parties
> Additional finance costs paid in cash related to the
Mercator loan note and convertible loan note facilities
of £0.4m;
> Share issues cost paid in cash of £0.2m;
> Net outflows from operating activities of £4.5m (year
ended 31 December 2021: £3.9m net outflow) as the
Group’s operating expenses increased primarily due to
growing headcount, together with spend on IT contractor
specialists and professional and legal fees; and
> Increased investment in the Group’s IM Platform of £1.2m
(year ended 30 December 2021: £4.6m).
Note 28 to the to the consolidated financial statements
for the year ended 31 December 2022 contains details
of the Group’s related parties.
Subsequent events
Note 30 of the to the consolidated financial statements for
the year ended 31 December 2022 contains details of all
subsequent events.
37 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Environmental, Social and Governance Review
The Group recognise the importance of considering and
managing our impact on society and the environment as
well as protecting and developing the business’s long-term
value for its shareholder base. Consideration has been given
to how to assess, measure and manage this impact over and
above that which is required from a statutory perspective
and managing and leveraging the Group’s opportunity to
have a positive impact. Supply@ME recognise that the Group
has the ability to have a positive impact in this area and
intends to continually develop its approach. Key to this
approach will be ensuring that consideration is being given
to the Environmental, Social and Governance (“ESG”) impacts
of the business as its builds its track record of successful
IM transactions executed over its Platform.
Environmental
Current
During 2022, the Group continued to be a low energy user,
using less than 40 MWh per annum.
As required by the Companies Act 2006 (Strategic and
Directors Report) Regulations 2013 and the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018 the Directors have
undertaken a review of the Group energy consumption
and associated emissions. The Group uses significantly less
than 40MWh of energy per year and is therefore classed
as a “low energy user” by the regulations, as a consequence
of which it is exempt from reporting annual emissions,
energy use and an intensity ratio.
Below is voluntary reporting to provide more detail of this
assessment and aspirations for the future.
Scope 1 emissions and associated energy usage
These emissions are directly related to combustible fuel,
used for heating company premises and or powering
company owned vehicles. The UK and Italian businesses are
remote first and do not own or lease offices. At times desk
sharing spaces or managed offices are rented for company
meetings. TradeFlow rents office space but does not use
heating fuel. The business does not own vehicles and focuses
on using technology as a means of communication which
limits business travel, for example all 2022 board meetings
having taken place via video conference.
Scope 2 emissions and associated energy usage
These emissions relate to electricity and / or heat supplied
to an organisation. No part of the organisation is directly
supplied with or pays for electricity. TradeFlow lease an
office, electricity usage being part of the rental fee. The total
electricity use of the organisation is therefore restricted to
the supply to the Singaporean office.
Scope 3 emissions
These emissions are the result of activities from assets not
owned or controlled by the reporting organization, but that
the organisation indirectly affects in its value chain. Reporting
in this area is something that the Group will look to develop
in the future.
Since December 2020, TradeFlow advised funds have been
one of the first trade funds in the world to start buying carbon
credits, with the aim of netting off carbon emissions from
transportation related to the funds TradeFlow advises.
Aspirations
Continue to keep energy consumption as low as possible,
exploring ways to reduce or offset this as the business grows.
Continue to utilise technology to avoid unnecessary travel,
especially given the staff and directors are based in a number
of different locations.
Continue to build on voluntary disclosure, considering the
impact and business supply chain in particular scope 3
emissions tracking and calculation.
Social capital
Current
The Group seeks to reach the highest ethical standards
and behaviours when conducting our business, and to
ensure this is done with integrity, openness and appropriate
protections for those with whom our business interacts
and impacts.
A key area of focus during 2022 has been a review by
an external partner of our Data Protection Governance with
the aim of ensuring the Group continues to build on and
embed privacy by design principles across the Group. This
proactive approach to data protection will form a bedrock
to the Group’s data management as the business grows.
The Group’s Platform, by its nature, helps businesses to
free up working capital earlier in their production or sales
cycle through the facilitation of Inventory Monetisation
transactions. Inventory Monetisation also allows trading
businesses to buy and hold more inventory in warehouse,
potentially resulting in fewer deliveries (facilitating a lower
carbon footprint from reduced supplier haulage).
Aspiration
Supply@ME aims to have a positive impact on society and
will continue to illicit feedback from our key stakeholders
on mechanisms through which to achieve this aim. In 2023
we plan to ask for feedback from the Supply@ME team to
ensure we are incorporating our employees’ views on how
the Group can contribute to our local communities.
38 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Aspiration
Robust, Systematic ESG assessment of potential users of
our Platform to become a core element of due diligence.
Leadership and governance
Current
The Company is a listed business which complies with
the QCA Corporate Governance Code. Risk is regularly
considered by the board and a proactive approach is taken
to risks identified, most recently through the application
of the COSO (Committee of Sponsoring Organizations
of the Treadway Commission) framework. Legal advice and
guidance are sought from external experts, as and when
required, in addition to a small inhouse team.
Aspiration
Further development and disclosure of proactive internal
risk management processes in line with business growth.
Human capital
Current
Our goal is to be a leading employer which offers real
opportunities for growth and development. As highlighted
in the Engaging with our Stakeholders section on pages
30 to 31, during 2022 feedback was sought from the team
about their experience of being an employee at Supply@ME.
The responses to this have informed the Group’s people
strategy. In particular, this focused on career growth and
retention of our employees to enable future success of
the business. As previously highlighted, the gender diversity
of the leadership team immediately below board level is
60% female and our employee population is 50% female
(excluding TradeFlow), which will be an ongoing focus for
the organisation.
Supply@ME’s equal opportunities policy aims to ensure
that the work environment is free from direct and indirect
discrimination on the grounds; of race, sex, disability,
sexual orientation, gender reassignment, marriage or
civil partnership, pregnancy or maternity, religion or belief
or age, and enables everyone to achieve their potential.
Having a global mindset, being collaborative and embracing
differences are fundamental to our corporate culture.
They run deeply through our people practices, including
in recruitment, performance management and development
of the team. In addition to the behaviours of innovation
and focusing on delivery.
Aspiration
Continue to build a diverse, inclusive organisation which
offers opportunities for growth and development for all
employees and contractors.
Business model and innovation
Current
Supply@ME’s model is, by its nature, innovative. The Group’s
desire is for the business to have a positive impact on the
environment, society and our stakeholders. One area of
focus during 2022 has been the assessment of the Group’s
corporate client’s approach to ESG, ensuring clients’ ESG
impact is being taken into consideration during the onboarding
process. This also allows potential inventory funders to
be informed of the corporate clients’ ESG impact to enable
a proactive approach to ESG management. Currently, during
due diligence, Moody’s ESG predictor is used to assess
corporate clients, which takes into consideration a potential
client's jurisdiction, size and industry. This information can
then be shared with potential inventory funders.
39 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Principal Risks and Uncertainties
The Board confirms that throughout 2022, a robust
assessment of the principal risks facing the Company was
completed. A comprehensive list of Group-wide risks and
emerging risks was reviewed and monitored throughout the
year, managed by our designated risk officer Stuart Nelson,
Head of Enterprise Risk Management. The most significant
risks and uncertainties we face are listed in the table below,
categorised by principal risk.
Strategic risk
Strategic risk is defined as the failure to build a sustainable,
diversified and profitable business that can successfully
adapt to environment changes due to the inefficient use
of Group’s available resources.
Key risks
Management of risk
Strategic competition
The Company’s business model is that of an innovative
Platform for inventory monetisation, aiming to capitalise
upon market developments where supply chains may
be placed under pressure. This has led suppliers to
hold increased amounts of inventory in order to supply
both on and off-line retailers, with a resultant restriction
on available working capital. The Company is aware
of certain larger key entrants to related markets that
may be able to offer competing or related products
on a larger scale that the Company is able to. This could
affect the Company’s ability to increase revenues and
profit margins in the future.
The Company acknowledges the risk of new and
potentially larger competitors and regularly monitors
new entrants to keep abreast of changes to this risk
factor. At present, the Company believes it is able
to more readily adapt to changing market conditions
than larger entrants, utilising its nimbler organisational
structure.
Future development and strategy
During 2022, the Company has proven its ability to
deliver a successful inventory monetisation transaction.
However, as the transaction process has not yet been
repeated, the business’ ability to scale remains unproven,
which could affect the Company’s ability to increase
revenues and profit margins in the future.
The key to our long-term business growth is the platform.
The platform and product roadmap are continually being
enhanced to enable seamless interactions with clients
and inventory funders, with minimal human intervention,
using a lean workforce to deliver a high volume of
transactions and revenue.
Inventory funding risk
The risk that demand from corporate clients for
Inventory Monetisation transactions – which generates
revenue for the Company via the due diligence and
origination fees and Platform consumption – cannot
be met by the debt funding providers to the respective
Stock Companies, and the Global Inventory Funds
as the demand requires or can only be met at an
uneconomic price. This risk varies with the economic
attractiveness of the Global Inventory programme
as an investment for potential inventory funders, the
level of diversification of funding sources, and the
level of resilience of these funding sources through
economic cycles.
This risk is carefully managed by:
> developing and building long-term relationships
with a portfolio of investors (Investors in the Global
Inventory programme and Inventory Funders)
and developing a forward-looking pipeline of new
investors/ inventory funders;
> actively managing concentration risk and diversifying
sources of funding; and
> leveraging a seasoned team of arrangers and placing
agents to help identify and secure new investors/
inventory funders.
40 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Key risks
Management of risk
The Company remains engaged with several key
stakeholders in respect of funding strategies and has
also announced on 28 April 2023, that the Company
has agreed a new equity subscription agreement with
gross proceeds of up to £2.2m and has entered into
an unsecured working capital loan agreement with
the AvantGarde Group S.p.A (“TAG”) of up to £2.8m.
Both these facilities are essential to support the
working capital and growth needs of the Group over
the coming months.
The Company acknowledges the risk, but believes it is
able to more readily adapt to changing market conditions
than larger entrants utilising its nimbler organisational
structure.
Group funding risk
The Company and the Group are currently in the early
stage of development and have not generated consistent
revenues from operations to date and are not currently
profitable. In addition, predicting the time frames within
which the Group will commence the generation of
consistent revenues is difficult. As a result of the current
stage of development, the Group has needed to rely
on funding from various sources including convertible
loan note facilities, equity investments and most recently,
more traditional bank financing to continue to operate.
Despite continued confidence in its business plan and
forecasts, the Directors recognise additional financing
may be required and that the availability of future
potential funding options maybe be limited, may not
be on terms that are favourable to the Group and may
be dilutive to shareholders.
Global economic risks
The disruption of global supply chain operations related
to Russia’s invasion of Ukraine continues; however,
the impact on supply chains may prove positive for
the Company’s business. Nonetheless, the Board
acknowledges the creation of inherent uncertainly
posed by current geo-political crises and attendant
interest and inflationary risks.
Operational risks
Operational risk is the risk of loss resulting from inadequate
or failed internal processes, people and systems or from
external events.
Key risks
Management of risk
Talent and diversity risk
Loss of certain member of the board and leadership
team could lead to a reduced ability to effectively run
the Company, while loss of the key members of the
team could materially hamper the speed at which the
Company is able to scale up the business and increase
operational efficiency.
During 2022 an employee experience and engagement
survey was undertaken to ensure the board and
leadership team are building a company which retains
and enables talent, which resulted in an action plan
focused on areas important to the team. The first awards
on the Long-Term incentive plan were made during
2022, with the goal of long-term retention of key members
of the team. Regular succession planning reviews are
conducted by the Nomination Committee supported
by the Chief Executive Officer and Chief People Officer.
41 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Principal Risks and Uncertainties
Key risks
Management of risk
Business continuity risk
As an expanding company, business continuity plans
inherently will lack visibility as it continues to develop
and grow.
The Company presents to third parties its business
continuity plans, when necessary, for third-party insight,
and continually reviews and tests its robustness to
attack or failure.
Regulatory, reputation and conduct risk
Regulatory, reputation and conduct risk is defined as
engaging in activities that detract from Group’s goal of being
a trusted and reputable company with products, services
and processes designed for customer success and
delivered in a way that will not cause customer detriment
or regulatory censure.
Key risks
Management of risk
Data protection
The Company undergoes data protection assessments,
predominantly under Regulation (EU) 2016/679 (General
Data Protection Regulation) and the Data Protection Act
2018, but the Board recognises that operating in multiple
jurisdictions leaves it at risk of breach of individual
jurisdictional legislation.
The Company has engaged extensively over the past
year with recognised data protection experts to
establish appropriate data protection protections
in the jurisdictions within which it currently operates,
with any issues raised considered by appropriate
committee.
Intellectual property risk
The proprietary fintech Platform developed by the Group
and used to facilitate inventory monetisation transactions
is the intellectual property of the Supply@ME Group. Given
the global rise in the number of data and cybersecurity
breaches carried out by malicious actors or hackers, the
Group’s intellectual property may be at risk of being
stolen as a result of unauthorised access to its systems.
Financial risk management
The Board monitors the internal risk management
function across the Group and advises on all relevant
risk issues. There is regular communication with internal
departments, external advisors and regulators.
The Company’s policies on financial instruments and
the risks pertaining to those instruments are set out
in the accounting policies in notes 2 and 23 of the
Company’s consolidated financial statements.
The Company and Group are aware of growing
cybersecurity risks and regularly reviews the robustness
of cybersecurity provisions around its network. This
includes mandatory staff training to recognise data
breach and/or phishing attempts, via software such
as malware or ransomware.
The Board are apprised of the Company’s risk register
on at least a quarterly basis, and respond appropriately.
The strategic report set out from pages 1 to 42 is
approved by the Board of Directors and signed on
its behalf by:
Alessandro Zamboni
Chief Executive Officer
28 April 2023
42 Supply@ME Capital Plc Annual Report and Accounts 2022 Strategic Report
Corporate
Governance
Report
43 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Corporate Governance Introduction
Our Board of Directors are focused on ensuring sound
corporate governance and an effective board. The Board
jointly takes responsibility for overseeing the Company’s
corporate governance model and ensuring that effective
communication flows freely between Executives and
Non-Executives in a timely manner.
We have adopted the Quoted Companies Alliance
Corporate Governance for small and mid-sized quoted
companies (“QCA code”). This report follows the structure
of these guidelines and explains how we have applied
the guidance. The Board is cognisant of the importance
of compliance with the QCA Code and endeavours
to adhere to this as far as practicable having regard
to the size, nature and current stage of development
of the Company.
We understand that application of the QCA code support
the Company’s medium to long term success whilst
simultaneously managing risks and providing an
underlying framework of commitment and transparent
communications with stakeholders. We are committed
to monitoring and promoting a socially responsible
corporate culture, illustrated through internal policies
and external stakeholder engagement.
As a main market company, (standard segment, trading
on the London Stock Exchange) this information needs
to be reviewed annually and details of our Corporate
Governance can be found on our website.
Outlined below are details of the Directors of the Group
during 2022.
3
1
4
2
5
44 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Information
Current Executive Directors
Alessandro Zamboni
Chief Executive Officer and Executive Director (1)
Appointed 23 March 2020
Alessandro is CEO and Executive Director of Supply@ME
Capital Plc. He specialises in the financial services industry
and related strategic and digital models. Since 2008,
he has been managing the delivery and the sales operations
of a consulting company specialising in Regulatory & Internal
Controls for Banks and Insurance Firms. He founded the
AvanteGarde Group S.p.A, the former parent company
of Supply@ME S.r.l., in 2014. He holds a BA degree in
Economics from the University of Turin.
As well as being CEO of Supply@ME Capital Plc, Alessandro
holds executive positions at AZ Company S.r.l., AvantGarde
4.0 S.r.l., Orchestra Group (rete di imprese), The AvantGarde
Group S.p.A., RegTech Open Project S.p.A., Future of Fintech
S.r.l. and 1AF2 Limited and a Non-Executive Director role
at Darwinsurance S.r.l.
Current Non-Executive Directors
Albert Ganyushin
Independent Chairperson and Non-Executive Director (2)
Appointed 30 June 2022
Albert was appointed as independent chairperson and
a Non-Executive Director in 2022 following a long career
in capital markets. Since 2017, he has served as Head
of Capital Markets at Dr. Peters Group with responsibility
for international institutional business, including investment
management, capital markets, financing and investor
relations. Prior to joining Dr. Peters Group, between 2010
and 2016, he worked in leadership roles in the listings
business of NYSE Euronext Group after a career in investment
banking that started with Deutsche Bank A.G. (London
Branch) in 2000.
He graduated with an MBA degree from London Business
School in 2000 and began his professional career as a
management consultant with Accenture in London in 1995.
In addition to his role with Supply@ME Albert is also a
director of Westcott Hill Capital Limited and Austen Grove
Capital Limited.
Enrico Camerinelli
Independent Non-Executive Director (3)
Appointed 23 March 2020
Enrico keeps abreast of market trends and business
practices by taking an active part in projects launched
by the United Nations Economic Commission for Europe,
the World Bank, the World Trade Board, and the Council
of Supply Chain Management Professionals. He regularly
attends major industry events as invited guest speaker and
writes on specialized magazines and papers. He holds an
MSc in Electronic Engineering from Università degli Studi
“La Sapienza”, Rome, Italy.
David Bull
Independent Non-Executive Director (4)
Appointed 22 July 2021
David, a Chartered Accountant, with 30 year’s experience,
is a technology-driven experienced financial services
professional with a banking and financial services digitisation
mindset. He has held a number of senior board roles within
banking, asset finance, treasury and credit management
institutions, including several years as Chief Financial
Accountant at The Bank of England. He holds a BSc (First
Class) in Mathematics and Statistics from the University
of Bradford.
During 2022 David was a director of Eight Capital Partners
plc until he resigned on 12 August 2022, and Epsion Capital
Ltd until he resigned on 12 October 2022. He remains
a director of Braintree Hockey Club Limited & KDB Office
Services Limited. On 24 February 2023 he was appointed
a director at Thumb Soldiers Limited.
Alexandra Galligan
Independent Non-Executive Director (5)
Appointed 16 March 2023
Alexandra holds more than 20 years’ experience in senior
business development positions, including most recently
as Partner and Chief Executive Officer at FCA-regulated
investment advisory firm MUSST Investments LLP (“MUSST”)
– a role she held for over a decade. During her time at
MUSST, Alexandra maintained and developed relationships
with a wide network of investors advising them on investing
in early-stage hedge funds, private credit and alternative
assets. Her previous roles also included business development
at financial services firm Matrix Group Ltd, where she was
appointed to create in-house platform of hedge funds and
UCITS vehicles. She was also responsible for the structuring
of these funds, preparation of related prospectuses,
subscription documentation and marketing materials.
45 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Information
Previous Executive Directors
Thomas (Tom) James
Executive Director
Appointed 30 July 2021 Resigned 23 March 2023
Tom was an Executive Director during 2022, and continues
to be the CIO, CEO and co-founder of the Trade Flow Funds
and fintech solutions. He has over 30 years of commercial
expertise in the commodity and energy industry and is the
business and system architect for this unique and innovative
digitised trade finance solution for bulk physical commodity
transactions. He has experience of senior regulated roles
in financial institutions (including Bank of Tokyo Mitsubishi
UFJ, Credit Agricole and Credit Lyonnais) and various trading
firms including BHP Billiton, covering a full range of functional
areas including trade finance, project finance, investment
banking, supply chain/operations, derivatives, physical
markets, and fund management.
During his career he has operated in many countries in
Africa, Europe, Middle East, and Asia Pacific. He has authored
over nine books in the energy and commodity trading
and risk management field and served as Chair Professor
and Adjunct Professor at various universities around the
world and is a former member of the United Nations FAO
Commodity Risk Management Advisory Group, and a former
Senior Energy Advisor to the United States Department
of Defence (TFBSO). He holds a PhD in Practices for the
Global Commodity Markets within the Functional Disciplines
of Trading and Risk Management and a Masters in Energy
Price Risk Management from Middlesex University London.
In addition to his role on the board of Supply@ME Capital
Plc during 2022, Tom is also Director of TradeFlow Capital
Management Pte. Limited, Tijara Pte. Limited, TradeFlow
Capital Management Systems Pte. Limited and the following
dormant companies, Navitas Resources (UK) Limited, Navitas
Resources Pte Limited and NR Capital Pte Limited which is
currently in liquidation.
John Collis
Executive Director
Appointed 30 July 2021 Resigned 23 March 2023
John was an Executive Director during 2022 and is co-founder
of the Trade Flow Funds and fintech solution where he holds
the position of Chief Risk Officer (CRO). As well as overseeing
the development of the fund’s critical legal infrastructure
and working with leading counsel on its enforceability, John
has overseen the classification of the specialist intellectual
property developed and acquired by TradeFlow and its
licensing. John is a commercial lawyer with expertise in
regulatory, compliance, structuring, and transactional matters.
John operated his own law firm from 2003, specialising
in international commercial work. John has written and
lectured about the rule of law, Eurasia Economic Union,
CSTO, and International Commercial Enforcement. Before
becoming a lawyer, John worked for Ernst & Young, he was
educated at Oxford University and is chairman of Hertford
College RFC.
In addition to his role as a Director of Supply@ME during
2022, John is also a director of TradeFlow Capital Management
Pte. Limited, Tijara Pte. Limited, TradeFlow Capital Management
Systems Pte. Limited, Kenwood Nominees Limited, Kenwood
Secretaries Limited, Higher Education Research Limited,
MTI Solutions Limited, JCS 107 Limited, JCS 110 Limited,
NR Capital Pte Limited, Price Verifier System Limited,
Softnpower Limited and Ultraponix Limited.
Previous Non-Executive Directors
Andrew Thomas
Independent Non-Executive Director
Appointed 30 June 2022 Resigned 115 March 2023
Andrew has over 20 years’ experience in various business
advisory roles and during this time has worked across
the US, UK, EU and APAC regions, acquiring expertise
of onshore and offshore fund structuring and oversight,
particularly in relation to regulatory issues. He also has
extensive experience in mitigating ESG risks while helping
organisations to maximise ESG opportunities. He holds
BA in History and Politics from the University of Exeter.
In addition to his role with Supply@ME he is also a director
of Transatlantic Regulatory Consulting LLC.
Susanne Chishti
Appointed 23 March 2020 Resigned 14 April 2022
Susanne has over 20 years of financial expertise and
board-level experience focused on organisational governance,
and a strong understanding of the small/medium size
enterprise market. Her experience draws on 14 years
in banking with senior positions at Morgan Stanley, Lloyds
Banking Group and Deutsche Bank.
As CEO of FINTECH Circle, she is an award-winning
entrepreneur and global expert in financial technology, new
business models and a bestselling Editor of The FINTECH
Book Series published by Wiley. During 2022 Susanne also
held directorships with FINTECH circle Ltd, Crowne Agents
Bank, CAB Tech HoldCo Ltd and Just Loans Group Plc.
James (Jim) Coyle
Appointed 28 October 2021 Resigned 4 March 2022
Jim is a highly respected, strategic leader with over four
decades of both executive and non-executive financial
services experience. After a thirty-year career at some of the
UK’s largest institutions, including BP, Bank of Scotland and
Lloyds Banking Group Plc, where he served most recently
46 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Since the end of the 2022 financial year, further Board
composition changes have taken place, with Andrew
Thomas stepping down on 15 March and being replaced
by Alexandra Galligan on 16 March and Tom James and John
Collis stepping down from the Plc Board on 23 March 2023.
The board generally plans to meet once a month, however,
additional board meetings were held during 2022 which
reflect the pivotal activities undertaken during the year
including, but not limited to, those activities related to the
capital enhancement plan and the open offer, and the level
of consideration and input provided by the board to these
matters. During 2022, there were 19 board meetings held
during the year, seven subcommittee meetings and 11
formal written resolutions.
Sub-committees are convened by the board to manage
specific work streams in a timely efficient manner, and
keep the board appraised of progress. The Sub-committee
meetings were focused on approval of the issuance of
convertible loan notes, warrant issuances and finalisation
of aspects of the open offer and prospectus post discussion
of such at board meetings. Written resolutions require
consideration and signatures from all members of the
board and covered the approval of conversion of open
offer warrants, finalisation and formalisation of PDMR
categorisations and approval of interim accounts.
as Group Financial Controller and Deputy Group Finance
Director, he has been appointed to a number of Board roles
mainly across the financial services industry. During 2022,
prior to his resignation from Supply@ME, Jim also held
directorships at HSBC UK Bank Plc, HSBC Trust Company
(UK) Limited, Marks and Spencer Financial Services Plc,
Marks and Spencer Unit Trust Management Limited,
Honeycomb Investment Trust Plc and Scottish Water
Horizons Holdings Limited and Scottish Water Business
Streams Holding Limited until he resigned from the latter
two positions on 31 March 2022.
Overview
During the course of 2022 there have been a number
of changes to the board structure and composition.
The Group started the year with Jim Coyle as Chairman,
Susanne Chishti as Senior Non-Executive Director, Enrico
Camerinelli as Non-Executive Director and Alessandro
Zamboni, John Collis and Tom James as Executive Directors.
On 4 March 2022 Jim Coyle stepped down as chair for
personal reasons, allowing him to better balance
existing time obligations across his extensive portfolio
of Non-Executive roles. Susanne Chishti ended her tenure
as Senior Non-Executive Director and Remuneration
Committee Chair on 14 April after having been with the
company since its listing in March 2020.
Albert Ganyushin and Andrew Thomas joined the board
post the AGM on 30 June 2022 as Chair of the Board and
Non-Executive Director respectively.
2022 Board attendance
Director Scheduled meeting attended Appointed to Board Resigned (if applicable)
David Bull 18 / 19 22 July 2021 N/A
Enrico Camerinelli 16 / 19 23 March 2020 N/A
Susanne Chishti 4 / 5 23 March 2020 14 April 2022
John Collis 12 / 19 30 July 2021 23 March 2023
Jim Coyle 3 / 3 28 October 2021 4 March 2022
Alexandra Galligan 0 / 0 16 March 2023 N/A
Albert Ganyushin 8 / 8 30 June 2022 N/A
Tom James 16 / 19 30 July 2021 23 March 2023
Andrew Thomas 7 / 8 30 June 2022 15 March 2023
Alessandro Zamboni 17 / 19 23 March 2020 N/A
47 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Information
Independence
Principal Board Activities and Decisions in 2022
The Board has considered the Non-Executive Directors
independence periodically throughout the year. The approach
taken to this is considering the UK Corporate Governance
Code’s definition of circumstances which are likely to impair
a Non-Executive Directors’ independence. These include
where a director:
> has been an employee of company/group within the last
5 years;
> has, or has had within the last 3 years, material business
relationship with the company, directly or as a partner,
shareholder, director or senior employee of a body that
has such a relationship;
> receives additional remuneration from the company
apart from director’s fee, participates in the company’s
share option or a performance-related pay scheme,
or is a member of company’s pension scheme; has close
family ties with any of the company’s advisers, directors
or senior employees;
> holds cross-directorships or has significant links with
other directors through involvement in other companies
or bodies;
> represents a significant shareholder; or
> has served on the board for more than nine years from
the date of their first appointment.
Having given consideration to these factors the following
current Non-Executive Directors are considered independent
by the Board, Albert Ganyushin, Enrico Camerinelli, David
Bull, Alexandra Galligan. In addition, Susanne Chishti, Andrew
Thomas and Jim Coyle were considered independent during
their tenure.
The principal decisions made, and activities carried out,
by the Board during 2022 are summarised below:
Ongoing regular governance activities
> During the pre-scheduled monthly board meetings,
regular agenda items included updates from the Chief
Executive Officer, Chief Financial Officer, Group Head
of Enterprise Risk Management, Chief People Officer
and business updates from TradeFlow. Updates were also
provided from each of the Remuneration, Nomination
and Audit Committees, following these respective
committee meetings, and where necessary, input and
approval was sought from the board on key topics in
lines with the terms of reference. This included, but was
not limited to, review of:
> related party transaction and potential conflicts
of interest;
> committee terms of reference;
> business continuity;
> discussion, review and approval of budgets and cash
flow forecasts;
> approval of regulatory news announcements including
those relating to the interim financial statements,
annual reports and accounts, prospectus, Open Offer
circular, issue of new ordinary shares, adhoc business
updates etc;
> risk management framework, with a focus on the
principal risks and uncertainties; and
> communication with and responses to enquiries
from regulators.
> Discussion and approval of board changes, including
members stepping down, and appointment of Albert
Ganyushin and Andrew Thomas during the year.
> Establishment of a new wholly owned Italian subsidiary,
Supply@ME Technologies S.r.l. and the approval of the
transfer of the Group’s Intellectual Property rights relating
to the Platform to this new entity from the existing Italian
subsidiary, Supply@ME Srl. The Board considered this
an important step for the Group, prior to the execution
of the first IM transaction, as it ensured the Platform,
and its associated Trademarks were able to be managed
by a dedicated entity within the Supply@ME Group.
> During the year, the Board established a new Disclosure
Committee, responsible for ensuring timely and accurate
disclosure of all information that is required to be disclosed
to the market to meet the legal and regulatory obligations
and requirements.
> Discussion, consideration and development of a new
shareholder communications strategy.
> Approval of the new long term incentive plan and granting
of share options to certain employees on 31 October 2022.
48 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Oversight of the key strategic activities carried
out during the year
> Completion of strategic alliance agreement in September
2022 with VeChain Foundation to complete the inaugural
inventory monetisation transaction.
> Discussions regarding the need to consider the
restructuring of the wholly owned subsidiary relationship
with TradeFlow. These discussions initially focussed on
the feedback received from the regulators in Singapore
on the perceived conflicts of interest between the fund
manager and advisor activities of TradeFlow and the
fintech activities of Supply@ME. Following these initial
discussions, various options to restructure the relationship
with TradeFlow were considered by the Board and work
began in 2022 on agreeing the terms and conditions of the
TradeFlow Restructuring. The Company was planning to
announce the completion of the TradeFlow Restructuring
in tandem with the publication of the Group’s 2022
Annual Report and Accounts at the end of April 2023, and
to publish a supplementary prospectus in conjunction
therewith, subject to the approval of the Financial Conduct
Authority (the “FCA”). However, immediately after tendering
their resignations as Directors, the TradeFlow Directors
provided further written notice to the Board of their
intention to exercise their rights to buy back 100% of the
share capital of TradeFlow (the “Buy Back”), pursuant to
certain earn out arrangements entered into in connection
with the Company’s acquisition of TradeFlow.
Oversight of existing financing, implementation of the
Capital Enhancement Plan and execution of traditional
bank financing arrangements
> During the first half of the year, the Board invested time
and effort evaluating and managing the Group’s short
term financing arrangements with Mercator Capital
Management Fund LP (“Mercator”). This included the
monthly consideration of the Group’s working capital
position in assessing whether to fund the monthly
repayments through cash or the issues of convertible
loan notes. In addition, as required, the Board approved
of share issues connected to the conversion by Mercator
of the convertible loan notes they held.
> During the early part of 2022, the Board spent time
exploring alternative longer-term funding options that
would allow the repayment of the Mercator financing
facility referred to above. Of the various options presented,
the Board agreed that the new Capital Enhancement
Plan would provide the Group with greater balance sheet
stability through the replacement of short-term financing
with the issue of shares to a new longer-term investor.
The Capital Enhancement Plan consisted of the issue of
new equity to Venus Capital S.A. (“Venus Capital”) for cash
and in settlement of convertible loan notes provided, and
the issue of new equity to existing retail shareholders
through an Open Offer.
> Following on from the decision made to enter in the
Capital Enhancement Plan, the Board was involved
in approving the issue of new share capital and warrants
to Venus Capital, the approval of the Open Offer to
existing retail shareholders, and review and approval
of the prospectus issued on 3 October 2022.
> The ongoing approval related to the issue of shares
connected to the conversion of the Open Offer warrants
exercised by existing shareholders.
> In the later part of 2022, the Board assessed the
opportunity for Supply@ME Technologies S.r.l to execute
a more traditional unsecured debt facility with Banco
BPM, the third largest banking group in Italy. This facility
was completed in October 2022 and has been primarily
used for continued investment into the Group’s Platform
technology.
49 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Statement of Compliance with the QCA Corporate
Governance Code
Principle 1
Principle 3
Establish a strategy and business model which promote
long-term value for shareholders.
The Board and management team have been focused
on the long-term growth of the business and building
solid foundation which underpin the reasons shareholders
should invest. Supply@ME has developed a novel and
unique solution which has taken time and investment.
There is a clear gap in the market which represents a
huge opportunity for the organisation to scale and grow,
whilst creating long-term value for shareholders. The solid
foundations have been built and the unique solution is
proven and multimarket ready.
Principle 2
Seek to understand and meet shareholder needs
and expectations.
The Group continually seeks to improve its engagement
with its shareholders, both private and institutional investors.
During 2022, guided by our external Public and Investor
relations team, focus has been placed on disseminating
information to the market in a timely manner, as well
as monitoring and responding to communications in the
dedicated investor relations inbox, where it is possible to
respond, for shareholders to be furnished with non-market
sensitive information. As a growing business, with limited
bandwidth, it is not possible for our team to provide an
individualised response to each and every enquiry we receive.
However, every communication is reviewed and, where
possible, furnished with a full response as a priority. This
is an evolutionary process and Supply@ME will continue
to augment its investor relations function to provide more
insights into the Company through regular engagement
and discourse.
The business has also sought to outline our business
model canvas and ensure that our revenue streams and
the foundations for our business are clear to external
stakeholders and will update, via regulated channels, on
these components as and when material developments
can be relayed.
Take into account wider stakeholder and social
responsibilities and their implications for long-term
success.
The Board considers the interests of shareholders and
all relevant stakeholders in line with section 172 of the
Companies Act 2006. Proactively engaging with our
stakeholders strengthens our relationships and helps
us make better business decisions to deliver on our
commitments. The Board is regularly updated on wider
stakeholder engagement feedback to stay abreast of
stakeholder insights into the issues that matter most
to them and our business, and to enable the Board to
understand and consider these issues in decision-making.
Details of how we seek to understand and meet shareholder
needs and expectations are set out at Principle 2, above.
Details of how the Board has engaged with our wider
stakeholder group, including our people, shareholders,
corporate clients inventory funders and fund investors
can be found as part of the engagement with stakeholders
and section 172.
Principle 4
Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
The Board has established a risk management process
for identifying, assessing and mitigating the principal risks
and uncertainties facing the Group. The Group’s risk position
is considered by the Board on a regular basis, with ad hoc
reviews conducted as required. The Board is responsible for
establishing and maintaining the Group’s system of internal
financial controls and the Audit Committee assists the Board
in discharging its duties relating to internal financial controls.
Internal financial control systems are designed to meet
the particular needs of the Group and the risk to which
it is exposed, and by its very nature can provide reasonable,
but not absolute, assurance against material misstatement
or loss.
Areas of focus for internal financial controls include strategic
planning, approval of annual budgets, regular monitoring
of performance against budget (including full investigation
of significant variances), control of capital expenditure
and ensuring proper accounting records are maintained.
The Directors will continue to reassess internal financial
controls as the Group expands further. It is the Board’s
policy to ensure that the management structure and the
quality and integrity of the personnel are compatible with
the requirements of the Group.
50 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
The Group’s auditors are encouraged to raise comments on
internal control in their management letter following their
audit, and the points raised and actions arising are moni-
tored through to completion by the Audit Committee.
Principle 5
Maintaining the Board as a well- functioning, balanced
team led by the Chair.
As referenced above there have been a number of Board
membership changes during 2022 and in early 2023 post
year end. The Board currently consists of one Executive
Director, Alessandro Zamboni, CEO. Tom James and John
Collis were Executive Directors for the financial year 2022,
departing the Board in March 2023. Albert Ganyushin leads
the Board as Non-Executive Chair supported by David Bull,
Enrico Camerinelli and Alexandra Galligan as Non-Executive
Directors. The balance of the Executive and Non-Executives
and the structure of the committees is in compliance
with the QCA code. The biographical details of the Board
members can be found in this Annual Report on page 45,
as well as on the Company’s website.
The Board typically meets monthly in order to, amongst
other things, approve financial statements and significant
changes in accounting practices and key commercial matters,
as well as receive functional updates from the Leadership
team. The Directors commit the requisite amount of time to
their respective roles to ensure that they fulfil their individual
and collective responsibilities in an effective manner. The
Company has effective procedures in place to monitor and
deal with conflicts of interest. The Board is supported by an
Audit Committee, a Remuneration Committee, a Nomination
Committee and a Disclosure Committee, the latter of which
is a new layer of governance introduced during 2022.
Further details of the Nominations, Remuneration and Audit
Committee can be found in each of the Committee Reports
within this Annual Report on pages 54, 66, 58 respectively,
as well as on the Company’s website. One element of the
role of the Independent Non-Executive Directors is to be
available to shareholders who wish to raise any concerns
that they have been unable to resolve through other channels
and to attend meetings between management and major
investors.
Principle 6
Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities.
During the recruitment process for a new Chair and
Independent Non-Executive Board members, a great deal
of consideration has been given to the knowledge, skills
and experience required for the future of group. Ensuring
a balance of broad corporate governance knowledge with
specific skills sets including regulations, trade finance, capital
markets, fintech sector knowledge and investor relations
and business development experience has been crucial.
In addition to the appropriate balance of personal qualities
and capabilities for our innovative global business. The Board
changes during 2022 and early 2023 are testament to the
fact the structure, size and composition of the Board is
regularly reviewed to ensure the Board operates effectively.
In order to develop their skills and keep up to date with
market developments and corporate governance matters,
new joiners to the Board are provided with a comprehensive
induction into the business. The Board also has regular
updates from and access to the management team.
All directors are able to take independent professional
advice in the furtherance of their duties, if necessary,
at the Company’s expense.
Biographies for each of the directors, including details on
their experience and skills, are set out on the Company’s
website and in the Directors’ Report section of this Annual
Report.
Principle 7
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement.
The Board’s effectiveness and the individual performance
of Directors are considered regularly by the Board on an
informal basis. A formal Board evaluation was conducted
in December 2022 and reported on to the Chair. This
evaluation looked at the process that underpins Board
effectiveness, Board and committee constitution and
commitment, Board dynamics and culture, stakeholder
oversight and strategy. As a result of this, changes have
also been made to the committee composition, which are
outlined in the individual committee reports. This evaluation
will be conducted annually. Board and Leadership Team
succession planning is a matter considered by the Nomination
Committee. During 2022 the risk and the impact of key
members of the team taking the decision to leave the Group
was assessed. How these risks would be mitigated was
considered and plans put in place. This evaluation will take
place at least annually.
51 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Statement of Compliance with the QCA Corporate
Governance Code
Principle 8
Promote a culture that is based on ethical values
and behaviours.
The Board believes that the promotion of a corporate culture
based on sound ethical values and behaviours is essential
to maximise shareholder value. The Executive team seeks
to engender open and positive interactions with a focus
on innovation, collaboration, delivery and a global mindset.
This culture is encouraged throughout the business,
with people management practices aligned to support.
Supply@ME is operating in a new business area and the
ability to innovate will be essential to the Group’s success.
Collaboration and ensuring each member of the team’s
views and opinions are heard will lead to a better product
and outcome for all the Group’s stakeholders. Understanding
the global perspective of each decision and having an
understanding of global nuances will lead to a greater
long-term reach of the Group. Most of all, the Group wants
to deliver for all its stakeholders and this is central to the
culture which is being created. The Company’s policies
set out its zero-tolerance approach towards any form
of modern slavery, discrimination or unethical behaviour
relating to bribery, corruption or business conduct.
Principle 9
Maintain governance structures and processes that
are fit for purpose and support good decision-making
by the Board.
The Board endeavors to ensure governance structures
within the Company are appropriate for the size, complexity
and risk profile of the Company. This is regularly reviewed
by the Board to ensure governance arrangements continue
to be appropriate as the Company changes over time. The
Board also responds to business opportunities and adjusts
its composition to take advantage of this, hence the changes
seen during 2022 and early 2023.
The Board typically meet monthly to set the overall direction
and strategy for the Group and to review operational and
financial performance. The Board and its Committees receive
appropriate and timely information prior to each meeting:
and a formal agenda is produced for each meeting, and
Board and committee papers are distributed before meetings
take place. Any director may challenge Company proposals
and decisions are taken democratically after discussion.
Any director who feels that any concern remains unresolved
after discussion may ask for that concern to be noted in the
minutes of the meeting, which are signed by the meeting
Chair and circulated to all directors.
Any specific actions arising from such meetings are agreed
by the Board or relevant Committee and then followed up
by the Company’s management. The Board and management
team, supported by external company secretaries and
lawyers, ensure Board procedures are followed and applicable
rules and regulations are complied with.
There is a formal schedule of matters reserved for the
decision of the Board that covers the key areas of the
Company’s affairs. The schedule includes:
> Determining the Company’s overall strategy and direction
> Establishing and maintaining controls, audit processes
and risk management policies to ensure they counter
identified risks and that the Company operates efficiently
> Ensuring effective corporate governance
> Approving budgets and reviewing performance relative
to those budgets
> Approving financial statements
> Approving material agreements and non-recurring projects
> Approving senior and Board appointments
> Additionally, there is a clear delegated authority matrix
stipulating what company costs need to be approved
by Board and which decisions can be made by the
management team.
Each member of the Board has clearly defined roles and
responsibilities. The Chair is responsible for the leadership
of the Board, ensuring its effectiveness and high standards
of corporate governance, approving and monitoring
strategic direction, and allowing stakeholder views to
be incorporated as part of the Board’s decision making.
The Chair’s role is also to build collaborative relationships,
and promote debate and openness so as to ensure the
effective contribution by all Directors and Non-Executive
Directors.
The Chief Executive Officer (“CEO”) is responsible for the
day-to-day operation and running of Group, supported by
the management team. The CEO also leads the development
and implementation of the approved strategy and business
plan, ensuring decisions of the Board are implemented,
effective working relationships with the Chair and NEDs are
maintained, whilst providing leadership in the Company’s
commitment to its purpose, high business standards, culture
and core values, and communication with key stakeholders.
The Non-Executive Director role is to bring external
perspective, constructive challenge, independent judgement
and objectivity to the Board’s decision making and discussion.
They act as a sounding Board for the Chairman and a source
of reciprocal feedback for other members of the Board and
shareholders. The Non-Executive Directors bring a range of
skills, expertise and knowledge to the Board, and constructively
challenge the executive management of the Company.
52 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
The Non-Executive Directors are responsible for a range
of activities, including monitoring the performance of the
executive management, determining appropriate levels
of remuneration, ensuring financial controls and risk
management systems are robust, as well as challenging
and supporting executive management in the development
of the strategy and objectives of the Company.
An Executive Director is an employee of the Group who sits
on the Board of directors but also performs management
duties within the business of the company. They oversee
and manage day to day activities within their own area of
the business, whilst supporting the CEO, and are tasked with
the objective of implementing the strategy, whilst upholding
the company’s values and culture. The Executive Directors
performance is reviewed and scrutinised by the Non-Executive
Directors. The board is supported by an Audit Committee,
Remuneration Committee, Nomination Committee and
Disclosure Committee. Further details of the responsibilities
of each of these are outlined in their respective reports.
Principle 10
Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders
and other relevant stakeholders.
The company is committed to open communications with
all its shareholders. Communication will be primarily through
the company’s website, the annual report and accounts,
Regulatory announcements, the AGM and one-to-one
meetings with large existing or potential new shareholders.
All shareholders will receive a copy of the annual report
and an interim report at the half year is available on the
company’s website.
Detail of the corporate governance frameworks provided
by the Audit Committee, Remuneration Committee and
Nomination Committee can be found in their respective
reports and their terms of reference are available on the
company website.
53 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Nomination Committee
Tom James’ and John Collis’ roles on the Plc Board ended on
23 March 2023. The change in relationship with TradeFlow
aims to remove any potential future conflicts of interest
between the two businesses and those associated regulatory
and commercial hurdles, which is hoped will in turn improve
the growth prospects of both businesses.
Alexandra Galligan joined the Board and became Chair
of the Remuneration Committee on 16 March 2023.
In this role, she will work diligently to ensure the team are
rewarded appropriately and in line with shareholders’ needs.
Alexandra will add a wealth of valuable knowledge about
Hedge Funds, Investments and Business Development
to the Board in addition to her valuable experience
and knowledge of investor motivation and their increasing
focus on investing in companies with demonstrable
Environmental, Social and Governance (“ESG”) credentials.
During 2022, the composition of the Committees was
reviewed, to enable them to benefit from the skills, knowledge
and experience of our Non-Executive Directors. Andrew and
I joined both the Remuneration and Nomination Committees
on our appointment to the Board. Enrico Camerinelli
continued to be a long-standing member of both committees
and David Bull joined the Remuneration and Nominations
committee in March 2022. Enrico was also invited to join the
Audit Committee in March 2022, a committee I also joined
on appointment on 30 June. On her appointment Alexandra
joined the Nomination and Audit Committee in addition to
her role as Chair of the Remuneration Committee.
In summary 2022 has been a year of change for the Board
and we are excited to build this business during 2023.
Albert Ganyushin
Chair of the Committee and Board
Dear Shareholders,
On behalf of the Board, I am pleased to present the
Nominations Committee Report for the year ending
31 December 2022, my first as Chair of the Committee
and the Board. There have been a number of changes
to the Board during the financial year ending 31 December
2022 and since year end. These changes are focused
on ensuring we have the right composition to lead and
govern our unique business to its full potential.
First, I would like to thank Jim Coyle for his contribution
to the Company’s progression prior to his departure from
his role as Chair on 4 March 2022. During his time with the
Company, TradeFlow Capital Management (“TradeFlow”)
announced it had partnered with Cargoes Finance by DP
World. Additionally Jim provided valuable support to improve
Supply@ME’s corporate governance structure and implement
a refreshed investor relations strategy. I would also like to
thank Susanne Chishti who left the Board and her role as
Remuneration Committee chair on 14 April 2022. Susanne
was instrumental in guiding the Company through its early
stages of development having joined the Board on the
Company’s admission to the London Stock Exchange in
March 2020.
I joined the board post the AGM on 30 June 2022 after
completing a comprehensive review of the business,
including assessing the long-term business objectives
and its governance requirements. My intention, and that
of each member of the Board, is to bring our collective
knowledge, skills and experience to bear by leading the
business through its next stage of growth. I hope my 20+
years of leadership in various capital markets roles will
be a valuable addition to the Supply@ME team.
Andrew Thomas joined the Board with me on 30 June 2022,
bringing with him a wealth of legal experience and knowledge
of onshore and offshore fund structuring and oversight,
particularly in relation to regulatory issues. He also added
further knowledge and experience of mitigating ESG risks
while helping organisations to maximise ESG opportunities.
Andrew chose to step down from his role to pursue other
business opportunities. We are grateful to Andrew for his
significant contribution over the time he spent on the Board.
54 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
2022 Committee members and attendance
Appointed to committee
Director Scheduled meetings attended if during 2022 or 2023 Resigned if applicable
David Bull 3/3* 23 March 2022 N/A
Enrico Camerinelli 3/3 N/A N/A
Susanne Chishti 1/1 N/A 14 April 2022
Jim Coyle 0/0** N/A 4 March 2022
Albert Ganyushin 2/2 30 June 2022 N/A
Alexandra Galligan 0/0 16 March 2023 N/A
Andrew Thomas 2/2 30 June 2022 15 March 2023
*2 as a member of the committee, 1 as observer. **First committee meeting of the year took place after he left the board.
As at 31 December 2022 the Nomination Committee
comprised of David Bull, Enrico Camerinelli and Andrew
Thomas as members and Albert Ganyushin as Chair (full
biographical details can be found on page 45). The Committee
must have at least two members, with a majority being
independent Non-Executive Directors. There must be a
majority of independent Non-Executive Directors appointed
to the Committee. After each meeting the Chair of the
Committee reports to the Board on the Committee’s
proceedings in respect of all matters within its duties
and responsibilities.
Meetings are held at least twice a year at appropriate times
and otherwise as required. The Committee met three times
during 2022 with meetings being held by video conference.
In addition to the Committee members other regular attendees
included the Chief Executive Officer, Chief Financial Officer,
Chief People Officer, Group Head of Enterprise Risk and the
Company Secretary.
Following its annual review of Board and Committee
composition, the independence of Non-Executive Directors
and their time commitment, the Committee focused on hiring
a Remuneration Committee Chair and also on increasing
the gender diversity of the board where and when possible.
Roles and responsibilities
The role of the Nomination Committee is set out in its
terms of reference, which were updated in April 2022 and
March 2023 and are available on the Company’s website.
The Nomination Committee is responsible for the following
key activities:
> Identify and evaluate suitable candidates to fill Board
vacancies when they arise and nominate candidates
for the approval of the Board. In identifying suitable
candidates, the Committee shall:
> Evaluate the balance of skills, knowledge, independence,
experience and diversity on the Board and prepare
a description of the role and capabilities required for
a particular appointment in light of this evaluation;
> Use open advertising or an external search consultant
for the appointment of the Chair and Non-Executive
Directors of the Board;
> Consider candidates based on merit and against
objective criteria, and within this context, promote
diversity of gender, social and ethnic backgrounds,
cognitive and personal strengths.
> Before the appointment of a Director (including the
chair of the Board), require the proposed appointee to
disclose any other significant commitments, including
the time involved;
> For the appointment of a Chair of the Board, prepare a
job specification, including the time commitment expected.
The proposed chair’s other significant commitments
should be disclosed to the Board before appointment
and any changes to the Chair’s commitments should
be reported to the Board as they arise;
> Keep under review the number of external appointments
held by each Director. A Director of the Company should
not undertake any additional external appointments or
other significant appointments without the prior approval
of the Board. Executive Directors of the Company should
not undertake more than one Non-Executive directorship
of another company or any other significant appointments;
> Perform a formal and rigorous annual review of the
structure, size and composition of the Board, its
Committees, its Chair and individual Directors (including
the skills, independence, knowledge, experience, and
diversity required to discharge duties) and recommend
any changes, to ensure that an effective succession
plan is in place;
> Undertake, with the support of the Chief Executive Officer,
a talent management and succession planning review
of the senior management of the Company at least once
each financial year;
55 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Nomination Committee
> Keep under review the Company’s leadership needs, both
Executive and Non-Executive, to ensure its continued
ability to compete in the market place;
> Review annually the time required from the Non-Executive
Directors and assess through performance evaluation
whether they are spending sufficient time to fulfil their
duties;
> Arrange for a Non-Executive Director, on appointment,
to receive a formal letter of appointment to the Board,
setting out what is expected in terms of time commitment,
Committee service and any involvement outside Board
meetings;
> Set policy for the granting of service agreements and
their termination;
> Ensure that all Directors undergo an appropriate induction
programme to ensure they are fully informed about their
duties and responsibilities as a director, and to consider
any training requirements for the Board as a whole.
Individual training will be discussed and facilitated by the
Company Secretary;
> Before the appointment of a Director (including the Chair
of the Board), require the proposed appointee to disclose
any other business interests that may result in a conflict
of interest and to report any future business interests
that could result in a conflict of interest;
> Review, on an annual basis, declarations by Directors of
situational and transactional conflicts / potential conflicts
of interest, ensuring that the influence of third parties
does not compromise independent judgement;
> Ensure that the Committee’s terms of reference are made
available to shareholders on the Company’s website and,
if requested, in hard copy.
Committee activity during 2022
The Nomination Committee meetings have focused on
a number of matters, including those set out below:
> New Chair attraction, assessment, appointment and
induction
> New Non-Executive Director attraction, assessment,
appointment and induction
> Review of independence of Directors
> Board and Board Committee evaluation including review
and assessment of board composition, balance and
competence
> Review of membership and composition of Board
Committees
> Review and assessment of elements of Board members
contracts
> Reviews of directors situational and transactional potential
conflicts
> Assessment of and appointment of company secretaries
> Board and leadership team succession planning
> Assessment and approval of Non-Executive Director
other appointments
> Review and updating terms of reference
> Completion of internal board evaluation process
> Review of time commitment from Non-Executive Directors
Board changes and succession planning
There have been a number of changes to the board during
2022, which were focused on ensuring we have the right
structure and composition to lead and govern this unique
business to its full potential.
Succession planning for both the board and senior leadership
team has been a topic discussed at the nomination
committee, whereby thought and consideration has been
given to the team; how the business mitigates any impact
of departures and to develop long term strategies around
the attraction and retention of talent throughout the
organisation. The nomination committee has worked closely
with the remuneration committee to mitigate these risks
with the long-term Incentive plan being a key element
of this strategy. The committee and the board want the
team and shareholders’ interests to be firmly aligned over
the long-term and this form of delayed performance-based
remuneration supports our retention strategy. The first
awards took place in 2022 and details of the proposal for
a 2023 award can be found in the Directors Remuneration
Report.
The Board views diversity on the board itself and within
Supply@ME Group’s leadership team as essential for the
future success of the organisation. One measure of diversity
is gender balance. The gender balance of the board during
2022 is not reflective of the gender balance in the Company.
The Supply@ME leadership team immediately below board
level is 60% female, our employee base is 50% female
(excluding TradeFlow). The organisation is focused on hiring
leaders and employees from diverse backgrounds and the
existing team reflects this effort.
At the AGM Supply@ME will request the reappointment
of Albert Ganyushin and Alexandra Galligan.
Board and committee evaluation
A thorough board and committee performance evaluation
was conducted in December 2022, to assess the following
areas:
> Processes that underpin board effectiveness
> Board and Committee constitution and commitment
> Board dynamics
> Culture, stakeholder oversight and strategy.
56 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Focus for 2023
The Nomination Committee will continue to focus on
future-proofing board-level and team capabilities as the
business develops, to enable Supply@ME to excel in the
future. While completing this work, there will be a continued
and renewed focus on diversity and ensuring Supply@ME
is positioned well to attract and retain the best talent.
57 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Audit Committee
Alongside the important activities listed above, the Audit
Committee has continued to focus on maintaining the
integrity and transparency of the Group’s external reporting,
has given careful consideration to the risk management
framework, has ensured compliance with relevant regulation,
and has provided challenge and guidance in respect of the
Group’s cash flow position in light of the delays that have
continued to be experienced in terms of the generation
of revenue from the facilitation of multiple inventory
monetisation transactions per year.
Despite the limited resources within the finance team,
progress has been made to establish and strengthen internal
controls around monthly reporting, cash flow forecasting
and the application of complex accounting issues. The
finance team has also developed a set of longer term goals
that will allow them to support the business as it moves
into the scale up phase of the business model. These goals
have been shared with the wider Board of Directors and
will be closely monitored and regularly evaluated by the
Audit Committee.
In line with the wider changes to the Board during 2022,
the Audit Committee’s membership has also changed with
the resignation of Jim Coyle and Susanne Chishti in March
and April 2022 respectively, followed by the appointment of
Enrico Camerinelli in March 2022 and then Albert Ganyushin
in June 2022. The most recent membership change in March
2023 has seen the appointment of Alexandra Galligan.
The Board and Nominations Committee has continued
to ensure that the Audit Committee will have the right mix
of relevant financial and fintech experience to support the
Group’s anticipated future growth.
David Bull
Chair, Audit Committee
Dear Shareholders,
On behalf of the Board, I am pleased to present the Audit
Committee Report for the year ended 31 December 2022.
This report sets out the areas of key focus for the Audit
Committee during this period.
The Audit Committees core activities are linked to the
Company’s financial reporting cycle and cover the areas
delegated to it by the Board in connection with the preparation
and publication of the interim and annual financial statements
and oversight of the external audit process. In respect of
these financial statements, the Audit Committee continued
to review and challenge the assumptions and judgements
made by management, particularly in connection with, the
accounting for the various fundraising and financing activities
undertaken by the Company during 2022, the revenue
recognition policies applied by the Group following the
inaugural inventory monetisation transaction, the application
of IFRS 5 (“Non-current Assets Held for Sale and Discontinued
Operations”) to the TradeFlow business, and the ability
of the Group to continue operating as a going concern.
During 2022, the Board also requested the Audit Committee
provide oversight in connection with the execution of Open
Offer and Capital Enhancement Plan, including the publication
of the associated regulatory documents being the Open
Offer Circular dated 22 July 2022 and the Prospectus dated
3 October 2022 (the “Prospectus”). In particular, the Audit
Committee provided challenge and review over the working
capital statement set out in the Prospectus.
Most recently, the Audit Committee has been involved
in challenging and reviewing the key parameters of the
proposed restructuring the Company’s ownership with
TradeFlow (the “TradeFlow Restructuring”) and the new
funding arrangements, including the unsecured working
capital loan agreement with the AvantGarde Group S.p.A
and the new equity subscription agreement, both of
which were announced on 28 April 2022, being the date
at which this Annual Report and Accounts were published.
Although these activities were completed in 2023, they
were linked to certain financial statement disclosures
included in the 2022 annual report and accounts.
58 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Audit Committee members and attendance
The table below sets out the members of the Audit Committee (the “Committee”) during the year (full biographical details can
be found on page 45). The current Committee members are all Independent Non-Executive Directors.
Director Scheduled meetings attended Appointed to Audit Committee Resigned (if appliable)
David Bull – Chair 8/8 22 July 2021 N/A
Enrico Camerinelli 7/8 23 March 2022 N/A
Albert Ganyushin 4/4 30 June 2022 N/A
Alexandra Galligan 0/0 16 March 2022 N/A
Susanne Chishti 2/2 23 March 2020 14 April 2022
Jim Coyle 0/0* 28 October 2021 4 March 2022
*First committee meeting of the year took place after he left the board and audit committee.
Role of the Committee
The role of the Audit Committee is set out in its terms of
reference, which were most recently reviewed and approved
in April 2022. These are available on the Company’s website.
The Committee’s primary purpose is to assume the delegated
authority from the Board for the responsibility of overseeing
financial reporting, the review and assessment of internal
control and risk management, compliance, and maintaining
an appropriate relationship with the external auditor. In
order to fulfil these responsibilities, the terms of reference
provided a framework for the Committee’s duties include
the following:
> Overseeing the relationship with the Company’s external
auditor, monitoring its effectiveness and independence
and making recommendations to the Board in respect
of its remuneration, appointment and removal. The
Committee also meets regularly with the external auditor
and reviews the findings from the external auditor,
including discussion of significant accounting and
audit judgements, levels of errors identified and overall
effectiveness of the audit process.
> Review and report to the Board on the financial statements
of the Company and the Group, including its annual
and interim reports and, if applicable, any other formal
announcements containing information on financial
performance. The Committee will also consider and report
to the Board on significant financial reporting issues,
accounting policies and key areas of judgement or
estimation. This review also includes consideration of
the clarity and completeness of disclosures presented
in the financial statements.
> Overseeing the accounting principles, policies and
practices adopted by the Company and its subsidiaries.
> Monitoring the need for an internal audit function in the
context of the Group’s overall risk management system.
> Reviewing the effectiveness of the Company’s system of
internal financial controls and internal control systems.
> Advising the Board on the Company’s risk strategy,
risk policies and current and emerging risk exposures,
including the oversight of the Group’s risk management
framework and systems.
> Assessing the adequacy and security of the Company’s
arrangements for its employees and contractors to raise
concerns, in confidence, about possible wrong doing
in financial reporting or other matters and to ensure
proportionate and independent investigation of such
matters.
> Making recommendations to the Board as it deems
appropriate on any area within its remit where action
or improvement is required.
Meetings
The Audit Committee has met on eight occasions during the
year and three occasions since the year-end. The meetings
were all held by video-conference which has not impacted
on the scheduled program or the Committee operating in
accordance with its terms of reference.
The Committee operates to an agenda linked to the
financial calendar which ensures that the responsibilities
and duties of the Committee are discharged in accordance
with the Terms of Reference and the requirements of the
QCA Corporate Governance Code.
59 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Audit Committee
In addition to the Committee members, by invitation, the
meetings of the Committee may be attended by the Chief
Executive Officer, the Chief Financial Officer (CFO) and
other members of the leadership team as appropriate.
The Company’s external auditor and accounting advisors
are invited to attend relevant Committee meetings, to ensure
full communication of matters as they relate to their
respective responsibilities. During the year, the Committee
members have the opportunity to meet with the external
auditor for a private discussion, without management being
present, regarding the audit process and the relationship
with management.
The Chair of the Committee holds regular meetings with the
external auditor and also with the CFO.
Meetings of the Committee are scheduled close to the end
of the interim period and full year, as well as before the
publication of the associated half-year and full-year financial
reports, so as to ensure the Committee is informed fully,
on a timely basis, on areas of significant risks and judgement.
The Board has confirmed that it is satisfied that Committee
members possess an appropriate level of independence
and depth of financial and fintech expertise.
For the year ended 31 December 2022, David Bull, the Chair
of the Committee, was determined by the Board as having
recent and relevant financial experience. Full biographies
of the members of the Audit Committee during the year can
be found in the Corporate Governance Report on pages 45
to 47.
The Committee is satisfied that it receives sufficient and
timely information and has access to relevant management
personnel to allow the Committee members to engage
in an informed debate during Committee meetings and
to fulfil its responsibilities.
Principal activities in 2022
During 2022 the Committee meetings have focused on
the principal matters set out below:
> Reviewed the 2021 annual report and consolidated
financial statements.
> Reviewed the 2022 interim financial results and any RNS’s
containing references to financial data.
> Monitored the Company’s risk management framework
and updating of the risk register.
> Reviewed key findings from 2021 year end Group audit
and approval of the 2022 external audit plan.
> Considered key accounting matters, including key
accounting judgements and estimates, and accounting
standards that were either newly issued or applicable
to the Group due to changing circumstances.
> Reviewed the output of any work produced by third
party accounting advisors to support the key accounting
matters.
> Assessment of going concern and cash flow forecasting
at regular intervals during the year and at least at those
times as required for formal sign off of the going concern
assessment in annual report and accounts and interim
report.
> Oversight of the execution of Open Offer and Capital
Enhancement Plan, including the publication of the
associated regulatory documents and assessment of
the working capital statement set out in the Prospectus
issued on 3 October 2022.
> Reviewed the Committee terms of reference.
> Considered the need of an internal audit function.
> Continued assessment of the skills and knowledge within
the finance team.
Significant issues considered in relation
to the financial statements
As part of its monitoring of the integrity of the financial
statements, the Committee reviews whether suitable
accounting policies have been adopted and whether
management has made appropriate estimates and
judgements and seeks support from the external auditor
to assess these. The Committee considered the following
significant judgements and other areas of audit focus
in respect of the financial statements for the year ended
31 December 2022. These areas have been identified
as being significant by virtue of their materiality, complexity,
being accounting items which are new for the current
financial year, or the level of judgement and/or estimation
involved.
In order to ensure the approaches taken were appropriate,
the Committee considered reports from both management
and the external auditor produced at relevant points during
the year. The Committee challenged judgements and sought
clarification where necessary.
The Committee received a report from the management
and the external auditor on the work it had performed to
arrive at its conclusions and discussed in detail all material
findings contained within the report.
60 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Alternative performance measures (‘APMs’) and
presentations not specifically defined by IFRS
Reporting issue
The Group has chosen to continue to use an APM which
is not specifically defined by IFRS, being Operating loss
from continuing operations before impairment charges,
to illustrate the impact on earnings from continuing
operations before impairment charges. This APM is used
in order to present clearly the underlying costs and results
of the Group.
Review of the Committee
The Committee reviewed the use and calculation of this
APM and agreed with management that this measure has
been appropriately calculated and disclosed as a non-GAAP
measure in the financial statements. The Committee is
satisfied that the non-GAAP measure is not given undue
prominence and that the reconciliations provided are
presented in a clear manner.
Going concern
Reporting issue
The Directors must satisfy themselves regarding the Group’s
ability to operate as a going concern and confirm that they
have a reasonable expectation that the Group will continue
to operate and meet its liabilities as they fall due for the
12 months following the date at which the consolidated
financial statements for the year ended 31 December 2022
are issued.
Review of the Committee
The Committee reviewed management’s cash flow forecasts,
including an overview of the assumptions made in the
preparation of the base case supporting the going concern
statement. This included the Group’s consolidated cash flow
forecasts covering 2023 – 2024. The Committee discussed
and challenged the cash flow forecasts and assessed this
in light of the principal risks and uncertainties set out within
this annual report and accounts.
Given the continued delays experienced by the business
during 2021 and 2022, the Committee discussed and
challenged the downside scenarios modelled as part of the
going concern statement. The downside scenarios reduced
the Group’s revenue generation but also looked at cost saving
measures that would be implemented in such instances.
These downside scenarios also looked at additional funding
that is either available to the Group at the date of signing
these accounts, or which the Directors have determined
is reasonable to include. In conclusion, the Committee have
recommended to the Board that the going concern statement
include material uncertainty primarily in regards to the
timing of ongoing inventory monetisation revenue streams,
and certain cash inflows that have been committed to the
Group but for which the cash has not yet been received.
Revenue recognition
Reporting issue
Prior to the Group’s facilitation of the first inventory
monetisaion transaction in October 2022, revenue generated
from the inventory monetisation operating segment consisted
of due diligence fees. The contracting arrangements for
the due diligence fees have changed over time and a large
portion of the fees received in prior periods were from
a contract with a related party. In determining the correct
revenue recognition profile for the due diligence fees
under IFRS 15 (“Revenue from Contracts with Customers”),
management needed to consider, and apply certain
judgements with respect the different performance
obligations from historical contracting agreements, current
contracting agreements, and contracting agreements with
the related party.
In connection with the initial inventory monetisation
transaction that took place in the current reporting period,
the Group received fees for the first time in connection
with the following activities:
a) origination of the contracts between the client company
and the independent stock (trading) company that
purchased the inventory;
b) usage of the Group’s IM Platform by the independent
stock (trading) company in order to facilitate the purchase
of the inventory from the client company; and
c) service fees charged to the independent stock (trading)
company by the Group in terms of the support and
administration activities such as the monitoring of the
inventory purchased using the Group’s IM Platform.
As with the due diligence fee revenue, management needed
to consider, and apply certain judgements with respect to
the different performance obligations in relation to the each
of the activities above in order to establish if the revenue
recognition profile in accordance with IFRS 15 (“Revenue
from Contracts with Customers”) was point in time or over
time, particularly given that some of the contracts extend
over more than one financial reporting period.
61 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Audit Committee
Review of the Committee
In connection with the review of the interim and annual
financial statements, the Committee received reports from
management that outlined the judgements made about the
performance obligations under each of the contracting
agreements. These reports were carefully reviewed,
challenged, and discussed at meetings of the Committee.
With respect to the fees referred to above, management
applied the following key judgements:
a) The due diligence services performed represent a distinct
beneficial service to the client companies receiving these
services, and as such the revenue is recognised at the
completion of the due diligence services;
b) The non-refundable origination fees received from the
client company relates to the fee payable to the Group
at the point in time the client company enters into binding
contracts with the stock (trading) company to purchase
its inventory. It was noted that it does not relate to any
transfer of asset from the Group to the client company
and as a result, management concluded there is no
separately identifiable performance obligation carried
out by the Group associated with this fee. As such
the recognition of the non-refundable origination fee
as revenue is at the point in time that the fee becomes
payable given that there are no performance obligations
that remain to be completed by the Group relating to
this fee;
c) The usage of the Platform granted by the Group to the
stock (trading) company represented a Software as a
Service (“SaaS”) contract, and as the related requirements
of IFRS 15 (“Revenue from Contracts with Customers”)
were satisfied, the annual Platform usage fees are
recognised over time; and
d) The service fees received in exchange for the support
and administration activities relate to this separately
identifiable performance obligation and as such the
annual fees are recognised over time in line with the
relevant requirements set out in IFRS 15 (“Revenue
from Contracts with Customers”).
Capitalisation of costs directly attributable
to the internally generated Inventory Monetisation
(“IM”) Platform
Reporting issue
The Group continues to invest in the development of its
IM Platform. During the current financial period management
was required to exercise judgement to distinguish those
costs that were capable of being capitalised under IAS 38
(“Intangible assets”) and those costs that related to research
and development activities, which have been recognised
as an expense during the relevant period.
Review of the Committee
The Committee reviewed reports from management that
detailed the judgements applied in determining which costs
would meet the criteria for capitalisation. This was assessed
in conjunction with feedback provided from the external
auditor. The Committee noted that to date only external
costs have been capitalised and concurred with managements
approach to the amounts to be capitalised. The Committee
also was required to review management’s assessment
of impairment of the Group’s IM Platform in light of certain
indicators of impairment that were in existence at year
end. Further details of the outcomes of this review are set
out below.
Share based payments – Acquisition related
earn-out payments
Reporting issue
The acquisition of TradeFlow on the 1 July 2021 included a
number of complex accounting judgements and estimates
for which management obtained assistance from external
accounting advisors. The area of complexity and judgement
that continued to impact on the current year financial
statements relates to determination of the fair value of the
acquisition related earn-out payments to be recognised
in the current financial year and within the Company’s share
based payment reserve.
Review of the Committee
In conjunction with the publication of the 2021 annual
report and accounts, the Committee received a comprehensive
report from management detailing the proposed accounting
treatment of the acquisition related earn-out payments
which was considered in depth alongside input from the
external auditors.
This proposed accounting treatment required careful analysis
and interpretation of the relevant agreements in order
to conclude on the appropriate accounting treatment under
IFRS 3 (“Business Combinations”). To support this analysis,
management engaged third party accounting advisors to
assist in this area. The results of the detailed analysis were
also shared with the Committee, and this was discussed
and challenged both by the Board of Directors and the
Committee. The Committee actively sought input from the
external auditor on this topic and after careful consideration,
concurred with managements judgement that the inclusion
of substantive post-acquisition service conditions required
the earn-out payments be accounted for as a charge to the
income statement (as deemed remuneration) rather than
as initial consideration of the acquisition.
62 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
In addition, the loan notes, certain of the convertible loan
notes and certain of the equity funding facilities required the
issue of warrants as an associated cost. Management was
required to assign a fair value of these warrants in line with
IFRS 2 (“Share-based Payments”) and ensure the cost of
these was appropriately recognised in the financial statements
for the year ended 31 December 2022.
Review of the Committee
In order to determine the fair value of the various share
warrants that have been issued, management engaged
a third-party accounting advisor to carry out the IFRS 2
(“Share-based Payments”) fair value exercise. This detailed
analysis was also shared with the Committee, and alongside
discussions with the external auditors, the Committee are
satisfied that the funding arrangements and the repayments
made during 2022, have been appropriately accounting for
and disclosed in the financial statements.
Accounting for discontinued operations
Reporting issue
During the second half of 2022, the Directors began the
process of the TradeFlow Restructuring and as part of the
preparation of the consolidated financial statements for the
year ended 31 December 2022, management considered
the application of IFRS 5 (“Non-current Assets Held for Sale
and Discontinued Operations”) to the TradeFlow business.
Management considered the factors that need to be in place
in order for a business or asset to be classified as held for
sale or a discontinued operation. Management concluded
that as at 31 December 2022, TradeFlow was available for
immediate sale in its present condition and it was highly
probable that the sale would be complete within 12 months
of 31 December 2022. As such, the TradeFlow business
as been classified as a discontinued operation as at 31
December 2022.
As further announced on 24 March 2023, the directors
of TradeFlow provided written notice to the Board of their
intention to exercise their rights to buy back 100% of the
share capital of TradeFlow, pursuant to certain earn-out
arrangements entered into in connection with the Company’s
acquisition of TradeFlow, the completion of which was
announced on 6 July 2021. The Audit Committee continued
to support the Board with the activities connected to the
buy back.
Additionally, management engaged a third-party remuneration
consultant to assist with calculating the fair value of the
acquisition related earn-out payments given that management
concluded these fell into the scope of IFRS 2 (“Share based
payments”). This IFRS 2 valuation provide a fair value assuming
100% of the related revenue milestone targets were met.
The Committee received the detailed analysis produced
which set out the valuation method used, the key inputs
and the results of the exercise. Following this review and
challenge, the Committee sought input from the external
auditors and agreed with managements estimate of the
potential IFRS 2 charge.
During the current financial year, the key new judgement
considered by management related to the expectation
regarding the achievability of the future revenue milestone
targets, being the non-market vesting conditions under IFRS
2 (“Share based payments”). Based on the revenue figure
achieved by TradeFlow for the year ended 31 December 2022,
it was confirmed that the 2022 acquisition related earn-out
payments due was nil. Management then assessed the level
of growth required to meet the 2023 revenue milestone
targets and concluded that this extremely high level of
growth as unlikely to be obtained. As a result, the 2022 and
2023 acquisition related earn-out amounts that had been
recognised to date were reversed in the current year financial
statements and no further amounts for these periods were
recognised. The Committee reviewed the analysis provided
by management in respect of this judgement and also
discussed with the external auditors. Following this review,
the Committee agreed with managements estimate
concerning the achievability of the 2023 TradeFlow revenue
milestone targets.
Accounting for funding facilities
Reporting issue
During the current and prior year the Company has entered
into loan note and convertible loan note funding facilities,
alongside new equity funding facilities, in order to support
the Group through its early-stage development. The Group
made a strategic decision to replace certain of the loan note
and convertible loan note facilities with funding received
from its new equity investor in order to provide a more
stable balance.
There were a number of complexities contained within the
agreements which management were required to carefully
analyse to ensure the carrying value of the funding facilities,
and the associated finance or share issue costs, were
correctly reflected in the balance sheet and income statement
respectively. Management also needed to ensure the
repayment of certain of the financing facilities during the
year were appropriately recorded in the Group’s consolidated
financial statements.
63 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Audit Committee
Review of the Committee
In order to review management’s judgement regarding
the classification of the TradeFlow business, the Committee
reviewed the analysis against the IFRS 5 criteria that was
presented to the Committee by management. This analysis
was also discussed with the external auditors. Following
this review and discussion, the Committee concluded that
the disclosure of the TradeFlow business as a discontinued
operation was appropriate.
Impairment reviews
Reporting issue
The Group is required to annually assess any investment
and intangible assets, including goodwill, for impairment.
The following impairment reviews took place at the
Group level:
> Internally generated IM platform; and
> Intangible assets in relation to the acquisition of TradeFlow.
The Group has recognised an intangible asset in respect
of its internally generated IM Platform, and has continued
to capitalise costs in line with IAS 38 (“Intangible assets”)
during the current financial year. During the preparation
of the 2021 annual report and accounts, this intangible
asset was fully impaired based on the fact that the material
uncertainties that existed in the going concern statement,
also applied to the impairment review of the IM Platform.
Given the continued delays the Group has faced in achieving
more than the first initial IM transaction, managements
assessment was that the indicators of impairment continued
to exist as at 31 December 2022. In line with the judgements
applied in the prior year, and the fact that similar material
uncertainties existed in the concern statement in the current
financial year, management again chose to fully going impair
the value of the Group’s IM Platform as at 31 December 2022.
Additionally, the Group has also recognised intangible assets,
including goodwill, in respect of the TradeFlow acquisition
that took place in the prior year. For the purposes of the
2022 interim financial statements, management considered
the continued underperformance of TradeFlow compared
to its forecasts were indicators of impairment as at 30 June
2022. Following an impairment review of the TradeFlow
Cash Generating Unit (“CGU”), the recoverable amount was
determined to be lower than the net invested capital value
held on the balance sheet at 30 June 2022, and as such an
impairment charge of £0.8m has been recognised in the
current financial year.
During the second half of 2022, the Directors began the
process of the TradeFlow Restructuring, and as set out
above the TradeFlow operations have been classified
as discontinued operation as at 31 December 2022.
When carrying out the impairment assessment of the
TradeFlow CGU as at 31 December 2022, management
was required to consider the fair value of the TradeFlow
operations which given the classification as a discontinued
operation is assumed to be the agreed price between
two market participants. Given the details of the buy back
are still being considered and finalised as at the date
of the consolidated financial statements, management
instead considered the specifics set out in the TradeFlow
Restructuring share purchase agreement that had been
agreed in principle prior to the buy back being exercised.
As a result the fair value of the TradeFlow CGU derived
from these agreements was compared to the net invested
capital held on the balance sheet at 31 December 2022.
This calculation resulted in no additional TradeFlow
impairment charges being recognised in the consolidated
Group financial statements as at 31 December 2022.
The Parent Company is required to annually assess
for impairment the investments that it currently holds
at carrying value including:
> Supply@ME S.r.l; and
> TradeFlow.
During the year ended 31 December 2021, the full amount
of the investment in Supply@ME S.r.l was impaired, along
with the full amount of any intercompany receivable
balances. This followed the same rationale as noted above
for the impairment review of the internally generated IM
platform asset. During the current financial year, management
followed the same approach and recognised additional
impairment charges as required.
As at 31 December 2022, management compared the
carrying value of the TradeFlow investment in the Company’s
books and records, with the fair value of TradeFlow CGU,
which has been calculated in the same way as referred to
above. This resulted in a further impairment charge being
recognised in the Company’s financial statements.
Review of the Committee
The Committee reviewed papers from management which
set out the key assumptions and judgements underpinning
the impairment assessments referred to above. The Group’s
external auditors provided their view of the assessment to
the Committee.
After due consideration and discussion, the Committee
concluded that it agreed with the impairment reviews carried
out by management during the year ended 31 December
2022 and this resulted in the impairment charges being
appropriately recognised in both the Group’s consolidated
financial statements and the Company’s stand alone financial
statements.
64 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Fair, Balanced and Understandable
The Committee supports the Board in ensuring that the
Annual Report is fair, balanced and understandable and as
such has given due consideration as to whether the Annual
Report and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy and can confirm that this is
the case.
Risk Management and Internal Controls
The Board has overall responsibility for determining the
nature and extent of its principal and emerging risks and
the extent of the Group’s risk appetite, and to ensure any
identified weaknesses are appropriately dealt. Further details
the principal risks and uncertainties facing the Group are
addressed pages 40 to 42. The Board has delegated to the
Committee the responsibility for monitoring the effectiveness
of the systems of risk management. The Committee remains
pleased with the improvements made to the Group’s internal
financial controls over the year, however this continues
to remain a key area of continued focus for the Committee
to ensure controls are developed and improved in line with
the Group’s developing operations.
Internal Audit
The Committee has considered if the Group’s internal
controls processes would be significantly enhanced by an
internal audit function and has taken the view that, given the
size of the Group’s current operations, the internal controls
in place and significant executive involvement in the Group’s
day to day business, an internal audit function is not required
at this stage. However, the Committee will keep this under
review especially as the Group’s operations grow and develop.
External Audit
The Committee reviews the independence and objectivity of
the external auditor prior to the proposal of a resolution to
shareholders at the Annual General Meeting concerning the
appointment and remuneration of the auditor. This process
includes the review of audit fee proposals, investigation
and approval for non-audit services’ fees, tenure and audit
partner rotation (based on best practice and professional
standards within the United Kingdom). The Group’s auditor,
Crowe UK LLP (‘Crowe’), similarly considers whether there
are any relationships between itself and the Group that
could have a bearing upon Crowe’s independence and has
confirmed its independence to us.
Each year the Committee obtains written confirmation
of auditor’s independence. Crowe have been the Group’s
auditors since the Group listed on the London Stock Exchange
in March 2020, and the current external audit partner is Leo
Malkin who was also appointed at this time. Having reviewed
the auditor’s independence and performance, the Committee
has concluded that these are effective and recommends
that Crowe be reappointed at the next AGM.
The Committee also has responsibility for approving the
nature of non-audit services which the external auditor may
or may not be allowed to provide to the Company and the
fees paid for these services. Currently all non-audit services
would need to be approved by the Audit Committee if they
were to be undertaken by the external auditor. During the
current financial year, Crowe carried out certain non-audit
assurance services in relation to the proposed TradeFlow
Restructuring. Crowe have not carried out any other
non-audit services for the Group since their appointment
as external auditor.
The auditor prepares an annual planning report for
consideration by the Committee, which details areas of
audit focus and anticipated key audit risks, together with
the anticipated level of materiality. This is reviewed and
approved by the Committee. Following the audit, the auditor
presented its findings to the Committee. No significant
areas of concern were raised by the external auditor.
Board and Committee Evaluation
A thorough board and committee evaluation was conducted
during November 2022. This performance evaluation
included the below areas:
> Processes that underpin board effectiveness
> Board and Committee Constitution and Commitment
> Board dynamics
> Culture, Stakeholder oversight and Strategy
In light of this evaluation the Committee will continue to
assess its current skill set and will highlight to the Nomination
Committee if there are any issues that arise in the future
due to lack of specific skill set or knowledge, particularly
as the Group continues to grow in both size and complexity.
Additionally, the Committee will continue to assess the
information provided to them by management and provide
effective feedback to help improve the quality and timeliness
of this information.
David Bull
Chair, Audit Committee
28 April 2023
65 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Annual Statement from the Remuneration Committee
I am pleased to present, on behalf of the Board, our Directors’
Remuneration Report for the year ending 31 December 2022.
In line with the UK reporting regulations, this Directors’
Remuneration Report is split into three sections:
> this Annual Statement which summarises the work
of the Committee and our approach to remuneration;
> the proposed Directors’ Remuneration Policy, which
provides details of our approach to remuneration and
the parameters within which we will implement our pay
arrangements going forward, and how this links to our
strategy; and
> the Annual Report on Remuneration, which sets out the
remuneration arrangements and incentive outcomes for
the year under review and how the Committee intends
to implement the new Remuneration Policy in FY23.
The fee levels for Non-Executive Directors is a matter for
the Chair and Executive team. Non-Executives fees were
also reviewed in light of external benchmarking. This review
demonstrated the Non-Executive Directors are all underpaid
comparative to market. However, this was most stark in
the case of the Remuneration and Audit Committee Chairs
whom to date had received the base Non-Executive
Director fee of £30,000. On reviewing the time commitment,
responsibility and input required to Chair the Audit and
Remuneration Committees the Chair and Executives made
the decision to provide an additional fee of £10,000 to the
Chair of the Audit Committee from 22 July 2022 taking the
total fee for a Non-Executive Director fulfilling this role to
£40,000 per annum. The decision was also taken to increase
the fee for the Remuneration Committee Chair in the same
way when a new Chair be appointed. The goal of this increased
payment is to recognise and retain the contribution made
by these key committee chair roles, whilst also attracting
a new Remuneration Chair to the position.
There will be two remuneration-related resolutions at the
2022 Annual General Meeting: (i) a binding vote on the
proposed Directors’ Remuneration Policy; and (ii) an advisory
vote on, together, the Annual Statement and Annual Report
on Remuneration.
As outlined in the 2021 report, consistent with general
market practice, the Committee has decided that it would
be appropriate to gradually introduce an annual bonus and
long-term incentive arrangement for our senior executives.
Renewal of Directors’ Remuneration Policy
At the 2022 Annual General Meeting we are asking
shareholders to renew our Director’s Remuneration
Policy (“Policy”). The policy is designed to align the best
interests of shareholders and management. The policy was
approved at the 2021 Annual General Meeting by 97.47%
(10,088,146,704) of the shareholder votes. However, it has
come to the attention of the committee that the reference
to maximum opportunity and performance measures
for the LTIP in the annual report related to pension, hence
we would prudently like to take this opportunity to clarify
these measures in the Remuneration Policy and again seek
shareholder approval for the policy for the next 3 years.
During 2022 the Remuneration Committee has continued
to monitor the pay of the Executive Directors, Chair and
Non-Executive Directors, based on external benchmarking
commissioned in 2021. The Executive Directors continued
to be paid below market levels, taking into account the size
and nature of the business. The Committee has decided
that, whilst the Group is still working towards achieving
profitability, it is not currently appropriate to increase
remuneration levels for Executive Directors; this will be
kept under review and re-considered once the economics
of the business justify it.
Remuneration in FY22
The Company continues to build its operations and 2022
was a year of incremental development and innovation,
including the first monetisation transaction taking place
with funding from the VeChain Foundation.
On 31 October 2022 the first Long Term Incentives Plan
Awards were made, the initial performance conditions being
absolute Total Shareholder Return (TSR) over 3 financial
years, requiring (assuming no dividends), the average closing
share price over the period 1 October 2024 to 31 December
2024 to be 0.6945p for 25% of the award to vest increasing,
on a straight-line basis, to 1p for 100% to vest. The Committee
has broad discretion to reduce vesting if it considers
the level of vesting to be inappropriate having regard to
affordability, risk management and other factors. As part
of the introduction of the LTIP, Executive Directors will
become subject to share ownership guidelines requiring
them to build up a holding of shares worth at least 200%
of base salary (and to normally continue to hold such shares
for 2 years’ post-cessation). During 2022 the CEO received
options on 100% of base salary, which will vest on the basis
of the performance conditions outlined above. Tom James
and John Collis who were also Executive Directors during
2022 did not receive a grant over shares given that their
earn-outs are outstanding.
66 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Conclusion
We continue to be committed to a responsible approach
to executive pay, which I hope this Directors’ Remuneration
Report demonstrates. The Committee recognises the
importance of developing a close relationship with
shareholders in facilitating the work of the Committee
in developing our pay arrangements. I am happy to meet
or speak with shareholders if there are any questions or
feedback on our approach to executive remuneration and
if you have any comments or feedback on this report, then
please let me know through the Company Secretary.
I look forward to receiving your support at the 2023 AGM.
On behalf of the Remuneration Committee:
Alexandra Gailligan
Chair of the Remuneration Committee
As outlined in the 2021 annual report no bonus payments
were made to Executive Directors during the year ending 2022.
Implementation of the Directors’ Remuneration
Policy in FY23
As explained above, remuneration levels of Executive and
Non-Executive Directors are appreciably below market level,
the committee has concluded this will be considered more
broadly as and when it is considered affordable.
There are two changes to directors pay to report since the
previous annual report. Firstly, the implementation of the
LTIP, which by its nature is aligned to shareholders’ needs.
Secondly an award of an additional fee to Non-Executive
Directors who chair the Audit or Remuneration Committee’s
of £10,000 over and above the base Non-Executive Director
fee of £30,000, to recognise the significant time commitment,
input and responsibility these roles entail.
The committee has given consideration to the performance
conditions for 2023 Long Term Incentives Plan Awards, which
aim to align to shareholders’ needs. Further details of this
are provided in the annual report on remuneration.
At the 2021 AGM an annual bonus plan was included as part
of the new Remuneration Policy, at this time the committee
concluded Executive Directors would not be invited to
participate in the plan for FY22. The Policy permits the
operation of a bonus plan with Executive Directors eligible to
receive a bonus of up to 100% of base salary. The Committee
has given consideration to the implementation of the bonus
plan for Executive Directors in 2023 in line with this policy
and concluded to not yet approve a plan for 2023. The
Remuneration Committee will consider this prudently during
2023 in light of revenue and cash flow. If significant progress
is made on the Group’s key financial targets a variable pay
pool would be formed based on a combination of profit and
satisfaction of strategic and personal objectives. These
objectives will be linked to the Group’s strategy and aligned
with key financial, strategic and/or individual targets and be
governed by the Remuneration Policy.
67 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Directors’ remunerations report – at a glance
Our pay principles
Promotion of the long-term success of the Group
The principal aim of the Directors’ Remuneration Policy is the ability to offer competitive remuneration packages which
are designed to attract, retain and provide appropriate incentives to Executive Directors and Leadership Team with the
experience and necessary skills to operate and develop the Group’s business to its maximum potential, thereby delivering
the highest level of return for our shareholders.
Implementation of our Policy in FY23
Fixed pay
Salary / fees
> CEO – GBP £207,000
Pension
Benefits
> CEO – 6% of salary
> CEO entitled to life assurance and health insurance,
however he has not taken up the health insurance
benefit
Annual bonus
Maximum
> 100% of salary
> 2023 plan not yet approved, consideration will be given
by the committee during 2023 to implementation of
a 2023 plan in line with the policy
Performance measures
> Individual bonuses allocated based on delivery of
corporate and/or individual performance objectives
Operation
> Any bonus in excess of 50% of salary deferred into
shares for three years
> Malus and clawback provisions operate
Long Term Incentive
Plan
Award level
> Up to 100% of salary, the CEO will receive a grant over
shares worth a maximum of 100% of salary
Performance measures
> 50% of the award based on absolute TSR over
Operation
3 financial years & 50% of the award based on volume
of inventory monetised over the same period
> Performance measured over three years
> Two-year additional holding period applies to vested
awards
> Malus and clawback provisions operate
Share ownership
guidelines
In-employment guideline
> 200% of salary
Post-cessation guideline
> 200% of salary to be held for two years post-employment
Shareholding as a
multiple of salary at
31 December 20221
> CEO – 51.09
1 The shareholding as a multiple of salary has been calculated using the value of the shareholding held at 31 December 2022 compared to the full year salary
for the year ended 31 December 2022.
68 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
As announced on 12 April 2023, the number of shares of the
Company held by the CEO, through the AvantGarde Group
S.p.A, increased by 925,000,000 to a total of 13,667,513,009.
There have been no other changes between 31 December
2022 and the 21 April 2023, being latest date practicable prior
to the publication of this report.
Directors Remuneration Policy
This part of the Directors’ Remuneration Report sets out the
Directors’ Remuneration Policy for the Company which the
committee would prudently like to put to binding shareholder
vote at the 2023 AGM to reconfirm shareholder agreement
with the policy. The date for the AGM will be announced
shortly after the release of the Annual Report and take effect
from that date subject to shareholder approval. The Policy
will formally apply for three years beginning on the date of
approval unless a new policy is presented to shareholders
in the interim. All payments to Directors are consistent with
the approved Policy.
Considerations when determining the Directors’
Remuneration Policy
The overarching objective of the Policy is to promote the
long-term success of the Group. In seeking to achieve this
objective the Remuneration Committee takes account of
the following guiding principles:
> remuneration packages should be clear and simple;
> arrangements should be closely aligned with the interests
of shareholders and other key stakeholders and ensure
that the Company is not unduly exposed to risk;
> remuneration should align with, and support, our values;
> a significant proportion of remuneration should be
based on performance-related components with potential
rewards subject to the achievement of challenging
performance targets based on measures linked to the
Group’s KPIs and to the best interests of stakeholders; and
> salaries and the overall level of potential remuneration
any additional feedback received from time to time (including
any updates to shareholders’ remuneration guidelines),
will then be considered as part of the Committee’s annual
review of remuneration policy and its implementation.
The Remuneration Committee also actively monitors
developments in the expectations of institutional investors
and considers good practice guidelines from institutional
shareholders and shareholder bodies.
Consideration of employment conditions elsewhere
in the Group
The Committee closely monitors the pay and conditions
of the wider workforce and the design of the Directors’
Remuneration Policy is informed by the policy for employees
across the Group. While employees are not formally directly
consulted on the design of the Directors’ Remuneration
Policy, we have a relatively small workforce which allows
the Board to regularly engage directly with employees.
In addition, the Committee receives periodic updates on
remuneration arrangements and employment conditions
across the Group from the Chief People Officer.
Differences in pay policy for Executive Directors
in comparison to employees more generally
The overall approach to reward for employees across
the workforce is a key reference point when setting the
remuneration of the Executive Directors. As for the Executive
Directors, general practice across the Group is to recruit
employees at competitive market levels of remuneration,
incentives and benefits to attract and retain employees,
accounting for local conditions. When affordable for the
Company, it is envisaged that all employees will be able to
earn annual bonuses for delivering exceptional performance
and the corporate measures used to generate the bonus
pool apply to all employees participating in the annual
bonus plan.
should be competitive but not excessive when compared
with other companies of a similar size, scale and
geographical reach and should be sufficient to recruit,
retain and motivate individuals of the requisite calibre
to deliver long-term success.
The key difference between the remuneration of Executive
Directors and that of our other employees is that, overall,
at senior levels, remuneration is increasingly long term, and
‘at risk’ with an emphasis on performance-related pay linked
to business performance and share based remuneration.
Consideration of shareholders’ views
The Committee is committed to an ongoing dialogue
with shareholders and welcomes feedback on Directors’
remuneration. The Committee will seek to engage appropriately
with major shareholders and their representative bodies
on changes to the Policy. The Committee will also consider
shareholder feedback received in relation to the remuneration-
related resolutions each year following the AGM. This, plus
This ensures that remuneration at senior levels will increase
or decrease in line with business performance and provides
alignment between the interests of Executive Directors and
shareholders.
In particular, performance-based long-term incentives are
normally reserved for those considered to have the potential
to influence overall levels of performance.
69 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Policy table for Executive Directors
The table below sets out the main components of the
proposed Directors’ Remuneration Policy, together with
further information on how these aspects of remuneration
operate, which was approved by shareholders at the 2021
AGM. The Remuneration Committee has discretion to
amend remuneration to the extent described in the table
and the written sections that follow it.
Component
Base salary
Purpose
and link to
strategy
To provide
competitive
fixed
remuneration.
To attract
and retain
Executives
of a superior
calibre.
Operation
Maximum
opportunity
Performance
measures
Although there are no
formal performance
conditions, any increase
in base salary is only
implemented after
careful consideration
of individual contribution
and performance and
having due regard to the
factors set out in the
Operation column of this
table.
Salaries are usually
reviewed annually, with
any increases typically
effective from the start
of the financial year.
Salaries are typically set
after considering:
> pay and conditions
elsewhere in the
Group;
> overall Group
performance;
> individual performance
and experience;
> progression within the
role; and
> competitive salary
levels in companies
of a broadly similar size,
scale and complexity.
While there is no
prescribed maximum
salary or maximum
increase, increases will
normally be in line with
the typical range of salary
increases awarded
(in percentage of salary
terms) to the wider
workforce.
Larger salary increases
may be awarded to take
account of individual
circumstances, such as:
> where an Executive
Director has been
promoted or has had
a change in scope or
responsibility;
> where the Committee
has set the salary of a
new hire at a discount
to the market level
initially, a series of
planned increases can
be implemented over
the following few years
to bring the salary to
the appropriate market
position, subject to
individual performance;
or
> where the Committee
considers it appropriate
to adjust salaries to
reflect the continuing
development of the
Company.
Increases may be
implemented over such
time period as the
Committee deems
appropriate.
70 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Component
Benefits
Purpose
and link to
strategy
To provide
competitive
fixed
remuneration.
To attract
and retain
Executives
of a superior
calibre.
Operation
Maximum
opportunity
Performance
measures
Not applicable.
As it is not possible
to calculate in advance
the cost of all benefits,
a maximum is not
pre-determined.
The maximum level
of participation in
all-employee share plans
is subject to the limits
imposed by the relevant
tax authority from time
to time.
Executive Directors
are currently entitled
to benefits including life
assurance and health
insurance.
Executives Directors
will be eligible for any
other benefits which are
introduced for the wider
workforce on broadly
similar terms, Other
benefits (including a car
or car allowance) might
be provided from time to
time based on individual
circumstances and if
the Committee decides
payment of such benefits
is appropriate.
For external and internal
appointments or
relocations, the Company
may pay certain relocation
and/or incidental
expenses as appropriate
(for up to two years from
recruitment).
Any reasonable business-
related expenses can be
reimbursed (and any tax
thereon met if determined
to be a taxable benefit).
Executive Directors are
also provided with the
opportunity to participate
in any all-employee share
plan arrangements on
the same basis as other
employees.
Pension
To provide
employees
with long-term
savings to allow
for retirement
planning.
The Group may offer
participation in a defined
contribution pension plan
or may permit Executive
Directors to take a cash
supplement in lieu of
pension up to the same
value.
The maximum employer’s
contribution or cash
allowance in lieu of
pension is limited to up
to the contribution levels
of the majority of the
workforce (currently 6%
of salary).
Not applicable.
71 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Component
Annual bonus
Purpose
and link to
strategy
Rewards
achievement of
annual financial
and business
targets aligned
with the KPIs
of the Group.
Bonus deferral
encourages
long-term
shareholding,
provides
a retention
element and
discourages
excessive risk
taking.
Operation
Maximum
opportunity
Performance
measures
Awards are based on
performance typically
measured over one year.
Maximum annual bonus
opportunity is 100% of
base salary.
A bonus plan has not
yet been approved for
2023. The remuneration
committee will consider
this prudently during
2023 in light of revenue
and cash flow.
Any payment is
discretionary and pay-out
levels are determined
by the Committee after
the year end based
on performance against
pre-set targets.
Bonus is normally paid
in cash, except for any
bonus in excess of 50%
of base salary which
is deferred into an award
over shares, typically
for a three-year period.
Dividends or dividend
equivalents may accrue
on deferred share awards.
The vesting of the deferred
share awards is not
subject to the satisfaction
of any additional
performance conditions.
The annual bonus plan
includes malus and
clawback provisions which
enable the Committee
(in respect of both the
cash and the deferred
elements of bonuses) to
recover or withhold value
in the event of certain
defined circumstances
(i.e. in cases of gross
misconduct, material
misstatement of financial
results, error in calculation,
material risk failings,
reputational damage or
corporate failure).
It is intended that a variable
pay pool is formed based
on a combination of profit
and satisfaction of strategic
and personal objectives
although the Committee
may adopt alternative
arrangements within the
overall cap.
Targets are set annually
with measures linked to
the Group’s strategy and
aligned with key financial,
strategic and/or individual
targets.
The performance
measures applied may be
financial or non-financial,
corporate, divisional
or individual, and in such
proportions as the
Committee considers
appropriate.
A graduated scale
of targets is set for each
measure, with no pay-out
for performance below
a threshold level of
performance.
The Committee has
discretion to amend
the pay-out should any
formulaic outcome not
reflect the Committee’s
assessment of overall
business performance.
72 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Component
Long Term
Incentive Plan
(‘LTIP’)
Purpose
and link to
strategy
To incentivise
Executive
Directors,
and to deliver
genuine
long-term
performance-
related pay,
with a clear
line of sight
for Executives
and direct
alignment with
shareholders’
interests.
Operation
Maximum
opportunity
Performance
measures
The LTIP allows for awards
over shares with a
maximum value of 100%
of base salary per financial
year (the Committee
reserves the discretion
to grant awards up to
a maximum value of 200%
of base salary per financial
year for recruitment
related awards or in
exceptional circumstances).
Actual participation levels
will be kept under regular
review, and the Committee
expressly reserves
discretion to make such
awards as it considers
appropriate within the
plan limits.
LTIP performance
measures may include,
but are not limited to,
financial, TSR, strategic and
ESG-related objectives.
The Committee retains
discretion to set alternative
measures and weightings
for awards over the life
of the Policy.
Targets are set and
assessed by the Committee
in its discretion.
A maximum of 25% of any
element vests for achieving
the threshold performance
target and 100% for
maximum performance.
The Committee has
discretion to reduce the
vesting level should any
formulaic outcome not
reflect the Committee’s
assessment of overall
business performance.
Awards will be in the form
of nil or nominal-cost
share options, conditional
shares or other such
form as has the same
economic effect.
Awards will normally
be granted with vesting
dependent on the
achievement of
performance conditions
set by the Committee,
with performance
normally measured
over at least a three-year
performance period.
In line with best practice
for financial-services
companies, ‘restricted
stock’ LTIP awards may be
made to control function
personnel (e.g. Chief Risk
Officer) which are not
subject to performance
measures.
Awards will be subject to
a further two-year holding
period, and shares will
typically not be released
to participants until the
end of any such holding
period.
During the vesting period
(and the additional holding
period) the value of any
dividends on performance
vested shares will be
credited as re-invested in
further LTIP award shares.
The LTIP includes malus
and clawback provisions
which enable the
Committee (to recover
or withhold value in the
event of certain defined
circumstances (i.e. in
cases of gross misconduct,
material misstatement
of financial results, error
in calculation, material
risk failings, reputational
damage or corporate
failure).
73 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Component
Share
ownership
guidelines
Purpose
and link to
strategy
To ensure
that Executive
Directors’
interests are
aligned with
those of share-
holders over
a longer time
horizon.
Operation
Maximum
opportunity
Performance
measures
Not applicable.
Not applicable.
Executive Directors are
expected to accumulate
and maintain a holding
in shares in the Company
equivalent in value to no
less than 200% of base
salary.
Executive Directors will
be expected to retain
the lower of actual shares
held at cessation and
shares equal to 200%
of salary for two years
post-cessation.
These guidelines apply in
respect of any shares which
vest from Supply@ME
share awards granted
after the 2022 AGM.
74 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Component
Purpose
and link to
strategy
Operation
Maximum
opportunity
Performance
measures
Not applicable
The aggregate fees
and any benefits
of the Chairman and
Non-Executive Directors
will not exceed the limit
from time to time
prescribed within the
Company’s Articles
of Association for such
fees (currently £500,000
p.a. in aggregate).
Any increases actually
made will be appropriately
disclosed.
Chairman and
Non-Executive
Directors’ fees
To attract
high calibre
individuals and
to appropriately
reflect
knowledge,
skills and
experience.
Fees are normally
reviewed annually taking
into account factors such
as the time commitment
and contribution of the
role and market levels in
companies of comparable
size and complexity.
The Non-Executive
Chairman is paid an
all-inclusive fee for all
Board responsibilities.
Fees for the other
Non-Executive Directors
may include a basic fee
and additional fees for
further responsibilities
(for example, holding
the office of Senior
Independent Director
or chairing of Board
committees).
The Company repays
any reasonable expenses
that a Non-Executive
Director incurs in carrying
out their duties as a
Director, including travel,
hospitality-related and
other modest benefits
and any tax liabilities
thereon, if appropriate.
In exceptional
circumstances, if there
is a temporary yet material
increase in the time
commitments for the
Chairman or Non-Executive
Directors, the Board may
pay extra fees on a pro
rata basis to recognise
the additional workload.
The Chairman and
Non-Executive Directors
cannot participate in any
of the Group’s incentive
arrangements.
75 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Explanation of performance measures chosen
Performance measures for the annual bonus, once
introduced, will be selected annually to align with the KPIs
and prevailing strategic imperatives of the Group, and the
interests of shareholders and other stakeholders. Financial
measures will normally be used to determine the overall
bonus pool (e.g. as a % of group pre-tax profit) and the
individual allocations will be made based on key strategic
and/or personal objectives designed to ensure that Executive
Directors are incentivised to deliver across a range of
objectives. ‘Target’ performance is typically set in line with
the business plan for the year, with threshold to stretch
targets set around this based on a sliding scale which
takes account of relevant commercial factors. Only modest
rewards are available for delivering threshold performance
levels, with rewards at stretch requiring material
outperformance of the business plan. Details of the specific
measures used for the annual bonus are set out in the
Annual Report on Remuneration.
Performance measures for the LTIP are selected in order
to provide a robust and transparent basis on which to
measure the Group’s performance, to demonstrably link
remuneration outcomes to delivery of the business strategy
over the longer term, and to provide strong alignment
between senior management and shareholders. The policy
provides for Committee discretion to alter the LTIP measures
and weightings to ensure they can continue to facilitate
an appropriate measurement of performance over the life
of the policy, taking account of any evolution in the Group’s
strategic ambitions. The measures for the first grant were
absolute TSR (equivalent to a range of 0.6945-1p over the
last 3 months of FY24). The performance measures for the
2023 grant are:
> 50% of the award to be based on absolute TSR over
3 financial years, requiring (assuming no dividends) the
average closing share price over the period 1 October
2025 – 31 December 2025 to be 0.15p for 25% of the
award to vest increasing on a straight line basis to 0.3p
for 100% to vest.
> 50% of the award to be based on volume of inventory
monetised by the end of the performance period
(31 December 2025). 25% of award to vest if £300m of
inventory is monetized (in aggregate) over the 3 financial
years ending 31 December 2025, increasing on a straight
line basis to 100% of the award to vest if £400m of
inventory is monetized (in aggregate) in the same period.
This is contingent on the Remuneration Committee
deeming the inventory was monetised on acceptable
commercial terms.
The vesting in both the first and 2023 award will also
be subject to the ability of the Committee to reduce vesting
if it considers that appropriate having regard to financial,
risk and strategic performance.
When setting performance targets for the bonus and LTIP,
the Committee will take into account a number of different
reference points, which may include the Group’s business
plans and strategy, external forecasts and the wider economic
environment.
Flexibility, discretion and judgement
The Remuneration Committee operates the annual bonus
and LTIP according to the rules of each respective plan which,
consistent with market practice, include discretion in a
number of respects in relation to the operation of each plan.
Discretions include:
> who participates in the plan, the quantum of an award
and/or payment and the timing of awards and/or payments;
> determining the extent of vesting;
> treatment of awards and/or payments on a change
of control or restructuring of the Group;
> whether an Executive Director or a senior manager is a
good/bad leaver for incentive plan purposes and whether
the proportion of awards that vest do so at the time of
leaving or at the normal vesting date(s);
> how and whether an award may be adjusted in certain
circumstances (e.g. for a rights issue, a corporate
restructuring or for special dividends);
> what the weighting, measures and targets should be for
the annual bonus plan and LTIP awards from year to year;
> the ability to apply malus and clawback provisions which
enable the Committee to recover or withhold value in the
event of certain defined circumstances;
> the Committee also retains the ability, within the policy,
if events occur that cause it to determine that the
conditions set in relation to an annual bonus plan or
a granted LTIP award are no longer appropriate or unable
to fulfil their original intended purpose, to adjust targets
and/or set different measures or weightings for the
applicable annual bonus plan and LTIP awards. Any such
changes would be explained in the subsequent Directors’
Remuneration Report and, if appropriate, be the subject
of consultation with the Company’s major shareholders;
and
> the ability to override formulaic outcomes in line with Policy.
All assessments of performance are ultimately subject to the
Committee’s judgement. Any discretion exercised, and the
rationale, will be disclosed in the Annual Remuneration Report.
76 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Legacy arrangements
For the avoidance of doubt, in approving this Directors’
Remuneration Policy, authority is given to the Company to
honour any previous commitments entered into with current
or former Directors (such as the payment of a pension
or the unwinding of legacy share awards granted before
the approval of this Policy) that remain outstanding.
While these details are included in the remuneration report
for transparency, it is not necessary to include them within
the remuneration policy or the various emoluments tables
as it does not comprise legal remuneration. However it is
accounted for as remuneration (see single total figure of
remuneration for each Director section).
Illustrations of application of remuneration policy
The chart below sets out an illustration of the application
of the Directors’ Remuneration Policy set out above.
The chart shows the split of remuneration between fixed
pay and LTIP on the basis of minimum remuneration,
remuneration receivable for performance in line with the
Group’s expectations, maximum remuneration (not allowing
for any share price appreciation) and maximum remuneration
(assuming 50% share price growth). As a 2023 bonus plan
for Executive Directors has not yet been approved the
charts exclude any value relating to annual bonus.
Remuneration
£600,000
£500,000
£400,000
£300,000
£200,000
£100,000
£0
£426,000
£271,000
49%
£530,000
59%
£219,000
100%
19%
81%
51%
41%
LTIP
Fixed pay
Minimum
On-target
Maximum
Maximum + 50% growth
Chief Executive Officer – Alessandro Zamboni
In illustrating the potential reward, the following assumptions have been made.
Minimum performance
Performance in line with
expectations
Maximum performance
Maximum performance plus
50% share price growth
Fixed pay
LTIP (normal policy level)
Fixed elements of remuneration only, being:
> base salary (being the salary to be paid in
No vesting.
FY23);
> benefits paid in FY23 with an assumed
value of £1k; and
> pension contributions of 6% of salary.
25% of maximum award vesting (equivalent
to 25% of salary) for achieving threshold per-
formance.
100% of maximum award vesting (equivalent
to 100% of salary) for achieving maximum
performance.
100% of maximum award vesting (equivalent
to 100% of salary) for achieving maximum
performance plus hypothetical share price
growth of 50%.
Notes to the scenarios methodology:
> LTIP is measured at face value, i.e. no assumption for dividends or share price growth (other than in the fourth scenario).
77 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Recruitment remuneration
The policy aims to facilitate the appointment of individuals
of sufficient calibre to lead the business, to execute the
Group’s strategy effectively and to promote the long-term
success of the Group for the benefit of shareholders and
other stakeholders. When appointing a new Executive
Director, the Committee seeks to ensure that arrangements
are in the best interests of the Group and not to pay more
than is appropriate.
When hiring a new Executive Director, the Committee
will typically align the remuneration package with the above
Policy. The Committee may include other elements of pay
which it considers are appropriate; however, this discretion
is capped and is subject to the principles and the limits
referred to below.
> New Executive Directors will be offered a basic salary
in line with the Policy. This will take into consideration
a number of factors including, external market forces,
the expertise, experience and calibre of the individual
and current level of pay. Where the Committee has set
the salary of a new appointment at a discount to the
market level initially until proven, they may receive an
uplift or a series of planned increases to bring the salary
to the appropriate market position over time.
> For external and internal appointments, the Committee
may agree that the Company will meet appropriate
relocation and/or incidental expenses as appropriate.
> Annual bonus awards, LTIP awards and pension
contributions would not be in excess of the levels stated
in the Policy table above.
> Depending on the timing of the appointment, the
Committee may deem it appropriate to set different
annual bonus performance conditions for the first
performance year of appointment. An LTIP award can
be made following an appointment (assuming the
Company is not in a closed period).
> Where a position is filled internally, any ongoing
remuneration obligations or outstanding variable pay
elements shall be allowed to continue according to the
original terms, adjusted as relevant to take into account
the appointment.
> In addition, the Committee may offer additional cash
and/or share-based buyout awards when it considers
these to be in the best interests of the Company (and
therefore shareholders) to take account of remuneration
given up at the individual’s former employer. Such awards
would represent a reasonable estimate of the value
foregone and would reflect, as far as possible, the delivery
mechanism, time horizons and whether performance
requirements are attached to that remuneration.
Shareholders will be informed of any such payments
at the time of appointment and/or in the next published
Annual Report. However, for the avoidance of doubt,
the value of buy-out awards is not capped.
> For the appointment of a new Chairman or Non-Executive
Director, the fee arrangement would be set in accordance
with the approved Policy.
Service contracts and letters of appointment
The Company’s policy is that Executive Directors should
normally be employed under rolling service contracts with
notice periods of up to 12 months (from each party). Further
details of the notice periods in respect of each Executive
Director is provided on page 86. All Non-Executive Directors
have letters of appointment which may be terminated by
the giving of notice by either party (see page 86 for details
of current notice periods). Chairman and Non-Executive
Director appointments are subject to Board approval and
election by shareholders at each annual general meeting.
Copies of Executive Directors’ service contracts and
Non-Executive Directors’ letters of appointment are available
for inspection at the Company’s registered office during
normal hours of business.
78 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Payments for loss of office
The principles on which the determination of payments for loss of office will be approached are set out below:
Policy
Payment in lieu of notice
The Company may terminate a Director’s contract with immediate effect with or without cause by
making a payment in lieu of notice by monthly instalments of salary and benefits, with reductions
for any amounts received from providing services to others during this period.
There are no obligations to make payments beyond those disclosed elsewhere in this report.
Annual bonus
This will be at the discretion of the Committee on an individual basis and the decision as to
whether or not to award an annual bonus award in full or in part will be dependent on a number
of factors, including the circumstances of the individual’s departure and their contribution to the
business during the annual bonus period in question. Any annual bonus award amounts paid will
be prorated for time in service during the annual bonus period and will, subject to performance,
be paid at the usual time (although the Committee retains discretion to pay the annual bonus
award earlier in appropriate circumstances). Any bonus earned for the year of departure and,
if relevant, for the prior year may be paid wholly in cash at the discretion of the Committee.
On a change of control, annual bonuses will either continue for the full year or a pro-rata bonus
may be paid out to the time of completion.
Deferred bonus awards
If a participant ceases employment for any reason (other than voluntary resignation or summary
dismissal, in which case the award will lapse), the award will ordinarily continue until the normal
vesting date. The Committee retains discretion to release awards when the participant leaves.
On a change of control, awards will generally vest on the date of a change of control, unless the
Committee permits (or requires) awards to roll over into equivalent shares in the acquirer.
LTIP
Any outstanding awards will ordinarily lapse, however in ‘good leaver’ cases the default treatment
is that awards will vest subject to any performance conditions and time pro-ration and the holding
period will normally continue to apply. For added flexibility, the rules allow for the Committee
to decide not to prorate (or pro-rate to a different extent) if it decides it is appropriate to do so,
and to allow vesting to be triggered at the point of leaving by reference to performance to that
date, rather than waiting until the end of the performance period if the Committee so decides.
On a change of control, awards will generally vest on the date of a change of control, unless
the Committee permits (or requires) awards to roll over into equivalent shares in the acquirer.
Any vesting of awards will be subject to assessment of performance against any performance
conditions and will normally be pro-rated.
Buy-out awards
Where a buy-out award is made under the Listing Rules then the leaver provisions would be
determined at the time of the award.
Other payments
The Group may pay outplacement and professional legal fees incurred by Executives in finalising
their termination arrangements, where considered appropriate, and may pay any statutory
entitlements or settle compromise claims in connection with a termination of employment,
where considered in the best interests of the Company. Outstanding savings/shares under
all-employee share plans would be transferred in accordance with the terms of the plans.
Where the Committee retains discretion it will be used to provide flexibility in certain situations, taking into account the particular
circumstances of the Director’s departure and performance.
79 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
External appointments
The Company recognises that its Executive Directors may
be invited to become Non-Executive Directors of other
companies and that such external appointments can broaden
a Director’s experience and knowledge to the potential
benefit of Supply@ME. Subject to approval by the Board,
Executive Directors are allowed to accept Non-Executive
appointments, provided that these appointments are not
likely to lead to conflicts of interest. The Committee will
consider its approach to the treatment of any fees received
by Executive Directors in respect of external Non-Executive
roles as they arise.
Annual Report on Remuneration
Role and composition of the Remuneration Committee
The Board is ultimately accountable for executive remuneration
and delegates this responsibility to the Remuneration
Committee. The Remuneration Committee is responsible
for developing and implementing a remuneration policy
that supports the Group’s strategy and for determining the
Executive Directors’ individual packages and terms of service
together with those of the other members of the leadership
team (including the Company Secretary). When setting the
remuneration terms for Executive Directors, the Committee
reviews and has regard to workforce remuneration and
related policies and takes close account of the remuneration-
related provisions of the QCA Corporate Governance Code.
The Committee is formally constituted and operates
on written terms of reference, which are available on the
Company’s website at https://www.supplymecapital.com/
investor/governance/.
During 2022 the Committee was comprised of Enrico
Camerinelli, David Bull following his appointment to the
committee on 23 March 2022, Andrew Thomas and Albert
Ganyushin following their appointments to the board on
30 June 2022, Susanne Chishti (Chair) until her resignation
on 14 April 2022 and Jim Coyle until his resignation on
4 March 2022. The Committee met seven times during the
year ended 31 December 2022. Enrico attended all meetings,
Susanne attended two meetings prior to her departure
on 14 April 2022, Jim attended one meeting prior to his
departure on 4 March 2022. Albert and Andrew both
attended four meetings and David attended three following
their respective appointments.
By invitation of the Committee, meetings are also attended
by the CEO, CFO, CPO and the Company Secretary, who are
consulted on matters discussed by the Committee, unless
those matters relate to their own remuneration. Advice or
information is also sought directly from other employees
where the Committee feels that such additional contributions
will assist the decision-making process.
In order to avoid any conflict of interest, remuneration
is managed through well-defined processes ensuring no
individual is involved in the decision-making process related
to their own remuneration. In particular, the remuneration
of all Executive Directors is set and approved by the
Committee. The Chair and Executives are responsible for
the remuneration of the Non-Executive Directors and the
Non-Executives (excluding the Chair) and the Executives
are responsible for determining the Chair’s remuneration.
None of the Directors are involved in the determination
of their own remuneration arrangements.
The Committee is authorised to take such internal and
external advice as it considers appropriate in connection
with carrying out its duties, including the appointment
of its own external remuneration advisers. During the year,
the Committee was assisted in its work by FIT Remuneration
Consultants LLP. FIT was appointed in July 2021 and
has continued to provided advice in relation to general
remuneration matters and the design of the remuneration
policy during 2022. Fees paid to FIT in relation to advice
provided to the Committee during the year to 31 December
2022 were £35,431 (excluding VAT), charged on a time/cost
basis. FIT is a member of the Remuneration Consultants
Group and, as such, voluntarily operates under the Code
of Conduct in relation to executive remuneration consulting
in the UK. The Committee is satisfied that the advice they
received from FIT was objective and independent.
The Committee considered the following main items during
the 2022 financial year:
> Review of the remuneration policy, including key
performance indicators
> Remuneration for incoming Chair and Non-Executive
Directors
> Review, approval and issuance of first awards under
the long term incentive plan
> Design for proposed Executive and Leadership team
bonus plan and discussion on appropriate targets and
timing, this will remain under review during FY23
> Reviewing previously commissioned Board level salary
benchmarking
> Preparations for Directors’ remuneration reporting in
respect of FY22 and review of the Remuneration policy
> Review and update of Committee terms of reference
Since the end of the 2022 financial year, the Committee has:
> Considered and recommended the 2023 LTIP Performance
conditions and considered 2023 LTIP award levels
> Considered the need for and timing of potential 2023
Executive Director Bonus
> Considered salary levels of incoming Non-Executive
Directors
80 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
The information that follows has been audited (where indicated) by the Company’s auditors, Crowe UK LLP.
Single total figure of remuneration for each Director (audited)
The table below reports the full-year total remuneration receivable by those Directors who performed qualifying services
during the year.
For the year ended 31 December 2022
Base salary/ Annual Long-term Total Total
fees Benefits1 Pension2 bonus3 incentives4 Total fixed variable
£ £ £ £ £ £ £ £
Executive Directors
Alessandro Zamboni 207,000 156 12,420 – – 219,566 219,566 –
Tom James5 222,083 – – – – 222,083 222,083 –
John Collis5 222,083 – – – – 222,083 222,083 –
Non-Executive Directors
Albert Ganyushin6 75,577 – – – – 75,577 75,577 –
Andrew Thomas7 15,115 – – – – 15,115 15,115 –
Enrico Camerinelli 30,000 – – – – 30,000 30,000 –
David Bull8 34,912 – – – – 34,912 34,912 –
Jim Coyle9 26,731 – – – – 26,731 26,731 –
Susanne Chishti10 11,538 – – – – 11,538 11,538 –
Total 845,039 156 12,420 – – 857,605 857,605 –
5
1
2
3
4
Non-salary benefits include the provision of life assurance.
The amount of employer contribution based on a fixed percentage of base salary, 6% for the Chief Executive Officer only.
The Group did not operate a bonus scheme in 2022. Please see details of future intention in the Directors Remuneration Policy.
The CEO was awarded share options in the 2022 LTIP award. The other Executive Directors were not included in the 2022 award due to existing earn out
arrangements. During the year ended 31 December 2022 there were no share options that vested under the 2022 LTIP award or any other share option
awards.
Tom James and John Collis receive a proportion of their salary in USD. These amounts have been converted to GBP in the total above using the average
exchange rate of 1.25.
Albert Ganyushin joined the board on 30 June 2022 and received fees from that date, this figure does not include fee paid to him prior to joining the board
of £12,500 (excluding VAT) for strategic advisory project.
Andrew Thomas joined the board on 30 June 2022 and received fees from that date.
7
David Bull’s fee was increased from £30,000 per annum to £40,000 per annum on 22 July 2022 to recognise his role as Chair of the Audit Committee.
8
9
Jim Coyle stepped down from the Board on 4 March 2022 and received fees to that date.
10 Susanne Chishti stepped down from the Board on 14 April 2022 and received fees to that date.
11 The aggregate emoluments (being salary/fees, bonuses, benefits and pension allowances) of all Directors for 2022 was £857,617 (2021:£629,352).
6
While not remuneration for the purposes of this table, for
completeness, in addition to an initial consideration received
on completion of the acquisition of TradeFlow Capital
Management Pte. Limited (“TradeFlow”), Tom James and
John Collis, the TradeFlow directors, are entitled to receive
acquisition related earn-out payments determined
by reference to pre-determined revenue milestones
of TradeFlow and, separately, of its subsidiary company
(Tijara Pte. Limited). These milestones are calculated by
reference to the revenues achieved in each of the 2021,
2022 and 2023 financial years and are contingent on
employment to the relevant dates. The acquisition related
earn-out amounts are able to be paid in either cash or
shares, and as this is at the Company’s discretion, they fall
into the definition of shared based payments under IFRS.
As such, the fair value of these earn-out payments have been
calculated at the grant date, being the date of completion
of the acquisition, with this fair value being spread over the
period from grant to vesting date in the consolidated financial
statements. Further details are set out in the notes to the
consolidated financial statements for the year ended 31
December 2022, including the fair value of the acquisition
related earn-out payments recognised in the current financial
year of which was a credit to the income statement of
£710,000 (2021: an expense of £1,410,000). The terms of
the earn-out payments provide that if the Company chose
to issue 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.
81 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
In addition, the number of shares will be enhanced by 50%
if the VWAP is greater than 1p. On the 19 July 2022, the
Company chose to equity settle the earn-out payment that
was due to the TradeFlow directors following the level of
revenues achieved in 2021 being 80% of the pre-determined
revenue milestone. This resulted in each of the two
TradeFlow directors, being Tom James and John Collis,
each being awarded 106,762,760 new ordinary shares. 50%
of these shares may not be sold for 12 months following
award but are not contingent on continued employment.
For the year ended 31 December 2021
Base salary/ Annual Long-term Total Total
fees Benefits1 Pension2 bonus3 incentives4 Total fixed variable
£ £ £ £ £ £ £ £
Executive Directors
Alessandro Zamboni 185,000 66 49,310 – – 234,376 234,376 –
Tom James4 85,766 – – – – 85,766 85,766 –
John Collis4 85,766 – – – – 85,766 85,766 –
Non-Executive Directors
Jim Coyle5 26,154 – – – – 26,154 26,154 –
Susanne Chishti6 70,513 – – – – 70,513 70,513 –
Enrico Camerinelli 30,000 – – – – 30,000 30,000 –
David Bull7 13,308 – – – – 13,308 13,308 –
Dominic White8 83,470 – – – – 83,470 83,470 –
Total 579,977 66 – – – 629,352 629,352 –
1
2
3
4
5
6
7
8
9
Non-salary benefits include the provision of life assurance.
The amount of employer contribution based on a fixed percentage of base salary, which was 15% for the Chief Executive Officer only for the year
ended 31 December 2021. The amount shown in table includes £21,560 that was paid during FY21 but which related to base salary earned in FY20. From 1
January 2022 the CEO’s pension contribution has been reduced to 6% in line with UK employee contribution.
The Group has not historically operated an annual bonus scheme or long-term incentive plan. Please see page 73 for details of new incentive arrangements
under the proposed Directors’ Remuneration Policy.
Tom James and John Collis joined the Board on 30 July 2021 and their remuneration reflects the period from then.
Jim Coyle joined the Board on 28 October 2021 and his remuneration reflects the period from then.
Susanne Chishti was appointed interim chair from 23 July 2021 to 27 October 2021.
David Bull joined the Board on 22 July 2021 and his remuneration reflects the period from then.
Dominic White stepped down from the Board on 22 July 2021 and received fees to that date.
The aggregate emoluments (being salary/fees, bonuses, benefits and pension allowances) of all Directors for 2021 was £629,352 (2020: £288,868).
Annual bonus for the year ending 31 December 2022
(audited)
The Company did not offer annual bonus for FY22.
The Awards granted include those made to the following
Director and person discharging managerial responsibilities
(“PDMR”):
LTIP awards with performance periods ending in the
year (audited)
There were no long-term incentive awards capable of
vesting in relation to performance during the year ending
31 December 2022.
LTIP awards granted in the year (audited)
On 31 October 2022 awards in the form of nominal-cost
share options (“Awards”) over 874,783,094 ordinary shares
of nominal value 0.002 pence each in the capital of the
Company (“Ordinary Shares”) were granted under the
Supply@ME Long Term Incentive Plan (the “LTIP”) to certain
of the Company’s executives and senior management.
Name
Position
Number of
Ordinary Shares
under Award
Alessandro
Zamboni
Amy Benning
Chief Executive
Officer; Executive
Director
Chief Financial
Officer; PDMR
258,750,000
187,500,000
Pursuant to the terms of the LTIP the Awards will normally
become exercisable on 31 October 2025.
82 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Awards may become exercisable subject to continued
employment and the achievement of an absolute Total
Shareholder Return performance condition measured over
a three-year performance period over the 2022, 2023 and
2024 financial years. The initial performance conditions will
be absolute TSR over 3 financial years, requiring (assuming
no dividends), the average closing share price over the
period 1 October 2024 to 31 December 2024 to be 0.6945p
for 25% of the award to vest increasing, on a straight-line
basis, to 1p for 100% to vest. In addition, the Remuneration
Committee will have broad discretion to reduce vesting
if it considers the level of vesting to be inappropriate having
regard to affordability, risk management and other factors.
The Award granted to the Chief Executive Officer is
additionally subject to a two-year holding period following
the vesting date.
Payments for loss of office and to past Directors (audited)
No such payments were made during the year.
Statement of Directors’ shareholding and share interests (audited)
The following table shows the interests of Directors and their connected persons in the Company’s ordinary shares as at
ending 31 December 2022.
Number of Share awards Share awards Shareholding
shares owned not subject to subject to as a multiple Shareholding
outright (including performance performance of salary at 31 guideline as a Shareholding
Director1 connected persons) conditions conditions December 20223 multiple of salary guideline met?
Alessandro Zamboni2 12,742,513,009 – – 51.09 2.0 Yes
Tom James 513,262,760 – – 1.92 2.0 No
John Collis 513,262,760 – – 1.92 2.0 No
Albert Ganyushin – – – N/A N/A N/A
Andrew Thomas – – – N/A N/A N/A
Enrico Camerinelli – – – N/A N/A N/A
David Bull – – – N/A N/A N/A
Jim Coyle – – – N/A N/A N/A
Susanne Chishti – – – N/A N/A N/A
1
2
3
The shareholdings and awards set out above include those held by Directors and their respective connected persons.
Alessandro Zamboni’s shares are held through the AvantGarde Group S.p.A.
The shareholding as a multiple of salary has been calculated using the value of the shareholding held at 31 December 2022 compared to the full year salary
for the year ended 31 December 2022. Tom James and John Collis receive a proportion of their salary in USD. These amounts have been converted to GBP
in the total above using the average exchange rate of 1.25.
As announced on 12 April 2023, the number of shares of the Company held by the CEO, through the AvantGarde Group
S.p.A, increased by 925,000,000 to a total of 13,667,513,009. There have been no other changes between 31 December
2022 and the 21 April 2023, being latest date practicable prior to the publication of this report
Executive Directors Long term incentive (share) plan interests
Face value
Holding period No of shares (no of shares
Executive Director Date of Grant Vesting date ends granted Grant Price x grant price)
Alessandro Zamboni 31 October 2022 31 October 2025 31 October 2027 258,750,000 0.08p £207,000
Tom James – – – – – –
John Collis – – – – – –
83 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Total shareholder return performance graph
The graph below shows the value at 31 December 2022 of
£100 invested in the Company on 23 March 2020 (i.e. the
date that Admission to trading on the London Stock Exchange)
compared to the value of £100 invested in the FTSE SmallCap
Index (excluding Investment Trusts), making the assumption
that dividends are reinvested to purchase additional equity.
The FTSE SmallCap Index (excluding Investment Trusts) has
been selected as a comparator index to the Company, being
made up of companies with a similar market capitalisation
to the Company.
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Supply Me Capital FTSE Small Cap Ex.Inv Trusts Source: Datastream (a Refinitiv product)
Chief Executive Officer’s remuneration
The total remuneration figure for the Chief Executive Officer in 2022 is shown in the table below, along with the value
of bonuses paid, and LTIP vesting, as a percentage of the maximum opportunity. This table will build up to show ten years’
worth of data over time.
CEO single figure of Annual
total remuneration bonus pay-out LTIP vesting
Year CEO £ % of maximum % of maximum
2022 Alessandro Zamboni 219,576 – –
2021 Alessandro Zamboni 234,376 – –
2020 Alessandro Zamboni 138,750 – –
84 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Annual percentage change in remuneration
of Directors and employees
The table below shows the percentage change in remuneration
of the Directors and employees of the business between the
2021 and 2022 financial years.
% change from FY21 to FY22
Salary or fees Benefits3 Bonus
Employees1 -15 – N/A
Executive Directors2
Alessandro Zamboni 12 (55) N/A
Tom James – N/A N/A
John Collis – N/A N/A
Non-Executive Directors
Jim Coyle4 2 N/A N/A
Susanne Chishti5 (84) N/A N/A
Enrico Camerinelli – N/A N/A
David Bull6 162 N/A N/A
Albert Ganyushin7 100 N/A N/A
2
3
4
5
6
7
In order to illustrate the % change of the Directors from FY21 to FY22
annualised FTE salaries have been used.
During FY21 the percentage of pension for the CEO was reduced from
15% of base salary to 6% of base salary, in order to align with the rest
of the workforce.
Jim Coyle was appointed as a director on 28 October 2021 and resigned
on 4 March 2022. The change in his salary reflects the period which he
was a director.
From 22 July 2021 to 28 October 2021, Susanne Chishti was appointed
as the interim Chair. On 14 April 2022, Susanne Chishti resigned. The
decrease in salary reflects both these factors.
David Bull was appointed as a director on 22 July 2021 and received an
increase in his directors fees during FY22 to reflect the time commitment
required to fulfil his role as Chair of the Audit Committee. The increase
in salary reflects both these factors.
Albert Ganyushin and Andrew Thomas both joined the board during FY22
and therefore had no comparative salary received in FY21. Dominic White
resigned during FY21 an had no comparative salary in FY22. The changes
in salary reflect these factors.
Relative importance of spend on pay
The table below details the change in total staff pay
between 2021 and 2022 as detailed in note 8 to the
Group consolidated financial statements, compared with
distributions to shareholders by way of dividend, share buy
backs on any other significant distributions or payments.
These figures have been calculated in line with those in
the audited financial statements:
Andrew Thomas7 100 N/A N/A
2022 (£000) 2021 (£000) % change
Dominic White7 (100) N/A N/A
Total gross staff pay 2,767 1,728 60%
1
The % change from FY21 to FY22 of the employees is calculated
using the mean annualised FTE salaries of the Supply@ME Capital Plc
employee base.
Dividends / share buybacks – – N/A
Summary of shareholder voting
The following table shows the results of the advisory vote on the 2021 Directors’ Remuneration Report and the binding vote
on the Directors’ Remuneration Policy at the 2022 Annual General Meeting:
Approval of the 2021 Directors’ Remuneration Report (2022 AGM) Approval of the Remuneration Policy (2022 AGM)
Total number of votes % of votes cast Total number of votes % of votes cast
For (including discretionary) 10,101,240,460 97.56% 10,088,146,704 97.47%
Against 252,712,593 2.44% 261,938,239 2.53%
Votes withheld 46,309,028 – 50,177,138 –
85 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Directors’ Remuneration Report
Executive Directors’ service contracts
The table below summarises key details in respect of the
Executive Directors’ contracts:
Notice period
Date of service (from either party
contract/letter of unless stated
appointment otherwise)
Alessandro Zamboni 23 March 2020 12 months
The service contracts of all current Executive Directors are
available for inspection at the Company’s registered office.
Non-Executive Directors’ letters of appointment
The table below summarises key details in respect of the
Non-Executive Directors’ contracts:
Date of letter of Notice period
appointment (from either party)
Enrico Camerinelli 23 March 2020 3 months
David Bull 21 July 2021 90 days
Albert Ganyushin 30 June 2022 90 days
Alexandra Galligan 16 March 2023 90 days
External appointments
Alessandro Zamboni is a Non-Executive Director with
Darwinsurance srl.
Implementation of policy for the year ending
31 December 2023
Basic salary
Executive Directors’ salaries for FY23 are as follows:
Base salary FY22 Director fees FY22
Alessandro Zamboni £207,000 –
The Committee reviewed Executive Directors salaries
during 2022 and although current total remuneration levels
are below market no increases are currently proposed for
FY23. The Committee intends to keep them under review
with a view to increasing total remuneration toward market
levels once the performance of the business warrants it.
Benefits and pension
The CEO receives a pension contribution or allowance
of 6% of salary.
Annual bonus
A bonus plan has not yet been approved for 2023. The
remuneration committee will consider this prudently during
2023 in light of revenue and cash flow. If significant progress
is made on the Group’s key financial targets a variable pay
pool would be formed based on a combination of profit
and satisfaction of strategic and personal objectives. These
objectives will be linked to the Group’s strategy and aligned
with key financial, strategic and/or individual targets and
be governed by the Remuneration Policy.
LTIP
Subject to approval of the proposed Directors’ Remuneration
Policy, all Executive Directors will be eligible to participate
in the LTIP. An award is anticipated to be made during
FY23 to the CEO over shares up to 100% of base salary.
The performance conditions will be:
> 50% of the award to be based on absolute TSR over
3 financial years, requiring (assuming no dividends) the
average closing share price over the period 1 October
2025 – 31 December 2025 to be 0.15p for 25% of the
award to vest increasing on a straight line basis to 0.3p
for 100% to vest.
> 50% of the award to be based on volume of inventory
monetised by the end of the performance period (31
December 2025). 25% of award to vest if £300m of
inventory is monetized (in aggregate) over the 3 financial
years ending 31 December 2025, increasing on a straight
line basis to 100% of the award to vest if £400m of
inventory is monetized (in aggregate) in the same period.
This is contingent on the Remuneration Committee
deeming the inventory was monetised on acceptable
commercial terms.
The Committee will have broad discretion to reduce vesting
if it considers the level of vesting to be inappropriate having
regard to affordability, risk management and other factors.
Non-Executive Directors’ fees
Non-Executive Directors’ fees for FY23 have been amended
slightly to reflect the significant contribution made by
Committee Chairs. The Chair of both Audit and Remuneration
Committee Chair will be eligible for an additional £10,000 fee
in addition to the base Non-Executive Director fee of £30,000.
The Non-Executive Directors fees are detailed below:
Fee FY23
£
Chairman 150,000
Base Non-Executive Director fee 30,000
Senior Independent Director fee 10,000
Chair of Audit or Remuneration Committee fee 10,000
86 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Directors
Report of the Directors
Review of Business and Future Developments
The Directors present their report on the Group together
with the audited consolidated financial statements for the
year ended 31 December 2022.
Results and dividends
The Group’s consolidated total loss for the year was
£9,878,000 (2021: £12,487,000). The Group’s consolidated
operating loss from continuing operations before impairment
charges for the year was £4,651,000 (2021: £3,993,000).
More information about the Group’s financial performance
can be found in the financial review on pages 32 to 37 and
in the financial statements on pages 93 to 172.
The Directors are not proposing a final dividend for the year
ended 31 December 2022.
The Chief Executive’s Review on pages 6 and 7 and the
Strategic Report on pages 1 to 42 provide a review of the
business, the Group’s trading for the year ended 31 December
2022, key performance indicators and an indication of future
developments and risks, form part of this Directors’ Report.
Matters covered in the Strategic Report
A comprehensive review and assessment of the Group’s
activities during the year as well as its position at the year
end and prospects for the forthcoming year are included
in the Chief Executive’s Review and the Strategic Report.
These reports can be found in the relevant sections above
and should be read in conjunction with this report.
Disclosure Location
Capital Structure Notes 15, 23 and 24 to the consolidated Financial
Statements – pages 127, 136 and 139
Directors’ interests Directors’ Remuneration Report – pages 66 to 86
Directors’ Remuneration Report Strategic Report – pages 66 to 86
Directors’ responsibility statement Page 92
Engaging with our stakeholders Strategic Report – pages 30 to 31
Environmental Impact Strategic Report, Environmental Impact – page 38
Exposure to price risk, credit risk, liquidity risk and Details can be found on pages 40 to 42 of the Strategic
cash flow risk Report and Note 23 to the consolidated Financial Statements
Financial risk management objectives and policies Notes 2 and 23 to the consolidated Financial Statements –
(including hedging policy and use of financial instruments) pages 105 to 118 and 136 to 139
Future business developments Strategic Report – pages 1 to 42
Greenhouse gas emissions Strategic Report, Environmental Impact – page 38
People, culture and employee engagement Strategic Report – page 30
Principal decisions made by the Board during the year Strategic Report – page 48
Section 172 Statement Strategic Report – page 30
The stakeholder engagement section of the strategic report
contains information in respect of the Group’s key stakeholders
and business relationships, including our people, shareholders,
corporate clients, inventory funders and fund investors.
Cautionary statement
The review of the business and its future development
in the Strategic Report has been prepared solely to provide
additional information to shareholders to assess the Group’s
strategy and the potential for this strategy to succeed.
It should not be relied on by any other party for any other
purpose. The review contains forward-looking statements
which are made by the Directors in good faith based on
information available to them up to the time of the approval
of the reports and should be treated with caution due to
the inherent uncertainties associated with such statements.
87 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Directors
Directors of the Group
The Directors, who held office during the period, and
subsequently, together with current Directors are as follows:
> Albert Ganyushin – Independent Chairperson and
Non-Executive Director (appointed 30 June 2022)
> Alessandro Zamboni – Chief Executive Officer and
Executive Director (appointed 23 March 2020)
> Enrico Camerinelli – Independent Non-Executive
Director (appointed 23 March 2020)
> David Bull – Independent Non-Executive Director
(appointed 22 July 2021)
> Alexandra Galligan – Independent Non-Executive
Director (appointed 16 March 2023)
> John Collis – Former Executive Director (appointed
30 July 2021, resigned 23 March 2023)
> Thomas James – Former Executive Director (appointed 30
July 2021, resigned 23 March 2023)
> Andrew Thomas – Former Non-Executive Director
(appointed 30 June 2022, resigned 15 March 2023)
Directors’ interests
> James Coyle – Former Independent Non-Executive
Chairman (appointed 28 October 2021, resigned
4 March 2022)
> Susanne Chishti – Former Senior Independent
Non-Executive Director (appointed 23 March 2020,
resigned 14 April 2022)
The biographies of the Directors in office as at the date
of this Annual Report are set out on pages 44 to 47 of the
Corporate Governance Report. As set out above, between
31 December 2022 to the date of the approval of the annual
report and financial statements there have been three
resignations of board members including John Collis and
Thomas James, both of whom resigned on 23 March 2023,
and Andrew Thomas, who resigned on 15 March 2023.
There has been one new board member appointed,
Alexandra Galligan, who joined the board on 16 March 2023.
The Directors who held office during the year and their interests in the ordinary shares of the Company were as follows:
Ordinary shares Ordinary shares
(At 31 December 2022) (At 31 December 2021)
Alessandro Zamboni (held through AvantGarde Group SpA and 1AF2 Limited) 12,742,513,009 12,742,513,009
John Collis 513,262,760 406,500,000
Thomas James 513,262,760 406,500,000
Albert Ganyushin Nil N/A
Enrico Camerinelli Nil Nil
David Bull Nil Nil
Andrew Thomas Nil N/A
Alexandra Galligan N/A N/A
James Coyle N/A Nil
Susanne Chishti N/A Nil
On 12 April 2023, it was announced that the AvantGarde
Group SpA acquired an additional 925,000,000 new ordinary
shares of the Company. Following this acquisition by the
AvantGarde Group S.p.A, the number of ordinary shares
held by Alessandro Zamboni increased to 13,667,513,009.
The Powers of the Company Directors
The powers of the Directors are set out in the Company’s
articles of association (the “Articles”) and the Companies
Act 2006 and are subject to any directions given by special
resolution.
The Directors are responsible for the management of the
Company’s business, for which purpose they may exercise
all the powers of the Company whether relating to the
management of the business or not. The Directors may
also, subject to the Articles, delegate any of their powers,
authorities and discretions as they see fit. The Board is
required by the Articles to consist of no fewer than two
Directors and is not subject to any maximum number.
88 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Appointment and replacement of Directors
IFRS
The rules governing the appointment and replacement of
Directors are set out in the Articles and are governed by the
QCA Code, the Companies Act 2006 and related legislation.
Directors may be appointed by ordinary resolution of the
shareholders or by the Board. At each AGM, all Directors
who have been appointed by the Board since the previous
AGM shall offer themselves for re-election by the shareholders.
In addition, any Directors for whom the AGM is their
third since they were last elected or re-elected, shall offer
themselves for re-election by the shareholders. As such,
at the Company’s next AGM, a date for which will be
announced shortly following the publication of this Annual
Report, the following Directors will offer themselves for
re-election; Albert Ganyushin and Alexandra Galligan.
Articles of Association
The rules governing the appointment and replacement
of Directors are set out in the Company’s Articles of
Association. The Articles of Association may be amended
by a special resolution of the Company’s shareholders.
The Directors have prepared the Group consolidated
financial statements in accordance with international
accounting standards in conformity with the requirements
of UK adopted International Accounting Standards.
Political and charitable donations
No political or charitable donations were made by the
Group during the period (2021: nil).
Research and Development
During the year the Group continued to invest in the
development of its core Inventory Monetisation (“IM”)
Platform, the purpose of which is to facilitate, record
and monitor IM transactions between third party client
companies and segregated trading companies (known
as stock companies). The internally generated IM Platform
includes not only the software but also:
> the methodologies and business policies underpinning
each IM transaction.
> the legal and accounting frameworks required to support
Compensation for loss of Office
each IM transaction.
No compensation for loss of office was paid to Directors who
resigned during the year or in the period following the year
end and up to the date at which this Annual Report has
been published.
Corporate governance statement
> the technical infrastructure (cloud environment,
distributed ledger technology) used to support each
IM transaction.
During the year the Group capitalised costs associated
with the development of the IM Platform to the value
of £1,125,000 (2021: £1,020,000) as disclosed in note
13 to the Group’s consolidated financial statements.
The Corporate Governance Report set out on pages 43 to
92 forms part of the Directors’ Report.
Authority for Company to Purchase own Shares
Directors’ and officers’ liability insurance
Throughout the financial year the Company had, as permitted
by sections 234 and 235 of the Companies Act 2006,
maintained Directors’ and Officers’ Liability insurance cover
on behalf of the Directors of the Company. These policies
indemnify them against certain liabilities which may be
incurred by them in relation to the Company.
Subject to authorisation by shareholder resolution, the
Company may purchase its own shares in accordance
with the Companies Act 2006. Any shares which have been
bought back may be held as treasury shares or cancelled
immediately upon completion of the purchase. Since listing
the Directors have not exercised any of their powers to
purchase its own shares.
Financial Instruments
The financial risk management objectives and policies of the
Group are shown in note 23 to the Group’s consolidated
financial statements.
89 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Report of the Directors
Significant Interests (greater than 3%)
The table below shows the interests in shares notified to the Company in accordance with the Disclosure Guidance and
Transparency Rules as of 31 December 2022, and 21 April 2023 (being the latest practicable date prior to publication of the
Annual Report):
As of 31 December 2022 As at 21 April 2023
No. of ordinary shares No. of ordinary shares
held of £0.00002 % of total held of £0.00002 % of total
Name of shareholder nominal value each voting rights held nominal value each voting rights held
Alessandro Zamboni (held through
AvantGarde Group SpA and 1AF2 Limited) 12,742,513,009 22.51% 13,667,513,009 24.14%
Venus Capital S.A. 7,900,000,000 13.95% 7,900,000,000 13.95%
Hartfort Growth Fund Limited – – 1,730,571,351 3.06%
Except as disclosed in the above table, the Company and
the Directors are not aware of any person who, directly
or indirectly, has a holding which is notifiable under English
law or who directly or indirectly, jointly or severally, exercises
or could exercise control over it, nor are they aware of any
arrangements the operation of which may at a subsequent
date result in a change of control over it. Those interested,
directly or indirectly, in 3% or more of the issued ordinary
shares (as set out in the above table) do not have different
voting rights from other shareholders.
Branches outside of the UK
The Group has subsidiaries outside the UK in Italy and
Singapore. Further details of these can be found in note
3 to the Company’s financial statements. The Company
currently does not have any branches outside of the UK.
Change of Control
The Group is party to a limited number of funding agreements
that include change of control provisions which, in the
event of a change of control of the Company, or the relevant
Group entity, could result in the termination of those
arrangements at the election of the lender, which if triggered
would result in the discontinuation of further funding and
a requirement to repay amounts outstanding under the
affected arrangement.
Going concern
In carrying out their duties in respect of going concern, the
directors have completed a review of the Group’s financial
forecasts for a period exceeding 12 months from the date
of issue of this annual report.
This review included sensitivity analysis focused on more
immediate going concern period to determine the potential
impact on the group of reasonably possible downside
scenarios. For the reasons set out below, the Directors
consider that it is appropriate to adopt the going concern
basis in preparing these financial statements.
As at 31 December 2022 the Group had a cash and cash
equivalents balance from continuing operations of £757,000.
In addition, cash balances from discontinued operations were
£324,000 as at 31 December 2022. These total combined
cash and cash equivalent balances of £1,081,000 compared
to a consolidated cash balance £1,727,000 as at 31 December
2021. The Group’s consolidated net current liabilities of
£828,000 as at 31 December 2022, compared to a consolidated
net current liability position of £6,609,000 as at 31 December
2021. The Group has posted a total comprehensive loss for
the year ended 31 December 2022 of £10,417,000 (2021:
comprehensive loss of £12,481,000) and retained losses
as at 31 December 2022 were £27,649,000 (31 December
2021: retained losses £16,209,000).
During the year, the Company continued to source additional
funds with the primary aim of allowing it to repay the
outstanding loan note and convertible loan note balances
that were outstanding with Mercator Capital Management
Fund LP (“Mercator”) to move to a more stable source of
funding to support the working capital needs of the Group
and the continued investment into the Group’s Inventory
Monetisation Platform. These new sources of funding
included both a subscription of new equity into the Company
and traditional bank financing from Banco BPM, the third
largest banking group in Italy. Further details of the cash
inflows as a result of the new funding sources, and the cash
outflows due to the repayment of the Mercator funding
facility can be found in consolidated statement of cash flows
and in the various notes to these consolidated financial
statements.
90 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Following the 31 December 2022, the Company has been
continuing to explore additional options of funding to support
the ongoing working capital needs of the Group while
a track record of positive revenue generation is established.
As at the date of issue of these consolidation financial
statements, the Company also announced the following
binding commitments:
1) A new unsecured working capital loan agreement of up
to £2,800,000 from the AvantGarde Group S.p.A (“TAG”)
(the “TAG Working Capital facility”); and
2) A new equity subscription agreement with irrevocable
commitments to subscribe for 4,500,000,000 new
ordinary shares in the Company at a price of 0.05 pence
per share, providing the Company with gross proceeds
of £2,250,000 (the “Subscription Agreement”).
Further details of each of the TAG Working Capital facility and
the Subscription Agreement can be found in note 30 to the
Group’s consolidated financial statements.
Taking into consideration the factors above and in order
to consider their assessment of the Group as a going
concern, the Directors have reviewed the forecast cash flows
for the next 12 months. The cash flow forecasts take into
account that the Group meets its day to day working capital
requirements through its available and committed cash
resources. The Directors have prepared the forecast using
their best estimates, information and judgement at this time,
including the TAG Working Capital facility and the Subscription
Agreement referred to above. The Directors have also
considered the expected cash flows 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 near future,
following the completion of the first IM transaction in 2022,
and that TradeFlow still currently remains a fully owned
subsidiary of the Group.
Despite the facts outlined above, there continues to be
an absence of a historical track record relating to multiple
inventory monetisation transactions being facilitated by the
Group’s Platform and the Group being cash flow positive.
As such the Directors have prudently identified uncertainty
in the cash flow model. This uncertainty arises with respect
to both the future timing and growth rates of the forecast
cash flows arising from the Group’s multiple inventory
monetisation revenue streams. In this regard, if these
future revenues are not secured as the Directors envisage,
it is possible that the Group will have a shortfall in cash
and require additional funding during the forecast period.
In addition the cash inflows arising from the TAG Working
Capital facility and the Subscription Agreement have not
been fully received. These amounts have been factored into
the cash flow forecast in line with the contractual commitments
received from the various counterparties. As such, there is
a risk that these cash flows might not be received or might
not reach the Group in the time frame expected despite
the various contractual commitments in place. On the
basis of the 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. These such loans will
allow the Group to access a lower cost of capital.
As such the Directors consider it appropriate to prepare
these annual consolidated financial statements on a going
concern basis and have not included the adjustments that
would result if the Company and Group were unable to
continue as a going concern.
Website publication
The Directors are responsible for ensuring that the Annual
Report and financial statements are made available on the
website. The financial statements are published on the
Group’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination
of financial statements, which may vary from legislation
in other jurisdictions. The Directors are responsible for
the maintenance and integrity of the corporate and
financial information included on the Company’s website.
The Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Directors’ responsibilities pursuant to DTR 4
The Directors confirm that to the best of their knowledge:
> the Group consolidated financial statements have been
prepared in accordance with International Accounting
Standards in conformity with the requirements of the
Companies Act 2006 and the requirements of UK
adopted International Accounting Standards and give
a true and fair view of the assets, liabilities, financial
position and profit and loss of the Group; and
91 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
In preparing these financial statements, the directors are
required to:
> select suitable accounting policies and apply them
consistently.
> make judgements and accounting estimates that are
reasonable and prudent.
> state whether applicable IFRSs have been followed, subject
to any material departures disclosed and explained in the
financial statements; and
> prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and the Company’s transactions and disclose
with reasonable accuracy at any time the financial position
of the Group and the Company and enable them to ensure
that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the
assets of the Group and the Company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of the financial
statements and other information included in the annual
reports may differ from legislation in other jurisdictions.
The Report of the Directors set out from page 87 to page
92 is approved by the Board of Directors and signed on its
behalf by:
Alessandro Zamboni
Chief Executive Officer and Executive Director
28 April 2023
Report of the Directors
> the Annual Report includes a fair review of the
development and performance of the business and the
position of the Group, and the parent Company, together
with a description of the principal risks and uncertainties
that they face.
Disclosure of information to the auditor
Each Director at the date of approval of this annual report
confirms that:
> so far as the Directors are aware, there is no relevant
audit information of which the Group’s and Company’s
auditor is unaware; and
> all the Directors have taken all the steps that they ought
to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish
that the auditor is aware of that information.
External Auditor
The auditor, Crowe U.K. LLP, will be proposed for
re-appointment at the forthcoming Annual General Meeting.
2023 AGM
The Notice of Annual General Meeting for 2023 will be
circulated to all the shareholders at least 21 working days
before the AGM and it will also be made available on our
corporate website www.supplymecapital.com. The voting
on the resolutions will be announced via the Regulatory
News Service.
Post balance sheet events
Details of post events since the reporting date can be found
in note 30 to the Group’s consolidated Financial Statements.
Statement of Directors’ Responsibilities
The Directors acknowledge their responsibilities for
preparing the Annual Report and the financial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have elected to prepare the Group consolidated
financial statements in accordance with UK adopted
International Accounting Standards. Under company law
the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and of the Group’s
results for that period.
92 Supply@ME Capital Plc Annual Report and Accounts 2022 Corporate Governance Report
Financial
Statements
93 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Independent Auditor’s Report
to the members of Supply@ME Capital Plc
Qualified opinion
Basis for qualified opinion
We have audited the financial statements of Supply@ME
Capital Plc (the “Company”) and its subsidiaries (the “Group”)
for the year ended 31 December 2022 which comprise
the consolidated statement of comprehensive income, the
consolidated and company statement of financial position,
the consolidated and company statement of changes in
equity, the consolidated statement of cash flows and notes
to the financial statements, including significant accounting
policies. The financial reporting framework that has been
applied in the preparation of the group financial statements
is applicable law and UK-adopted international accounting
standards. The financial reporting framework that has been
applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 102
The Financial Reporting Standard applicable in the UK and
Republic of Ireland (United Kingdom Generally Accepted
Accounting Practice).
During the year, the classification and presentation
requirements of IFRS 5 (Non-current Assets Held for Sale
and Discontinued Operations) were met for the group’s
wholly owned subsidiary TradeFlow Capital Management
Pte. Limited (“TradeFlow”). Subsequent to the year-end
on 24 March 2023, the TradeFlow option holders provided
written notice to the company of their intention to exercise
their right to acquire 100% of the share capital under the
original share purchase agreement (see note 27 for details).
The fair value to be calculated under the terms of the share
purchase agreement is to be determined by a third party
valuer and has not yet been finalised.
With respect to the group financial statements, we were
unable to obtain sufficient appropriate audit evidence
regarding the fair value of the disposal group at 31
December 2022 and any resulting impact on the statement
of comprehensive income.
In our opinion, except for the possible effects of the matters
described in the basis for qualified opinion section of our
report:
> the financial statements give a true and fair view of the
state of the Group’s and of the Company’s affairs as at
31 December 2022 and of the Group’s loss for the year
then ended;
> the Group financial statements have been properly
prepared in accordance with UK-adopted international
accounting standards;
> the parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
> the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
With respect to the parent company balance sheet, we
were unable to obtain sufficient appropriate evidence
regarding the carrying value of the investment in the
Tradeflow subsidiary and any impact it may have on
retained earnings.
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are
independent of the group and company in accordance with
the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed pubic interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide
a basis for our qualified opinion.
94 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Material uncertainty relating to going concern
We draw your attention to note 2 of the consolidated
financial statements which indicates the existence of a
material uncertainty in relation to the going concern basis
of preparation due to assumptions about future trading
and funding. As stated in note 2, these events or conditions,
along with other matters as set forth in note 2 indicate that
a material uncertainty exist that may cast significant doubt
on the Group’s and company’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group
and company’s ability to continue to adopt the going concern
basis of accounting included:
> we reviewed and challenged the forecast cashflows,
paying particular attention to cash inflows in the model;
> we reviewed management’s assessment regarding the
material uncertainty disclosed in note 2 and considered
the impact the quantum and timing of these cashflows;
> we tested the mathematical accuracy of the model; and
> we reviewed the appropriateness of the disclosure made
and its consistency with our knowledge of the business.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept
of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions
of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the
impact of misstatements identified.
Based on our professional judgement, we determined
overall materiality for the financial statements as a whole
to be £480,000 (2021 £600,000), based on approximately
5% of the loss before tax including the loss from discontinued
operations for the period. Materiality for the parent company
financial statements as a whole was set at £400,000 (2021:
£310,000) based on approximately 5% of its individual result.
We use a different level of materiality (‘performance
materiality’) to determine the extent of our testing for the
audit of the financial statements. Performance materiality
is set based on the audit materiality as adjusted for the
judgements made as to the entity risk and our evaluation
of the specific risk of each audit area having regard to the
internal control environment. We determined performance
materiality to be £288,000 (2021 £360,000) for the Group
and £240,000 (2021: £186,000) for the parent company.
Where considered appropriate performance materiality
may be reduced to a lower level, such as, for related party
transactions and directors’ remuneration.
We agreed with the Audit Committee to report to it all
identified errors in excess of £20,000 (2021: £7,200).
Errors below that threshold would also be reported
to it if, in our opinion as auditor, disclosure was required
on qualitative grounds.
Overview of the scope of our audit
Following the acquisition of TradeFlow Capital Management
Pte Ltd in the prior year, the group consists of three
significant components, Supply@ME Capital Plc, a holding
company based in London, United Kingdom and its trading
subsidiaries, Supply@ME Srl based in Italy and TradeFlow
Capital Management Pte Ltd based in Singapore. Supply@ME
Capital Plc was audited by us and was conducted from
the UK. Audit work on the significant non-UK components
being Supply@ME Srl,and TradeFlow Capital Management
Pte Ltd were carried out by members of the Crowe Global
International network as component auditors.
95 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Independent Auditor’s Report
to the members of Supply@ME Capital Plc
In establishing our overall approach to the Group audit,
we determined the type of work that needed to be undertaken
at each of the components by us, as the primary audit
engagement team. For the full scope components in Italy
and Singapore, where the work was performed by component
auditors, we determined the appropriate level of involvement
to enable us to ensure that sufficient appropriate audit
evidence had been obtained as a basis for our opinion on
the Group as a whole.
The primary team led by the Senior Statutory Auditor was
ultimately responsible for the scope and direction of the
audit process. The primary team, using technology, interacted
regularly with the component teams where appropriate
during various stages of the audit, reviewed working papers
and were responsible for the scope and direction of the
audit process. This, together with the additional procedures
performed at Group level, gave us appropriate evidence
for our opinion on the Group financial statements.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most
significant assessed risks of material misstatement (whether
or not due to fraud) we identified, including those which had
the greatest effect on the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
In addition to the matter described in the material uncertainty
relating to going concern and the basis for qualified opinion
above, we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key audit matter
How our scope addressed the key audit matter
Recognition of TradeFlow Capital Management Pte Ltd as
Assets held for sale and Discontinued Operations (IFRS5)
As disclosed in note 27 to the financial statements,
during the year the criteria for presenting TradeFlow
Capital Management Pte Ltd as Assets held for sale
and Discontinued operations were met and this has
had a pervasive impact across the primary financial
statements and related notes.
Given the size and importance of the disposal of
TradeFlow Capital Management Pte Ltd and the impact
on the primary financial statements this was therefore
a key area of focus for our audit.
To assess whether the criteria for meeting the definition
of a discontinued operation and whether the assets
and liabilities met the criteria for presentation as a
disposal group:
> We have reviewed managements application
of IFRS 5 and their consideration of the recognition
criteria within.
> We obtained evidence regarding the timing of the
decision and that the “highly probably” criteria are met.
> We agreed that the TradeFlow Capital Management
Pte Ltd met the definition of a discontinued operation
given it is a significant component of the Group.
> We assessed managements presentation including
the Assets and Liabilities held for sale, the loss from
discontinued operations and the disclosure note
and we are satisfied they are in line with IFRS 5.
Key observation
With the exception of the matters outlined in the basis
for qualified opinion we concluded that the accounting
for the potential sale of TradeFlow Capital Management
Pte Ltd was appropriate.
96 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Our audit procedures in relation to these matters were
designed in the context of our audit opinion as a whole.
They were not designed to enable us to express an opinion
on these matters individually and we express no such opinion.
Other information
The other information comprises the information included
in the annual report other than the financial statements and
our auditor’s report thereon. The directors are responsible
for the other information contained within the annual report.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read
the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the
audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
As described in the basis for qualified opinion section of our
report, we were unable to satisfy ourselves concerning the
carrying value of the assets and liabilities held for sale as
well as the investment in subsidiaries in the parent company
statement of financial position at 31 December 2022.
We have concluded that where the other information refers
to these balances including but not limited to profit or loss
from discontinued operations and total profit or loss for the
period, it may be materially misstated for the same reason.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion the part of the directors’ remuneration report
to be audited has been properly prepared in accordance
with the Companies Act 2006.
Except for the possible effects of the matter described
in the basis for qualified opinion section of our report, in
our opinion based on the work undertaken in the course
of our audit:
> the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
> the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report
by exception
Except for the matter described in the basis for qualified
opinion section of our report, in the light of the knowledge
and understanding of the Group and the Company and
their environment obtained in the course of the audit, we
have not identified material misstatements in the strategic
report or the directors’ report.
Arising solely from the limitation on the scope of our work
relating to the fair value of the disposal group and the
carrying value of the investment in TradeFlow in the parent
company balance sheet, referred to above:
> we have not obtained all the information and explanations
that we considered necessary for the purpose of our
audit; and
> we were unable to determine whether adequate
accounting records have been kept.
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
> returns adequate for our audit have not been received
from branches not visited by us; or
> the company financial statements and the part of the
directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
> certain disclosures of directors’ remuneration specified
by law are not made.
97 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Independent Auditor’s Report
to the members of Supply@ME Capital Plc
Responsibilities of the directors for the
financial statements
As explained more fully in the directors’ responsibilities
statement set out on page 92, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and the parent
company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors
either intend to liquidate the Group or the parent company
or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
> enquiry of management about the Company’s policies,
procedures and related controls regarding compliance
with laws and regulations and if there are any known
instances of non-compliance; the laws and regulations
we considered in this context were relevant company
law and taxation legislation;
> examining supporting documents for all material balances,
transactions and disclosures;
> review of the Board of directors and the Audit Committee
minutes;
> enquiry of management about litigations and claims and
inspection of relevant correspondence;
> evaluation of the selection and application of accounting
policies related to subjective measurements and complex
transactions;
> analytical procedures to identify any unusual or unexpected
relationships;
> testing the appropriateness of journal entries recorded
in the general ledger and other adjustments made in the
preparation of the financial statements;
> review of accounting estimates for biases; and
> Communications with component auditors to request
identification of any instances of non-compliance with
laws and regulations that could give rise to a material
misstatement of the group financial statements.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that some material misstatements of the
financial statements may not be detected, even though
the audit is properly planned and performed in accordance
with the ISAs (UK). The potential effects of inherent limitations
are particularly significant in the case of misstatement
resulting from fraud because fraud may involve sophisticated
and carefully organized schemes designed to conceal it,
including deliberate failure to record transactions, collusion
or intentional misrepresentations being made to us.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
98 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Other matters which we are required to address
We were appointed by management on 22 September
2020 to audit the financial statements for the period
ending 31 December 2019. Our total uninterrupted period
of engagement is 4 years, covering the periods ending
31 December 2019 to 31 December 2022.
The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the group or the company
and we remain independent of the group and the company
in conducting our audit.
Our audit opinion is consistent with the additional report
to the audit committee.
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company's members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report,
or for the opinions we have formed.
Leo Malkin
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
28 April 2023
99 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Consolidated Statement of Comprehensive Income
for the Year Ended 31 December 2022
Year ended Year ended
31 December 2022 31 December 2021
Note £000 £000
Continuing operations
Revenue 3 138 279
Cost of sales (338) (804)
Gross (loss)/profit (200) (525)
Administrative expenses 6 (4,460) (3,468)
Other operating income 5 9 –
Operating loss from continuing operations before impairment charges 3 (4,651) (3,993)
Impairment charges 6 (1,078) (1,773)
Operating loss from continuing operations (5,729) (5,766)
Finance costs 6 (1,982) (1,255)
Loss before tax from continuing operations (7,711) (7,021)
Income tax 10 – (399)
Loss after tax from continuing operations (7,711) (7,420)
Discontinued operations
Loss from discontinued operations 27 (2,167) (5,067)
Total loss for the year (9,878) (12,487)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations (539) 6
Total comprehensive loss for the year (10,417) (12,481)
Loss attributable to:
Owners of the company (10,417) (12,481)
Pence Pence
Earnings/(loss) per share
Basic and diluted loss per share – continuing operations 12 (0.018) (0.022)
Basic and diluted loss per share – discontinued operations 12 (0.005) (0.015)
Basic and diluted loss per share – total 12 (0.023) (0.037)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
100 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Consolidated Statement of Financial Position
as at 31 December 2022
As at As at
31 December 2022 31 December 2021
Note £000 £000
Non-current assets
Intangible assets and goodwill 13 – 7,895
Tangible assets 7 17
Other non-current assets 19 –
Total non-current assets 26 7,912
Current assets
Trade and other receivables 14 1,219 896
Cash and cash equivalents 257 1,727
1,476 2,623
Assets of disposal group held for sale 27 6,844 –
Total current assets 8,320 2,623
Total assets 8,346 10,535
Current liabilities
Trade and other payables 18 4,587 3,500
Loan notes 16 – 5,732
4,587 9,232
Liabilities of disposal group held for sale 27 4,561 –
Total current liabilities 9,148 9,232
Net current liabilities (828) (6,609)
Non-current liabilities
Long-term borrowings 16 748 1,284
Provisions 19 468 340
Deferred tax liabilities 11 7 1,104
Total non-current liabilities 1,223 2,728
Net liabilities (2,025) (1,425)
Equity attributable to owners of the parent
Share capital 15 5,897 5,486
Share premium 25,269 18,171
Share-based payment reserve 26 5,871 2,018
Other reserves (11,413) (10,891)
Retained losses (27,649) (16,209)
Total equity (2,025) (1,425)
The above consolidated statement of financial position should be read in conjunction with the accompanying notes. The
consolidated financial statements on pages 100 to 151 were approved and authorised for issue by the Board on 28 April
2023 and signed on its behalf by:
Alessandro Zamboni David Bull
Chief Executive Officer and Executive Director Independent Non-Executive Director and Chair of Audit Committee
Supply@ME Capital Plc
Company registration number: 03936915
101 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Consolidated Statement of Changes in Equity
for the Year Ended 31 December 2022
Share-based Reverse
Share Share Other payment Merger takeover Forex Retained
capital premium reserves reserve reserve reserve reserve losses Total
Note £000 £000 £000 £000 £000 £000 £000 £000 £000
At 1 January 2021 5,420 11,820 4 – 223,832 (237,835) 13 (3,706) (452)
Loss for the year – – – – – – – (12,487) (12,487)
Forex retranslation difference – – – – – – 5 1 6
Loss for the year and total
comprehensive income – – – – – – 5 (12,486) (12,481)
Issuance of new shares 25 66 6,351 – – 3,073 – – – 9,490
Issue of warrants 25 – – – 608 – – – – 608
Credit to equity for acquisition
related earn-out payments 25 – – – 1,410 – – – – 1,410
Legal reserve movement – – – 17 – – – – (17) –
At 31 December 2021 5,486 18,171 21 2,018 226,905 (237,835) 18 (16,209) (1,425)
Share-based Reverse
Share Share Other payment Merger takeover Forex Retained
capital premium reserves reserve reserve reserve reserve losses Total
Note £000 £000 £000 £000 £000 £000 £000 £000 £000
At 1 January 2022 5,486 18,171 21 2,018 226,905 (237,834) 18 (16,209) (1,425)
Loss for the year - - - - - - - (9,878) (9,878)
Forex retranslation difference - - - - - - (539) - (539)
Loss for the year and total
comprehensive income 5,486 18,171 21 2,018 226,905 (237,834) (521) (26,087) (11,841)
Issuance of new shares 15 406 10,396 - - - - - - 10,802
Costs incurred in connection with
the issuance of new ordinary shares - (4,024) - - - - - (1,605) (5,629)
Credit to equity for issue of warrants 26 - - - 5,292 - - - - 5,292
Exercise of Open Offer Warrants 15 1 31 - (40) - - - 40 32
Credit to equity for prior year
acquisition related earn-out
payments - - - 172 - - - - 172
Settlement of prior year acquisition
related earn-out payments 15 4 695 - (699) - - - - -
Debit to equity for current year
and future acquisition related
earn-out payments - - - (883) - - - - (883)
Equity settled employee share
based payment schemes - - - 11 - - - - 11
Pension plan actuarial gain or loss - - 16 - - - - - 16
Subsidiaries disposed of
during the year - - - - - - - 3 3
At 31 December 2022 5,897 25,269 37 5,871 226,905 (237,834) (521) (27,649) (2,025)
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
102 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Consolidated Statement of Cash Flows
for the Year Ended 31 December 2022
Year ended Year ended
31 December 2022 31 December 2021
£000 £000
Cash flows from operating activities
Loss before interest and tax for the year from continuing operations (5,729) (5,766)
Loss before interest and tax for the year from discontinued operations (1,955) (5,048)
Total loss before interest and tax (7,684) (10,814)
Adjustments for non-cash acquisition related costs and impairment charges
Acquisition related transaction costs – 1,900
Acquisition related earn-out payments (710) 1,410
Amortisation of intangible assets arising on acquisition 846 391
Impairment charges 1,843 2,573
(5,705) 6,274
Other non-cash adjustments (134) (70)
Other depreciation and amortisation 51 396
Increase to provisions 110 52
Decrease/(increase) in accrued income (38) (46)
Decrease/(increase) in trade receivables (44) 505
Increase in trade and other payables 1,158 77
Other decreases/(increases) in net working capital 337 (158)
Net cash flows from operations (4,265) (3,784)
Finance costs paid in cash (14) (2)
Income taxes paid in cash (276) (89)
Net cash flow from operating activities (4,555) (3,875)
Cash flows from investing activities
Acquisition of property, plant and equipment (4) (7)
Acquisition of intangible assets (1,175) (1,020)
Increase in other non-current assets (18) –
Cash consideration on acquisition of Tradeflow, net of cash acquired – (3,523)
Net cash flows from investing activities (1,197) (4,550)
Cash flows from financing activities
Cash inflow from convertible loan notes 1,500 5,000
Net cash inflow from new long-term borrowings 2,334 –
Cash inflow from issue of new ordinary shares 7,013 –
Net cash inflow from Mercator loan notes – 6,629
Other finance costs paid in cash (425) (25)
Cash repayment of loan notes and convertible loan notes (5,572) (2,016)
Cost of share issue paid in cash (231) –
Net cash flows from financing activities 4,619 9,588
Net (decrease)/increase in cash and cash equivalents (1,133) 1,163
Foreign exchange differences to cash and cash equivalents on consolidation (13) 12
Cash and cash equivalents at 1 January 1,727 552
Cash and cash equivalents at 31 December 581 1,727
103 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Consolidated Statement of Cash Flows
for the Year Ended 31 December 2022
Significant non-cash transactions
During the year, the Group issued 20,553,126,359 new
ordinary shares in the Company. Of this total, 5,511,908,277
new ordinary shares were not issued in exchange for cash:
1) 1,400,898,372 new ordinary shares were admitted to
trading during the year to fulfil the conversion of Mercator
Capital Management Fund LP (“Mercator”) convertible
loan notes. These new ordinary shares were issued to
extinguish £1,356,666 principal value of convertible loan
notes that had previously been issued to Mercator;
2) 213,525,520 new ordinary shares were issued to settle
the acquisition related earn-out payments for the financial
year ended 31 December 2021. The fair value of these
acquisition related earn-out payments that had been
recorded as the share-based payment reserve was
£699,000;
3) 3,897,484,385 new ordinary shares were issued to fulfil
the conversion of Venus Capital S.A. (“Venus Capital”)
convertible loan notes issued during the year. These new
ordinary shares were issued to extinguish £1,917,500
principal value of convertible loan notes that had previously
been issued to Venus.
Further details of share issues can be found in note 16.
Further details of the convertible loan note facilities can be
found in note 17.
The reconciliation of the movement in net debt is set out
in note 24.
The above consolidated statement of cash flows should
be read in conjunction with the accompanying notes.
104 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
1 General information
Supply@ME Capital Plc is a public limited company
incorporated in England and Wales. The address of its
registered office is 27/28 Eastcastle Street, London,
W1W 8DH, United Kingdom. Supply@ME Capital’s shares
are listed on the Standard List of the main market of the
London Stock Exchange.
These consolidated financial statements have been prepared
in accordance with UK adopted International Accounting
Standards.
The financial statements of the Group, consisting of
Supply@ME Capital Plc (the “Company”) and its subsidiaries
(the “Group”), are presented in Pounds Sterling and all
values are rounded to the nearest thousand pounds (£000)
except when otherwise stated.
These consolidated financial statements have been prepared
in accordance with the accounting policies set out below, which
have been consistently applied to all the years presented.
2 Accounting policies
Going concern
As at 31 December 2022 the Group had a cash and cash
equivalents balance from continuing operations of £257,000.
In addition, cash balances from discontinued operations were
£324,000 as at 31 December 2022. These total combined
cash and cash equivalent balances of £581,000 compared to
a consolidated cash balance £1,727,000 as at 31 December
2021. The Group’s consolidated net current liabilities of
£828,000 as at 31 December 2022, compared to a consolidated
net current liability position of £6,609,000 as at 31 December
2021. The Group has posted a total comprehensive loss
for the year ended 31 December 2022 of £10,417,000 (2021:
comprehensive loss of £12,481,000) and retained losses
as at 31 December 2022 were £27,649,000 (31 December
2021: retained losses of £16,209,000).
During the year, the Company continued to source additional
funds with the primary aim of allowing it to repay the
outstanding loan note and convertible loan note balances
that were outstanding with Mercator Capital Management
Fund LP (“Mercator”). Additionally, the focus was to move
to a more stable source of funding to support the working
capital needs of the Group and the continued investment
into the Group’s Inventory Monetisation Platform.
These new sources of funding included both a subscription
of new equity into the Company and traditional bank financing
from Banco BPM, the third largest banking group in Italy.
Further details of the cash inflows as a result of the new
funding sources, and the cash outflows due to the repayment
of the Mercator funding facility can be found in consolidated
statement of cash flows and in the various notes to these
consolidated financial statements.
Following the 31 December 2022, the Company has been
continuing to explore additional options of funding to support
the ongoing working capital needs of the Group while
a track record of positive revenue generation is established.
As at the date of issue of these consolidation financial
statements, the Company also announced the following
binding commitments:
1) A new unsecured working capital loan agreement of up
to £2,800,000 from the AvantGarde Group S.p.A (“TAG”)
(the “TAG Working Capital facility”) which will be received
in tranches up to 31 January 2024 and shall be repayable
on 1 February 2028; and
2) A new equity subscription agreement with irrevocable
commitments to subscribe for 4,500,000,000 new
ordinary shares in the Company at a price of 0.05 pence
per share, providing the Company with gross proceeds
of £2,250,000 (the “Subscription Agreement”).
Further details of each of the TAG Working Capital facility
and the Subscription Agreement can be found in note 30
to these consolidated financial statements.
Taking into consideration the factors above and in order to
consider their assessment of the Group as a going concern,
the Directors have reviewed the forecast cash flows for the
next 12 months from approval of these consolidated financial
statements. The cash flow forecasts take into account that
the Group meets its day to day working capital requirements
through its available and committed cash resources.
The Directors have prepared the forecast using their best
estimates, information and judgement at this time, including
the TAG Working Capital facility and the Subscription
Agreement referred to above. The Directors have also
considered the expected cash flows arising from TradeFlow’s
investment advisory services 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 near future,
following the completion of the first IM transaction in 2022,
and that currently TradeFlow still currently remains a fully
owned subsidiary of the Group.
105 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
2 Accounting policies
Despite the facts outlined above, there continues to be
an absence of a historical track record relating to multiple
inventory monetisation transactions being facilitated by the
Group’s Platform and the Group being cash flow positive.
As such the Directors have prudently identified uncertainty
in the cash flow model. This uncertainty arises with respect
to both the future timing and growth rates of the forecast
cash flows arising from the Group’s multiple inventory
monetisation revenue streams. In this regard, if these future
revenues are not secured as the Directors envisage, it is
possible that the Group will have a shortfall in cash and
require additional funding during the forecast period.
In addition the cash inflows arising from the TAG Working
Capital facility and the Subscription Agreement have not
yet been fully received. These amounts have been factored
into the cash flow forecast in line with the contractual
commitments received from the various counterparties.
As such, there is a risk that these cash flows might not be
received or might not reach the Group in the time frame
expected despite the various contractual commitments
in place.
On the basis of the factors identified in the above paragraph,
the Directors believe there are material uncertainties which
may cast significant doubt upon the entities ability to continue
as a going concern.
The Directors do however remain confident in the business
model and believe the Group could be managed in a way
to allow it to meet its ongoing commitments and obligations
through mitigating actions including cost saving measures
and securing alternative sources of funding should this
be required. This includes the application by certain of the
Company’s subsidiaries to access specialised loans for SME
businesses provided by Italian commercial banks with the
support of government guarantees. These such loans will
allow the Group to access a lower cost of capital.
As such the Directors consider it appropriate to prepare
these annual consolidated financial statements on a going
concern basis and have not included the adjustments that
would result if the Company and Group were unable to
continue as a going concern.
Adjusted performance measures
Management believes that adjusted performance measures
provide meaningful information to the users of the accounts
on the operating performance of the business. Accordingly,
the adjusted measure of operating profit from continuing
operations excludes, where applicable, transaction costs,
amortisation of intangible assets arising on acquisitions,
acquisition related earn-out payments and impairment
charges. These terms are not defined terms under IFRSs
and may therefore not be comparable with similarly titled
profit measures reported by other companies. They are
not intended to be a substitute for, or superior to, GAAP
measures. The items excluded from adjusted results are
those items that are charged to the consolidated statement
of comprehensive income in accordance with IFRS 3
(“Business Combinations”) or which arise due to the
impairment of the Group’s intangible assets or investments.
They are not influenced by the day-to-day operations
of the Group.
Basis of consolidation
The Group financial statements consolidate those of the
Company and its subsidiary undertakings drawn up to
31 December 2022. Subsidiaries are entities over which
the Group has control. Control comprises an investor having
power over the investee and is exposed, or has rights,
to variable returns from its involvement with the investee
and has the ability to affect those returns through its power.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated
from the date that control ceases.
On 1 July 2021the Company completed the acquisition of
the entire share capital of Tradeflow Capital Management
Pte. Ltd. (“TradeFlow”) by way of cash and share consideration.
As such from this date TradeFlow became a fully owned
subsidiary of the Company and formed part of the Group’s
consolidated financial performance and position from the
date of acquisition.
During the second half of 2022, the Directors began the
process of the proposed restructuring the Company’s
ownership with TradeFlow (“TradeFlow Restructuring”) and
as a result the TradeFlow business has been classified as
held for sale / a discontinued operation as at 31 December
2022 in line with IFRS 5 “Non-current Assets Held for Sale
and Discontinued Operations”. This is due to the fact that
TradeFlow was available for immediate sale in its present
condition and it was highly probable that that sale would
be completed.
Supply@ME Technologies S.r.l. was incorporated by the
Company in Italy on 25 March 2022 for the purpose
of holding the Group’s intellectual property rights relating
to the Platform together with future developments in a
dedicated entity. On 9 September 2022, Supply@ME S.r.l.
assigned the intellectual property rights to Supply@ME
Technologies S.r.l. As both Supply@ME S.r.l and Supply@ME
Technologies S.r.l are 100% owned subsidiaries of the
Company, this was an intragroup reassignment.
106 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
2 Accounting policies
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 €1,000. Prior to the sale, Stock Company 1 S.r.l. was
a non-trading entity. As at 31 December 2022, Supply@ME
S.r.l. continued to own Supply@ME Stock Company 2 S.r.l.
and Supply@ME Stock Company 3 S.r.l., both of which are
also non-trading entities.
Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions,
are eliminated. Unrealised losses are eliminated in the same
way as unrealised gains, but only to the extent that there is
no evidence of impairment.
New and revised accounting standards and
interpretations
Management has concluded that to date there has been
no impact on the results or net assets of the Company as
a result of adopting new or revised accounting standards.
New standards, interpretations and amendments
not yet effective
At the date of authorisation of the Group’s financial statements
there have been no new standards, amendments or
interpretations to existing standards that have been
published by the International Accounting Standards Board.
Business Combinations
The acquisition of subsidiaries and businesses are accounted
for using the acquisition method under IFRS 3 “Business
Combinations”.
Measurement of consideration
The consideration for each acquisition is measured at the
aggregate of the fair values, at the date of exchange, of
assets given, liabilities incurred to former owners and equity
instruments issued by the Group in exchange for control
of the acquiree.
Acquisition related earn-out payments
(deemed remuneration)
In accordance with the IFRS Interpretations Committee’s
interpretation of paragraph B55 of IFRS 3 (“Business
Combinations”), the cost of the business combination
excludes consideration which requires post-acquisition service
obligations to be performed by the selling shareholders.
In the event that the deemed remuneration is to be equity
settled under IFRS 2 (“Share-Based Payments”), the fair value
is determined at the grant date and then charged to the
consolidated statement of comprehensive income over the
period of the service obligations.
Fair value assessment
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. Where the
fair value of the assets and liabilities at acquisition cannot be
determined reliably in the initial accounting, these values are
considered to be provisional for a period of 12 months from
the date of acquisition. If additional information relating to
the condition of these assets and liabilities at the acquisition
date is obtained within this period, then the provisional
values are adjusted retrospectively. This includes the
restatement of comparative information for prior periods.
Intangible assets arising on business combinations are
recognised initially at fair value at the date of acquisition.
Subsequently they are carried at cost less accumulated
amortisation and impairment charges.
Goodwill
Goodwill arises where the consideration of the business
combination exceeds the Group’s interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. This is recognised as an asset and
is tested annually for impairment. The identifiable assets and
liabilities acquired are incorporated into the consolidated
financial statements at their fair value to the Group.
Transaction costs
Transaction costs associated with the acquisition are
recognised in the consolidated statement of comprehensive
income as incurred and separately disclosed due to the
nature of this expense.
Intangible assets
Goodwill
Goodwill arising on consolidation is recognised as an asset.
Following initial recognition, goodwill is subject to impairment
reviews, at least annually, and measured at cost less
accumulated impairment losses. Any impairment is recognised
immediately in the consolidated statement of comprehensive
income and is not subsequently reversed.
107 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
2 Accounting policies
Other intangible assets
a) Internally developed Inventory Monetisation
(“IM”) platform
The core activity of the existing Supply@ME business is the
creation and marketing of a software-driven secure platform
(the “IM Platform”) that can be used for the facilitation,
recording and monitoring of IM transactions between third
party client companies and segregated trading companies
(known as stock companies). The software modules which
form part of the IM Platform can also be used, through
a White-label model, by third party banks in order for them
to deploy their own inventory backed financial products.
The internally generated IM Platform includes not only the
software but also:
> the methodologies and business policies underpinning
each IM transaction
> the legal and accounting frameworks required to support
each IM transaction
> the technical infrastructure (cloud environment, distributed
ledger technology) used to support each IM transaction.
Associated with this core activity are significant product
development requirements to address compliance with
legal, regulatory, accounting, valuation and insurance
criteria. The three main categories of cost are: Software and
infrastructure development, intellectual property (IP) related
costs and professional fees related to the development
of legal and accounting infrastructure.
These costs are capitalised and initially measured at cost
and are amortised over their estimated useful economic
lives, considered to be 5 years, on a straight-line basis.
Amortisation of this internally developed IM platform is
charged within cost of sales in the consolidated statement
of comprehensive income.
Amortisation methods and useful lives are reviewed at each
reporting date and adjusted if appropriate. The carrying
amount is reduced by any provision for impairment where
necessary.
b) Acquired intangible assets
Intangible assets arising on business combinations are
recognised initially at fair value at the date of acquisition.
Subsequently they are carried at cost less accumulated
amortisation. Amortisation of acquired intangible assets
is charged within administrative expenses in the consolidated
statement of comprehensive income but is excluded from
the adjusted operating profit measures as described above.
The estimated useful lives of the acquired intangible assets
are set out below:
Customer relationships 13 years
Brand (TradeFlow) 5 years
Commodity Trade Risk Management
(“CTRM”) software 5 years
Artificial Intelligence and back-office
(“AI”) software 5 years
Amortisation methods and useful lives are reviewed at each
reporting date and adjusted if appropriate. The carrying
amount is reduced by any provision for impairment where
necessary.
Impairment
At each balance sheet date, the Group reviews the carrying
amounts of its intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine
the extent of any impairment loss. Where the asset does
not generate cash flows that are independent from other
assets, the Group estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs
to sell and value in use.
In assessing value in use, the estimated future cash flows
are discounted to their present value using a discount rate
that reflects current market assessments of the time value
and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted. If the recoverable
amount of an asset (or cash-generating unit) is estimated to
be less than its’ carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to its recoverable
amount.
An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed
the carrying amount that would have been determined
had no impairment loss been recognised for the asset
(or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately.
108 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
2 Accounting policies
Revenue recognition
Revenue for the Group is measured at the fair value of the
consideration received or receivable. The Group recognises
revenue when the performance obligation is satisfied,
the amount of revenue can be reliably measured and it
is probable that future economic benefits will flow to the
entity. Currently all the Group’s revenues are recognised
at a point in time when the relevant performance obligation
has been satisfied.
The Group recognises revenue from the following activities:
a) Captive inventory monetisation platform servicing
(“C.IM”) – Due diligence fees
This revenue arises from due diligence services performed
by the Group in relation to the potential client companies.
This due diligence covers topics such as the client's financial
information, operations, credit rating and analysis of its
inventory.
Given the stage of the Group’s development, and the
evolution of the Group’s contracting arrangements, the
due diligence revenues recognised by the Group to date
have been limited. Further details are provided below:
Historical contractual arrangements – Prior to June 2020,
the Group’s contractual arrangements required the client to
make a down payment intended to remunerate the Group
for the due diligence services being provided. However, these
agreements did not clearly identify the Group’s performance
obligation and such down payments were also refundable
under certain circumstances and up to the point when the
Platform was able to be used for the first time by the client
companies.
Due to the above circumstances, these down payments
have not been recognised as revenue under IFRS 15
(“Revenue from Contracts with Customers”) until the specific
performance obligation, being the use of the Group’s
Platform for the first time, has been satisfied by the Group.
Until such time, these amounts have been recognised as
deferred income in the balance sheet, or as other payables
in the case where a refund has been requested (due to the
current delays being experienced by the Group), but not
yet paid as at the balance sheet date.
Current contractual arrangements – Post June 2020, the
Group updated its contractual arrangements to specifically
identify a separate performance obligation in relation to the
completion of the due diligence services being provided by
the Group, also considering the actual benefits the client
companies can directly obtain from such activities, even in
the case where the inventory monetisation transaction does
not take place. In these contracts, the due diligence fees are
paid in advance by the client companies, and the revenue
is recognised when the Group has successfully fulfilled its
performance obligation, being the completion of the due
diligence service and communication to the client in this
respect through the issuance of a detailed due diligence
report. Prior to the completion of the performance obligation,
the due diligence fees received are held on the balance
sheet as deferred income.
In order to conclude if the performance obligations have
been successfully fulfilled, management currently assess this
on a client-by-client basis to ensure that the control of the
due diligence has been transferred to the client company.
In developing this accounting policy management have
made the assessment that the due diligence services result
in a distinct beneficial service being provided to client
companies as the information provides insight into their
business which can also be used for alternative purposes
as well (such as client companies business and operational
optimisation). This is also referred to the critical accounting
judgements and sources of estimation uncertainty note.
Specific contractual arrangements with related party originator
– During 2020, the Group entered into an origination
contract with 1AF2 S.r.l in connection with the identification
of potential client companies. Also, during 2020, 1AF2 S.r.l
merged with The AvantGarde Group S.p.A (“TAG”). As set
out in the related party note to these accounts (note 29),
both 1AF2 S.r.l and TAG are related parties of the Group.
Under this origination contract it was the originators
responsibility to carry out the due diligence services.
However, given the Group already had this expertise the
originator chose to contract with the Group to perform
the due diligence services on their behalf. In this case the
Group acts as a service provider to the originator, with the
completion of single due diligence activities the identified
performance obligation.
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. Management’s judgement was that the provision
of each of the individual due diligence reviews represented
a distinct performance obligation under IFRS 15 (“Revenue
from Contracts with Customers”).
109 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
2 Accounting policies
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, specifically where the performance
obligation had been satisfied being the completion and
communication of the due diligence results.
During FY22, this contractual arrangement did not generate
any revenue for the Group (2021: 33% of Group Revenue).
b) Captive inventory monetisation platform servicing
(“C.IM”) – Origination fees
This revenue arises from origination of the contracts
between the client company wishing to have their inventory
monetised and the independent stock (trading) company
that purchased the inventory from the client company.
Given the stage of the Group’s development, and the
evolution of the Group’s contracting arrangements,
as at 31 December 2022, the Group had only facilitated
one IM transaction over its IM Platform and therefore had
received origination fees from just one client company.
The non-refundable origination fees received from the
client company relates to the fee payable to the Group
at the point in time the client company enters into binding
contracts with the stock (trading) company to purchase
its inventory. Management have considered the activities it
is required to carry out in exchange for the receipt of these
origination fees and have concluded that they do not relate
to any specific transfer of asset from the Group to the client
company. As a result, management concluded there is no
separately identifiable performance obligation carried out
by the Group associated with this fee and have recognised
the non-refundable origination fee as revenue at the point
in time that the fee becomes receivable from the client
company. This is consistent with the fact that there are
no performance obligations that remain to be completed
by the Group relating to this fee at this point in time.
c) Captive inventory monetisation platform servicing
(“C.IM”) – IM Platform usage fees
This revenue arises from usage of the Group’s IM Platform
by the independent stock (trading) company to facilitate the
purchase of the inventory from the client company. Given
the stage of the Group’s development, and the evolution
of the Group’s contracting arrangements, as at 31 December
2022, the Group had facilitated one IM transaction over its
IM Platform and therefore had received IM Platform usage
fees from the independent stock (trading) company in
respect of one IM transaction only.
Management concluded that the usage of the IM Platform
granted by the Group to the stock (trading) company
represented a Software as a Service (“Saas”) contract and
as such the annual IM Platform usage fees are recognised
over time in line with the time period covered by the
contract as required by IFRS 15 (“Revenue from Contracts
with Customers”). As the annual IM Platform usage fees
are received by the Group at the beginning of the annual
period, any unrecognised amounts are held on the balance
sheet as deferred income.
d) Captive inventory monetisation platform servicing
(“C.IM”) – IM service fees
This revenue arises as a result of the service fees charged
by the Group to the independent stock (trading) company
as remuneration for the support and administration activities,
such as the monitoring of the inventory purchased, the
Group performs in connection with the use of the Group’s
IM Platform. Given the stage of the Group’s development,
and the evolution of the Group’s contracting arrangements,
as at 31 December 2022, the Group had facilitated one IM
transaction over its IM Platform and therefore had received
IM service fees from the independent stock (trading) company
in respect of one IM transaction only. Management
concluded that the support and administration activities
performed in exchange for these fees represent separately
identifiable performance obligation and as such the annual
fees are recognised over time in line with the time period
covered by the contract as required by IFRS 15 (“Revenue
from Contracts with Customers”). As the service fees are
received following the year end of the independent stock
(trading) company, these fees are accrued up to the point
the fees are received and then any unrecognised amounts
are held on the balance sheet as deferred income.
e) Investment Advisory (“IA”) fees
This revenue arises from investment advisory services
provided by the Group’s wholly owned subsidiary, TradeFlow,
in its capacity as investment advisor of the Global Inventory
Fund (more specifically, at the date of this report to its well-
established CEMP – USD/ EUR Trade Flow Funds Segregated
Portfolios). Investment Advisory fees are generated on
a monthly basis through investment advisory agreements
and are generally based on an agreed percentage of the
valuation of Assets Under Management (“AUM”) during the
relevant period. Investment Advisory fees are recognised
as the service is provided and it is probable that the fee will
be collected. As these fees are generally received following
the particular period to which they relate, any amounts
that have been recognised as revenue but not yet received,
are recorded on the balance sheet as accrued income.
110 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
2 Accounting policies
Cost of Sales
Cost of sales represents those costs that can be directly
related to the sales effort. At this early stage in the Group’s
development, the cost of sales includes both the costs of
the work force who are engaged in the due diligence related
processes, and the amortisation of the costs relating to
the internally developed IM platform. Management regard
both as the direct costs associated with generating the C.IM
revenue; in line with similar fintech companies.
Leases
The Group has entered into short term lease contracts
(as defined by IFRS 16 “Leases”) in respect of one property
only and as such, at this time, the Group does not have any
material lease arrangements that would be required to
be accounted for under IFRS 16 (“Leases”). For these leases
the costs are recognised in the consolidated statement
of comprehensive income in the period which is covered
by the term of the lease.
Property, Plant and equipment
Recognition and measurement
All property, plant and equipment is stated at cost less
accumulated depreciation and impairment. The costs
of the plant and equipment is the purchase price plus any
incidental costs of acquisition. Depreciation commences
at the point the asset is brought into use.
If there is any indication that an asset's value is less than
it’s carrying amount an impairment review is carried out.
Where impairment is identified an asset's value is reduced
to reflect this.
The residual values and useful economic lives of plant and
equipment are reviewed by management on an annual
basis and revised to the extent required.
Depreciation
Depreciation is charged to write off the cost, less estimated
residual values, of all plant and equipment equally over their
expected useful lives. It is calculated at the following rates:
> Computers and IT equipment at 33% per annum.
Tax
The tax expense for the period comprises current tax.
Tax is recognised in profit or loss, except that a charge
attributable to an item of income or expense recognised
as other comprehensive income is also recognised directly
in other comprehensive income.
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities in
the consolidated financial statements and the corresponding
tax bases used in the computation of taxable profit and
is accounted for using the statement of financial position
method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill
or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting
profit.
The carrying amount of any deferred tax assets is reviewed
at each statement of financial position date and reduced to
the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset
realised based on tax rates that have been enacted or
substantively enacted at the statement of financial position
date. Deferred tax and current tax are charged or credited
to profit or loss, except when it relates to items charged
or credited in other comprehensive income or directly
to equity, in which case the deferred tax is also recognised
in other comprehensive income or equity respectively.
In line with IAS 1 “Presentation of Financial Statements” the
deferred tax assets have been classified as non-current assets.
Cash and cash equivalents
Cash and other short-term deposits in the Statement
of Financial Position comprise cash at banks and in hand
and short-term deposits with an original maturity of three
months or less and where there is an insignificant risk of
changes in value. In the consolidated cash flow statement,
cash and cash equivalents consist of cash and cash
equivalents as defined above.
Functional and presentational currencies
The consolidated financial statements are presented in
pounds sterling (£), the Company’s functional currency.
Foreign currency
The main currencies for the Group are the euro (EUR),
pounds sterling (GBP), US dollars (USD) and Singapore
dollars (SGD).
111 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
2 Accounting policies
Foreign currency transactions and balances
Items included in the consolidated financial statements of
each of the Group’s subsidiaries are measured using their
functional currency. The functional currency of the parent
and each subsidiary is the currency of the primary economic
environment in which the entity operates.
Foreign currency transactions are translated into the
functional currency using the average exchange rates in the
month. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at the reporting period end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in the profit and loss.
Share capital, share premium and brought forward earnings
are translated using the exchange rates prevailing at the
dates of the transactions.
See applicable exchange rates to GBP used during FY22
and FY21 below:
2022 2021
Closing Average Closing Average
SGD 1.6218 1.7221 1.8195 1.8487
EUR 1.1276 1.1780 1.1907 1.1592
USD 1.2102 1.2495 1.3477 1.3775
Consolidation of foreign entities
On consolidation, results of the foreign entities are translated
from the local functional currency to pounds sterling, the
presentational currency of the Group, using average exchange
rates during the period. All assets and liabilities are translated
from the local functional currency to pounds sterling using
the reporting period end exchange rates. The exchange
differences arising from the translation of the net investment
in foreign entities are recognised in other comprehensive
income and accumulated in a separate component of equity.
Employee benefits
Short-term employee benefits
The Group accounts for employee benefits in accordance
with IAS 19 (“Employee Benefits”).
Short-term employee benefits are expensed as the related
service is provided. A liability is recognised for the amount
expected to be paid if the Group has a present legal or
constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can
be estimated reliably.
Defined contribution pension obligations
The Group accounts for retirement benefit costs in accordance
with IAS 19 (“Employee Benefits”).
Contributions to the Group’s defined contributions pension
scheme are charged to profit or loss in the period in which
they become payable.
Financial assets
Classification
Financial assets currently comprise trade and other receivables,
cash and cash equivalents.
Recognition and measurement
Loans and receivables
Loans and receivables are mainly contractual trade
receivables and are non-derivative financial assets with fixed
or determinable payments that do not have a significant
financial component and are not quoted in an active market.
Accordingly, trade and other receivables are recognised
at undiscounted invoice price. A reserve for credit risk
is made at the beginning of each transaction and adjusted
subsequently through profit and loss.
Impairment provisions for trade receivables are recognised
based on the simplified approach within IFRS 9 (“Financial
Instruments”) using the lifetime expected credit losses.
During this process the probability of the non-payment
of trade receivables is assessed. This probability is then
multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
trade receivables. For trade receivables, which are reported
net, such provisions are reported in a separate provision
account with the loss being recognised within administrative
expenses in the consolidated statement of comprehensive
income. On confirmation that the trade receivable will not
be collectable, the gross carrying value of the asset is written
off against the associated provision.
Financial liabilities
Classification
Financial liabilities comprise trade and other payables, loan
notes, long-term borrowings, convertible loan notes and
derivative financial instruments.
Recognition and measurement
Trade and other payables
Trade and other payables are initially recognised at fair value
less transaction costs and thereafter carried at amortised cost.
112 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Share warrants
Certain equity-settled share-based payments relate to
the warrants issued in connection with the cost of issuing
loan notes, convertible loan notes and new equity.
These equity-settled share-based payments are measured
at the fair value of the equity instruments at the grant date.
The fair value excludes the effect of non-market-based
vesting conditions. Details regarding the determination
of the fair value of these equity-settled share-based
transactions are set out in note 26.
The fair value determined at the grant date of the equity-
settled share-based payments relating to the warrants
issued in connection with the issue of loan notes or
convertible loan notes are netted off against the fair value
of the underlying loan notes, convertibles loan notes to
which they directly relate. The fair value is then expensed
together with the other related finance costs on an
amortised cost basis to the Group’s income statement
using the effective interest method.
The fair value determined at the grant date of the equity-
settled share-based payments relating to the warrants
issued in connection with the issue of equity are netted
off against the amount of share premium that is recognised
in respect of the share issue to which they directly relate.
Any amounts in excess of the share premium recognised,
are netted off against retained losses.
In respect of the share-based payments, the fair value is
not revised at subsequent reporting dates, however, the fair
value is released from the share-based payment reserve
at the point in time that any of the warrants are exercised
by the third party holder.
Employee share schemes
Grants made to certain employees of the Group will result in
a charge recognised in the Group’s income statement. Such
grants will be measured at fair value at the date of grant and
will be expensed on a straight-line basis over the vesting
period, based on the Group’s estimate of the shares that will
eventually vest. Vesting assumptions are reviewed during
each period to ensure they reflect current expectations.
Full details of the Group’s share-base payments refer to
note 26.
2 Accounting policies
Derivative financial instruments
The Group’s derivative financial instrument is a historic
convertible loan note that was both issued and then cleared
in the past by a debt for equity swap, and warrants were
issued with options to acquire shares that are accounted
for at fair value, with changes in value taken through profit
and loss. The release of the fair value discount on the debt
for equity swap has been taken to the income statement
as these warrants expired during the prior financial year.
Loan note and long-term borrowings
Interest bearing loan notes and long-term borrowings
are 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).
Finance charges, including direct issue costs, are accounted
for on an amortised cost basis to the consolidated statement
of comprehensive income using the effective interest method
and are added to the carrying amount of the instrument
to the extent that they are not settled in the period in which
they arise. The carrying value of the loan notes have been
adjusted to take for the fair value of principal repayments
made since inception.
Convertible loan notes
Convertible loan notes issued by the Group are recorded
at the fair value of the convertible loan notes issued, net
of direct issue costs including commitment fees. Finance
charges, including direct issue costs, are accounted for on
an amortised cost basis to the consolidated statement of
comprehensive income using the effective interest method
and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which
they arise. The carrying value of the convertible loan notes
have been adjusted to take into account of the fair value
of those notes that have been converted into new ordinary
shares since inception.
Provisions
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of a past event,
it is probable that the Group will be required to settle the
obligation and the amount can be reliably estimated.
Share-based payments
Equity-settled share-based payments relate to the acquisition
related earn-out payments, warrants issued in connection
with the cost of issuing loan notes, convertible notes and
new ordinary shares during the relevant year.
113 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
2 Accounting policies
Acquisition related earn-out payments
In addition, the Group recognises a share-based payment
reserve in connection with acquisition related earn-out
payments arising from the acquisition of TradeFlow. The fair
value of these earn-out payments has been measured using
the same methods as outlined above. Given the service
conditions related to these payments are linked to one of
the Group’s current subsidiaries, the share-based payment
expense is recognised within the consolidated financial
statements as an increase to the share-based payment
reserve and through the Group’s income statement. The fair
value determined at the grant date of these equity-settled
share-based payments are recognised over the vesting
period on a straight-line basis, based on the estimate of equity
instruments that will eventually vest. Vesting assumptions
are reviewed during each period to ensure they reflect
current expectations and any changes required to true-up
the related share-based payment reserve are recognised
through the Group’s income statement in the relevant period.
Discontinued Operations
The Group classifies non-current assets and disposal groups
as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through
continuing use. Non-current assets and disposal groups
classified as held for sale are measured at the lower of their
carrying value and fair value less costs to sell. Costs to sell
are the incremental costs directly attributable to the disposal
of an asset (disposal group), excluding finance costs and
income tax expense.
The criteria for held for sale classification is regarded as met
only when the sale is highly probable and the asset or disposal
group is available for immediate sale in its present condition.
Actions required to complete the sale should indicate that
it is unlikely that significant changes to the sale will be made
or that decisions to sell will be withdrawn. Management
must be committed to the plan to sell the asset and the sale
expected to be completed within one year from the date
of the classification.
Property, plant and equipment and intangible assets are not
depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented
separately in the balance sheet.
A disposal group qualifies as a discontinued operation if
it is a component of an entity that either has been disposed
or, is classified as held for sale, and:
> Represents a separate major line of business or
geographical area of operations
> Is part of a single co-ordinated plan to dispose of a
separate major line of business or geographical area of
operations. Discontinued operations are excluded from
the results of continuing operations and are presented
as a single amount as profit or loss after tax from
discontinued operations in the income statements. All
other notes in the financial statements include amounts
for continuing operations, unless otherwise mentioned.
The Board considered that in light of the TradeFlow
Restructuring that commenced during the second half
of 2022, the TradeFlow operations meet the criteria to be
classified as held for sale at 31 December 2022 as at this
date the details of the TradeFlow Restructuring had all been
agreed in principle between the parties and was expected
to be completed post year end together with the publication
of the 2022 Annual Report and Accounts. As a result the
TradeFlow operations were available for immediate sale in
its present condition and it was highly probable that that sale
would be completed within 12 months of 31 December 2022.
On 24 March 2023, the Company announced the TradeFlow
directors, being Tom James and John Collis, provided written
notice of their intention to exercise their rights to buy back
100% of the share capital of TradeFlow (the “Buy Back”),
pursuant to certain earn-out arrangements entered into
in connection with the Company’s acquisition of TradeFlow,
the completion of which was announced on 6 July 2021
(“Completion”). As a result of the exercise of the Buy Back,
the details of the TradeFlow Restructure, that had been
agreed in principle prior to year end, now need to be
renegotiated, and a new independent valuation of the
TradeFlow operations needs to be completed. As at the
date of these consolidated financial statements, these
activities had not been completed and were still ongoing.
Equity
“Share capital” represents the nominal value of equity shares
issued.
“Share premium” represents the excess over nominal value
of the fair value of consideration received for equity shares
net of expenses of the share issue.
“Other reserves” represents legal reserves in respect of
Supply@ME S.r.l. In accordance with Article 2430 of the
Italian Civil Code, Supply@ME S.r.l., a limited liability company
registered in Italy, with a corporate capital of euro 10,000
or above shall annually allocate as a legal reserve an amount
of 5% of the annual net profit until the legal reserve will be
equal to 20% of corporate capital.
114 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
2 Accounting policies
“Share-based payment reserve” represents the credit
adjustments to equity in respect of the fair value of outstanding
share-based payments including acquisition related earn-out
payments, warrants issued in connection with the cost
of issuing loan notes, convertible notes and new equity, and
employee share schemes.
A number of these key estimates and underlying assumptions
have been considered for the first time this financial year as
a result of specific transactions outlined in these consolidated
financial statements. The Directors have evaluated the
estimates using historical experience and other methods
considered reasonable specific to the circumstances. The
Directors have also but also in consultation with third-party
experts where appropriate. These estimates will be evaluated
on an ongoing basis as required.
“Merger relief reserve” represents the excess of the value
of the consideration shares issued to the shareholders
of Supply@ME S.r.l. upon the reverse takeover over the fair
value of the assets acquired.
The Group believes that the estimates and judgements
that have the most significant impact on the annual results
under IFRS are as set out below:
“Reverse takeover reserve” represents the accounting
adjustments required to reflect the reverse takeover
upon consolidation. Specifically, removing the value of the
“investment” in Supply@ME S.r.l., removing the share capital
of Supply@ME S.r.l. and bringing in the pre-acquisition
equity of Supply@ME Capital Plc.
“FX reserves” represents foreign currency translation
differences on consolidation of subsidiaries reporting under
a different functional currency to the parent company.
“Retained losses” represents retained losses of the Group.
As a result of the reverse takeover, the consolidated figures
include the retained losses of the Group only from the date
of the reverse takeover together with the brought forward
losses of Supply@ME S.r.l.
Critical accounting judgements and sources
of estimation uncertainty
The preparation of financial information in conformity with
IFRS requires the use of certain critical accounting estimates.
It also requires the Directors to exercise their judgement
in the process of applying the accounting policies which
are detailed above. These judgements are continually
evaluated by the Directors and management and are based
on experience to date and other factors, including reasonable
expectations of future events that are believed to be
reasonable under the circumstances.
The key estimates and underlying assumptions concerning
the future and other key sources of estimation uncertainty
at the statement of financial position date, that have
a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial period, are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods
if the revision affects both current and future periods.
Judgements
Internally developed intangible assets
The cost of an internally generated IM platform comprises all
directly attributable costs necessary to create, produce, and
prepare the asset to be capable of operating in the manner
intended by management. During the period judgement
was required to distinguish those costs that were capable of
being capitalised under IAS 38 (“Intangible assets”) and that
costs that related to research activities, the cost of which has
been recognised as an expense during the relevant period.
The Directors noted that the plan giving rise to the IM Platform
asset remains, with an unchanged technical feasibility and
the identification of a growing market. Additionally, the
IM platform is now utilised following the facilitation of the
first IM transaction announced during 2022. Despite this,
management considered the material uncertainties with
respect to both the future timing and growth rates of the
forecast discounted cash flows arising from the use of
the IM Platform following the delays experienced in the
delivery of the business plan to date. This has resulted
in an impairment of internally generated IM Platform as
at 31 December 2022.
Revenue recognition – assessment of performance obligations
> The Directors are required to make a judgement as to if
the due diligence services represent a distinct performance
obligation under IFRS 15 (“Revenue from Contracts with
Customers”). The Board and management have concluded
that this is indeed the case due to the distinct beneficial
service being provided to client companies through the
delivery of the due diligence report which provide insight
and information into the business.
> The Directors are required to make a judgement as to
if the receipt of non-refundable origination fees received
from the client companies represent a distinct performance
obligation under IFRS 15 (“Revenue from Contracts with
Customers”). The Board and management have concluded
that no separately identifiable performance obligation is
carried out by the Group associated with this fee.
115 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
2 Accounting policies
Accounting for acquisition related earn-out payments
The terms of the agreement to acquire TradeFlow included
acquisition related earn-out payments that, together with
the initial cash payment and issue of equity, form the total
legal consideration agreed between the parties. The 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. Under the IFRS Interpretations
Committee’s interpretation of paragraph B55 of IFRS 3
(“Business Combinations”), the Directors have concluded
that the inclusion of the substantive post-acquisition service
conditions requires the fair value of these earn-out payments
to be accounted for as a charge to the income statement
(as deemed remuneration) rather than as consideration.
Discontinued operations
The Board considered that in light of the TradeFlow
Restructuring that commenced during the second half
of 2022, the TradeFlow operations meet the criteria to be
classified as held for sale at 31 December 2022 as at this
date the details of the TradeFlow Restructuring had all been
agreed in principle between the parties and was expected
to be completed post year end together with the publication
of the 2022 Annual Report and Accounts. As a result the
TradeFlow operations were available for immediate sale
in its present condition and it was highly probable that that
sale would be completed within 12 months of 31 December
2022. As disclosed above the final terms of the sale are
still being finalised following the triggering of the Buy Back.
On this basis, the fair value less costs to sell used in these
consolidated financial statement has been determined
by reference to the specific terms and conditions of the
Tradeflow Restructuring that had been agreed in principle
prior to the triggering of the Buy Back.
Estimates
Intangible assets in a business combination
On the acquisition of a business the identifiable intangible
assets may include customer relationships, brands and
internally generated software. The fair value of certain of
these assets is determined by discounting estimated future
net cash flows generated by the asset where no active
market for the asset exists. The use of different assumptions
for the expectations of future cash flows and the discount
rate would change the valuation of the intangible assets,
with a resultant impact on the goodwill or gain on acquisition
recognised.
On acquisition the Group recognised intangible assets of
£6,888,000, representing customer relationships (£4,829,000),
Brand (“TradeFlow”) (£205,000), CTRM software (£1,429,000)
and AI software (£425,000).
Customer relationships
The most significant intangible asset recognised is relationships
with customers, in this case being potential investors to the
Global Inventory programme (more specifically, at the date
of this report to its well-established CEMP – USD/ EUR Trade
Flow Funds Segregated Portfolios) for which TradeFlow acts
as an investment advisor. A model was used that present
valued the earnings forecast to be generated by the investor
relationships, net of a reasonable return on other assets
also contributing to that stream of earnings. The significant
assumptions used in this model were as follows:
Discount rate – 25%
Annual customer attrition rate – 5%
If the discount rate was adjusted by 2.5% the impact on the
value of the asset would be approximately plus or minus
£769,000 and £605,000 respectively. If the annual customer
attrition rate was adjusted by 2.5% the impact on the value
of the asset would be approximately plus or minus £989,000
and £824,000 respectively.
Brand
The brand has been valued by present valuing the saved
costs by owning the brand rather than paying a royalty to
licence the brand. The significant assumptions used in this
model were as follows:
Discount rate – 25%
Royalty rate – 1%
If the discount rate was adjusted by 2.5% the impact on the
value of the asset would not be impacted. If the royalty rate
was adjusted by 1% the impact on the value of the asset
would be approximately plus or minus £220,000.
CTRM software
CTRM software has been valued by present valuing the
saved costs by owning the software rather than paying a
royalty to licence the software. The significant assumptions
used in this model were as follows:
Discount rate – 25%
Royalty rate – 7%
116 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
2 Accounting policies
If the discount rate was adjusted by 2.5% the impact on the
value of the asset would be approximately plus or minus
£110,000. If the royalty rate was adjusted by 1% the impact
on the value of the asset would be approximately plus or
minus £220,000.
AI software
AI software has been valued with reference to the costs that
would have to be expended in order to recreate the asset.
The cost assumptions were based on historical costs and
as such there we no significant judgemental or subjective
assumptions.
Useful Economic Lives of Acquired Intangibles
On acquisition, the useful economic lives of acquired
intangibles, which are key estimates, are assessed by
management. The estimated useful lives of the acquired
intangible assets are set out below:
Customer relationships 13 years
Brand (TradeFlow) 5 years
CTRM software 5 years
AI software 5 years
These useful economic lives have been based on the following
factors:
> Customer relationships – the period over which 95%
of the value of the customer relationships is expected
to be achieved.
> Brand, CTRM software and AI software – the specific
characteristics of the asset, its life to date and bench-
marking to market data for comparable acquisition
transactions.
We have outlined below a sensitivity analysis detailing the
impact of changing the useful economic lives of each of the
acquired intangibles would have on the amortisation charged
to profit or loss for the year ended 31 December 2022:
Decreasing useful Increasing useful
life by 3 years life by 3 years
Approximate increase Approximate decrease
in amortisation in amortisation
£000 £000
Customer relationships 81 100
Brand (TradeFlow) 58 19
CTRM software 406 130
AI software 121 39
Total 666 287
Valuation of acquisition related earn-out payments
The acquisition related earn-out payments described above,
are able to be settled in either cash or equity. The contracts
governing the acquisition of TradeFlow however contain
conflicting terms with respect to which party has the right
to decide whether to settle the earn-out payments in
cash or shares. After taking legal advice, management have
concluded that the choice is at the discretion of the
Company, and that it is the Company’s current intention
to settle these payments in equity, capturing them within
the 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. This valuation needed
to take into account the following market conditions related
to these earn-out awards:
> 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; and
> That 50% of any earn-out shares may not be sold for
12 months following the award but are not contingent
on continued employment.
Judgement was required in determining the most appropriate
inputs into the valuation model (refer to detail in note 26)
used and the key judgemental input was the expected
volatility rate of the Company’s share price over the relevant
period and the assumption applied in the model was 90%,
with 162% applied for any required holding period. This
assumption reflects the Company’s actual volatility from the
date of listing through the grant date, and the Company’s
actual volatility for a 12 month period prior to the grant date,
respectively. Given the Group’s early stage of development,
it was concluded that the Group’s actual volatility was the
most appropriate rate to use. If the expected volatility rates
were adjusted by plus 10%, then the impact on the fair value
credit recognised in the income statement in the current
year would have been approximately minus £61,000. If the
expected volatility rates were adjusted by minus 10%, then
the impact on the fair value credit recognised in the income
statement in the current year would have been approximately
plus £51,000. These calculations assume that the volatility
rates had also been adjusted by similar percentages in the
prior year given that the current year fair value credit resulted
partly from an adjustment to charges recognised in the
prior year.
117 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
The fair value cost of those share warrants that were
issued connection with debt funding were recognised in
the consolidated income statement. If the expected volatility
rate was adjusted by plus 10%, then the impact on the fair
value recognised in the income statement in the current
year would have been approximately plus £23,000 (2021:
£71,000). If the expected volatility rate was adjusted by
minus 10%, then the impact on the fair value recognised
in the income statement in the current year would have
been approximately minus £24,000 (2021: £76,000).
The fair value cost of those share warrants that were issued
connection with equity funding during the current year were
recognised as debits to equity on the consolidated balance
sheet. If the expected volatility rate was adjusted by plus
10%, then the impact on the fair value recognised as the
initial debit to equity in the current year would have been
approximately plus £307,000. If the expected volatility rate
was adjusted by minus 10%, then the impact on the fair
value recognised as the initial debit to equity in the current
year would have been approximately minus £328,000.
2 Accounting policies
If management had reached the alternative conclusion
that the choice to settle in either cash or shares is at the
discretion of the TradeFlow shareholder, they would have
been accounting for under IFRS 2 (“Share-based payments”).
The impact would be to increase the acquisition related
earn-out credit recognised in the current financial year
by approximately £1.9m. Similar to above, these calculations
assume that the alternative conclusion had been reached
in the prior year given that the current year fair value credit
resulted partly from an adjustment to charges recognised
in the prior year.
Valuation of share warrants issued
During the year the Company issued share warrants
in connection with the loan notes, certain convertible loan
notes and new equity that were also issued during the year
ended 31 December 2022. As these share warrants were
issued as a cost of securing the debt and equity funding
facility they fall into the 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. Judgement
was required in determining the most appropriate inputs
into the valuation models (Black Scholes) used and the key
judgemental input was the expected volatility rate of the
Company’s share price over the relevant period and the
assumption applied in the models were between 97% – 88%
and were based the actual volatility of the Company’s share
price from the date of the RTO to the date at which the
relevant valuation model was run.
118 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
3 Segmental reporting
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 managed the Group as two operating segments being inventory monetisation
(currently comprising largely of 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, the provision of due diligence services and the facilitation of the initial IM
transaction that took place during 2022.
Following the work carried out in respect of the TradeFlow Restructuring, and the announcement on the 24 March 2023 regarding
the 100% buy back option exercised by the TradeFlow directors, the TradeFlow operations have been classified as a discontinued
operation under IFRS 5 (“Non-current assets held for sale and discontinued operations”). As such the Group has reverted back
to a single segment from its continuing operations for financial year ended 31 December 2022, being inventory monetisation,
alongside the head office costs (largely compromising the Company).
The key metrics assessed by the Board of Directors include revenue and adjusted operating profit (before deemed cost of
listing, 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.
Inventory Head Consolidated Group –
monetisation office continuing operations
Year ended 31 December 2022 £000 £000 £000
Revenue from continuing operations
Due Diligence fees 102 – 102
Inventory monetisation fees 36 – 36
Revenue from continuing operations 138 – 138
Operating loss from continuing operations before impairment charges (1,308) (3,343) (4,651)
All the Group’s revenue from due diligence fees is recognised at a point in time. Of the revenue generated from inventory
monetisation fees, £20,000 is generated from origination fees which is recognised at a point in time, and the remaining £16,000
is generated from usage of the Group’s IM Platform and services provided by the Group in connection with the IM transaction.
This £16,000 of revenue is recognised over time and the amount recognised in the current financial year relates to the
performance obligations satisfised prior to 31 December 2022.
Inventory Head Consolidated Group –
monetisation office continuing operations
As at 31 December 2022 £000 £000 £000
Balance sheet
Assets 635 867 1,502
Liabilities (4,773) (1,037) (5,810)
Net assets / (liabilities) (4,138) (170) (4,308)
Geographical analysis
The Group’s inventory monetisation operation is currently predominately located in Europe, while the investment advisory
operations (classified as a discontinued operation) are currently predominately located in Singapore.
119 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
3 Segmental reporting
Comparative segmental reporting
Inventory Monetisation Investment Advisory Head office Consolidated Group
Year ended 31 December 2021 £000 £000 £000 £000
Revenue
Due Diligence fees 279 – – 279
Investment Advisory fees – 259 – 259
Revenue by operating segment 279 259 – 538
Operating loss before deemed cost of listing and
acquisition related costs and impairment charges (1,071) (407) (2,953) (4,431)
All the Group’s revenue is recognised at a point in time.
Inventory Monetisation Investment Advisory Head office Consolidated Group
As at 31 December 2021 £ 000 £000 £000 £000
Balance sheet
Assets 802 181 9,552 10,535
Liabilities (4,363) (1,526) (6,071) (11,960)
Net assets / (liabilities) (3,561) (1,345) 3,481 (1,425)
The Company completed the acquisition of TradeFlow in 1 July 2021 and therefore the above tables include the results from
this date and the assets / (liabilities) only as at 31 December 2021.
Geographical analysis
The Group’s inventory monetisation operation is currently predominately located in Europe, while the investment advisory
operations are currently predominately located in Singapore.
4 Finance costs
2022 2021
£000 £000
Interest expense – loan notes / convertible loan notes 1,969 1,252
Interest expense – long-term borrowings 13 89
Total finance costs 1,982 1,341
5 Other operating income
2022 2021
£000 £000
Interest receivable 6 –
Other operating income 3 –
9 –
120 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
6 Operating loss
The Group’s operating loss from continuing operations for the year has been arrived at after charging (crediting):
2022 2021
£000 £000
Amortisation of internally developed IM platform (note 13) 47 391
Depreciation 4 2
Staff costs (note 8) 2,061 1,402
Professional and legal fees 2,194 1,772
Contractor costs 274 44
Insurance 100 123
Training and recruitment costs 4 75
In addition to the above, the Group incurred the following costs from continuing operations relating to impairment charges as
detailed below:
2022 2021
£000 £000
Impairment charges (note 13) 1,078 1,773
Total impairment charges 1,078 1,773
The following acquisition related costs and impairment charges have been recognised in the discontinued operations:
2022 2021
£000 £000
Transaction costs (note 25) – 2,009
Amortisation of intangible assets arising on acquisition (note 13) 846 391
Acquisition related earn-out payments (note 26) (710) 1,410
Impairment charges (note 13) 765 800
901 4,610
7 Auditors’ remuneration
During the year, the Group obtained the following services from the Group’s auditor, at the costs detailed below:
2022 2021
£000 £000
Fees payable to the Company’s auditors for the audit of the consolidated financial statements 100 75
Fees payable to the Company’s auditors and its associates for other services to the Group:
Audit of the Companies subsidiaries 34 29
Audit fees relating to prior periods 24 30
Total audit fees 158 134
Non-audit assurance services 25 –
Total audit and non-audit assurance related services 183 134
121 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
8 Staff costs
The aggregate payroll costs (including directors' remuneration) included within continuing operations were as follows:
2022 2021
£000 £000
Wages, salaries and other short term employee benefits 1,783 1,164
Social security costs 203 153
Post-employment benefits 76 86
Total staff costs 2,061 1,402
The aggregate payroll costs (including directors' remuneration) included within discontinued operations were as follows:
2022 2021
£000 £000
Wages, salaries and other short term employee benefits 680 312
Social security costs 27 13
Total staff costs – discontinued operations 706 325
The average number of persons employed by the Group (including executive directors) during the year, analysed by category
was as follows:
2022 2021
No. No.
Executive directors 3 2
Finance, Risk and HR 5 2
Sales and marketing 4 4
Legal 1 2
Operations and Platform development 13 9
Total average number of people employed 26 19
9 Key management personnel
Key management compensation (including directors):
2022 2021
£000 £000
Wages, salaries and short-term employee benefits 1,521 890
Social security costs 111 60
Post-employment benefits 42 60
Total key management compensation 1,674 1,010
Key management personnel consist of the Company leadership team and the Directors.
No retirement benefits are accruing to Company Directors under a defined contribution scheme (2021: none), however the
Chief Executive Officer received cash in lieu of payments to a defined contribution pension scheme of £12,420 during the year
(2021: £49,310). This was allowable under his director’s employment contract.
The Directors’ emoluments are detailed in the Remuneration Report of the Annual Report and Accounts for the year ended 31
December 2022.
122 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
10 Income tax
Tax charged in the income statement:
2022 2021
£000 £000
Current Taxation
UK Corporation tax – –
Foreign taxation paid/(receivable) by subsidiaries – continuing operations – 399
Foreign taxation paid/(receivable) by subsidiaries – discontinued operations – (67)
– 332
The tax on loss before tax for the period is more than (2021 – more than) the standard rate of corporation tax in the UK of 19%
(2021 – 19%).
The differences are reconciled below:
2022 2021
£000 £000
Loss before tax 9,877 12,155
Corporation tax at standard rate – 19% (1,877) (2,309)
Effect of expenses not deductible in determining taxable profit (tax loss) 817 929
Increase in tax losses carried forward which were unutilised in the current year 1,612 616
Tax adjustments in respect of foreign subsidiaries (timing differences) – 1,096
Over provision of tax in prior years (1) –
Income not taxable (452) –
Deferred tax not recognised (131) –
Differences between UK and foreign tax legislation 31 –
Total tax charge (1) 332
11 Deferred tax
The following are the deferred tax (liabilities)/assets have been recognised by the Group and movements thereon during the
current and prior year:
Deferred tax liability Deferred tax asset
arising on acquired arising on short-term
intangible assets timing differences Total
£000 £000 £000
As at 1 January 2021 – 394 394
Arising on acquisition of TradeFlow (1,171) – (1,171)
Additions – 24 24
Credit / (charge) to income 67 (254) (187)
Impairment – (164) (164)
As at 31 December 2021 (1,104) – (1,104)
As at 1 January 2022 (1,104) – (1,104)
Credit / (charge) to income 144 – 144
Reclassified to assets of disposal group held for sale 960 – 960
As at 31 December 2022 – – –
123 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
11 Deferred tax
The deferred tax liability arises on the acquisition of TradeFlow in 2020 and in particular on the fair value uplift that was applied
to the acquired intangible assets. This deferred tax liability will be released in line with the amortisation profile of the acquired
intangible assets. The balance as at 31 December 2022 has been reclassified to assets of disposal group held for sale.
The deferred tax asset previously recognised related to short term timing differences arising from revenue recognition, amortisation
costs and IAS 19 timing differences. As at 31 December 2022 the Directors reviewed the carrying amount of all deferred tax
assets to determine whether sufficient future taxable income will be generated to permit the use of the existing deferred tax
assets. In order to be prudent, and to follow a consistent approach used to determine the impairment of the Group’s internally
generated IM platform asset (refer to note 13 for further details), the Directors reached the conclusion to impair the full carrying
value of the deferred tax assets as at the year-end date. No further deferred tax assets have been recognised in the current
financial year due to the fact that the Group’s track record of successful IM facilitation is still being established.
In addition, unrecognised deferred tax assets, relating to tax losses carried forward across the Group have not been recognised
due to uncertainty over the timing and extent of future taxable profits. The losses can be carried forward indefinitely and have
no expiry date. The total approximate tax losses carried forward across the Group as at 31 December 2022 were £16.8m, being
£13.7m relating to continuing operations and £3.1m relating to discontinued operations.
12 Earnings per share
The calculation of the basic earnings/(loss) per share (EPS) is based on the total loss for the year of £9,878,000 (2021 – loss
£12,487,000) and on a weighted average number of ordinary shares in issue of 43,240,915,594 (2021 – 33,921,396,568). The
basic EPS is (0.023) pence (2021 – (0.037 pence)).
The calculation of the basic earnings/(loss) per share (EPS) from continuing operations is based on the total loss for the year
from continuing operations of £7,711,000 (2021 – loss £7,420,000) and on a weighted average number of ordinary shares in
issue of 43,240,915,594 (2021 – 33,921,396,568). The basic EPS from continuing operations is (0.018) pence (2021 – (0.022
pence)).
The calculation of the Basic earnings/(loss) per share (EPS) from discontinued operations is based on the total loss for the year
discontinued operations of £2,167,000 (2021 – loss £5,067,000) and on a weighted average number of ordinary shares in issue
of 43,240,915,594 (2021 – 33,921,396,568). The basic EPS from discontinued operations is (0.005) pence (2021 – (0.015 pence)).
The Company has share warrants and employee share scheme options in issue as at 31 December 2022, which would dilute
the earnings per share if or when they are exercised in the future. Further details of these share warrants and employee share
scheme options can be found in note 26.
No dilution per share was calculated for 2022 and 2021 as with the reported loss they are all anti-dilutive.
124 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
13 Intangible assets
Internally
Customer CTRM developed
Relationships Brand Software AI Software Goodwill IM platform Total
£000 £000 £000 £000 £000 £000 £000
Cost or valuation
At 1 January 2021 – – – – – 1,524 1,524
Arising of acquisition of Tradeflow 4,829 205 1,429 425 2,199 – 9,087
Additions – – – – – 1,020 1,020
At 31 December 2021 4,829 205 1,429 425 2,199 2,544 11,631
Additions – – – – – 1,125 1,125
Reclassified to assets of disposal group
held for sale (4,829) (205) (1,429) (425) (2,199) – (9,087)
At 31 December 2022 – – – – – 3,669 3,669
Amortisation
At 1 January 2021 – – – – – 380 380
Amortisation charge 186 20 143 43 – 391 783
At 31 December 2021 186 20 143 43 – 771 1,163
Amortisation charge 401 44 309 92 – 47 893
Reclassified to assets of disposal group
held for sale (587) (64) (452) (135) – – (1,238)
At 31 December 2022 – – – – – 818 818
Impairment
At 1 January 2021 – – – – – – –
Impairment charge – – – – 800 1,773 2,573
At 31 December 2021 – – – – 800 1,773 2,573
Impairment charge – – – – 765 1,078 1,843
Reclassified to assets of disposal group
held for sale – – – – (1,565) – (1,565)
At 31 December 2022 – – – – – 2,851 2,851
Net Book Value
At 31 December 2022 – – – – – – –
At 31 December 2021 4,643 185 1,286 382 1,399 – 7,895
The following intangible assets arose on the acquisition of TradeFlow during the prior period; Customer relationships, Brand,
Commodity Trade Risk Management (“CTRM”) software, Artificial Intelligence and back-office (“AI”) software and Goodwill. The
carrying value of these assets at the date of acquisition is shown in the table above. As at 31 December 2022, the TradeFlow
operations were reclassified as discontinued operations and as such the net book value of the intangible assets relating to the
TradeFlow operations have been reclassified to assets of disposal group held for sale at this date.
Impairment assessment – Internally developed IM Platform
The Directors considered the continued current year losses of the Group’s Italian subsidiary, to which the Internally developed
IM platform relates, and the full impairment of this intangible asset in the prior year, as an impairment indicators and therefore,
in accordance to IAS 36 (“Impairment of Assets”), considered if as at 31 December 2022, this intangible asset required further
impairment of the additions during the year or if some so the prior year impairment could be reversed.
125 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
13 Intangible assets
The full going concern statement, set out in note 2, noted there is currently an absence of a historical recurring track record relating
to inventory monetisation transactions being facilitated by the Group’s Platform, the generation of the full range of fees from
the use of its Platform from more than one inventory monetisation transaction, and the Group being cash flow positive. As such
the Directors have prudently identified a material uncertainty in relation to the going concern statement. The Directors have also
concluded that these uncertainties also apply to the discounted cash flow model used in this impairment test also. In particular,
there is uncertainty that arises with respect to both the future timing and growth rates of the forecast discounted cash flows
arising from the use of the Internally developed IM Platform intangible asset.
As such, the Directors have prudently decided to continue to impair the full carrying amount of this asset as at 31 December
2022. This impairment loss may subsequently be reversed and if so, the carrying amount of the asset will be increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the investment in prior years.
Impairment assessment – TradeFlow
The Directors considered the underperformance of TradeFlow compared to the forecast for the year ended 31 December
2022 (included in the independent valuation report prepared for the purposes of the acquisition) to be an impairment indicator.
In particular, the Directors noted that the earn-out milestone target, which had been set in line with the forecast referred to
above, for the year ended 31 December 2022 had not been achieved. Therefore, in accordance with IAS 36 (“Impairment of
Assets”) and IFRS 5 (“Non-current Assets Held for Sale and Discontinued Operations”), management have considered the need
for further impairment during the current financial year.
During the preparation of the interim financial statements this included a full IAS 36 (“Impairment of Assets”) impairment test
being 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. This
reforecast is considered to be based on a set of reasonable assumptions 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 and also to be consistent with the independent purchase price accounting exercise carried out in respect of the TradeFlow
acquisition in the prior financial year. 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 30 June 2022 by
£765,000.
As such, in accordance with IAS 36 (“Impairment of Assets”), an impairment charge of £765,000 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 financial year.
As described earlier in these consolidated financial statements, during the second half of 2022, the Directors began the process of
the TradeFlow Restructuring, and as detailed in notes 2 and 27 the TradeFlow operations have been classified as a discontinued
operation as at 31 December 2022 in accordance with IFRS 5 (“Non-current Assets Held for Sale and Discontinued Operations”).
When carrying out the impairment assessment of the TradeFlow CGU as at 31 December 2022, management was required to
consider the fair value less cost to sell of the TradeFlow operations, which given the classification as a discontinued operation,
is assumed to be the agreed price between two market participants.
Further to the TradeFlow Restructuring activities, on the 24 March 2023, that the TradeFlow Directors had provided written
notice to the Board of their intention to exercise their rights to buy back 100% of the share capital of TradeFlow, pursuant to
certain earn-out arrangements entered into in connection with the Company's acquisition of TradeFlow (the “Buy Back”), the
completion of which was announced on 6 July 2021.
126 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
13 Intangible assets
Given the proximity of this Buy Back announcement to the date of publication of these consolidated financial statements, details
of the Buy Back are still being considered and finalised as at the date of these financial statements. As such, management
instead considered the specifics set out in the TradeFlow Restructuring share purchase agreement that had been agreed in
principle between the Company and the TradeFlow directors, Tom James and John Collis, who together acted as the buyers
(the “Buyers”), prior to the Buy Back being exercised (the “TradeFlow SPA”). These specifics included that the:
a) TradeFlow SPA set out the total legal consideration for the 81% of the TradeFlow business and required an amount of
£2,000,000 to be payable to the Company by the TradeFlow directors as a result of the TradeFlow Restructuring;
b) Based on the amount agreed in a) above, the estimated fair value of 100% of the TradeFlow CGU is assumed to be
£2,469,000;
c) This value was compared to the net asset value of the TradeFlow operations in the consolidated financial statements as at
31 December 2022. This net asset value was £2,311,000.
As the estimated fair value of the TradeFlow CGU exceeded the net asset value of the TradeFlow operations in the consolidated
Group financial statements as at 31 December 2022, no additional impairment charges were recognised during the second
half of 2022.
14 Trade and other receivables
As at As at
31 December 2022 31 December 2021
£000 £000
Trade receivables 7 13
Contract assets – 84
Other receivables 1,179 727
Prepayments 33 72
Total trade and other receivables 1,219 896
15 Share capital
Allotted, called up and fully paid shares
As at As at As at As at
31 December 2022 31 December 2022 31 December 2021 31 December 2021
No. 000 £000 No. 000 £000
Equity – – – –
Ordinary shares of £0.00002 each 56,621,568 1,132 36,068,442 721
Deferred shares of £0.04000 each 63,084 2,523 63,084 2,523
2018 Deferred shares of £0.01000 each 224,194 2,242 224,194 2,242
56,908,846 5,897 36,355,720 5,486
127 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
15 Share capital
Reconciliation of allotted, called up and full paid
2022 2022 2021 2021
No. 000 £000 No. 000 £000
Ordinary shares as at 1 January 36,355,720 5,486 33,042,223 5,420
New ordinary shares issued to fulfil the conversion of Mercator
Capital Management Fund LP convertible loan notes 1,400,898 28 680,791 14
New ordinary shares issued to Venus Capital S.A. in connection
with the Capital Enhancement Plan 14,350,000 287
New ordinary shares issued to settle the FY21 acquisition
related earn-out payments 213,526 4
New ordinary shares issued in connection with Open Offer
completed during the year 641,710 13
New ordinary shares issued to fulfil the conversion
of Open Offer warrants 49,508 1
New ordinary shares issued to fulfil the conversion
of Venus Capital S.A. convertible loan notes 3,897,484 78
New ordinary shares issued to fulfil the conversion
of Negma Group Limited convertible loan notes 1,319,706 26
New ordinary shares issued as consideration for acquisition
of TradeFlow 813,000 16
New ordinary shares issued as consideration for support
with the TradeFlow acquisition 500,000 10
Total at 31 December 56,908,846 5,897 36,355,720 5,486
New shares allotted during the current financial year
New ordinary shares issued to fulfil the conversion of Mercator Capital Management Fund LP (“Mercator”) convertible loan notes
> On 13 January 2022, the Company allotted 594,664,101 new ordinary shares as a result of the conversion of £678,333 of
the convertible loan notes issued and subscribed by Mercator.
> On 28 February 2022, the Company allotted 489,787,922 new ordinary shares as a result of the conversion of £500,000 of
the convertible loan notes issued and subscribed by Mercator.
> On 29 March 2022, the Company allotted 316,446,349 new ordinary shares as a result of the conversion of £178,333 of the
convertible loan notes issued and subscribed by Mercator.
New ordinary shares issued to Venus Capital S.A. (“Venus”) in connection with the 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 and undertake an open offer to existing shareholders, in order to raise up to £7,500,000 in new equity
capital (the “Capital Enhancement Plan”). This new equity capital enabled the Company to settle the outstanding loan notes and
convertible loan notes with Mercator in cash rather than by the conversion of the convertible loan notes into new ordinary
shares. During the current financial year ended 31 December 2022, the following share issues were made to Venus in line with
subscription agreement dated 26 April 2022, and the subsequent amendment agreement dated 21 July 2022 and the side
letter agreement dated 3 October 2022:
> On 26 April 2022, the Company issued 2,770,000,000 of new ordinary shares to Venus in exchange for £1,385,000.
> On 10 May 2022, the Company issued 550,000,000 of new ordinary shares to Venus in exchange for £275,000.
> On 18 July 2022, the Company issued 1,350,000,000 of new ordinary shares to Venus in exchange for £675,000.
> On 5 September 2022, the Company issued 950,000,000 of new ordinary shares to Venus in exchange for £475,000.
> On 11 October 2022, the Company issued 8,730,000,000 of new ordinary shares to Venus in exchange for £4,365,000.
As at 31 December 2022 £500,000 of this amount is included with other receivables.
New ordinary shares issued in connection with the TradeFlow FY21 acquisition related earn-out payment
> On 19 July 2022, the Company issued 213,525,520 of new ordinary shares in settlement of the TradeFlow acquisition related
earn-out for FY21.
128 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
15 Share capital
New ordinary shares issued in connection with Open Offer completed on 17 August 2022
> On 18 August 2022, the Company issued 641,710,082 of new ordinary shares as a result of an Open Offer issue in exchange
for £306,029.
New ordinary shares issued to fulfil the conversion of Open Offer warrants
Further to the issue of new ordinary shares on the 18 August 2022 as a result of the Open Offer, the Company also issued
320,855,008 warrants to certain qualifying shareholders who participated in its open offer (the “Open Offer Warrants”). Following
the issue of the Open Offer Warrants, certain holders have elected to exercise their Open Offer Warrants and this resulted in
the following share issues during the current financial year:
> On 2 September 2022, the Company issued 5,064,230 of new ordinary shares as an Open Offer Warrant conversion.
> On 17 September 2022, the Company issued 8,058,388 of new ordinary shares as an Open Offer Warrant conversion.
> On 27 September 2022, the Company issued 1,608,176 of new ordinary shares as an Open Offer Warrant conversion.
> On 11 October 2022, the Company issued 30,897,410 of new ordinary shares as an Open Offer Warrant conversion.
> On 21 October 2022, the Company issued 2,190,452 of new ordinary shares as an Open Offer Warrant conversion.
> On 7 November 2022, the Company issued 615,335 of new ordinary shares as an Open Offer Warrant conversion.
> On 26 November 2022, the Company issued 512,454 of new ordinary shares as an Open Offer Warrant conversion.
> On 8 December 2022, the Company issued 561,555 of new ordinary shares as an Open Offer Warrant conversion.
New ordinary shares issued to fulfil the conversion of Venus convertible loan notes
In connection with the Capital Enhancement Plan, the Company also issued convertible loan note to the value of £1,917,500 to
Venus during the year. Further details of the Venus convertible loan notes can be found in note 8 to these financial statements.
The Venus convertible loan notes were settled through the issue of the following new ordinary shares:
> On 6 October 2022, the Company issued 3,048,986,302 of new ordinary shares to Venus Capital for the conversion of
Tranche B convertible loan notes with a principal value of £1,500,000.
> On 11 October 2022, the Company issued 848,498,083 of new ordinary shares to Venus Capital the conversion of Tranche
A convertible loan notes with a principal value of £417,500.
Rights, preferences and restrictions
Ordinary shares have the following rights, preferences, and restrictions
The Ordinary shares carry rights to participate in dividends and distributions declared by the Company and each share carries
the right to one vote at any general meeting. There are no rights of redemption attaching to the Ordinary shares.
Deferred shares have the following rights, preferences, and restrictions
The deferred shares carry no rights to receive any dividend or distribution and carry no rights to vote at any general meeting.
On a return of capital, the Deferred shareholders are entitled to receive the amount paid up on them after the Ordinary
shareholders have received £100,000,000 in respect of each share held by them. The Company may purchase all or any of the
Deferred shares at an appropriate consideration of £1.
2018 Deferred shares have the following rights, preferences, and restrictions
The deferred shares carry no rights to receive any dividend or distribution and carry no rights to vote at any general meeting.
129 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
16 Loan notes and Long-Term Borrowings
Loan notes
On 29 September 2021, the Company announced it had entered a loan note facility with Mercator Capital Management Fund
LP (“Mercator”). The new loan note facility consisted of a short-term loan with the following key terms:
> Initial draw down of £5m, with a further £2m 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 £7.7m, 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 17.
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 (the “Mercator Amendment”).
To assist with the final settlement of the outstanding Mercator loan notes and convertible loan notes, the Company and Mercator
signed a further Addendum Deed on 3 October 2022 (the “Addendum Deed”).
Pursuant to both the original agreement dated 29 September 2021, the Mercator Amendment and the Addendum Deed, the
Group repaid the following monthly instalments of the loan note liability over the year ended 31 December 2022:
> The January, February and March monthly repayments of £678,333 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 Mercator Amendment referred to
above. This was for an amount of £678,333, plus an additional late payment interest charge of £72,767.
> 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 £1,502,198, in lieu of cash repayments, to Mercator. This combined repayment was in accordance with the
Mercator Amendment and included additional late payment interest charges of £145,532.
> In line with the Mercator Amendment, each of the July, August and September monthly repayments were made through a
part issue of convertible loan notes of £400,000 each and through a part cash payment of £278,333 each. Each of these
monthly repayments incurred additional interest charges in line with the Mercator Amendment. The total additional interest
for these three months totalled £86,000.
> In October 2022, the Company exercised the repayment option that was agreed as part of the Addendum Deed entered
into on 3 October 2022. Under this option the Company, made the final October monthly payment of £678,333 in cash.
This payment incurred an addition interest charge of £20,000.
The settlements 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 periods in which they were incurred and have not
been included in the effective interest rate calculation.
Further details on the fair value of the warrants are set out in note 26.
130 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
16 Loan notes and Long-Term Borrowings
The movement in the loan notes during the current financial year are set out in the table below:
2022 2021
£000 £000
Loan note liability at 1 Jan 5,732 –
Initial drawdown net of commitment, introducer fees and fair value of warrants
issued in connection with the loan notes – 4,209
Second drawdown net of commitment and introducer fees – 1,900
Amortisation of finance costs during the period (recognised in the income statement) 1,051 540
Less: repayments made via issue of convertible loan notes (4,592) (917)
Less: repayments made via cash (2,191) –
Loan note liability at 31 December – 5,732
Long-Term Borrowings
As at As at
31 December 2022 31 December 2021
£000 £000
Unsecured loan notes – 1,263
Other bank borrowings (non-current portion) 748 21
Total long-term borrowings 748 1,284
TradeFlow entered into an unsecured loan note subscription agreement on 23 October 2020 and this was recognised by the
Group from the date of acquisition. This loan note was for a principal amount of USD 1,700,000. The terms of this agreement
require the principal to be repaid as one lump sum on the 23 October 2023 along with an additional cost of issue of USD
300,000. As at 31 December 2022 TradeFlow is disclosed as a discontinued operation under IFRS 5 (“Non-current assets Held
for Sale and Discontinued Operations”) and as such equivalent liability have been disclosed in aggregate as liabilities of disposal
group held for sale (refer to note 27 for more information).
On 13 October 2022, the Company announced that its subsidiary, Supply@ME Technologies S.r.l, had entered into a new long
term loan facility with Banco BPM S.p.A (the “Banco BPM Facility”). The obligations of Supply@ME Technologies S.r.l under the
Banco BPM Facility are guaranteed by the Company. The key commercial terms of the Banco BPM Facility include:
a) €1m in principal amount;
b) 275 basis points over Euribor interest rate; and
c) a five-year repayment term (the final payment to be made on 11 October 2027), including an initial six months of interest
only repayments, followed by 54 months of combined principal and interest repayments.
Fees totalling €52,000 were incurred in connection with the arrangement of the Banco BPM Facility. These costs have been
capitalised and will be spread over the term of the Banco BPM Facility. The amount include in the table above represents the
non-current portion of the Banco BPM Facility.
131 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
17 Convertible loan notes
As at 31 December 2022, the convertible loan note liability was nil (31 December 2021:nil). However, during the current financial
year, the Company entered into two different convertible loan arrangements. These are set out below:
Mercator convertible loan notes
As set out in Note 16 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 Mercator Amendment no further warrants were required to be issued on the monthly
repayments due following April 2022.
During the year ended 31 December 2022, the Company issued convertible loan notes to Mercator to the value of £4,737,000
which included the monthly repayments of £4,592,000 made by way of convertible loan notes (as set out in Note 6 above) and
the additional interest charge due on the May and June repayments of £145,532.
Of the £4,737,000 of convertible loan notes issued during the year, £3,381,000 was repaid in cash and the remaining £1,357,000
was converted into ordinary shares in the Company.
The Mercator convertible loan notes did not have any annual interest costs in addition to the loan notes but did have costs relating
to commitment fees and late payment interest charges of £571,000 and the fair value of the warrants of £236,000 associated
with issue of the convertible loan notes. All these costs have been recognised in the income statement in the current year given
the liability to which they relate has been extinguished (2021: £113,000). Further details on the fair value of the warrants are
set out in note 23 to the Group consolidated financial statements.
The movement in Mercator convertible loan note liability during the current financial period is set out in the table below:
£000
Mercator convertible loan note liability at 1 January 2022 –
Monthly loan note repayments made via issue of convertible loan notes 4,592
Financial costs satisfied via the issue of convertible loan notes 145
Less convertible loan notes converted into ordinary shares (1,356)
Less convertible loan notes repaid in cash (3,381)
Mercator convertible loan note liability at 31 December 2022 –
Venus convertible loan notes
In connection with the Capital Enhancement Plan announced by the Company on 26 April 2022, the Company executed a new
convertible loan note agreement with Venus Capital S.A. (“Venus”), under which the Company, at its discretion, could issue to
Venus convertible loan notes up to £1,950,000 in aggregate principal amount. These convertible loan notes were split into two
tranches being:
1. The Tranche A Venus convertible loan notes up to the value of £417,500 which could be issued by the Company to cover
the fees associated with the Venus equity subscription (£342,500) and convertible loan agreements (£75,000). The former
fees were required to be paid by the Company, proportionally, in line with when new ordinary shares were issued to Venus
under the Capital Enhancement Plan. The obligation to pay the later fees arose at the point the Company executed of the
working capital facility which is referred to below; 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 £1,500,000.
132 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
17 Convertible loan notes
In order to preserve the Company’s cash balance, the full £417,500 of fees were settled by the issue of the Tranche A convertible
loan notes to Venus between the period the 19 July 2022 and the 10 October 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 cost of the Tranche A Venus
convertible loan notes associated with the Venus equity subscription (£342,500) was offset against the share premium in
accordance with IAS 32 (“Financial Instruments”). The cost of the Tranche A Venus convertible loan notes associated with the
arrangement of the working capital facility with Venus (£75,000) was recorded as finance costs in the income statement given
these directly related to the cost of drawing down on this financing facility. These costs were recognised in line with the draw
down of the working capital facility.
Additionally, during July and August 2022, the Company drew down a total of £1,500,000 Tranche B convertible loan notes from
Venus in the form of the working capital facility. These convertible loan notes were also repayable in shares with a maturity
date of 31 December 2025 and incur a 10% per annual interest rate.
The settlement of both the Tranche A and Tranche B Venus convertible loan notes took place in October 2022 as follows:
a. On 3 October 2022, the Company and Venus entered into the side letter agreement, pursuant to which and conditional on
the admission subject to the Prospectus issued on the 3 October 2022, £1,500,000 in principal amount of Tranche B Venus
convertible loan notes, plus accrued interest of £25,000, were converted into 3,048,986,302 new ordinary shares which
were issued to Venus at a price of 0.05 pence per share on the 6 October 2022; and
b. On the 10 October 2022, in line with the side letter agreement referred to above, and conditional on the secondary admission
subject to the Prospectus issued on the 3 October 2022, £417,500 in principal amount of Tranche A Venus convertible loan
notes, plus accrued interest of £7,000, (including £61,500 in principal amount of Tranche A Venus CLNs to be issued and
immediately converted, not attracting interest) converted into 848,498,083 new ordinary shares which were issued to Venus
at a price of 0.05 pence per share on the 11 October 2022.
Both interest costs referred to above have been recognised in the income statement during the current financial period. As at
31 December 2022, there were no amounts outstanding under the Venus convertible loan note facility (31 December 2021: nil).
£000
Venus convertible loan note liability at 1 January 2022 –
Tranche A Venus convertible loan notes 418
Tranche B Venus working capital convertible loan notes 1,500
Interest cost associated with Tranche A and B convertible loan notes 32
Repayment of Venus convertible loan notes via the issue of new ordinary share (1,950)
Venus convertible loan note liability at 31 December 2022 –
Historical convertible loan notes
In addition to the above, the Company also had historical convertible loan notes and associated derivative financial instruments
that expired during the financial year ended 31 December 21 resulting in a credit to the income statement in the prior
year in respect of the outstanding fair value of £24,000. There were no amounts recorded in the income statement in the
current financial year.
133 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
18 Trade and other payables
As at As at
31 December 2022 31 December 2021
£000 £000
Trade payables 2,209 1,086
Other payables 747 588
Current portion of long term borrowings 158 –
Social security and other taxes 977 994
Accruals 402 437
Contract liabilities 94 395
4,587 3,500
19 Provisions
Post-employment Provision for risks Provision for VAT
benefits and charges and penalties Total
£000 £000 £000 £000
At 1 January 2021 32 36 267 335
Released to profit and loss – – (58) (58)
Provided for in the year 26 51 – 77
Payments (11) – – (11)
Actuarial (gain)/loss (3) – – (3)
At 31 December 2021 44 87 209 340
Forex retranslation adjustment 2 5 12 19
At 1 January 2022 46 92 221 359
Released to profit and loss – (19) (20) (39)
Provided for in the year 22 12 144 178
Payments (8) – – (8)
Actuarial (gain)/loss (22) – – (22)
At 31 December 2022 38 85 345 467
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 31 December 2022, the Group has included a provision relating to a
potential VAT liability, including penalties, in respect of these advance payments of £201,000 (31 December 2021: £209,000).
The reduction in the provision during the year represents the fact that some of these payments have been refunded, at the
customer’s request, and therefore the potential VAT liability has been removed.
134 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
19 Provisions
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 31 December 2022, however there is a
contingent asset of £143,000 as at 31 December 2022 (31 December 2021: £149,000) in respect of this.
From time to time, during the course of business, the Group maybe subject to disputes which may give rise to claims. The Group
will defend such claims vigorously and provision for such matters are made when costs relating to defending and concluding
such matters can be measured reliably. There were no cases outstanding as at 31 December 2022 that meet the criteria for a
provision to be recognised.
An additional amount of £144,000 was added to the provision during the current financial year to reflect the fact that the Italian
intercompany invoice was issued late and this balance reflects potential VAT penalties that may arise due to the timing of the
invoice.
20 Pension and other schemes
Defined contribution pension scheme
The Group operates a defined contribution pension scheme. The assets of the scheme are recognised as being held separately
from those of the Group and Company and will be paid over to an independently administered fund. The pension cost charge
represents contributions payable by the Group to the fund.
The total pension charge for the year represents contributions payable by the Group to the scheme and amounted to £76,000
(2021: £86,000).
Contributions totalling £9,000 (2021: £21,000) were payable to the scheme at the end of the year and are included in creditors.
This has been paid post year end.
21 Capital commitments
There were no capital commitments for the Group at 31 December 2022 or 31 December 2021.
22 Contingent liabilities
There were no contingent liabilities for the Group at 31 December 2022 or 31 December 2021.
135 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
23 Financial instruments
Financial assets
Carrying value Carrying value Fair value Fair value
As at As at As at As at
31 December 2022 31 December 2021 31 December 2022 31 December 2021
£000 £000 £000 £000
Financial assets at amortised cost:
Cash and cash equivalents 257 1,727 257 1,727
Trade receivables 7 13 7 13
Other receivables 1,179 727 1,179 727
1,443 2,467 1,443 2,467
Valuation methods and assumptions: The directors believe due to their short term nature, the fair value approximates to the
carrying amount.
Financial liabilities
Carrying value Carrying value Fair value Fair value
As at As at As at As at
31 December 2022 31 December 2021 31 December 2022 31 December 2021
£000 £000 £000 £000
Financial liabilities at amortised cost:
Loan notes – 5,732 – 5,732
Long-term borrowings 906 1,284 906 1,284
Trade payables 2,209 1,086 2,209 1086
Other payables 747 588 747 588
3,862 8,690 3,862 8,690
Valuation methods and assumptions: The directors believe that the fair value of trade and other payables approximates to the
carrying value.
There are no financial liabilities that are carried at fair value through the profit and loss as at 31 December 2022 (31 December
2021:nil).
Risk management
The Group is exposed through its operations to the following financial risks: credit risk, foreign exchange risk, and liquidity risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for managing these risks and the methods used to measure them.
Further quantitative information in respect of these risks is presented throughout these financial statements. There have been
no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing
those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, were as follows:
> trade receivables;
> cash at bank; and
> trade and other payables.
General objectives, policies and processes
The board had overall responsibility for the determination of the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it had delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group's finance function. The board received monthly reports from
the Chief Financial Officer through which it reviewed the effectiveness of the processes put in place and the appropriateness of
the objectives and policies it had set. The overall objective of the board was to set polices that sought to reduce risk as far as possible
without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below.
136 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
23 Financial instruments
Interest rate risk
At present the directors do not believe that the Group has significant interest rate risk and consequently does not hedge against
such risk. Cash balances earn interest at variable rates.
The Group's interest generating financial assets from continuing operations as at 31 December 2022 comprised cash and cash
equivalents of £257,000 (2021: £1,727,000). Interest is paid on cash at floating rates in line with prevailing market rates.
The Group’s interest generating financial liabilities from continuing operations as at 31 December 2022 comprised long term
borrowings of £906,000 (2021 – loan notes of £5,732,000 and long term borrowings of £1,284,000).
Sensitivity analysis
At 31 December 2022, had the LIBOR 1 MONTH rate of 0.01609 (2021 – 0.01047) increased by 1% with all other variables held
constant, the increase in interest receivable on financial assets would amount to approximately £nil (2021 – £nil). Similarly, a
1% decrease in the LIBOR 1 MONTH rate with all other variables held constant would result in a decrease in interest receivable
on financial assets of approximately £nil (2021 – £nil).
Credit risk and impairment
Credit risk is the risk of financial loss to the Group if a customer or a counterparty to a financial instrument fails to meet its
contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to
assess the credit risk of new customers before entering contracts. Such credit ratings take into account local business practices.
The Group has a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s
standard payment and delivery terms and conditions are offered.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. To manage this, the
Group has made sure that they use reputable banks.
The Group’s Chief Financial Officer monitors the utilisation of the credit limits regularly.
The Group’s maximum exposure to credit by class of individual financial instrument is shown in the table below:
Carrying value Maximum exposure Carrying value Maximum exposure
as at as at as at as at
31 December 2022 31 December 2022 31 December 2021 31 December 2021
£000 £000 £000 £000
Cash and cash equivalents 257 257 1,727 1,727
Trade receivables 7 7 13 13
264 264 1,740 1,740
As at 31 December 2022, the assets held by the Group are not past due or impaired. Trade receivables are all considered to
be low risk and have been fully repaid since year end.
Foreign exchange risk
Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency
is not the same as the functional currency in which the Group operates. Although its global market penetration reduces the Group’s
operational risk, in that it has diversified into several markets, the Group’s net assets arising from such overseas operations are
exposed to currency risk resulting in gains or losses on retranslation into sterling. Only in exceptional circumstances would the
Group consider hedging its net investments in overseas operations as generally it does not consider that the reduction in
foreign currency exposure warrants the cash flow risk created from such hedging techniques.
The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency
(primarily Euros or Pound Sterling) with the cash generated from their own operations in that currency. Where Group entities
have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency
to settle them) cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.
137 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
23 Financial instruments
Currency profile
Financial assets
> Cash and cash equivalents Sterling: £229,000 (2021 – £1,585,000)
> Cash Euro: £28,000 (2021 – £92,000)
> Cash US Dollar: £nil (2021 – £44,000)
> Cash Singapore Dollar: £324,000 (2021 – £5,000)
> Trade receivables Sterling: £nil (2021 – £nil)
> Trade receivables Euro: £7,000 (2020 – £13,000)
> Trade receivables Singapore Dollar: £1,000 (2021 – £4,000)
Financial liabilities
> Trade payables Sterling: £482,000 (2021 – £193,100)
> Trade payables Euro: £1,727,000 (2021 – £879,000)
> Trade payables Singapore Dollar: £6,000 (2021 – £14,000)
TradeFlow financial assets and liabilities have been included within the currency disclosures above. TradeFlow financial assets
and liabilities form part of the of the assets/liabilities held for disposal groups within the statement of financial position.
Sensitivity analysis
At 31 December 2022, if Sterling had strengthened by 10% against the below currencies with all other variables held constant,
loss before tax for the year would have been approximately
> EUR: £60,000 higher (2021 – £131,000 higher)
> Singapore Dollar: £69,000 higher (2021 – £51,000 higher)
Conversely, if the below currencies had weakened by 10% with all other variables held constant, loss before tax for the year
would have been approximately:
> EUR: £60,000 lower (2021 – £131,000 lower)
> Singapore Dollar: £60,000 lower (2021 – £51,000 lower)
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its
debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.
The board receives rolling 12-month cash flow projections on a regular basis as well as information regarding cash balances.
At the statement of financial position date, these projections indicated that the Group expects to have sufficient liquid resources
to meet its obligations under all reasonably expected circumstances.
There were no undrawn facilities at 31 December 2022 or 31 December 2021.
Between Between Between
Up to 3 months 3 and 12 months 1 and 2 years 2 and 5 years Over 5 years
At 31 December 2022 £000 £000 £000 £000 £000
Liabilities
Long-term borrowings – 158 189 559 –
Trade and other payables 2,209 747 – – –
Social security and other taxes 977 – – – –
Total liabilities 3,186 905 189 559 –
138 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
23 Financial instruments
Between Between Between
Up to 3 months 3 and 12 months 1 and 2 years 2 and 5 years Over 5 years
At 31 December 2021 £000 £000 £000 £000 £000
Liabilities
Loan notes 1,493 4,239 – – –
Loans and borrowings – 2 1,269 13 –
Trade and other payables 1,674 – – – –
Social security and other taxes 994 – – – –
Total liabilities 4,161 4,241 1,269 13 –
Capital risk management
The Group’s capital management objectives are to ensure the Group is appropriately funded to continue as a going concern
and to provide an adequate return to shareholders commensurate with risk. The Group defines capital as being total shareholder’s
equity. The Group’s capital structure is periodically reviewed and, if appropriate, adjustments are made in the light of expected
future funding needs, changes in economic conditions, financial performance and changes in Group structure. As explained in
notes 16 and 17, the Group has currently entered into external debt finance by way of loan notes, long term borrowings and
convertible loan notes.
The Group adheres to the capital maintenance requirements as set out in the Companies Act.
Capital for the reporting periods under review is summarised as follows:
> Net liabilities: (£2,025,000) (2021: (£1,425,000))
> Cash and cash equivalents: £257,000 (2021: 1,727,000)
24 Net debt
The Group reconciliation of the movement in net debt is set out below:
Convertible Total long-term
Cash at bank Loan notes loan notes borrowings Total
£000 £000 £000 £000 £000
At 1 January 2022 1,727 (5,732) – (1,284) (5,289)
Net cash flows (1,133) – (1,500) (2,403) (5,036)
Convertible loan notes issued as repayment of loan
notes, share issue costs and/or interest – – (5,187) – (5,187)
Amortisation of finance costs – (1,051) – (356) (1,407)
Cash repayments made during the year – 2,191 3,381 – 5,572
Repayment of convertible loan notes via share issues – – 3,306 – 3,306
Repayment of loan notes via issue of
convertible loan notes – 4,592 – – 4,592
Reclassification of disposal group held for sale – – – 3,171 3,171
Foreign exchange (13) – – (34) (47)
As at 31 December 2022 581 – – (906) (325)
139 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
24 Net debt
Convertible Long-term
Cash at bank Loan notes loan notes borrowings Total
£000 £000 £000 £000 £000
At 1 January 2021 552 – – (22) 530
Net cash flows 686 (6,629) (5,000) – (10,943)
Fair value of warrants – 520 – – 520
Amortisation of finance costs – (540) (600) – (1,140)
Cash repayments – – 2,016 – 2,016
Non cash repayments – 917 3,584 – 4,501
Arising on acquisition 477 – – (1,229) (752)
Foreign exchange 12 – – (33) (21)
As at 31 December 2021 1,727 (5,732) – (1,284) (5,289)
25 Business combinations
On 1 July 2021, the Group completed the acquisition of the entire issued share capital of TradeFlow Capital Management Pte.
Ltd (“TradeFlow”). TradeFlow is a leading Singapore-based fintech-powered commodities trade enabler focused on small and
medium size entities. The Board approved the acquisition by the Group to complement its global offering of its “warehouse goods”
inventory monetisation platform with the TradeFlow offering of monetising “in-transit” inventory (in particular, commodities). It
was also expected the acquisition generate a number of attractive synergy benefits for Group from both a funding and customer
origination perspective.
TradeFlow owns 85% of the issued share capital of Tijara Pte. Limited and 50% of the issued share capital of TradeFlow Capital
Management Systems Pte. Limited. Both of these companies are at very early-stage of their development and their results and
balances as at both 31 December 2021 and 31 December 2022 are immaterial to the Group.
The net asset amounts in respect of the identifiable assets acquired and liabilities which have recognised in the financial statements
are set out in the table below. These are based on a fair valuation of the acquired identifiable net assets as at the acquisition
date. The assets and liabilities recognised as a result of the acquisition on 1 July 2021 are:
Book Value Fair value Adjustment Fair Value
£000 £000 £000
Net assets / (liabilities) acquired
Cash and cash equivalents 477 – 477
Accrued income 47 – 47
Trade and other receivables 6 – 6
Property, plant and equipment 9 – 9
Trade and other payables (137) – (137)
Long-term borrowings (1,229) – (1,229)
Intangible assets
Customer relationships – 4,829 4,829
Brand – “TradeFlow” – 205 205
CTRM Software – 1,429 1,429
AI Software – 425 425
Deferred tax liability – (1,171) (1,171)
Total identifiable net (liabilities) / assets acquired (827) 5,717 4,890
140 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
25 Business combinations
Satisfied by:
Consideration under IFRS 3:
£000
Cash consideration 4,000
Equity instruments (813,000,000 new ordinary shares) 3,089
Total consideration 7,089
Goodwill recognised on acquisition 2,199
Consideration accounted as deemed remuneration
Acquisition related earn-out recognised in the prior financial year 1,410
Acquisition related earn-out recognised in the current financial year (710)
Acquisition related earn-out expected to be recognised in future periods –
700
The goodwill arising is attributable to:
> the significant amount of knowledge, experience and expertise acquired through the TradeFlow workforce, and in particular
the earn-out shareholders;
> the anticipated future profit from growth opportunities; and
> synergies expected to be realised with the Group.
The goodwill arising from the acquisition has been allocated to the TradeFlow Cash Generated Unit (“CGU”). Fair value adjustments
of £6,888,000 have been recognised for acquisition-related intangible assets and related deferred tax of £1,171,000 as at 1 July
2021. Details of intangible assets recorded can be found in note 13.
As detailed above, elements of the consideration payable for this acquisition require post-acquisition service obligations to be
performed by the earn-out shareholders over a three-year period. These amounts are accounted for as deemed remuneration
(see notes 2 and 27) as required by IFRS 3 (“Business Combinations”).
Transaction costs of £2,009,000 have been charged to the statement of comprehensive income during the year ended 31 December
2021. Of these costs, £1,900,000 represented the fair value of 500,000,0000 new ordinary shares issued as consideration to
third party intermediaries who either introduced TradeFlow to the Company or who provided due diligence activities in respect
of the TradeFlow business, market, sector and geographic location. The remaining £109,000 related to legal fees that were di-
rectly associated with the acquisition.
During the second half of 2022, the Directors began the process of the proposed restructuring the Company’s ownership with
TradeFlow (“TradeFlow Restructuring”) and as a result the TradeFlow business has been classified as held for sale / a discontinued
operation as at 31 December 2022 in line with IFRS 5 (“Non-current Assets Held for Sale and Discontinued Operations”). This
is due to the fact that TradeFlow was available for immediate sale in its present condition and it was highly probable that sale
would be completed. Further details are set out in note 27.
141 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
26 Share-based payments
Share warrants issued to Mercator
As explained in note 17, during the year the Group entered into a funding facility with Mercator which included the Group
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 Group elect not to repay any of the interest or principal relating to the loan notes in cash. Both the loan note and
convertible loan note agreements required share warrants to be issued representing 20% of the face value of any loan notes
or convertible loans issued. The warrants have a term of 3 years from issue and an exercise price of 130% of the lowest closing
VWAP over the ten trading days immediately preceding the issue of the warrants. Under the terms of amendment agreement
signed with Mercator dated 26 April 2022, no further warrants were required to be issued on the monthly repayments due
following April 2022.
The total number of share warrants issued during the current financial year was 439,040,922, which together with the total of
522,791,511 issued in the prior financial year takes the total number of share warrants issued to Mercator as at 31 December
2022 to 961,832,433 (31 December 2021: 522,791,511). Details of the outstanding share warrants issued to Mercator are set
out in the table below.
Principal value Amount Amount
of warrants recognised recognised
issued Number of Fair value during FY22 during FY21
Date of issue (£000) warrants Exercise price (£000) (£000) (£000)
1 October 2021 1,400 443,726,030 £0.00316 520 343 177
1 November 2021 92 29,197,856 £0.00314 42 – 42
1 December 2021 92 49,867,625 £0.00184 46 – 46
4 January 2022 136 77,763,767 £0.00174 83 83 –
2 February 2022 136 79,179,799 £0.00171 54 54 –
4 March 2022 136 105,948,198 £0.00128 44 44 –
10 June 2022 149 176,149,157 £0.00085 55 55 –
Total 2,141 961,832,433 844 579 265
As these share warrants were issued as a cost of securing the funding facility they are classified as 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 and the key judgemental assumptions have been
detailed in note 2.
The total fair value of the above share warrants issued during the current financial year is £236,000 (2021:£608,000). In the prior
year, a fair value amount of £520,000 related to warrants that were issued in connection with the loan notes and this fair value
was netted off the initial proceeds received on the balance sheet. This amount is being amortised to the income statement using
the effective interest rate method and £343,000 was recognised in the income statement for the period ended 31 December 2022
(2021: £177,000). The remaining £236,000 (2021: £88,000) related to those warrants issued in connection with the convertible
loan notes, this amount was expensed fully in the income statement in the current year given the liability to which they relate
has been extinguished (2021: £88,000).
Share warrants issued to Venus under Capital Enhancement Plan
As set out in note 1, on the 27 April 2022, the Group announced it had entered into a subscription agreement with Venus in
connection with the Capital Enhancement Plan. The subscription agreement specified that the Group was required to issue
one warrant for every two shares issued in connection with the mandatory tranches of the new shares issues. This was a total
of 2,950,000,000 share warrants. The subscription agreement specified that the Group was required to issue one warrant for
every five shares issued in connection with the optional tranches of the new shares issues. This was a total of 1,500,000,000
share warrants. Additionally, an amount of 3,250,000,000 share warrants were to be issued to Venus in connection with the
signing of the subscription agreement on 26 April 2022. As such the Group issued a total of 8,175,000,000 share warrants to
Venus during the year ended 31 December 2022, and as at the year end date, these all remain outstanding. 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.
142 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
26 Share-based payments
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 and the key
judgemental assumptions have been detailed in note 2.
The total fair value of the above share warrants to be issued to Venus at 31 December 2022 is £4,795,000 (31 December 2021:
nil). Given this amount directly related to the cost of issuing new ordinary shares to Venus, an amount of £3,204,000 has been
offset against the share premium balance as at 31 December 2022 (31 December 2021: nil) in accordance with IAS 32 “Financial
Instruments”. This amount was offset against the related share premium that was created in connection with the relevant issue
of ordinary share to Venus. The remaining fair value amount of £1,591,000 has been recognised in retained losses.
Share warrants issued to retail shareholders under the Open Offer
On 22 July 2022, the Group announced the Open Offer, giving existing shareholders the opportunity to subscribe for up to
641,710,082 new ordinary share in the Group on the basis of one Open Offer share for every 66 existing ordinary shares held
at an offer price of 0.05 pence per Open Offer share. The Open Offer closed on 17 August 2022 and on 18 August 2022, the
Group announced it would allot and issue 641,710,082 new ordinary shares to those qualifying shareholders and that this
would raise £320,855 gross (and £269,855 net of fees and expenses) for the Group.
In addition to the new ordinary share that were issued, the Group also issued 320,855,008 warrants to the qualifying shareholders
on the basis of one warrant for every two ordinary shares received as a result of the Open Offer. The 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 the new Open Offer ordinary shares 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 and the key judge-
mental assumptions have been detailed in note 2.
The total fair value of the above share warrants to be issued in connection with the Open Offer was £261,000 (31 December
2021: nil). Given this amount directly related to the cost of issuing new Open Offer ordinary shares, the amount of £247,000
has been offset against the share premium balance as at 31 December 2022 (31 December 2021: nil) in accordance with IAS
32 “Financial Instruments”. This amount was offset against the related share premium that was created in connection with
Open Offer share issue. The remaining fair value amount of £14,000 has been recognised in retained losses.
Subsequent to the issue of the Open Offer warrants, and prior to 31 December 2022, an amount of 51,869,971 of these warrants
have been converted in exchange for new ordinary shares and as at 31 December 2022 there is a balance of 268,985,037
Open Offer warrants which remained outstanding. On the exercise of the Open Offer warrants, the fair value amount is reclassified
from the share-based payment reserve to retained losses.
A summary of the share warrants outstanding as at 31 December 2022 is detailed in the table below:
Number of Number of
warrants outstanding warrants outstanding
at 31 December 2022 at 31 December 2021
Share warrants issued to Mercator 961,832,433 522,791,511
Share warrants issued to Venus 8,175,000,000 –
Share warrants issued to retail shareholders 268,985,037 –
Total 9,405,817,470 522,791,511
143 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
26 Share-based payments
A summary of the fair value of the share warrants issued during the period are detailed in the table below:
FY22 FY21
£000 £000
Share warrants issued to Mercator 236 608
Share warrants issued to Venus 4,795 –
Share warrants issued to retail shareholders 261 –
Total 5,292 608
Acquisition related earn-out payments
In addition, the Group recognised a share-based payment reserve in connection with acquisition related earn-out. Given the
service conditions related to these payments the Group records this amount as a share-based payment expense through the
income statement and through the share-based payment reserve.
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. Further details are set out below.
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. The 2021 earn-out payment was settled through the issue of new ordinary
shares on the 18 July 2022.
Considering 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 note 2. The models above have assumed
the non-market conditions surrounding these earn-out payments / awards will be met and as such 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 during the year ended 31 December 2021 was £1,410,000. This reflected
managements best estimate at the time of the earn-out payments that would be required to be settled in relation to FY21,
FY22 and FY23.
During the preparation of these consolidated financial statements, management concluded the continued underperformance
of TradeFlow compared to the forecast for the year ended 31 December 2022 (included in the independent valuation report
prepared for the purposes of the Acquisition) resulted in the FY22 acquisition related earn-out targets of TradeFlow not being
achieved. This led the Directors to revise their IFRS 2 judgements in connection with the FY22 acquisition related earn-out
payments and the likelihood of FY23 acquisition related earn-out targets being met is now considered to be remote.
144 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
26 Share-based payments
As a result the Directors revised their IFRS 2 judgements in respect of the acquisition related earn-out payments to be made
in connection with the FY22 and FY23 revenue targets of TradeFlow. This resulted in an amount of £833,000 being reversed
from the share-based payment reserve in relation to the FY22 and FY23 acquisition related earn-out payments. As the FY21
acquisition related earn-out payment was settled during the current financial year, an additional amount was added to the
share-based payment reserve of £172,000 which covered the amounts to be recognised in FY22 in line with the estimated
vesting date of March 2022. The net amount that was recognised in the income statement during the year ended 31 December
2022 was £710,000. As this relates to the TradeFlow operations, it has been recognised through the loss from discontinued
operations in the current year.
The settlement of the FY21 acquisition related earn-out payment occurred in July 2022 when the Group had sufficient equity
headroom to issue the Tom James and John Collis, the directors of TradeFlow, with 213,525 of new ordinary shares. The fair
value of the FY21 acquisition related earn-out payments that was recognised in the year ended 31 December 2021 was
£699,000. At the point this was settled in shares, the relevant share-based payment reserve was released and the corresponding
increase in share capital and share premium was recognised.
Employee share scheme awards
On 31 October 2022, the Group awarded an LTIP conditional on performance conditions, being the achievement of specified
Total Shareholder Return (“TSR”) (market condition) performance, as well as continued employment. The TSR performance related
to a three year period over the 2022, 2023 and 2024 financial years and the required TSR performance is set out in the table
below with the adjusted share price measurement period being the average closing mid-market price of a share over a three
month period ending on the last dealing day of the performance period:
Adjusted share price per share Percentage of TSR award vesting
Below 0.6945 pence 0%
Equal to 0.6945 pence 25%
1 penny or greater 100%
Vesting is on a straight-line basis between target levels.
The vesting date of these share awards is 31 October 2025, and the continued employment covers up until this date. The share
awards issued to the Chief Executive Officer are subject to an additional 2 years holding period following the vesting date.
For those share schemes with market related vesting conditions, the fair value is determined using the Monte Carlo model at
the grant date. The following table lists the inputs to the model used for the awards granted in the year ended 31 December
2022 based on information at the date of grant:
LTIP awards (granted on 31 October 2022) TSR element
Share price at date of grant 0.08 pence
Award price 0.002 pence
Volatility 116.38%
Life of award 3 years
Risk free rate 3.34%
Dividend yield 0%
Fair value per award 0.0245 pence
145 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
26 Share-based payments
The additional holding period applicable to the share awards issued to the Chief Executive Officer have been valued using the
Finnerty model. The following table lists the inputs to the model used for the awards granted in the year ended 31 December
2022 based on information at the date of grant:
LTIP awards (granted on 31 October 2022) TSR element additional holding period
Share price at date of grant 0.08 pence
Award price 0.08 pence
Volatility 116.73%
Life of holding period 2 years
Risk free rate 3.60%
Dividend yield 0%
Fair value per award with holding period 0.0208 pence
These awards will be equity-settled by award of ordinary shares. The total share-based payment charge recognised in the
consolidated income statement for the year ended 31 December 2022 is £11,000 (2021: nil). As all social security charges with
respect to the share awards will be the responsibility of the employee, no expense has been recognised by the Group in respect
of these charges.
The following table summarised the movements in the number in share awards issued by the Company:
2022 2021
Outstanding at 1 January – –
Conditionally awarded in year 874,783,094 –
Exercised – –
Forfeited or expired in year – –
Outstanding at 31 December 874,783,094 –
Exercisable at the end of the year – –
All of the outstanding share awards as at 31 December 2022 related to the share awards issued on the 31 October 2022.
27 Discontinued Operations
During the second half of 2022, the Directors began the process of the TradeFlow Restructuring, and as detailed in notes 2
and 3, the Board considered the TradeFlow operations meet the criteria to be classified as held for sale at 31 December 2022
in accordance with IFRS 5 (“Non-current Assets Held for Sale and Discontinued Operations”). This is due to the fact that as at
this date the details of the TradeFlow Restructuring had all been agreed in principle between the parties and was expected to
be completed post year end together with the publication of the 2022 Annual Report and Accounts. As a result the TradeFlow
operations were available for immediate sale in its present condition and it was highly probably that that sale would be completed
at 31 December 2022. With the classification as discontinued operations, the TradeFlow operations have been excluded from
the segmental reporting note (note 3).
Further to the TradeFlow Restructuring activities, on the 24 March 2023, that the TradeFlow Directors, being Tom James and
John Collis, had provided written notice to the Board of their intention to exercise their rights to buy back 100% of the share
capital of TradeFlow, pursuant to certain earn-out arrangements entered into in connection with the Company’s acquisition of
TradeFlow (the “Buy Back”), the completion of which was announced on 6 July 2021. As a result of the exercise of the Buy Back,
the details of the TradeFlow Restructure, that had been agreed in principle prior to year end, now need to be renegotiated,
and a new independent valuation of the TradeFlow operations needs to be completed. Given the proximity of this Buy Back
announcement to the date of publication of these consolidated financial statements, details of the Buy Back are still being
considered and finalised as at the date of these financial statements.
146 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
27 Discontinued Operations
The results of the TradeFlow operations for the year are presented below:
2022 2021
£000 £000
Revenue 629 259
Administration expenses (1,705) (697)
Other operating income 22 –
Operating loss before acquisition relation costs and impairment charges (1,054) (438)
Transaction costs (note 25) – (2,009)
Amortisation of intangible assets arising on acquisition (note 25) (846) (391)
Acquisition related earn-out payments (note 26) 710 (1,410)
Impairment charges (note 13) (765) (800)
Operating loss (1,955) (5,048)
Finance costs (refer below) (356) (86)
Loss before tax (2,311) (5,134)
Deferred tax credit (note 11) 144 67
Loss for the year (2,167) (5,067)
The major classes of assets and liabilities of the TradeFlow operations as held for sale as at 31 December 2022 are as follows:
31 December 2022
£000
Assets
Intangible assets (note 13) 6,283
Tangible assets 4
Trade and other receivables 101
Contract assets 132
Cash and cash equivalents 324
Assets of disposal group held for sale 6,844
Liabilities
Trade and other payables 429
Long term borrowings (refer below) 3,171
Deferred tax liability (note 11) 960
Liabilities of disposal group held for sale 4,560
Net assets 2,284
The net cash flows from the TradeFlow operations were as follows:
2022 2021
£000 £000
Net cash flows from operating activities (1,228) (387)
Net cash flows from investing activities (1) –
Net cash flows from financing activities 1,517 –
Net cash inflows/(outflows) 288 (387)
147 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
27 Discontinued Operations
Financial instruments
Carrying value Fair value
As at As at
31 December 2022 31 December 2022
£000 £000
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents 324 324
Trade receivables 1 1
Other receivables 29 29
354 354
Carrying value Fair value
As at As at
31 December 2022 31 December 2022
£000 £000
Financial liabilities
Financial liabilities at amortised cost:
Loan notes – –
Long-term borrowings 3,171 3,171
Trade payables 6 6
Other payables 196 196
3,372 3,372
TradeFlow long term borrowings
On 1 April 2022, TradeFlow settled the outstanding unsecured loan notes earlier than the original maturity date of 23 October
2023. This involved the settlement of the principal amount of USD$1,700,000, the additional redemption premium cost of USD
$300,000 and accrued interest of USD $100,000. These loan term borrowings were replaced by a 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 a redemption premium cost which is payable together with
the settlement of the principal amount of the facility. This redemption premium cost is recognised over the expected life of the
facility using the effective interest rate method. Due to the early settlement of the unsecured loan notes this resulted in the
unrecognised portion of the redemption premium cost being accelerated. This contributed an additional finance cost of
£128,000 during the year ended 31 December 2022.
As at 31 December 2022, the Group has recognised outstanding monthly accrued interest on the new long term loan facility
of £186,000 within trade and other payables. An additional amount of £30,000 relating to the amortisation of the redemption
premium cost has been recognised as part of the unsecured loan balance at 31 December 2022.
148 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
28 Related Party Transactions
During the year to 31 December 2022, the following are treated as related parties:
Alessandro Zamboni
Alessandro Zamboni is the Chief Executive Officer of the Group and is also the sole director of The AvantGarde Group S.p.A as well
as holding numerous directorships across companies including RegTech Open Project S.p.A. Both of these entities are related
parties due the following transactions that took place over the current or prior financial year.
The AvantGarde Group S.p.A (“TAG”) and its subsidiaries
As at 31 December 2022 TAG held 22.5% of the Company’s total ordinary shares 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 31 December 2022, nil (period ended 31 December 2021 £175,000) 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 note 2.
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 31 December 2022, the
Group incurred expenses of £70,000 (period ended 31 December 2022: £129,000) to TAG in respect of this agreement.
Following the above transactions with TAG the Group has a net amount receivable of £9,000 as at 31 December 2022 (net
amount payable of £64,000 as at 31 December 2021).
The TAG Group includes other companies which the Group had entered into transactions with. These companies include the
Future of Fintech S.r.l. and RegTech Open Project S.p.A (“RTOP”), 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.
In July 2022, the Company entered into an agreement with RTOP, pursuant to which RTOP was engaged to build and create a
number of modules for the Company, including “data factory” (i.e., data ingestion and business rule application), and, during
the year ended 31 December 2022, £270,000 has been paid by the Company to RTOP pursuant to that agreement. As at 31
December 2022 there is an outstanding amount accrued by the Group of £58,000 to RTOP in relation to this specific agreement.
As at 31 December 2021 there is an outstanding amount owed by the Group of £5,000 to RTOP in relation historical amounts
owing for regulatory technology professional services provided to the Group.
As at 31 December 2022 there were no outstanding amounts between the Group and Future of Fintech as the amount that
had been outstanding had been fully provided against (31 December 2021: amount owed to the Group of £6,000 in relation
to severance pay accrued by former employees which had been transferred to the Group).
Eight Capital Partners Plc
David Bull is an Independent Non-Executive Director and audit committee chair was the CEO of Eight Capital Partners PLC from
22 June 2021 until 12 August 2022. Following the reverse takeover in March 2020, the Company entered into a Master Service
Agreement with Eight Capital Partners Plc in respect of certain shared service to be provided to the Group. During the year, this
agreement was terminated and the Group paid £3,000 (2021: £72,000) to Eight Capital Partners Plc in respect of this agreement.
As at 31 December 2022 there was no amount outstanding amount owed by the Group (31 December 2021: £8,000).
149 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2022
28 Related Party Transactions
Westcott Hill Limited
Albert Ganyushin was appointed as the Independent Chair of the Company on 6 June 2022. Albert is also a director of Westcott
Hill Limited. Prior to his appointment Albert carried out a strategic review of the Group focusing on the long-term business
objectives and its governance requirements. This strategic review was contracted by the Company with Westcott Hill Limited and
the Group recorded an expense of £12,000 in relation to this review. As at 31 December 2022 there was no amount outstanding
amount owed by the Group (31 December 2021: nil).
29 Controlling party
At 31 December 2022 the Directors do not believe that a controlling party exists.
30 Subsequent events
Board restructuring
On 15 March 2023 Andrew Thomas, a Non-Executive Director at the time, resigned from the Board of Directors of the Group
in order to focus on his other business interests.
On 16 March 2023, Alexandra Galligan was appointed to the Board of Directors as a new independent Non-Executive Director.
On 23 March 2023 Dr Tom James and John Collis resigned from the Board of Directors of the Group.
Shares issued post year relating to Open Offer Warrant Conversions
> On 10 January 2023, the Company announced the exercise of 67,471 Open Offer Warrants by certain Qualifying Shareholders,
and the issue of 67,471 Open Offer Warrant Shares.
> On 30 January 2023, the Company announced the exercise of 1,800,019 Open Offer Warrants by certain Qualifying Shareholders,
and the issue of 1,800,019 Open Offer Warrant Shares.
> On 2 March 2023, the Company announced the exercise of 494,481 Open Offer Warrants by certain Qualifying Shareholders,
and the issue of 494,481 Open Offer Warrant Shares.
TradeFlow Buy Back
On the 24 March 2023, that the TradeFlow Directors, being Tom James and John Collis, had provided written notice to the Board
of their intention to exercise their rights to buy back 100% of the share capital of TradeFlow, pursuant to certain earn-out
arrangements entered into in connection with the Company’s acquisition of TradeFlow (the “Buy Back”), the completion of which
was announced on 6 July 2021. As a result of the exercise of the Buy Back, the details of the TradeFlow Restructure, that had been
agreed in principle prior to year end, now need to be renegotiated, and a new independent valuation of the TradeFlow operations
needs to be completed. Given the proximity of this Buy Back announcement to the date of publication of these consolidated
financial statements, details of the Buy Back are still being considered and finalised as at the date of these consolidated financial
statements.
150 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
30 Subsequent events
TAG unsecured Working Capital loan agreement
On the 28 April 2023, the Company and TAG entered into a fixed term unsecured working capital loan agreement (the “TAG
Working Capital facility”). Under the TAG Working Capital facility, TAG shall provide, subject to customary restrictions, a facility of
up to £2,800,000, in tranches up to 31 January 2024, to cover the Company’s interim working capital and growth needs.
The due date for repayment by the Company of amounts (if any) drawn under the TAG Working Capital facility shall be 1 February
2028. Any sums drawn under the TAG Working Capital facility shall attract a non-compounding interest rate of 10% per annum,
and any principal amount (excluding accrued interest) outstanding on 1 February 2028 shall attract a compounding interest
rate of 15% per annum thereafter. Interest will be due to be paid annually on 31 March of each relevant calendar year.
New Equity Subscription Agreement
On the 28 April 2023, the Company and Venus Capital entered into a new subscription agreement, pursuant to which Venus
Capital committed to subscribe for 4,500,000,000 new Ordinary Shares (the “Subscription Shares”) at £0.0005 per Subscription
Share (the “Subscription Agreement”). The issue of the Subscription Shares will be over two tranches as set out below:
> an initial tranche of 3,375,000,000 Subscription Shares for gross proceeds of £1,687,500 gross (or £1,603,125 net of a 5%
commission chargeable by Venus Capital) expected to be admitted to a Standard Listing and to trading on the Main Market
on or around 10 May 2023; and
> a second tranche of up to 1,125,000,000 Subscription Shares for proceeds of up to £562,500 gross (or up to £534,375 net a
5% commission chargeable by Venus Capital), for which admission to a Standard Listing and to trading on the Main Market
may be sought by the Company until a long stop date of 31 May 2023.
In additional to the commission chargeable by Venus Capital set out above:
> £112,500 will be paid to Venus Capital in respect of agreed costs and expenses incurred by Venus Capital in connection
with the Subscription Agreement; and
> New warrants will be issued to Venus at a ratio of one warrant for every two Subscription shares issued under the Subscription
Agreement. The new warrants are each exercisable into one new Ordinary Share at a price equal to 0.065 pence per share
up to a final exercise date of 31 December 2026.
The fees referred to above were agreed through the commission and fee letter signed with Venus Capital and the new warrant
instrument agreement, both of which were also dated 28 April 2023. In connection with the above, the final exercise date of the
existing 8,175,000,000 warrants issued to Venus Capital in connection with the Capital Enhancement Plan have been extended
from 31 December 2025 for 12 months to 31 December 2026, through a deed of amendment to the existing warrant instruments.
Other corporate activities
Discussions are currently ongoing with a significant creditor of the Group regarding a reduction to the total amount owed and
included in the financial statements as at 31 December 2022 of £1.0m. To date no agreement has been reached.
151 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Company Statement of Financial Position
as at 31 December 2022
As at As at
31 December 2022 31 December 2021
Note £000 £000
Non-current assets
Property, plant and equipment 7 9
Investments 3 2,478 5,426
Other non-current assets 19 –
Total non-current assets 2,504 5,435
Current assets
Trade and other receivables 4 612 98
Cash and cash equivalents 229 1,585
Total current assets 841 1,683
Total assets 3,345 7,118
Current liabilities
Trade and other payables 6 1,035 534
Loan notes 7 – 5,732
Total current liabilities 1,035 6,266
Net assets 2,310 852
Equity attributable to owners of the parent
Share capital 5 5,897 5,486
Share premium 25,269 18,171
Share-based payment reserve 9 5,871 2,018
Retained earnings (34,727) (24,823)
Total equity 2,310 852
A separate income statement for the parent company has not been presented, as permitted by section 408 of the Companies
Act 2006. The Company’s loss for the year was £8,339,000 (2021: loss for the year of £8,134,000). The Company’s operating
loss before acquisition related costs and impairment charges for the year was £3,440,000 (2021: loss for the year of £2,907,000).
The notes on pages 154 to 171 form an integral part of these financial statements.
The Company financials on pages 152 to 171 were approved and authorised for issue by the Board on 28 April 2023 and signed
on its behalf by:
Mr Alessandro Zamboni Mr David Bull
Chief Executive Officer and Executive Director Independent Non-Executive Director and Chair of Audit Committee
Supply@ME Capital Plc
Company registration number: 03936915
152 Supply@ME Capital Plc Annual Report and Accounts 2022 Section
Company Statement of Changes in Equity
for the Year Ended 31 December 2022
Share-based
payment Retained
Share capital Share premium reserve losses Total
Notes £000 £000 £000 £000 £000
At 1 January 2021 5,420 11,820 – (16,689) 551
Loss for the year – – – (8,134) (8,134)
Total comprehensive loss for the period – – – (8,134) (8,134)
Issuance of new shares 5 66 6,351 – – 6,417
Credit to equity for issue of warrants 9 – – 608 – 608
Credit to equity for acquisition related earn-out 3 – – 1,410 – 1,410
At 31 December 2021 5,486 18,171 2,018 (24,823) 852
Share-based
payment Retained
Share capital Share premium reserve losses Total
Notes £000 £000 £000 £000 £000
At 1 January 2022 5,486 18,171 2,018 (24,823) 852
Loss for the year – – – (8,339) (8,339)
Total comprehensive loss for the period – – – (8,339) (8,339)
Issuance of new ordinary shares 5 406 10,396 – – 10,802
Costs incurred in connection with the issuance
of new ordinary shares 10 – (4,024) – (1,605) (5,629)
Credit to equity for issue of warrants 9 – – 5,292 – 5,292
Exercise of Open Offer warrants 9 1 31 (40) 40 32
Credit to equity for prior year acquisition
related earn-out payments 3 – – 172 – 172
Settlement of prior year acquisition related
earn-out payment 9 4 695 (699) – –
Debit to equity for current year and future
acquisition related earn-out payments 3 – – (883) – (883)
Equity settled employee share-based
payment schemes – – 11 – 11
At 31 December 2022 5,897 25,269 5,871 (34,727) 2,310
The notes on pages 154 to 171 form an integral part of these financial statements.
153 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
1 General information
2 Accounting policies
Supply@ME Capital Plc (the “Company” or “SYME”) is a
public company limited by share capital incorporated and
domiciled in England. The address of its registered office
is 27/28 Eastcastle Street, London W1W 8DH. The Company’s
ordinary shares are traded on the Main Market of the
London Stock Exchange.
These financial statements are the separate financial
statements for the Company and have been prepared
in compliance with Financial Reporting Standard 102, the
Financial Reporting Standard applicated in the United
Kingdom and the Republic of Ireland (“FRS 102”) and the
Companies Act 2006.
Going concern
These financial statements have been prepared on a going
concern basis. The Directors have assessed the Company’s
ability to continue in operational existence for the foreseeable
future and consider it appropriate to continue to prepare
these financial statements on a going concern basis.
The full going concern assessment of the Group, being the
Company and its subsidiaries, has been set out in note 2 to
the Group consolidated financial statements.
Investments in subsidiaries
The Company’s financial statements are presented in
Pounds Sterling, the Company’s functional and presentational
currency, and all values are rounded to the nearest thousand
pounds (£000) excepted when otherwise stated.
Subsidiaries are all entities over which the Company has
control. The Company controls an entity when the Company
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity.
These financial statements have been prepared under the
historical cost convention, modified to include certain financial
instruments at fair value. The principal accounting policies
are set out below, which have been consistently applied to
all the years presented.
As permitted by FRS 102 section 1.12, the Company has
taken advantage of the disclosure exemptions available
under that standard in relation to:
> Section 7 ‘Statement of Cash Flows’: Presentation of a
statement of cash flow and related notes and disclosures;
> Section 11 ‘Basic Financial Instruments’ and Section 12
‘Other Financial Instrument Issues’: Carrying amounts,
interest income/expense and net gains/losses for each
category of financial instrument; basis of determining fair
values; details of collateral, loan defaults or breaches;
> Section 26 ‘Share-based Payment’: Share-based payment
expense charged to profit or loss, reconciliation of opening
and closing number and weighted average exercise price
of share options, how the fair value of options granted
was measured, measurement and carrying amount
of liabilities for cash-settled share-based payments,
explanation of modifications to arrangements;
> Section 33 ‘Related Party Disclosures’: Compensation
for key management personnel.
The parent company meets the definition of a qualifying entity
under FRS 102. Where required, equivalent disclosures are
given in the Group accounts of Supply@ME Capital Plc.
Supply@ME Capital Plc is the parent company of the Group
and its results are included in the consolidated financial
statements on pages 100 to 151.
Unless otherwise stated, the investments in subsidiary
undertakings are stated at cost, including the costs associated
with the acquisitions, if applicable.
The value of the acquisition of Supply@ME S.r.l and TradeFlow
Capital Management Pte. Ltd. (“TradeFlow”) as shown in
the accounts of the holding company has been determined
by applying the sections 610, 612 and 615 of the Companies
Act 2006 as they relate to merger relief. These sections
of the Companies Act 2006 are applicable to corporate
investments where more than 90% of the acquired entity
is represented by a share for share exchange, as occurred
with the acquisition of Supply@ME S.r.l and Tradeflow.
In this instance FRS 102 allows the investment to be carried
in the Company’s balance sheet at the nominal value of the
shares issued, ignoring any associated share premium.
The carrying value referred to above is then adjusted by:
a) any provision for impairment in the value. Where events
or changes in circumstances indicate that the carrying
value of an investment may not be recoverable, an
impairment review is carried out. An impairment write
down is recognised to the extent that the carrying value
of the investment exceeds the higher of fair value less
costs to sell and value in use; and
b) any increases or decreases due to acquisition related
earn-out payments recognised in the Company’s
subsidiaries during the current year. Refer to the
share-based payment reserve accounting policy for
further details.
154 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
2 Accounting policies
Financial liabilities
Any subsidiary undertakings sold or acquired during the
year are included up to, or from, the date of acquisition
or the date of the change of control. When control of the
subsidiary is lost, any profit or loss on disposal is recognised
in the profit or loss.
The amounts due to and from subsidiaries are unsecured,
interest free and repayable on demand. The carrying
amounts of such payables or receivables are considered
to be the same as their fair values due to their short-term
nature.
Financial assets
Classification
Financial assets currently comprise trade and other receivables,
cash and cash equivalents.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and
other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to
an insignificant risk of change in value.
Impairment of financial assets
Financial assets, other than those held at fair value through
the income statement, are assessed for indicators of
impairment at each reporting end date. Financial assets are
impaired where there is objective evidence that, as a result
of one or more events that occurred after the initial
recognition of the financial asset, the estimated future
cash flows have been affected. If an asset is impaired, the
impairment loss is the difference between the carrying
amount and the present value of the estimated cash flows
discounted at the asset’s original effective interest rate.
The impairment loss is recognised in profit or loss. If there
is a decrease in the impairment loss arising from an event
occurring after the impairment was recognised, the
impairment is reversed. The reversal is such that the current
carrying amount does not exceed what the carrying amount
would have been, had the impairment not previously
been recognised. The impairment reversal is recognised
in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual
rights to the cash flows from the asset expire or are settled,
or when the Company transfers the financial asset and
substantially all the risks and rewards of ownership to another
entity, or if some significant risks and rewards of ownership
are retained but control of the asset has transferred
to another party that is able to sell the asset in its entirety
to an unrelated third party.
Classification
Financial liabilities comprise trade and other payables,
convertible loan notes and derivative financial instruments.
Recognition and measurement
Trade and other payables
Trade and other payables are initially recognised at fair value
less transaction costs and thereafter carried at amortised cost.
Loan note and long-term borrowings
Interest bearing loan notes and long-term borrowings are
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).
Finance charges, including direct issue costs, are accounted
for on an amortised cost basis to the Company’s income
statement using the effective interest method and are
added to the carrying amount of the instrument to the
extent that they are not settled in the period in which
they arise. The carrying value of the loan notes have been
adjusted to take into account the fair value of principal
repayments made since inception.
Convertible loan notes
Convertible loan notes issued by the Company are recorded
at the fair value of the convertible loan notes issued, net
of direct issue costs including commitment fees. Finance
charges, including direct issue costs, are accounted for on
an amortised cost basis to the Company’s income statement
using the effective interest method and are added to the
carrying amount of the instrument to the extent that they
are not settled in the period in which they arise.
The carrying value of the convertible loan notes have been
adjusted to take into account the fair value of those notes
that have been converted into ordinary shares since inception.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company’s
contractual obligations expire or are discharged or cancelled.
Provisions
Provisions are recognised when the Company has a present
legal or constructive obligation as a result of a past event,
it is probable that the Company will be required to settle
the obligation and the amount can be reliably estimated.
155 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
2 Accounting policies
Share-based payments
Share warrants
Equity-settled share-based payments relate to the warrants
issued in connection with the cost of issuing loan notes,
convertible notes and equity. Equity-settled share-based
payments are measured at the fair value of the equity
instruments at the grant date. The fair value excludes
the effect of non-market-based vesting conditions.
Details regarding the determination of the fair value
of equity-settled share-based transactions are set out
in note 9.
The fair value determined at the grant date of the equity-settled
share-based payments relating to the warrants issued in
connection with the issue of loan notes or convertible loan
notes are netted off against the fair value of the underlying
loan notes or convertibles loan notes to which they directly
relate. The fair value is then expensed together with the other
related finance costs on an amortised cost basis to the
Company’s income statement using the effective interest
method.
The fair value determined at the grant date of the equity-settled
share-based payments relating to the warrants issued in
connection with the issue of equity are netted off against
the amount of share premium that is recognised in respect
of the share issue to which they directly relate. Any amounts
in excess of the share premium recognised, are netted off
against retained earnings.
In respect of the share-based payments, the fair value is
not revised at subsequent reporting dates, however, the fair
value is released from the share-based payment reserve
at the point in time that any of the warrants are exercised
by the third party holder.
Employee share schemes
Grants made to certain employees of the Company will result
in a charge recognised in the Company’s income statement.
Such grants will be measured at fair value at the date
of grant and will be expensed on a straight-line basis over
the vesting period, based on the Company’s estimate
of the shares that will eventually vest. Vesting assumptions
are reviewed during each period to ensure they reflect
current expectations.
Grants made to subsidiary employees will not result in a
charge to the Company’s income statement as any charges
for share-based payments are recognised in the cost of
investment in the relevant subsidiary.
Full details of the Group’s share-base payments refer to note
26 to the Group consolidated financial statements.
Acquisition related earn-out payments
In addition, the Company recognises a share-based payment
reserve in connection with acquisition related earn-out
payments arising from the acquisition of TradeFlow. The fair
value of these earn-out payments has been measured using
the same methods as outlined above. Given the service
conditions related to these payments are linked to the
Company’s subsidiaries, the share-based payment expense
is recognised by this entity. The Company records this
amount as an increase to the investment value and through
the share-based payment reserve. The fair value determined
at the grant date of these equity-settled share-based payments
are recognised over the vesting period on a straight-line
basis, based on the estimate of equity instruments that will
eventually vest. Vesting assumptions are reviewed during
each period to ensure they reflect current expectations and
any changes required to true-up the related share-based
payment reserve are recognised through the income
statement of the Company’s subsidiary, and the Company’s
investment value and share-based payment reserve, in the
relevant period. Full details can be found in notes 26 and
27 of the Group’s consolidated financial statements and
note 3 to these financial statements of the Company.
Equity
“Share capital” represents the nominal value of equity shares
issued.
“Share premium” represents the excess over nominal value
of the fair value of consideration received for equity shares
net of costs associated with the share issue.
“Share-based payment reserve” represents the adjustments
to equity in respect of the fair value of outstanding share-based
payments including acquisition related earn-out payments,
warrants issued in connection with the cost of issuing loan
notes, convertible notes and equity during the relevant
period, and employee share schemes.
“Retained earnings” represents retained losses of the Company.
Foreign currency transactions
Foreign currency transactions are translated into the
functional currency using the average exchange rates
in the month. Foreign exchange gains and losses resulting
from the settlement of such transactions, and from the
translation at the reporting period end exchange rates
of monetary assets and liabilities denominated in foreign
currencies, are recognised in the income statement.
156 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Valuation of share warrants issued
During the current and prior year the Company issued
share warrants in connection with the loan notes, certain
convertible loan notes, and new ordinary shares that were
issued during the respective years. As these share warrants
were issued as a cost of securing funding facilities or new
equity investment into the Company they are classified as
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. Judgement
was required in determining the most appropriate inputs
into the valuation models (Black Scholes) used and the key
judgemental input was the expected volatility rate of the
Company’s share price over the relevant period and the
assumption applied in the models were between 97% – 88%
and were based the actual volatility of the Company’s share
price from the date of the RTO to the date at which the
relevant valuation model was run. If the expected volatility
rate was adjusted by plus 10%, then the impact on the fair
value recognised in the income statement in the current
year would have been approximately plus £24,000 (2021:
£71,000). If the expected volatility rate was adjusted by
minus 10%, then the impact on the fair value recognised
in the income statement in the current year would have
been approximately minus £25,000 (2021: £71,000).
Impairment
At the end of the accounting period the Company assesses
if there are any indicators of impairment with respect to its
investments in subsidiaries. The carrying value is determined
by the use of a discounted cash flow model of future free
cash flows which involves estimates to be made by the
Directors around future cash forecasts, discount rates etc.
2 Accounting policies
Critical judgements and significant
accounting estimates
In determining and applying accounting policies, judgement
is often required in respect of items where the choice
of specific policy, accounting estimate or assumption
to be followed could materially affect the reported results
or net asset position of the Company should it later
be determined that a different choice would be more
appropriate. The most significant areas where judgement
and estimates have been applied are as follows:
Judgements
Accounting for acquisition related earn-out
The terms of the agreement to acquire TradeFlow included
acquisition related earn-out payments that, together
with the initial cash payment and issue of equity, form the
total legal consideration agreed between the parties.
The acquisition related earn-out payments are determined
by reference to pre-determined revenue milestone targets
in each of FY21, FY22 and FY23. 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 set out in note 2 to the
Group’s consolidated financial statements, the Directors
have concluded that the inclusion of the substantive
post-acquisition service conditions requires the fair value
of these earn-out payments to be accounted for a charge
to the income statement (as deemed remuneration) in
the financial statements of the entity to which the service
condition relates, rather than as consideration or part
of the initial investment made.
Estimates
Valuation of acquisition related earn-out
The full disclosures relating to the valuation of the acquisition
relation earn-out payments are set out in note 2 to the Group’s
consolidated financial statements.
157 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
3 Investment
Details of undertakings
Details of the investments in which the Company holds 20% or more of the nominal value of any class of share capital as at 31
December 2022 are as follows:
Proportion of voting Proportion of voting
Country of rights and shares held rights and shares held
Subsidiary undertakings incorporation Registered address Holding 2022 2021
Supply@ME S.r.l. Italy Via Giosuè Carducci Legal capital 100% 100%
36, 20123, Milano,
Italy
Supply@ME Italy Legal capital 100% N/A
Technologies S.r.l
Supply@ME Stock Italy Legal capital N/A 100% (indirectly through
Company 1 S.r.l. Supply@ME S.r.l.)
Supply@ME Stock Italy Legal capital 100% (indirectly 100% (indirectly through
Company 2 S.r.l. through Supply@ME S.r.l.)
Supply@ME S.r.l.)
Supply@ME Stock Italy Legal capital 100% (indirectly 100% (indirectly through
Company 3 S.r.l. through Supply@ME S.r.l.)
Supply@ME S.r.l.)
Supply@ME Limited England 27/28 Eastcastle Ordinary 100% 100%
and Wales Street, London shares
W1W 8DH, UK
Tradeflow Capital Singapore 16 Raffles Quay, Legal capital 100% 100%
Management Pte. Ltd. #16-02, Hong Leong
Building, Singapore
048581
Tijara Pte. Ltd. Singapore Legal capital 85% (indirectly 85% (indirectly through
through TradeFlow) TradeFlow)
Tradeflow Capital Singapore Legal capital 50% (indirectly 50% (indirectly through
Management Systems through TradeFlow) TradeFlow)
Pte. Ltd.
Supply@ME S.r.l. is the Group’s operating subsidiary currently engaged in inventory monetisation activities. Supply@ME
Technologies S.r.l. was incorporated by the Company in Italy on 25 March 2022 for the purpose of holding the Group’s intellectual
property rights relating to the Platform together with future developments in a dedicated entity. On 9 September 2022,
Supply@ME S.r.l. assigned the intellectual property rights to 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 intragroup reassignment.
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 €1,000. Prior to the sale,
Stock Company 1 S.r.l. was a nontrading entity. As at 31 December 2022, Supply@ME S.r.l. continued to own Supply@ME Stock
Company 2 S.r.l. and Supply@ME Stock Company 3 S.r.l., both of which are also nontrading entities.
Tradeflow was acquired in July 2021 to complement the Company’s global offering of its “warehouse goods” inventory
monetisation platform with the TradeFlow offering of monetising “in-transit” inventory (in particular, commodities). It was also
expected that the acquisition would generate a number of attractive synergy benefits for the Group from both a funding and
customer origination perspective.
158 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
3 Investment
TradeFlow owes 85% of the issued share capital of Tijara Pte. Limited and 50% of the issued share capital of TradeFlow Capital
Management Systems Pte. Limited. Both of these companies are at very early-stage of their development and their results and
balances as at 31 December 2022 are immaterial to the Group. The Company’s holdings in Tijara Pte. Limited and TradeFlow Capital
Management Systems Pte. Limited are held indirectly through its direct holding in Tradeflow Capital Management Pte. Ltd.
Investments
£000
As at 1 January 2021 646
Additions at cost – TradeFlow 4,016
Increase for acquisition related earn-out 1,410
Impairment charges – Supply@ME S.r.l (646)
As at 31 December 2021 5,426
As at 1 January 2022 5,426
Increase in investment of Supply@ME S.r.l due to waiver of intercompany debt 420
Transfer of prior year intercompany debt impairment charge to Investments (420)
Additions at cost - Supply@ME Technologies S.r.l 9
Increase for FY21 acquisition related earn-out payments 172
Reversal of FY22 and FY23 acquisition related earn-out payments (883)
Impairment charges – TradeFlow (2,246)
As at 31 December 2022 2,478
Investment in Supply@ME S.r.l
On 23 March 2020, the Company issued 32,322,246,220 ordinary shares to acquire the whole of the share capital of Supply@ME
S.r.l. These shares had a nominal value of £0.00002 per share and an issue price of £0.006945 per share. As outlined in note
2 above the value of the acquisition of Supply@ME S.r.l. has been determined by applying the sections 610, 612 and 615 of the
Companies Act 2006 as they relate to merger relief. These sections of the Companies Act 2006 are applicable to corporate
investments where more than 90% of the acquired entity is represented by a share for share exchange, as occurred with the
acquisition of Supply@ME S.r.l. In this instance FRS 102 permits the investment to be carried in the Company’s balance sheet
at the nominal value of the shares issued, ignoring any associated share premium.
On the 9 March 2022, an agreement was signed between the Company and Supply@ME S.r.l. stating that the Company would
unconditionally waive repayment of the intercompany debt to the amount of €500,000 (£420,000). The waiving of this debt
resulted in an increase in the value of the investment in Supply@ME S.r.l. As at 31 December 2021, the Directors had fully impaired
the carrying value of the full amount owed by Supply@ME S.r.l. to the Company. As a result of the intercompany debt wavier
being agreed post 31 December 2021, an amount of £420,000 was transferred from the provision for impairment of the receivable
from Supply@ME S.r.l., to the provision for impairment of the investment in Supply@ME S.r.l. No amounts were recorded in
the income statement in the current financial year as a result of this transfer.
Impairment assessment
As at 31 December 2021, the Directors impaired the full carrying amount of the investment in Supply@ME S.r.l. As set out
above, the additional investment in Supply@ME S.r.l. that was added during the current year as a result of the intercompany
debt wavier, had also been fully impaired by the Directors in the prior year. As such the value of the investment in Supply@ME
S.r.l as at 31 December 2022 was nil (31 December 2021: nil).
159 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
3 Investment
During the preparation of these current year financial statements for the Company, the Directors considered if there were indicators
that the previously recognised impairment loss on the investment in Supply@ME S.r.l. could be reversed. Given the following
factors, the Directors concluded this was not currently the case:
> Supply@ME S.r.l continued to record losses in the current year;
> the continued absence of a historical recurring track record relating to inventory monetisation transactions being facilitated
by the Group;
> the inability to fully establish recurring generation of the full range of fees from the use of its Platform; and
the Group being cash flow positive.
The previously recognised impairment losses may subsequently be reversed in future financial periods, and if so, the carrying
amount of the investment will be increased to the revised estimate of its recoverable amount. The increased carrying amount should
not exceed the carrying amount that would have been determined had no impairment loss been recognised for the investment
in prior years.
Investment in TradeFlow
On 1 July 2021 the Company completed the acquisition of the entire share capital of TradeFlow by way of cash and share
consideration (the “Acquisition”). As such from this date TradeFlow became a fully owned subsidiary of the Company and formed
part of the Group’s consolidated financial performance and position from this point. The Company acquired 100% of the equity
of TradeFlow for a purchase consideration of £4,000,000 which was paid in cash and the issue of 813,000,000 equity shares.
As outlined in note 2 above the value of the acquisition of TradeFlow has been determined by applying the sections 610, 612
and 615 of the Companies Act 2006 as they relate to merger relief. These sections of the Companies Act 2006 are applicable
to corporate investments where more than 90% of the acquired entity is represented by a share for share exchange, as occurred
with the acquisition of TradeFlow. In this instance FRS 102 permits the investment to be carried in the Company’s balance sheet
at the nominal value of the shares issued, ignoring any associated share premium.
In addition, the Company recognises an increase or decrease in the carrying amount of the TradeFlow investment in connection
with acquisition related earn-out. Full details can be found in notes 2 and 26 of the Group consolidated financial statements.
Investment in TradeFlow £000
As at 1 January 2021 –
Cash consideration paid on acquisition 4,000
Nominal value of equity instruments (813,000,000 new ordinary shares) issued on acquisition 16
Increase for acquisition related earn-out 1,410
As at 31 December 2021 5,426
As at 1 January 2022 5,426
Increase for FY21 acquisition related earn-out payments 172
Reversal of FY22 and FY23 acquisition related earn-out payments (883)
Impairment charges – TradeFlow (2,246)
As at 31 December 2022 2,469
Impairment assessment
During FY22, the Directors began the process of restructuring the Company’s ownership with TradeFlow (the “TradeFlow
Restructuring”) and as at 31 December 2022 a share purchase agreement between the Company and the TradeFlow directors,
Tom James and John Collis, who together acted as the buyers (the “Buyers”) had been agreed in principal (the “TradeFlow SPA”).
Subsequent to year end, on 24 March 2023, the Company announced the TradeFlow directors, being Tom James and John
Collis, provided written notice of their intention to exercise their rights to buy back 100% of the share capital of TradeFlow (the
“Buy Back”), pursuant to certain earn out arrangements entered into in connection with the Company’s acquisition of TradeFlow,
the completion of which was announced on 6 July 2021 (“Completion”). As a result of the exercise of the Buy Back, the details
of the TradeFlow Restructure, that had been agreed in principle prior to year end, now need to be renegotiated, and a new
independent valuation of the TradeFlow operations needs to be completed.
160 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
3 Investment
Given the details of the Buy Back are still being considered and finalised as at the date of the Company’s financial statements,
management instead considered the specifics set out in the TradeFlow SPA that had been agreed in principle prior to the Buy
Back being exercised. These specifics included the following facts:
1) The TradeFlow SPA set out the total legal consideration for the 81% of the TradeFlow business and required an amount of
£2,000,000 to be payable to the Company by the TradeFlow directors as a result of the TradeFlow Restructuring; and
2) The continued underperformance of TradeFlow compared to the forecast for the year ended 31 December 2022 (included
in the independent valuation report prepared for the purposes of the Acquisition) resulted in the FY22 acquisition related
earn-out targets of TradeFlow not being achieved, and led the Directors to revise their IFRS 2 judgements in connection with
the FY22 acquisition related earn-out payments and the likelihood of FY23 acquisition related earn-out targets being met to
remote.
As a result of the Directors revised IFRS 2 judgements, the total amounts reversed in relation to the FY22 and FY23 acquisition
related earn-out payments was £833,000 during the current financial year. As the FY21 acquisition related earn-out payment
was settled during the current financial year, an additional amount was added to the share-based payment reserve of £172,000
which covered the amounts to be recognised in FY22 in line with the estimated vesting date of March 2022. In the prior financial
year, an amount of £1,410,000 was added to the share-based payment reserve which covered the Directors judgements at
that time relating to the FY21, FY22 and FY23 acquisition related earn-out payments.
Due to the combination of the factors outlined above, the Directors concluded that the carrying value of the TradeFlow investment
as at 31 December 2022 should be compared to the fair value, calculated by reference to the £2,000,000 that will be received
by the Company in exchange for 81% of the TradeFlow business that was sold to the Buyers through the TradeFlow Restructuring.
The difference between the carrying value of the TradeFlow investment as at 31 December 2022 of £4,715,000, and the fair
value of 100% of the TradeFlow investment of £2,469,000, resulted in an impairment charge of £2,246,000 being recognised
as at 31 December 2022.
4 Trade and other receivables
As at As at
31 December 2022 31 December 2021
£000 £000
Trade receivables – –
Other receivables 579 39
Amounts due from Group companies – 5
Prepayments 33 54
Total current trade and other receivables 612 98
Impairment of amounts due from Group companies
As at 31 December 2022, the Directors reviewed the carrying value of amounts due from Group companies for indicators of
impairment. In order to be prudent, and to follow a consistent approach used to determine the impairment of the Company’s
investment in Supply@ME S.r.l due to the factors set out in note 3, the Directors reached the conclusion to impair the full
carrying value of the specific receivable balance due from both the Company’s Italian subsidiaries as at the 31 December 2022.
Prior to this review, the Company held a total combined amount due from Supply@ME S.r.l and Supply@ME Technologies of
£1,588,000. In order to be prudent, and to follow a consistent approach used to determine the impairment of the Company’s
investment in Supply@ME S.r.l (refer to note 3 for further details), the Directors reached the conclusion to impair the full carrying
value of the specific receivable balance as at 31 December 2022. An impairment charge in respect of the amounts due from
Group companies of £689,000 has been recognised in the Company’s income statement for the current financial year (2021:
£1,319,000). The impairment charge for the year ended 31 December 2022 reflects the increase in the amounts due from
Group companies of £269,000, together with the £420,000 that was transferred from the provision for impairment of the
receivable from Group companies, to the provision for impairment of the investment in Supply@ME S.r.l. during the current
year as a result of the intercompany debt waiver agreed on 9 March 2022.
161 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
4 Trade and other receivables
Financial assets, other than those held at fair value through the income statement, are assessed for indicators of impairment
at each reporting end date. Financial assets are impaired where there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset
is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash
flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in the income statement. If
there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment
is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been,
had the impairment not previously been recognised. The impairment reversal is recognised in the income statement.
5 Share capital
Allotted, called up and fully paid shares
As at As at As at As at
31 December 2022 31 December 2022 31 December 2021 31 December 2021
No. 000 £000 No. 000 £000
Equity
Ordinary shares of £0.00002 each 56,621,568 1,132 36,068,442 721
Deferred shares of £0.04000 each 63,084 2,523 63,084 2,523
2018 Deferred shares of £0.01000 each 224,194 2,242 224,194 2,242
Total 56,908,846 5,897 36,355,720 5,486
Reconciliation of allotted, called up and full paid
2022 2022 2021 2021
No. 000 £000 No. 000 £000
Ordinary shares as at 1 January 36,355,720 5,486 33,042,223 5,420
New ordinary shares issued to fulfil the conversion of Mercator
Capital Management Fund LP convertible loan notes 1,400,898 28 680,791 14
New ordinary shares issued to Venus Capital S.A. in connection
with the Capital Enhancement Plan 14,350,000 287 – –
New ordinary shares issued to settle the FY21 acquisition
related earn-out payments 213,526 4 – –
New ordinary shares issued in connection with Open Offer
completed during the year 641,710 13 – –
New ordinary shares issued to fulfil the conversion of
Open Offer warrants 49,508 1 – –
New ordinary shares issued to fulfil the conversion of
Venus Capital S.A. convertible loan notes 3,897,484 78 – –
New ordinary shares issued to fulfil the conversion of
Negma Group Limited convertible loan notes – – 1,319,706 26
New ordinary shares issued as consideration for acquisition
of TradeFlow – – 813,000 16
New ordinary shares issued as consideration for support
with the TradeFlow acquisition – – 500,000 10
Total at 31 December 56,908,846 5,897 36,355,720 5,486
162 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
5 Share capital
Details of new shares allotted during the current financial year
New ordinary shares issued to fulfil the conversion of Mercator Capital Management Fund LP (“Mercator”)
convertible loan notes
> On 13 January 2022, the Company allotted 594,664,101 new ordinary shares as a result of the conversion of £678,333 of
the convertible loan notes issued and subscribed by Mercator.
> On 28 February 2022, the Company allotted 489,787,922 new ordinary shares as a result of the conversion of £500,000 of
the convertible loan notes issued and subscribed by Mercator.
> On 29 March 2022, the Company allotted 316,446,349 new ordinary shares as a result of the conversion of £178,333 of the
convertible loan notes issued and subscribed by Mercator.
New ordinary shares issued to Venus Capital S.A. (“Venus”) in connection with the 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 and undertake an open offer to existing shareholders, in order to raise up to £7,500,000 in new equity
capital (the “Capital Enhancement Plan”). This new equity capital enabled the Company to settle the outstanding loan notes and
convertible loan notes with Mercator in cash rather than by the conversion of the convertible loan notes into new ordinary
shares. During the currently financial year ended 31 December 2022, the following share issues were made to Venus in line
with subscription agreement dated 26 April 2022, and the subsequent amendment agreement dated 21 July 2022 and the
side letter agreement dated 3 October 2022:
> On 26 April 2022, the Company issued 2,770,000,000 of new ordinary shares to Venus in exchange for £1,385,000.
> On 10 May 2022, the Company issued 550,000,000 of new ordinary shares to Venus in exchange for £275,000.
> On 18 July 2022, the Company issued 1,350,000,000 of new ordinary shares to Venus in exchange for £675,000.
> On 5 September 2022, the Company issued 950,000,000 of new ordinary shares to Venus in exchange for £475,000.
> On 11 October 2022, the Company issued 8,730,000,000 of new ordinary shares to Venus in exchange for £4,365,000.
As at 31 December 2022 £500,000 of this amount is included in other receivables.
New ordinary shares issued in connection with the TradeFlow FY21 acquisition related earn-out payment
> On 19 July 2022, the Company issued 213,525 of new ordinary shares in settlement of the TradeFlow acquisition related
earn-out for FY21.
New ordinary shares issued in connection with Open Offer completed on 17 August 2022
> On 18 August 2022, the Company issued 641,710,082 of new ordinary shares as a result of an Open Offer issue in exchange
for £306,029.
New ordinary shares issued to fulfil the conversion of Open Offer warrants
Further to the issue of new ordinary shares on the 18 August 2022 as a result of the Open Offer, the Company also issued
320,855,008 warrants to certain qualifying shareholders who participated in its open offer (the “Open Offer Warrants”). Following
the issue of the Open Offer Warrants, certain holders have elected to exercise their Open Offer Warrants and this resulted in
the following share issues during the current financial year:
> On 2 September 2022, the Company issued 5,064,230 of new ordinary shares as an Open Offer Warrant conversion.
> On 17 September 2022, the Company issued 8,058,388 of new ordinary shares as an Open Offer Warrant conversion.
> On 27 September 2022, the Company issued 1,608,176 of new ordinary shares as an Open Offer Warrant conversion.
> On 11 October 2022, the Company issued 30,897,410 of new ordinary shares as an Open Offer Warrant conversion.
> On 21 October 2022, the Company issued 2,190,452 of new ordinary shares as an Open Offer Warrant conversion.
> On 7 November 2022, the Company issued 615,335 of new ordinary shares as an Open Offer Warrant conversion.
> On 26 November 2022, the Company issued 512,454 of new ordinary shares as an Open Offer Warrant conversion.
> On 8 December 2022, the Company issued 561,555 of new ordinary shares as an Open Offer Warrant conversion.
163 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
5 Share capital
New ordinary shares issued to fulfil the conversion of Venus convertible loan notes
In connection with the Capital Enhancement Plan, the Company also issued convertible loan note to the value of £1,917,500 to
Venus during the year. Further details of the Venus convertible loan notes can be found in note 8 to these financial statements.
The Venus convertible loan notes were settled through the issue of the following new ordinary shares:
> On 6 October 2022, the Company issued 3,048,986,302 of new ordinary shares to Venus Capital for the conversion of
Tranche B convertible loan notes with a principal value of £1,500,000.
> On 11 October 2022, the Company issued 848,498,083 of new ordinary shares to Venus Capital the conversion of Tranche
A convertible loan notes with a principal value of £417,500.
Rights, preferences and restrictions
Ordinary shares have the following rights, preferences, and restrictions
The Ordinary shares carry rights to participate in dividends and distributions declared by the Company and each share carries
the right to one vote at any general meeting. There are no rights of redemption attaching to the Ordinary shares.
Deferred shares have the following rights, preferences, and restrictions
The deferred shares carry no rights to receive any dividend or distribution and carry no rights to vote at any general meeting.
On a return of capital, the Deferred shareholders are entitled to receive the amount paid up on them after the Ordinary shareholders
have received £100,000,000 in respect of each share held by them. The Company may purchase all or any of the Deferred
shares at an appropriate consideration of £1.
2018 Deferred shares have the following rights, preferences, and restrictions
The deferred shares carry no rights to receive any dividend or distribution and carry no rights to vote at any general meeting.
6 Trade and other payables
As at As at
31 December 2022 31 December 2021
£000 £000
Trade payables 482 193
Amounts due to Group companies 5 –
Other payables 32 48
Social security and other payroll taxes due 89 42
Accruals and deferred income 427 251
Total 1,035 534
164 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
7 Loan notes
On 29 September 2021, the Company announced it had entered a loan note facility with Mercator Capital Management Fund
LP (“Mercator”). The new loan note facility consisted of a short-term loan with the following key terms:
> Initial draw down of £5m with a further £2m 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 £7.7m, 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 8.
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 (the “Mercator Amendment”).
To assist with the final settlement of the outstanding Mercator loan notes and convertible loan notes, the Company and Mercator
signed a further Addendum Deed on 3 October 2022 (the “Addendum Deed”).
Pursuant to both the original agreement dated 29 September 2022, the Mercator Amendment and the Addendum Deed, the
Group repaid the following monthly instalments of the loan note liability over the year ended 31 December 2021:
> The January, February and March monthly repayments of £678,333 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 Mercator Amendment referred to
above. This was for an amount of £678,333, plus an additional late payment interest charge of £72,767.
> 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 £1,502,198, in lieu of cash repayments, to Mercator. This combined repayment was in accordance with the
Mercator Amendment and included additional late payment interest charges of £145,532.
> In line with the Mercator Amendment, each of the July, August and September monthly repayments were made through a
part issue of convertible loan notes of £400,000 each and through a part cash payment of £278,333 each. Each of these
monthly repayments incurred additional interest charges in line with the Mercator Amendment. The total additional interest
for these three months totalled £86,000.
> In October 2022, the Company exercised the repayment option that was agreed as part of the Addendum Deed entered
into on 3 October 2022. Under this option the Company, made the final October monthly payment of £678,333 in cash.
This payment incurred an addition interest charge of £20,000.
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 periods in which they were incurred and have not
been included in the effective interest rate calculation.
Further details on the fair value of the warrants are set out in note 9.
165 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
7 Loan notes
The movement in the loan notes during the current financial year are set out in the table below:
2022 2021
£000 £000
Loan note liability at 1 Jan 5,732 –
Initial drawdown net of commitment, introducer fees and fair value
of warrants issued in connection with the loan notes – 4,209
Second drawdown net of commitment and introducer fees – 1,900
Amortisation of finance costs during the period (recognised in the income statement) 1,051 540
Less: repayments made via issue of convertible loan notes (4,592) (917)
Less: repayments made via cash (2,191) -
Loan note liability at 31 December – 5,732
8 Convertible loan notes
As at 31 December 2022, the convertible loan note liability was nil (31 December 2021: nil). However, during the current financial
year, the Company entered into two different convertible loan arrangements. These are set out below:
Mercator convertible loan notes
As set out in Note 7 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 holder’s 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 Mercator Amendment no further warrants were required to be issued on the monthly
repayments due following April 2022.
During the year ended 31 December 2022, the Company issued convertible loan notes to Mercator to the value of £4,737,000
which included the monthly repayments of £4,592,000 made by way of convertible loan notes (as set out in Note 7 above) and
the additional interest charge due on the May and June repayments of £145,532.
Of the £4,737,000 of convertible loan notes issued during the year, £3,381,000 was repaid in cash and the remaining £1,357,000
was converted into ordinary shares in the Company.
The Mercator convertible loan notes did not have any annual interest costs in addition to the loan notes but did have costs relating
to commitment fees and late payment interest charges of £571,000 and the fair value of the warrants of £236,000 associated
with issue of the convertible loan notes. All these costs have been recognised in the income statement in the current year given
the liability to which they relate has been extinguished (2021: £113,000). Further details on the fair value of the warrants are
set out in note 24 to the Group consolidated financial statements.
166 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
8 Convertible loan notes
The movement in Mercator convertible loan note liability during the current financial period is set out in the table below:
£000
Mercator convertible loan note liability at 1 January 2022 –
Monthly loan note repayments made via issue of convertible loan notes 4,592
Financial costs satisfied via the issue of convertible loan notes 145
Less convertible loan notes converted into ordinary shares (1,356)
Less convertible loan notes repaid in cash (3,381)
Mercator convertible loan note liability at 31 December 2022 –
Venus convertible loan notes
In connection with the Capital Enhancement Plan announced by the Company on 26 April 2022, the Company executed a new
convertible loan note agreement with Venus Capital S.A. (“Venus”), under which the Company, at its discretion, could issue to
Venus convertible loan notes up to £1,950,000 in aggregate principal amount. These convertible loan notes were split into two
tranches being:
1) The Tranche A Venus convertible loan notes up to the value of £417,500 which could be issued by the Company to cover
the fees associated with the Venus equity subscription (£342,500) and convertible loan agreements (£75,000). The former
fees were required to be paid by the Company, proportionally, in line with when new ordinary shares were issued to Venus
under the Capital Enhancement Plan. The obligation to pay the later fees arose at the point the Company executed of the
working capital facility which is referred to below; 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 £1,500,000.
In order to preserve the Company’s cash balance, the full £417,500 of fees were settled by the issue of the Tranche A convertible
loan notes to Venus between the period the 19 July 2022 and the 10 October 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 cost of the Tranche A Venus
convertible loan notes associated with the Venus equity subscription (£342,500) was offset against the share premium in
accordance with IAS 32 (“Financial Instruments”). The cost of the Tranche A Venus convertible loan notes associated with the
arrangement of the working capital facility with Venus (£75,000) was recorded as finance costs in the income statement given
these directly related to the cost of drawing down on this financing facility. These costs were recognised in line with the draw
down of the working capital facility.
Additionally, during July and August 2022, the Company drew down a total of £1,500,000 Tranche B convertible loan notes from
Venus in the form of the working capital facility. These convertible loan notes were also repayable in shares with a maturity
date of 31 December 2025 and incur a 10% per annual interest rate.
The settlement of both the Tranche A and Tranche B Venus convertible loan notes took place in October 2022 as follows:
a) On 3 October 2022, the Company and Venus entered into the side letter agreement, pursuant to which and conditional on
the admission subject to the Prospectus issued on the 3 October 2022, £1,500,000 in principal amount of Tranche B Venus
convertible loan notes, plus accrued interest of £25,000, were converted into 3,048,986,302 new ordinary shares which
were issued to Venus at a price of 0.05 pence per share on the 6 October 2022; and
b) On the 10 October 2022, in line with the side letter agreement referred to above, and conditional on the secondary admission
subject to the Prospectus issued on the 3 October 2022, £417,500 in principal amount of Tranche A Venus convertible loan
notes, plus accrued interest of £7,000, (including £61,500 in principal amount of Tranche A Venus CLNs to be issued and
immediately converted, not attracting interest) converted into 848,498,083 new ordinary shares which were issued to Venus
at a price of 0.05 pence per share on the 11 October 2022.
Both interest costs referred to above have been recognised in the income statement during the current financial period. As at
31 December 2022, there were no amounts outstanding under the Venus convertible loan note facility (31 December 2021: nil).
167 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
8 Convertible loan notes
The movement in Venus convertible loan note liability during the current financial period is set out in the table below:
£000
Venus convertible loan note liability at 1 January 2022 –
Tranche A Venus convertible loan notes 418
Tranche B Venus working capital convertible loan notes 1,500
Interest cost associated with Tranche A and B convertible loan notes 32
Repayment of Venus convertible loan notes via the issue of new ordinary share (1,950)
Venus convertible loan note at 31 December 2022 –
Historical convertible loan notes
In addition to the above, the Company also had historical convertible loan notes and associated derivative financial instruments
that expired during the financial year ended 31 December 21 resulting in a credit to the income statement in the prior year in
respect of the outstanding fair value of £24,000. There were no amounts recorded in the income statement in the current
financial year.
9 Share-based payments
Share warrants issued to Mercator
As explained in notes 7 and 8, during the year the Company 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 have a term of 3 years from issue and an exercise price of 130% of
the lowest closing VWAP over the ten trading days immediately preceding the issue of the warrants. Under the terms of amendment
agreement signed with Mercator dated 26 April 2022, no further warrants were required to be issued on the monthly repayments
due following April 2022.
The total number of share warrants issued during the current financial year was 439,040,922, which together with the total of
522,791,511 issued in the prior financial year takes the total number of share warrants issued to Mercator as at 31 December
2022 to 961,832,433 (31 December 2021: 522,791,511). Details of the outstanding share warrants issued to Mercator are set
out in the table below.
Amount Amount
Principal value of recognised recognised
warrants issued Fair value during FY22 during FY21
Date of issue (£000) Number of warrants Exercise price (£000) (£000) (£000)
1 October 2021 1,400 443,726,030 £0.00316 520 343 177
1 November 2021 92 29,197,856 £0.00314 42 – 42
1 December 2021 92 49,867,625 £0.00184 46 – 46
4 January 2022 136 77,763,767 £0.00174 83 83 -
2 February 2022 136 79,179,799 £0.00171 54 54 -
4 March 2022 136 105,948,198 £0.00128 44 44 -
10 June 2022 149 176,149,157 £0.00085 55 55 -
Total 2,141 961,832,433 844 579 265
As these share warrants were issued as a cost of securing the funding facility they are classified as 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 and the key judgemental assumptions have been
detailed in note 2.
168 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
9 Share-based payments
The total fair value of the above share warrants issued during the current financial year is £236,000 (2021: £608,000). In the
prior year, a fair value amount of £520,000 related to warrants that were issued in connection with the loan notes and this fair
value was netted off the initial proceeds received on the balance sheet. This amount is being amortised to the income statement
using the effective interest rate method and £343,000 was recognised in the income statement for the period ended 31
December 2022 (2021: £177,000). The remaining £236,000 (2021: £88,000) related to those warrants issued in connection
with the convertible loan notes, this amount was expensed fully in the income statement in the current year given the liability
to which they relate has been extinguished (2021: £88,000).
Share warrants issued to Venus under Capital Enhancement Plan
As set out in note 5, on the 27 April 2022, the Company announced it had entered into a subscription agreement with Venus
in connection with the Capital Enhancement Plan. The subscription agreement specified that the Company was required to issue
one warrant for every two shares issued in connection with the mandatory tranches of the new shares issue. This was a total
of 2,950,000,000 share warrants. The subscription agreement specified that the Company was required to issue one warrant
for every five shares issued in connection with the optional tranches of the new shares issues. This was a total of 1,500,000,000
share warrants. Additionally, an amount of 3,250,000,000 share warrants were to be issued to Venus in connection with the
signing of the subscription agreement on 26 April 2022. As such the Company issued a total of 8,175,000,000 share warrants
to Venus during the year ended 31 December 2022, and as at the year end date, these all remain outstanding. 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 and the key judgemental
assumptions have been detailed in note 2.
The total fair value of the above share warrants to be issued to Venus at 31 December 2022 is £4,795,000 (31 December 2021:
nil). Given this amount directly related to the cost of issuing new ordinary shares to Venus, an amount of £3,204,000 has been
offset against the share premium balance as at 31 December 2022 (31 December 2021: nil) in accordance with IAS 32 “Financial
Instruments”. This amount was offset against the related share premium that was created in connection with the relevant issue
of ordinary share to Venus. The remaining fair value amount of £1,591,000 has been recognised in retained earnings.
Share warrants issued to retail shareholders under the 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 shares 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 it would allot and issue 641,710,082 new ordinary shares to those qualifying shareholders and that
this would raise £320,855 gross (and £269,855 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 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 the new Open Offer ordinary shares 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 and the key
judgemental assumptions have been detailed in note 2.
The total fair value of the above share warrants to be issued in connection with the Open Offer was £261,000 (31 December
2021: nil). Given this amount directly related to the cost of issuing new Open Offer ordinary shares, the amount of £247,000
has been offset against the share premium balance as at 31 December 2022 (31 December 2021: nil) in accordance with IAS
32 “Financial Instruments”. This amount was offset against the related share premium that was created in connection with
Open Offer share issue. The remaining fair value amount of £14,000 has been recognised in retained earnings.
169 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Notes to the Company Financial Statements
for the Year Ended 31 December 2022
9 Share-based payments
Subsequent to the issue of the Open Offer warrants, and prior to 31 December 2022, an amount of 51,869,971 of these warrants
have been converted in exchange for new ordinary shares and as at 31 December 2022 there is a balance of 268,985,037
Open Offer warrants which remained outstanding. On the exercise of the Open Offer warrants, the fair value amount is reclas-
sified from the share-based payment reserve to retained earnings.
A summary of the share warrants outstanding as at 31 December 2022 is detailed in the table below:
Number of warrants Number of warrants
outstanding at outstanding at
31 December 2022 31 December 2021
Share warrants issued to Mercator 961,832,433 522,791,511
Share warrants issued to Venus 8,175,000,000 –
Share warrants issued to retail shareholders 271,347,008 –
Total 9,408,179,441 522,791,511
A summary of the fair value of the share warrants issued during the period are detailed in the table below:
FY22 FY21
£000 £000
Share warrants issued to Mercator 236 608
Share warrants issued to Venus 4,795 –
Share warrants issued to retail shareholders 261 –
Total 5,292 608
Acquisition related earn-out
In addition, the Company recognised a share-based payment reserve in connection with acquisition related earn-out. Given
the service conditions related to these payments are linked to the Company’s subsidiaries, the share-based payment expense
is recognised by this entity. The Company records this amount as an increase or decrease to the investment value and the
share-based payment reserve.
As detailed in note 3, the Directors revised their IFRS 2 judgements in respect of the acquisition related earn-out payments to
be made in connection with the FY22 and FY23 revenue targets of TradeFlow. This resulted in an amount of £833,000 being
reversed from the share-based payment reserve in relation to the FY22 and FY23 acquisition related earn-out payments. As
the FY21 acquisition related earn-out payment was settled during the current financial year, an additional amount was added
to the share-based payment reserve of £172,000 which covered the amounts to be recognised in FY22 in line with the estimated
vesting date of March 2022. In the prior financial year, an amount of £1,410,000 was added to the share-based payment reserve
which covered the Directors judgements at that time relating to the FY21, FY22 and FY23 acquisition related earn-out payments.
The settlement of the FY21 acquisition related earn-out payment occurred in July 2022 when the Company had sufficient equity
headroom to issue the Tom James and John Collis, the directors of TradeFlow, with 213,525 of new ordinary shares. The fair value
of the FY21 acquisition related earn-out payments that was recognised in the year ended 31 December 2021 was £699,000.
At the point this was settled in shares, the relevant share-based payment reserve was reversed and the corresponding increase
in share capital and share premium was recognised.
Further details can be found in notes 2 and 26 of the Group consolidated financial statements.
170 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
10 Share issue costs
As referred to in note 9 above, the costs relating to the various share issues that took place during the year have been netted
off against the amount of share premium that is recognised in respect of the share issue to which they directly relate. Any
amounts in excess of the share premium recognised, are netted off against retained earnings. Details of the share issue costs
recognised during the year ended 31 December 2022 are set out in the table below. There were no equivalent costs recognised
in the prior year.
FY22 FY22
Costs debited to Costs debited to
share premium retained earnings
£000 £000
Capital enhancement plan warrant costs (note 9) 3,204 1,591
Capital enhancement plan costs settled through issue of convertible loan notes (note 8) 343 –
Open offer warrant costs (note 9) 247 14
Other costs (legal fees, listing fees, registrars’ fees) 230 –
Total 4,024 1,605
11 Related party transactions
The Company has taken advantage of the exemption under FRS 102:33.1A from disclosing transactions with other, wholly
owned members of the Group.
A full list of the Company’s subsidiaries and related party transactions are set out in note 28 to the Group consolidated financial
statements.
12 Controlling party
At 31 December 2022 the Directors do not believe that a controlling party exists.
13 Subsequent events
A full list of the Company’s subsequent events are set out in note 30 to the Group consolidated financial statements.
Additionally, on 27 April 2023, an agreement was signed between the Company and its subsidiaries, Supply@ME SRL and Supply@ME
Technologies SRL, stating that the Company would unconditionally waive repayment of intercompany debt to the amount of
€1,000,000 and €320,000 respectively.
171 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
172 Supply@ME Capital Plc Annual Report and Accounts 2022 Financial Statements
Information
173 Supply@ME Capital Plc Annual Report and Accounts 2022 Information
Company Information
Directors
David Bull
Enrico Camerinelli
Alexandra Galligan
Albert Ganyushin
Alessandro Zamboni
Registered Office
27/28 Eastcastle Street
London W1W 8DH
United Kingdom
Company Number
03936915
Website
www.supplymecapital.com
Company Secretary
MSP Corporate Services Limited
27/28 Eastcastle Street
London W1W 8DH
United Kingdom
Auditors
Crowe U.K. LLP
55 Ludgate Hill
London EC4M 7JW
United Kingdom
Solicitors
Orrick, Herrington & Sutcliffe (UK) LLP
107 Cheapside
London EC2V 6DN
United Kingdom
Investor and Public Relations
MHP Group
4th Floor
60 Great Portland Street
London W1W 7RT
United Kingdom
174 Supply@ME Capital Plc Annual Report and Accounts 2022 Information
Glossary
Term
Definition
Board
Buy Back
The Board of Directors of Supply@ME Capital Plc
With specific reference to Tradeflow, the written notice provided by the Tom James and
John Collis of their intention to exercise their rights to buy back 100% of the share capital
of TradeFlow pursuant to certain earn out arrangements entered into in connection with
the Company’s acquisition of TradeFlow in July 2021.
Company or SYME
Supply@ME Capital Plc
ERP
FY21
FY22
Enterprise Resource Planning
The financial year ended 31 December 2021
The financial year ended 31 December 2022
GIF or the Fund
Global Inventory Fund (Segregated Portfolios)
Group
The Company and its subsidaries
ICT
IM
IoT
KPIs
LTIP
Mercator
NFT
Platform
Information and communications technology
Inventory Monetisation
Internet of things
Key Performance Indicators
Long Term Incentive Plan
Mercator Capital Management Fund LP
Non-Fungable Token
The Supply@ME Inventory Monetisation Platform
PNP Regulation
Italian legislation Pegno non Possessorio, introduces the concept of “security interest”
into Italian law
QCA Code
Quoted Companies Alliance Corporate Governance Code
TAG
The AvantGarde Group S.p.A
TradeFlow
TradeFlow Capital Management Pte. Limited
TradeFlow Group
TradeFlow and its subsidaries
TradeFlow
Restructure
VeChain
Venus
White-Label
The proposed restructuring of the Company’s ownership with TradeFlow in order to separate
the Platform (fintech business) from the fund management activities (regulated business)
The VeChain Foundation
Venus Capital S.A.
The service whereby banks and other financial institutions access and pay for the use of our
technology and platform to deploy with their customer bases
175 Supply@ME Capital Plc Annual Report and Accounts 2022 Information
176 Supply@ME Capital Plc Annual Report and Accounts 2022 Information
Design and produced by Haggie Partners / www.haggiepartners.com
Supply@ME Capital Plc
Eastcastle House
27/28 Eastcastle Street
London W1W 8DH UK
ww.supplymecapital.com