TIDMSYME

RNS Number : 0864O

Supply @ME Capital PLC

29 September 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 2014/596/EU, WHICH IS PART OF DOMESTIC LAW OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND ("UK") PURSUANT TO THE MARKET ABUSE (AMMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

29 September 2023

Supply@ME Capital plc

(the "Company", " Supply@ME " or "SYME" and, together with its subsidiaries, the "Group")

Unaudited interim results for the six months ended 30 June 2023 and entry into Top-Up Shareholder Loan Agreement and Side Letter Agreement

SYME, the fintech business which provides an innovative fintech platform (the "Platform") for use by manufacturing and trading companies to access Inventory Monetisation(c) ("IM") solutions enabling their businesses to generate cashflow, announces its unaudited results for the six months ended 30 June 2023 ("H1 2023") and entry into Top-Up Shareholder Loan Agreement and Side Letter Agreement - details of which are set out in Appendices 1 and 2 to this announcement, respectively.

Highlights from the H1 2023 interim results:

 
 
              *    Group revenue from continuing operations of GBP0.1m 
                   in H1 2023 compared to nil in the comparative interim 
                   period for the six-month period ended 30 June 2022 
                   ("H1 2022"). The GBP0.1m revenue includes a 
                   combination of the various elements of revenue 
                   related to: 
 
 
              *    origination and due diligence fees (pre-IM), charged 
                   directly by the Group to the Client Companies; and 
 
 
              *    fees relating to the Platform usage and servicing 
                   (post-IM), charged to the relevant independent Stock 
                   Company involved in each IM. 
 
 
              *    This increase reflects the completion of the first 
                   IMs over the prior 12-month period and continued due 
                   diligence activities. 
 
 
              *    Group operating loss from continuing operations of 
                   GBP2.3m in the current interim period compared to 
                   GBP2.1m in H1 2022. 
 
 
              *    Finance costs have significantly reduced by GBP1.4m 
                   in H1 2023 compared to H1 2022 due to the replacement 
                   of Mercator Capital Management Fund LP debt financing 
                   with longer term equity funding from Venus Capital 
                   S.A. ("Venus Capital") during 2022 and H1 2023. 
 
 
              *    Loss from discontinuing operations of GBP0.2m in H1 
                   2023, compared to a loss of GBP2.6m in H1 2022, 
                   primarily as a result of: 
 
 
              *    a gain on disposal of 81% of the TradeFlow Capital 
                   Management Pte. Ltd. ("TradeFlow") operations (the 
                   "TradeFlow Restructuring") of GBP0.7m recognised in 
                   H1 2023; and 
 
 
              *    no additional impairment or acquisition related 
                   earn-out charges recognised in H1 2023, compared to 
                   an aggregate total of GBP1.5m for these charges 
                   recognised in H1 2022. 
 
 
              *    The combined impact of the above resulted in a total 
                   loss of GBP2.6m in H1 2023, compared to GBP6.2m in H1 
                   2022. 
 
 
              *    The completion of the TradeFlow Restructuring on 30 
                   June 2023 resulted in the removal of the TradeFlow 
                   net assets from the Group's consolidated balance 
                   sheet as at 30 June 2023 and the recognition of two 
                   new assets. Further details as set out below: 
 
 
              *    the value of the TradeFlow net assets removed from 
                   the Group's consolidated balance sheet as at 30 June 
                   2023 was GBP1.6m. This included the net book value of 
                   the intangible assets that were recognised by the 
                   Group as part of the TradeFlow acquisition in July 
                   2021; 
 
 
              *    the addition of the new receivable balance of GBP2.0m 
                   relating to the outstanding cash consideration still 
                   to be received by the Company as at 30 June 2023; and 
 
 
              *    the addition of the new investment of GBP0.3m 
                   relating to the Group's remaining 19% ownership of 
                   TradeFlow. 
 
 
              *    Execution of the new equity funding that was 
                   announced on 28 April 2023 with Venus Capital. This 
                   resulted in a cash inflow to the Group of GBP2.0m, 
                   net of commission and other share issue costs. 
 
 
             With the completion of inaugural IMs, the Group now expects 
             to start to build a demonstrable track record of revenue generation 
             as it scales delivery of new IM transactions. 
 

Operational Highlights

 
 
              *    The completion of the TradeFlow Restructuring on 30 
                   June 2023 was an important step for the Group as it 
                   will allow us to better serve both the needs of our 
                   client companies and the funders of both businesses. 
                   It will create value for the Company shareholders 
                   ("Shareholders") by eliminating any perception of 
                   conflicts of interest between the two businesses and 
                   providing both businesses with greater commercial 
                   opportunities through the clear differentiation of 
                   responsibilities of the individual entities. 
 
 
              *    Following the reconfiguration of investment advisory 
                   business line through the disposal of majority stake 
                   of TradeFlow, the Group is now focussed on its core 
                   business lines: 
 
 
              *    IM transactions from the pipeline originated by the 
                   Group and funded by third-party investors ( " 
                   Open-Market IM " ) ; and 
 
 
              *    IM deals with local commercial banks and their client 
                   companies ( " White-Label IM " ). 
 
 
              *    Completion of commercial agreements for the inaugural 
                   Open-Market IMs, using traditional funding, showcases 
                   the Group's progress against the activity outlined in 
                   its year end 2022 business update. In particular, s 
                   ignificant progress has been made against the Group's 
                   key operational key performance indicators ("KPIs") 
                   with the evolving pipeline of IM opportunities. 
 
 
              *    The pipeline (representing the value of the inventory 
                   to be monetised) was valued at GBP404.5m as at 22 
                   September 2023, which compares to GBP374.6.m as at 21 
                   April 2022. This increase reflects the strength of 
                   the proposition and its appeal to quality businesses, 
                   across a diversified portfolio of companies both in 
                   Italy and the UK, with demand driving opportunities 
                   in other European countries. 
 
 
              *    The Group is now in advanced stages of formalising a 
                   White-Label IM agreement with a leading Italian 
                   banking group ( " WL Inventory Funder " ) to execute 
                   an initial IM transaction with an inventory value to 
                   be monetised of up to EUR10m, which involves an 
                   existing client of the WL Inventory Funder. This 
                   White-Label IM agreement (which remains subject to 
                   contract) is expected to allow the Group to scale its 
                   revenue in Italy, leveraging the balance sheet and 
                   the client base of the WL Inventory Funder in 
                   specific supply chains. 
 
 
              *    Similarly, the Group has started exploring similar 
                   White-Label IM partnerships in the UK. 
 
 
              *    Supply@ME has been collaborating with a group of 
                   private investors and subject matter experts of 
                   working capital solutions to launch an independent 
                   Swiss-based trading business ( " CH Trading Hub " ) 
                   to replace the Cayman-based global inventory fund ( " 
                   GIF " ), previously advised by TradeFlow. The CH 
                   Trading Hub, owned by Société 
                   Financière Européenne S.A. ( " SFE " ), is 
                   also expected to assume control of the independent 
                   Stock Companies from the GIF once this restructuring 
                   is completed, to manage the overall trading 
                   businesses using the Platform and the associated 
                   services provided by the Group. 
 
 
              *    Additionally, the CH Trading Hub will handle the 
                   token route including implementation of the strategic 
                   agreement with VeChain Foundation ("VE Chain"). In 
                   this regard, the Group is working with the CH Trading 
                   Hub on the launch of a security token framework which 
                   will allow up to US$100m to be issued and subscribed, 
                   mostly by institutional investors active in the 
                   digital asset markets. The security token is expected 
                   to be issued by a vehicle sponsored by SFE and be 
                   tradeable on authorised digital asset exchanges. 
 
 
              *    Discussions have commenced with a global investment 
                   bank to serve as a cornerstone funder for IMs of the 
                   Group's current and prospective pipeline, deploying a 
                   scalable and multi-jurisdictional Open-Market IM 
                   programme. 
 

Summary of H1 2023 financial results

The below unaudited consolidated financial summary of the Group's income statement is presented to distinguish the continuing operations (being the Group's IM segment) and the discontinued operations consisting of TradeFlow and its subsidiaries (the "TradeFlow Group"). The unaudited consolidated financial summary of the Group's balance sheet includes the total assets and liabilities from both continuing and discontinued operations as at 31 December 2022, however, no longer includes the assets and liabilities of the TradeFlow Group as at 30 June 2023, following SYME's disposal of 81% of the TradeFlow Group on 30 June 2023.

Consolidated financial summary:

 
                                                          6 months to 30 June 2023   6 months to 30 June 2022 
                                                                         Unaudited                  Unaudited 
                                                                              GBPm                       GBPm 
 Continuing operations 
                                                         -------------------------  ------------------------- 
 Revenue from continuing operations                                            0.1                          - 
                                                         -------------------------  ------------------------- 
 Adjusted operating loss(1) from continuing operations                       (2.0)                      (2.0) 
                                                         -------------------------  ------------------------- 
 Operating loss from continuing operations                                   (2.3)                      (2.1) 
                                                         -------------------------  ------------------------- 
 Loss from continuing operations                                             (2.4)                      (3.6) 
                                                         -------------------------  ------------------------- 
 Loss from discontinued operations(2)                                        (0.2)                      (2.6) 
                                                         -------------------------  ------------------------- 
 Total loss for the period                                                   (2.6)                      (6.2) 
                                                         -------------------------  ------------------------- 
                                                                As at 30 June 2023     As at 31 December 2022 
                                                                         Unaudited                    Audited 
                                                                              GBPm                       GBPm 
                                                         -------------------------  ------------------------- 
 Total assets                                                                  3.4                        8.3 
                                                         -------------------------  ------------------------- 
 Net liabilities                                                             (2.1)                      (2.0) 
                                                         -------------------------  ------------------------- 
 

(1) Adjusted operating loss is the operating (loss) from continuing operations before impairment charges.

(2) Discontinued operations relate to the operations of the TradeFlow Group, and these have been presented in line with IFRS 5 ("Non-current Assets Held for Sale and Discontinued Operations"). The prior period's income statement has been restated to aid comparability in line with the standard. Revenue from discontinued operations in H1 2023 was GBP0.7m (H1 2022: GBP0.2m).

Operational KPI

 
                                          As at 22 September 2023  As at 21 April 2023 
                                                        Unaudited            Unaudited 
 Warehoused Goods monetisation pipeline                GBP404.5 m            GBP374.6m 
                                         ------------------------  ------------------- 
 

The pipeline KPI shown above represents the current potential value of warehoused goods inventory to be monetised rather than pipeline revenue expected to be earned by the Group (being the Company and its subsidiaries). As such, this provides a good indicator of the level of demand for the Group's warehoused goods monetisation services. This pipeline represents the value as at most practical date possible prior to the issue of this interim report (being 22 September 2023). The Company expects that the increase of the pipeline will be reflected in new due diligence activities over the coming months and, accordingly, additional due diligence fees for the Group's subsidiaries. In the case of positive due diligence outcomes, such pipeline would then be expected to move into IM phase at which stage the Group's subsidiaries will be able to charge its IM fees (including origination fees, fees for the usage of the Platform and IM servicing fees).

Entry into Top-Up Shareholder Loan Agreement and Side Letter Agreement

On 28 September 2023, the Company and TAG entered into an English law governed top-up unsecured shareholder loan agreement (the "Top-Up Shareholder Loan Agreement"), pursuant to which The AvantGarde Group S.p.A. (an entity ultimately beneficially wholly-owned and controlled by Alessandro Zamboni, Chief Executive Officer of the Company) ("TAG") agreed to provide the Company with a further facility of up to GBP3,500,000 to cover the Company's working capital and growth needs up to 30 June 2025 (the "Top-Up Facility").

As disclosed in the Company's second supplementary prospectus published on 30 June 2023 (the "Secondary Supplementary Prospectus") , the Company entered into an English law governed share purchase agreement with Dr. Thomas (Tom) James and John Collis, former Directors (the "Buyers") on 30 June 2023, pursuant to which, the Company sold 81% of the issued share capital of TradeFlow Capital Management Pte. Limited . The GBP2,000,000 TAG Amoun t (as defined in the Second Supplementary Prospectus) was novated from the Buyers to TAG on the terms of an English law governed debt novation deed entered into between the Company, the Buyers and TAG on 30 June 2023 (the "Debt Novation Deed"). Pursuant to the Debt Novation Deed, TAG agreed with the Company to settle the TAG Amount in three tranches: GBP500,000 on 30 June 2023 (which, as at the date of this announcement, has been paid to the Company by TAG); GBP1,000,000 on 30 September 2023; and GBP500,000 on 31 January 2024. On 28 September 2023, the Company and TAG entered into an English law governed side letter agreement ("Side Letter Agreement"), cast as a deed, in relation to the outstanding TAG Amount, pursuant to which TAG agreed to pay to the Company GBP1,000,000 on 31 October 2023, and GBP500,000 on 31 January 2024.

TAG has agreed to pay a 15% per annum compounding rate of interest on the GBP1,000,000 of principal amount of the TAG Amount for the period of 30 September 2023 to 31 October 2023, and shall incur a 15% per annum compounding rate of interest on any outstanding principal amount of the TAG Amount following the agreed payment dates.

The entry by (i) the Company and TAG into the Top-Up Shareholder Loan Agreement and (ii) the Company and TAG into the Side Letter Agreement each constituted a material related party transaction for the purposes of DTR 7.3 and were, accordingly, voted upon by the independent Directors (excluding Alessandro Zamboni, who, in each case, constituted a "related party" (as such term is defined in IFRS)), and such independent Directors consider each such material related party transaction in respect of the Top-Up Shareholder Loan Agreement and the Side Letter Agreement to be fair and reasonable from the perspective of the Company and its Shareholders who are not a related party.

Alessandro Zamboni, CEO, Supply@ME Capital plc , said:

"The past six months have been productive for Supply@ME, with our team working tirelessly on several key development workstreams. I am delighted with the progress we have made. We've started to build our track record on IMs which have unlocked a significant increase in engagement and interest in the Supply@ME Platform, both in our core markets and further afield. Our pipeline is strong and the experience we have gained continues to streamline the onboarding process. The launch of the Swiss Trading Hub will be a key development which provides the long-term framework for Inventory Monetisations and sends a clear and positive message to potential Inventory Funders, in both traditional and digital asset classes.

"We have also made further significant progress in building the fundamentals for a scalable business model. The security token framework is close to being launched - which is in line with future trends of the crypto bond market - and, critically, on the formalisation of our first white label partnership together with a first transaction, which we expect to prove an effective working relationship from day one. The new agreed funding facility gives us a clear platform from which to pursue the exciting opportunities that lie ahead.

"The SYME Board and I are positive about the prospects for the Group, given the operational and strategic progress being made, and we look forward to providing further business updates to the market in due course."

- Ends -

For the purposes of UK MAR, the person responsible for arranging release of this announcement on behalf of SYME is Alessandro Zamboni, CEO.

Enquiries

Investors & analysts:

Alessandro Zamboni, CEO, Supply@ME Capital plc, investors@supplymecapital.com

Media:

MHP Group, Supplyme@mhpgroup.com

APPIX 1 - CEO REPORT AND INTERIM FINANCIAL STATEMENTS

Chief Executive's report

Business model summary

The Group provide its innovative fintech Platform for use by manufacturing and trading companies to access IM solutions enabling their businesses to generate cashflow, via a non-credit approach and without incurring debt. This is achieved by their existing eligible inventory being added to the Platform and then monetised via purchase by third party Inventory Funders ("IM Transactions").

The completion of the TradeFlow Restructuring on June 2023 was an important step for the Group. When we acquired TradeFlow in July 2021, we had a clear goal to support businesses at every stage of the inventory lifecycle. We remain committed to this and will continue to explore opportunities to integrate in-transit and cross-border inventory programmes. John Collis and Tom James made a valuable contribution to our business and our board, but this was a necessary restructuring which removes any potential or perceived conflict of interest. It will enable both businesses to better realise their potential by providing greater commercial opportunities through the clear differentiation of responsibilities of the individual entities. With the completion of the TradeFlow Restructuring we can now redouble our efforts and focus on our core business lines.

Business model canvas: structural market drivers making business more and more relevant

Corporates in our core markets and globally have taken a multilayered approach to improving their supply chain resilience. These steps have included increasing inventory levels, with the incumbent cost of storing this inventory also increasing. The impact on cashflow and the demand for funding to alleviate this has never been greater. The dual drivers of inflation and climate linked changes to seasonality of inventories has also prompted reassessments and crystalised focus. There is now an abundance of highly profitable, long-established manufacturing and trading businesses which present an opportunity for investors, particularly those comfortable with receivables, to generate strong returns by monetising their inventories via the Platform.

Traditional financial institutions are not specialists in inventory. Historically, the difficulties in evaluating the inventories and the risk of fraud due to infrequent and imprecise monitoring combined with the unattractive prospect of disposing of unsold inventory have reduced engagement with this asset class, with lenders offering restrictive terms and unattractive rates. However, the need for a commercial facility for inventory is clear. Supply@ME has developed the systems and technology which remove the barriers to entry and provide certainty and security for Inventory Funders. We also have now begun to establish a track record of completed IM transactions supported by different funding routes.

Supply@ME's onboarding process for clients has been honed and is now demonstrably straightforward. We have, and are continuing to, invest heavily in our inventory ingestion, rule processing, and monitoring technology and expertise to ensure that it plugs seamlessly into existing systems and enhances monitoring.

We are confident in our ability to attract and convert client companies in our core markets and to add to this list of countries. For Inventory Funders, we are now progressing several paths and have commenced discussions to secure a cornerstone funder. This type of partnership will unlock a new level of momentum for the business. In tandem with this, the completion of the next stage of the security token framework will, alongside traditional funding, ensure we are increasingly well placed to furnish the demand in our pipeline.

New funding structure

Supply@ME's acquisition of TradeFlow Capital had, as one of its central goals, the creation of an independent trading business, the Stock Companies, owned by a regulated fund, which would use Supply@Me's IM Platform to facilitate the IM transactions. The regulated fund GIF also served to raise equity capital for IM Transactions. The restructuring of our relationship with TradeFlow was driven by an evolution in the regulation of the fund management industry, in particular, the direction from the Monetary Authority of Singapore, that TradeFlow should separate its licensed fund management activities from the rest of its business.

Since then, Supply@ME has been collaborating with a group of private investors and subject matter experts in working capital solutions, to launch an independent Swiss-based trading business (" CH Trading Hub ") to replace the GIF, previously advised by TradeFlow.

Switzerland is traditionally an important trading hub (in particular for raw materials and commodities) and one of the more advanced jurisdictions regarding the regulation over the digital asset industry.

The CH Trading Hub, owned by Société Financière Européenne S.A. (" SFE "), will invest its equity capital to build up a dedicated internal structured financing team. It is expected that SFE will assume the control of the independent Stock Companies from the GIF once this restructure is completed, to manage the overall trading businesses using the platform and the services provided by the Group from this point.

Finally, the CH Trading Hub will handle the token route including progressing the strategic agreement with VeChain. In this regard, the Group is working with the CH Trading Hub on the launching of a security token framework which will see up to US$100m issued which is expected to be subscribed mostly by institutional investors active in the digital asset markets. The security token will be issued by a vehicle sponsored by SFE and it will be tradeable on authorised digital asset exchanges.

Updates to the Platform

Over the past six months, the Group has continued to improve its Platform to ensure that it is and will continue to be best-in-class and that it has the capabilities to scale with the business and diversification of the required monetisation portfolios, both in terms of geographies and industries.

We have continued to leverage the enhanced expertise we brought onto our team via key hires in 2022, and to leverage and further build out the vital partnerships with our software factory and information and commercial technology ( " ICT " ) partners.

To that end the key areas of more recent development can be broken down into five modules.

   1.   Onboarding Module 

In order to more efficiently & effectively manage the pipeline of client prospects for Inventory Monetisation, a dedicated Onboarding Module has been implemented. This module allows:

 
 
        *    analysis and identification of eligible inventory 
             items using purpose-built workflows to drive due 
             diligence tasks; 
 
 
        *    clear and transparent pipeline tracking; 
 
 
        *    comprehension and insight into the inventory 
             associated risks; 
 
 
        *    secure exchange of data for clients and to various 
             third parties; 
 
 
        *    production of critical inputs into the Trading and 
             Monitoring modules; 
 
 
        *    production of due diligence reports for presentation 
             to potential Inventory Funders. 
 

With the above information, it allows the Platform to represent clients to prospective Inventory Funders and finalise the commercial agreements governing the IM transaction.

   2.   Data Module 

Data and analyses are core to our business model and what makes the Platform distinct.

As previously discussed in the Annual Report and Accounts for the year ended 31 December 2022, the 'data factory' software module allows for the required level of data ingestion we have envisaged alongside API management and the automated application of key business rules. We have continued to enhance this module, utilising " Test & Learn " methodologies that have enabled us to augment our analysis models and interact with our key partners more effectively.

The inventory data-lake continues to be enhanced, hitting key milestones, to enable advanced inventory data analytic metrics such as seasonality, obsolescence risk, critical components, margin and sales trends, inventory risk scores, and to enable robust and accurate monitoring and reporting.

   3.   Trading Module 

Leveraging the feedback from the first IM transactions with existing clients, we continue to improve both our processes (from efficiency and client focussed points of view), security protocols, and user experience of the Trading Module.

   4.   Monitoring & Reporting Module 

We have achieved key checkpoints in developing the key controls and KPIs that need to be monitored for each Inventory Monetisation and believe that these are key to providing Inventory Funders comfort against the risk of potential fraud.

We continue to build out the suite of reports for the various audiences, such as Client Companies, Stock Companies, Inventory Funders, in a robust and auditable manner.

   5.   Web3 Module 

The Group continues to leverage its relationship with VeChain and to enhance on the Web3 solution. Integrating the technology to the Platform ready for Web3 will help us to introduce the IM as a new asset class to a broader range of investors. It also means the Group is able to harness the developments in this nascent sector at pace, including the ability to explore the issuance of non-fungible tokens (NFTs), participating in digital ownership and business-to-business (B2B) marketplaces, decentralised finance and tokenised governance protocol. In this space, the Group and the CH Trading Hub will continue to explore further collaborations with digital asset investment banks and exchanges.

Update on the Group's Operational KPIs

Client company origination

Origination of client companies with inventory suitable for Inventory Monetisation has seen a significant increase both in the quality of businesses we are engaging and the strength of initial discussions. The first IM Transactions already have positively changed the tone and we are now operating at a more optimal level at each stage of client engagement. Our business in Italy is at a more advanced stage, however the impact of the UK IM has been significant, and we expect business in that market to follow a similar timeline as we have already experienced in Italy.

Pipeline of client companies now stands at GBP 404.5 m as at 22 September 2023. The drivers for inventory solutions are also diversifying, with supply chain frustrations, the impact of inflation and climate all prompting enquiries. We are confident in the appeal of the Platform to client companies in our core markets and also expect to expand, the list of territories in which we operate, due to a combination of market factors and demand from potential clients.

Italy

The group now has the track record of two IM Transactions, in markedly different sectors, being industrial vehicles and tyre retreading, which serves to emphasise the value of our Platform to a deeper pool of prospective clients. Our existing businesses are also now vital advocates and reference points for those wishing to engage with Inventory Monetisation. The benefits of this are significant. This third-party endorsement of our unique and innovative model is also helping us to attract larger businesses with significant portfolios of monetisable inventory.

The Group is now in advanced stages of formalising a White-Label IM agreement with the WL Inventory Funder to execute an initial IM transaction with an inventory value to be monetised of up to EUR10m, which involves an existing client of the WL Inventory Funder. This White-Label IM agreement (which remains subject to contract) will allow the Group to scale its revenue in Italy, leveraging the balance sheet and the client base of the WL Inventory Funder in specific supply chains. This first transaction will likely see us expanding the IM footprint in the agrifood sector, focusing on those goods which retain long-term value and high demand.

Formalising our first White Label partnership, much like our first IM Transaction , has required significant discussion and due diligence , including the involvement of a Big 4 consultancy firm. It is a new product for our partners and their customer base, without precedent, but we are confident that completing our initial white label agreement will provide a template for similar partnerships in Italy, the UK and other territories.

United Kingdom

Our first IM transaction using traditional funding in the UK represented a key milestone, providing proof of concept in the market, a tangible track record and a template for IMs being managed within an existing floating charge facility, confirming the ability to work alongside existing financing arrangements as a commercial facility . Since the announcement of this transaction, momentum has increased, and we feel confident in our stated goal of securing white label and self-funding agreements. Origination in the UK has also been gathering pace and we have a strong growing pipeline of prospective clients. The triggers which prompt businesses to contact us have also broadened and we are seeing a growing number of businesses affected by supply chain issues and climate related impacts seeking to offset increased costs. In the UK, the next milestones will be aligning long-term funding partnerships and White Label alliances.

Outlook

In the coming months Supply@ME will look to finalise its first White Label Partnership in Italy, implement the security token funding route and secure the backing of international Inventory Funders. These three initiatives will form the basis of the next phase of growth for our business, as we target the Group's revenue growth and opening the scale-up momentum. The new CH Trading Hub will provide the backbone for these initiatives and future transactions, providing a new layer of long-term certainty for Inventory Funders and corporates. This is a formative period for the business, and we are confident in our ability to deliver against these stated objectives to ultimately deliver greater value for our clients, investors and shareholders.

Financial review

 
                                            6 months     6 months     Movement 
                                                  to           to 
                                             30 June      30 June 
                                                2023         2022    Unaudited 
                                           Unaudited    Unaudited 
                                              GBP000       GBP000       GBP000 
                                         -----------  -----------  ----------- 
 Continuing operations 
 Revenue from continuing operations               77            -           77 
 Operating loss from continuing 
  operations before impairment charges       (1,981)      (1,963)         (18) 
 Impairment charges                            (349)        (151)        (198) 
                                         -----------  -----------  ----------- 
 Operating loss from continuing 
  operations                                 (2,330)      (2,114)        (216) 
 Finance costs                                  (22)      (1,466)        1,444 
                                         -----------  -----------  ----------- 
 Loss before tax from continuing 
  operations                                 (2,352)      (3,580)        1,228 
 Income tax                                     (24)            -         (24) 
                                         -----------  -----------  ----------- 
 Loss after tax from continuing 
  operations                                 (2,376)      (3,580)        1,204 
 Loss from discontinued operations             (185)      (2,610)        2,425 
                                         -----------  -----------  ----------- 
 Total loss for the year                     (2,561)      (6,190)        3,629 
                                         ===========  ===========  =========== 
 
                                                                      Movement 
                                               Pence        Pence        Pence 
 Total loss per share ( " EPS " 
  )                                         (0.0046)     (0.0162)       0.0116 
                                         ===========  ===========  =========== 
 

The Group's unaudited condensed consolidated interim financial statements for the six-month period ended 30 June 2023 ( " H1 2023 " ) have been prepared in line with International Accounting Standard IAS 34 ( " Interim Financial Reporting " ). The TradeFlow operations continued to be classified as discontinued operations and assets held for resale in line with the requirements of IFRS 5 ( " Non-current Assets Held for Sale and Discontinued Operations " ) from 1 January 2023 until the date of completion of the TradeFlow Restructuring, being 30 June 2023. The prior period income statement has been restated to aid comparability in line with the standard.

As shown in the financial summary above, the TradeFlow operations contributed a loss of GBP185,000 (inclusive of the gain of GBP718,000 recognised in connection with the TradeFlow Restructuring) in H1 2023.

Revenue from continuing operations

 
                                    6 months     6 months     Movement 
                                          to           to 
                                     30 June      30 June 
                                        2023         2022    Unaudited 
                                   Unaudited    Unaudited 
                                      GBP000       GBP000       GBP000 
                                 -----------  -----------  ----------- 
 Revenue 
 Due Diligence fees                       40            -           40 
 Inventory Monetisation fees              37            -           37 
                                 -----------  -----------  ----------- 
 Total revenue from continuing 
  operations                              77            -           77 
                                 ===========  ===========  =========== 
 

The table above provides a break down of the Group's revenue from Inventory Monetisation activities during H1 2023. Revenue is recognised in accordance with IFRS 15 ( " Revenue from Contracts with Customers " ) and more details on the Group's revenue recognition policies can be found in the note 2 to the Group's condensed consolidated financial statements for the year ended 31 December 2022 (the " 2022 Annual Report " ) .

During H1 2023, the Group recognised GBP77,000 ( H1 2022 : nil) of Inventory Monetisation revenue, which it split 52% related to due diligence fees, and the remaining 48% relating to Inventory Monetisation fees.

In line with IFRS 15 ( " Revenue from Contracts with Customers " ) the Group recognised the due diligence revenues when the due diligence services have been delivered and the Group's performance obligation has been satisfied. During H1 2023, the Group has continued to carry out, and charge for due diligence activities, and the GBP40,000 recognised as revenue reflects the value of those due diligence activities completed during H1 2023.

Following the announcement of the first Italian IM transactions during 2022 and H1 2023, which were facilitated using the Group's Platform, the Group recognised Inventory Monetisation fees of GBP37,000. These fees related to the following activities:

1) Origination fees - the origination of the contracts between the client company wishing to have their inventory monetised and the independent Stock (trading) Company that purchased the inventory from the client company. In line with IFRS 15 ( " Revenue from Contracts with Customers " ) the Group recognised these revenues at the point in time they are due to be received from the client;

2) IM Platform usage fees - usage of the Group's IM Platform, under a Software as a Service ( " SaaS " ) contract, by the independent Stock (trading) Company to facilitate the purchase of the inventory from the client company. In line with IFRS 15 ( " Revenue from Contracts with Customers " ) the Group recognised these revenues over the time period they related to; and

3) IM service fees - the support and administration activities, such as the monitoring of the inventory purchased, that the Group performs in connection with the use of the Group's IM Platform. In line with IFRS 15 ("Revenue from Contracts with Customers") the Group recognised these revenues over the time period they related to.

These revenues are expected to grow in future accounting periods in line with expected growth in both the number of IM transactions that are facilitated using the Group's IM Platform and, the quantum of inventory monetised by the independent Stock (trading) Companies per transaction, increases.

Operating loss from continuing operations before impairment charges

During H1 2023, the Group was focused on securing the binding commercial agreements in terms of the first IM transactions to use traditional funding in both Italy and the UK, the latter of these being announced in early July 2023. In conjunction with this, efforts have also been directed to building and continually reevaluating the Group's Inventory Monetisation pipeline following the announcement of the inaugural IM transactions. In addition, progress has made in terms of the Group's White-Label initiative, and in terms of securing new sources of inventory funding. Further details of this progress has been set out earlier in this announcement.

The Group recorded an operating loss from continuing operations before impairment charges for H1 2023 of GBP1,981,000 (H1 2022: GBP1,963,000 loss). There have been two main changes in the components to this figures that largely offset each other including:

 
 
   *    an increase in professional and legal fees in H1 2023 
        as the Group undertook several different corporate 
        activities such as the TradeFlow Restructuring, the 
        financing and equity subscription that was announced 
        in conjunction with the 2022 Annual Report, and the 
        regulatory requirement to keep the prospectus that 
        the Company issued in October 2022 updated for any 
        significant changes to the business. In addition, the 
        Group are continuing to invest into improving the 
        functionality and enhancing the performance of the IM 
        Platform, and certain of those costs did not meet the 
        criteria for capitalisation under IAS 38 ( " 
        Intangible Assets " ). As such, these costs have been 
        expensed during H1 2023. An example of such costs 
        includes those related to early-stage planning and 
        research activities; and 
 
 
   *    these increases were then offset by an increase to 
        other operating income during H1 2023 as a result of 
        a settlement agreement reached with an existing 
        supplier to reduce the total amount payable by the 
        Group in exchange for payment of a lower agreed 
        amount by a specific date. The difference in the 
        previous amount owed and the agreed final settlement 
        amount resulted in a gain recognised in the income 
        statement of GBP376,000 in H1 2023. 
 

Impairment charges from continuing operations

 
                                                       6 months     6 months 
                                                             to           to 
                                                   30 June 2023      30 June 
                                                      Unaudited         2022 
                                                                   Unaudited 
                                                         GBP000       GBP000 
                                                 --------------  ----------- 
 Impairment charges from continuing operations              349          151 
                                                 --------------  ----------- 
                                                            349          151 
                                                 ==============  =========== 
 

The impairment charges from continuing operations of GBP349,000 recognised during H1 2023 relate to the impairment of the Group's internally developed IM platform as at 30 June 2023 in line with the requirements of IAS 36 ( " Impairment of Assets " ). This followed the conclusion that indicators of impairment were present, which included the losses continued to be generated by the assets held by the Group's Italian operating subsidiaries. In line with the going concern statement, set out in note 4 to the unaudited condensed consolidated interim financial statements, there is currently a material uncertainty with respect to both the future timing and growth rates of the forecast cash flows arising from the use of the internally developed IM Platform intangible asset. As such, the Directors have prudently decided to continue to impair the full carrying amount of this asset of GBP349,000 as at 30 June 2023.

Discontinued Operations

The revenue and operating loss of the TradeFlow operations for the period from 1 January 2023 through to the date on which the TradeFlow Restructuring was completed, being 30 June 2023, are shown in the table below. As detailed above, the TradeFlow operations have been classified as discontinued operations and assets held for resale in line with the requirements of IFRS 5 ( " Non-current Assets Held for Sale and Discontinued Operations " ). The comparatives show the revenue and operating loss of the TradeFlow operations for H1 2022.

 
                                                        6 months          6 months 
                                                              to                to 
                                                    30 June 2023           30 June 
                                                       Unaudited    2022 Unaudited 
                                                          GBP000            GBP000 
                                                  --------------  ---------------- 
 Revenue from discontinued operations                        684               209 
 Operating loss from discontinued operations 
  before acquisition relation costs, impairment 
  charges and costs/(gains) relating to 
  the restructuring of the TradeFlow ownership             (329)             (555) 
 Amortisation of intangible assets arising 
  on acquisition                                           (442)             (406) 
 Acquisition related earn-out payments                         -             (747) 
 Impairment charges                                            -             (765) 
 Foreign currency translation loss reclassified 
  to other comprehensive income                             (62)                 - 
 Gain arising on the restructuring of 
  the TradeFlow operations                                   718                 - 
                                                  --------------  ---------------- 
 Operating loss from discontinued operations               (115)           (2,473) 
                                                  ==============  ================ 
 

TradeFlow's investment advisory revenue arose from investment advisory services provided in TradeFlow's capacity as investment advisor to its well-established USD fund and its growing EUR fund. In line with IFRS 15 ( " Revenue from Contracts with Customers " ) these revenues were recognised when the investment advisory services have been delivered and TradeFlow's performance obligation has been satisfied.

Further details of the costs recognised in H1 2023 set out in the table above are detailed below:

 
 
   *    amortisation of intangible assets arising on 
        acquisition of GBP442,000. These costs related to the 
        intangible assets recognised by the Group in 
        connection with the TradeFlow acquisition, which had 
        an initial fair value of GBP6,888,000. The GBP442,000 
        represents the amortisation charge arising on these 
        assets for the six month period from 1 January 2023 
        through to the date on which the TradeFlow 
        Restructuring was completed, being 30 June 2023; 
 
 
   *    foreign currency translation loss reclassified to 
        other comprehensive income of GBP62,000. This 
        represents the cumulative foreign currency 
        translation reserve created on consolidation in 
        respect of the TradeFlow operations. This is 
        reclassified to income statement at 30 June 2023 due 
        to TradeFlow no longer being consolidated by the 
        Group from this date ; and 
 
 
   *    the gain arising on the restructuring of the 
        TradeFlow operations of GBP718,000. On the 30 June 
        2023, the net assets of TradeFlow (representing a 
        value of GBP1,634,000 at 30 June 2023) are no longer 
        consolidated by the Group, and instead the value of 
        the new 19% investment of GBP352,000 was recognised 
        on the balance sheet, together with the GBP2,000,000 
        remaining cash consideration to be received. The 
        difference between these items resulted in a gain 
        arising on the restructuring of the TradeFlow 
        operations recorded in the unaudited condensed 
        consolidated interim income statement of GBP718,000. 
 

As shown above there were no additional acquisition related earn-out costs recognised during H1 2023 which reflected the fact that as part of the TradeFlow Restructuring all future potential earn-out payments were offset against the initial cash consideration value.

Additionally, following the finalisation of the TradeFlow Restructuring on 30 June 2023, the assets and liabilities of TradeFlow, including the intangible assets arising as part of the original TradeFlow acquisition in July 2021 , are no longer consolidated by the Group. As such no further impairment charges relating to the discontinued operations were recognised during H1 2023. Instead, a calculation was undertaken to calculate any gain or loss arising on as a result of the change in ownership structure of the TradeFlow operations. The details of this calculation set out in below and in further detail can be found in note 21 to unaudited condensed consolidated interim financial statements for the six-month period ended 30 June 2023.

 
                                                         6 months to 
                                                        30 June 2023 
                                                           Unaudited 
                                                            GBP '000 
                                                      -------------- 
 Accounting fair value of the 81% ownership 
  of the TradeFlow operations disposed of by 
  the Group                                                    2,000 
 Accounting fair value of 19% ownership of the 
  TradeFlow operations retained by the Group                     352 
                                                      -------------- 
                                                               2,352 
                                                      -------------- 
 Less: 
 Accounting fair value of net assets disposed 
  of by the Group                                            (1,634) 
                                                      -------------- 
 Gain arising on the restructuring of the TradeFlow 
  ownership                                                      718 
                                                      ============== 
 

New equity funding

On 28 April 2023, the Company and Venus Capital entered into a new equity subscription agreement, pursuant to which Venus Capital committed to subscribe for 4,500,000,000 new ordinary shares (the " Subscription Shares " ) at GBP0.0005 per Subscription Share (the " Subscription Agreement " ) over two separate tranches, both of which took place in May 2023. The total gross proceeds received by the Group in relation to this Subscription Agreement was GBP2,250,0000 or GBP2,137,500 net of the GBP112,500 commission that was charged be Venus Capital in connection with the subscription of the Subscription Shares. An additional GBP112,500 was paid to Venus Capital in respect of agreed costs and expenses incurred by Venus Capital in connection with the Subscription Agreement.

The Subscription Agreement required new warrants to be issued to Venus Capital at a ratio of one warrant for every two Subscription Shares issued. This resulted in an obligation for the Group to issue 2,250,000,000 new warrants to Venus Capital ( " New Venus Warrants " ) which existed at 30 June 2023. The New Venus Warrants are each exercisable into one new ordinary share at a price equal to GBP0.00065 pence per share up to a final exercise date of 31 December 2026. As at 30 June 2023, the obligation to issue these share warrants to Venus Capital has been recognised within equity as " warrants to be issued " within the share-based payment reserve. These share warrants had a total fair value of GBP1,717,000. As at 30 June 2023, all of these share warrants remain outstanding.

The total share issue costs incurred in connection with the Subscription Agreement during H1 2023 were GBP1,972,000 including GBP1,717,000 relating to the fair value of the warrants issued, GBP225,000 relating the commission and other fees charged by Venus Capital and GBP30,000 of other share issue costs. This has been accounted for as a GBP1,972,000 reduction to share premium during H1 2023 given there was sufficient share premium created on the issue of the Subscription Shares.

New debt financing

On the 28 April 2023, the Company and The AvantGarde Group S.p.A ("TAG"), the Group's major shareholder, entered into a fixed term unsecured working capital loan agreement (the "TAG Unsecured Working Capital facility"). This agreement was subsequently amended on 30 June 2023 in conjunction with the TradeFlow Restructuring. Under the amended TAG Unsecured Working Capital facility, TAG shall provide, subject to customary restrictions, a facility of up to GBP800,000 to cover the Company's interim working capital and growth needs.

The due date for repayment by the Company of amounts (if any) drawn under the TAG Unsecured Working Capital facility is 1 February 2028. Any sums drawn under the TAG Unsecured Working Capital facility will attract a non-compounding interest rate of 10% per annum, and any principal amount (excluding accrued interest) outstanding on 1 February 2028 will attract a compounding interest rate of 15% per annum thereafter. Interest will be due to be paid annually on 31 March of each relevant calendar year.

On 30 June 2023, the Company issued a draw down notice to TAG under the amended TAG Unsecured Working Facility for the full GBP800,000 available. As at 30 June 2023, no funds had been received from TAG in respect of this facility, however subsequent to 30 June 2023, and prior to the release of these unaudited condensed consolidated interim financial statements, TAG had provided GBP245,000 of the GBP800,000 that had been drawn down by the Company.

Cash flow

The Group decreased its net cash balance by GBP465,000 (H1 2022: GBP797,000 decrease) due to a combination of the following cash inflows and outflows:

 
 
   *    cash inflow of GBP2,018,000, net of commission and 
        other share issue costs, received from the issue of 
        new ordinary shares during H1 2023 under the 
        Subscription Agreement, and from existing warrant 
        holders who chose to convert their warrants (which 
        had been issued in issued in conjunction with the 
        open offer completed during 2022), during H1 2023; 
        and 
 
 
   *    cash inflows from long-term borrowing of GBP372,000, 
        net of repayments and other finance costs, 
        predominantly due to the new long-term borrowings 
        secured by TradeFlow during the six-month period 
        prior to the completion of the TradeFlow 
        Restructuring. 
 

These net cash inflows were then offset by the following items:

 
 
   *    net outflows from operating activities of 
        GBP2,143,000 (H1 2022: GBP2,095,000 net outflow); 
 
 
   *    increased investment in the Group's IM Platform of 
        GBP388,000 (H1 2022: GBP164,000); and 
 
 
   *    removal of the opening cash balance of the TradeFlow 
        operations of GBP324,000 to reflect the fact that the 
        TradeFlow Restructuring was completed on 30 June 2023 
        and the TradeFlow assets and liabilities are no 
        longer consolidated by the Group at the period end. 
 
 
                                                6 months to          6 months 
                                               30 June 2023                to 
                                                  Unaudited           30 June 
                                                               2022 Unaudited 
                                                     GBP000            GBP000 
                                             --------------  ---------------- 
 Net cash flow from operating activities            (2,143)           (2,095) 
 Net cash flow from investing activities              (712)             (187) 
 Net cash flow from financing activities              2,390             1,485 
                                             --------------  ---------------- 
 Net increase in cash and cash equivalents            (465)             (797) 
 Foreign exchange differences to cash 
  and cash equivalents on consolidation                (19)              (25) 
 Cash and cash equivalents at 1 January                 581             1,727 
                                             --------------  ---------------- 
 Cash and cash equivalents as at 30 
  June                                                   97               905 
                                             ==============  ================ 
 

Net liabilities

As at 30 June 2023 net liabilities were GBP2,108,000 (31 December 2022: net liabilities of GBP2,025,000).

The largely stable net liability position at 30 June 2023 compared to 31 December 2022 is due to the following:

 
 
   *    the addition of the new assets created as a result of 
        the TradeFlow Restructuring including the 
        GBP2,000,000 outstanding cash consideration 
        receivable by the Company from TAG, following TAG's 
        assumption of the receivable from the buyers of 
        TradeFlow on 30 June 2023, and the GBP352,000 new 
        investment balance accounting for the Group's 
        remaining 19% ownership of TradeFlow. Further details 
        on these new assets can be found in notes 3, 13 and 
        21 to the unaudited condensed consolidated interim 
        financial statements for the six-month period ended 
        30 June 2023. 
 

This increase in assets compared to 31 December 2022 was then offset by:

 
 
   *    the removal of the assets and liabilities relating to 
        TradeFlow from the Group's consolidated balance sheet 
        at 30 June 2023 to reflect the fact that the 
        TradeFlow Restructuring was completed on this date. 
        The value of the net asset relating to TradeFlow that 
        were consolidated as at 31 December 2022 was 
        GBP2,283,000; and 
 
 
   *    a small increase in other working capital items 
        primarily due to the overall net cash outflows from 
        operations. 
 

Going Concern

The Board's assessment of going concern and the key considerations thereto are set out in the note 4 to the unaudited condensed consolidated interim financial statements for the six-month period ended 30 June 2023 .

Related Parties

Note 22 to the unaudited condensed consolidated interim financial statements for the six-month period ended 30 June 2023 contains details of the Group's related parties.

Subsequent events

Note 23 to the unaudited condensed consolidated interim financial statements for the six-month period ended 30 June 2023 contains details of all subsequent events.

Directors' Responsibility Statement

The Directors are responsible for preparing the unaudited condensed consolidated interim financial statements in accordance with applicable law and regulations. A list of current directors is maintained on the Group's website: https://www.supplymecapital.com.

The Directors confirm that, to the best of their knowledge, the unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 ("Interim Financial Reporting"), as issued by the International Accounting Standards Board as contained in UK - adopted International Financial Reporting Standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4 R of the FCA's Disclosure Guidance and Transparency Rules ("DTRs").

The Directors further confirm that the unaudited condensed consolidated interim financial statements include a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

In accordance with the DTR Rule 4.2.9(2)R, the Directors confirm that these unaudited interim condensed consolidated financial statements have not been audited or reviewed by auditors pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information.

The Directors have shared all the relevant working papers with their advisers.

By Order of the Board

Alessandro Zamboni

Chief Executive Officer

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 6 MONTH PERIODED 30 JUNE 2023

 
                                                     6 months    6 months to 
                                                           to   30 June 2022 
                                                 30 June 2023 
                                                    Unaudited      Unaudited 
                                         Notes       GBP '000       GBP '000 
                                                -------------  ------------- 
 
Continuing operations 
Revenue                                    5               77              - 
Cost of sales                              7            (185)          (183) 
                                                -------------  ------------- 
Gross loss                                              (108)          (183) 
Administrative expenses                    7          (2,258)        (1,769) 
Other operating income / (costs)           8              385           (11) 
Operating loss from continuing 
 operations before impairment charges                 (1,981)        (1,963) 
Impairment charges                        12            (349)          (151) 
Operating loss from continuing 
 loss                                                 (2,330)        (2,114) 
Finance costs                              6             (22)        (1,466) 
Loss before tax from continuing 
 operations                                           (2,352)        (3,580) 
Taxation                                   9             (24)              - 
Loss for the period from continuing 
 operations                                           (2,376)        (3,580) 
                                                -------------  ------------- 
 
Discontinuing operations 
Loss for the period from discontinuing 
 operations                               21            (185)        (2,610) 
                                                -------------  ------------- 
Total loss for the period                             (2,561)        (6,190) 
 
Other comprehensive income 
Exchange differences on translating 
 foreign operations                                       415          (257) 
Total comprehensive loss for the 
 period                                               (2,146)        (6,447) 
                                                =============  ============= 
 
Loss per share                                          Pence          Pence 
                                                -------------  ------------- 
Basic and diluted loss per share 
 - continuing operations                   11        (0.0043)       (0.0094) 
Basic and diluted loss per share 
 - discontinued operations                 11        (0.0003)       (0.0068) 
                                                -------------  ------------- 
Basic and diluted loss per share 
 - total                                  11         (0.0046)       (0.0162) 
                                                =============  ============= 
 

The above unaudited condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

 
       UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
                                                     AS AT 30 JUNE 2023 
                                             30 June 2023   31 December 
                                                Unaudited          2022 
                                                                Audited 
                                     Notes       GBP '000      GBP '000 
                                            -------------  ------------ 
Non-current assets 
Intangible assets and goodwill        12                -             - 
Tangible assets                                         5             7 
Investment                            21              352             - 
Other non-current assets                               19            19 
Total non-current assets                              376            26 
 
Current assets 
Trade and other receivables           13              933         1,219 
Receivable from related party         13            2,000             - 
Cash and cash equivalents                              97           257 
                                            -------------  ------------ 
                                                    3,030         1,476 
                                            -------------  ------------ 
Assets of disposal group held 
 for sale                             21                -         6,844 
                                            -------------  ------------ 
Total current assets                                3,030         8,320 
                                            -------------  ------------ 
Total assets                                        3,406         8,346 
 
Current liabilities 
Trade and other payables              14            4,335         4,587 
Liabilities of disposal group 
 held for sale                        21                -         4,561 
                                            -------------  ------------ 
Total current liabilities                           4,335         9,148 
                                            -------------  ------------ 
Net current liabilities                           (1,305)         (828) 
 
Non-current liabilities 
Long-term borrowings                  15              741           748 
Provisions                            16              431           468 
Deferred tax liabilities                                7             7 
Total non-current liabilities                       1,179         1,223 
 
Net liabilities                                   (2,108)       (2,025) 
                                            =============  ============ 
 
Equity attributable to owners 
 of the parent 
Share capital                         17            5,988         5,897 
Share premium                                      25,348        25,269 
Share-based payment reserve           20            7,949         5,871 
Other reserves                                   (10,998)      (11,413) 
Retained losses                                  (30,395)      (27,649) 
                                            -------------  ------------ 
Total equity                                      (2,108)       (2,025) 
                                            =============  ============ 
 

The above unaudited condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTH PERIODED 30 JUNE 2022

 
                                                  Share-based     Merger    Reverse       Foreign 
                    Share       Share      Other      payment     relief   takeover      currency   Retained 
                  capital     premium  reserves*      reserve   reserve*   reserve*      reserve*   earnings     Total 
                 GBP '000    GBP '000   GBP '000     GBP '000   GBP '000   GBP '000      GBP '000   GBP '000  GBP '000 
                ---------  ----------  ---------  -----------  ---------  ---------  ------------  ---------  -------- 
As at 1 
 January 2022       5,486      18,171         21        2,018    226,905  (237,835)            18   (16,209)   (1,425) 
Loss for the 
 6-month 
 period                 -           -          -            -          -          -             -    (6,190)   (6,190) 
Forex 
 retranslation 
 difference             -           -          -            -          -          -         (257)          -     (257) 
Loss for the 
 period and 
 total 
 comprehensive 
 income             5,486      18,171         21        2,018    226,905  (237,835)         (239)   (22,399)   (7,872) 
Issue of 
 warrants               -           -          -          180          -          -             -          -       180 
Warrants to be 
 issued                 -           -          -        3,074          -          -             -          -     3,074 
Issuance of 
 new ordinary 
 shares                95       2,922          -            -          -          -             -          -     3,017 
Share issue 
 costs                  -     (1,593)          -            -          -          -             -    (1,591)   (3,184) 
Credit to 
 equity for 
 acquisition 
 related 
 earn-out 
 payments               -           -          -          747          -          -             -          -       747 
As 30 June 
 2022               5,581      19,500         21        6,019    226,905  (237,835)         (239)   (23,990)   (4,038) 
                =========  ==========  =========  ===========  =========  =========  ============  =========  ======== 
 
 

*The "other reserves" balance in the unaudited condensed consolidated statement of financial position represents an aggregate of other reserves, the merger relief reserve, the reverse takeover reserve and the foreign currency reserve.

The above unaudited condensed consolidated statement of changes in equity should be read in conjunction with the accompany notes.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTH PERIODED 30 JUNE 2023

 
                                                    Share-based     Merger    Reverse    Foreign 
                     Share       Share       Other      payment     relief   takeover   currency    Retained 
                   capital     premium   reserves*      reserve   reserve*   reserve*   reserve*    earnings     Total 
                  GBP '000    GBP '000    GBP '000     GBP '000   GBP '000   GBP '000   GBP '000    GBP '000  GBP '000 
                ----------  ----------  ----------  -----------  ---------  ---------  ---------  ----------  -------- 
As at 1 
 January 2023        5,897      25,269          37        5,871    226,905  (237,834)      (521)    (27,649)   (2,025) 
Loss for the 
 6-month 
 period                  -           -           -            -          -          -          -     (2,561)   (2,561) 
Forex 
 retranslation 
 difference              -           -           -            -          -          -        415           -       415 
Loss for the 
 period and 
 total 
 comprehensive 
 income              5,897      25,269          37        5,871    226,905  (237,834)      (106)    (30,210)   (4,171) 
Credit to 
 equity for 
 issue of 
 warrants                -           -           -        1,717          -          -          -           -     1,717 
Exercise of 
 Open Offer 
 warrants                1          23           -         (29)          -          -          -          29        24 
Issuance of 
 new shares             90       2,160           -            -          -          -          -           -     2,250 
Increase in 
 fair value of 
 previously 
 issued 
 warrants                -       (132)           -          346          -          -          -       (214)         - 
Share issue 
 costs                   -     (1,972)           -            -          -          -          -           -   (1,972) 
Equity settled 
 employee 
 share-based 
 payment 
 schemes                 -           -           -           44          -          -          -           -        44 
As 30 June 
 2023                5,988      25,348          37        7,949    226,905  (237,834)      (106)    (30,395)   (2,108) 
                ==========  ==========  ==========  ===========  =========  =========  =========  ==========  ======== 
 

*The "other reserves" balance in the unaudited condensed consolidated statement of financial position represents an aggregate of other reserves, the merger relief reserve, the reverse takeover reserve and the foreign currency reserve.

The above unaudited condensed consolidated statement of changes in equity should be read in conjunction with the accompany notes.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE 6 MONTH PERIODED 30 JUNE 2023

 
                                                   6 months to    6 months to 
                                                  30 June 2023   30 June 2022 
                                                     Unaudited      Unaudited 
                                                      GBP '000       GBP '000 
                                                 -------------  ------------- 
Cash flows from operating activities 
Loss before interest and tax from continuing 
 operations                                            (2,330)        (2,114) 
Loss before interest and tax from discontinued 
 operations                                              (115)        (2,473) 
                                                 -------------  ------------- 
Total loss for the period before interest 
 and tax                                               (2,445)        (4,587) 
Adjustments for non-cash acquisition 
 related costs and impairment charge 
Acquisition related earn-outs                                -            747 
Amortisation of intangible assets arising 
 on acquisition                                            442            406 
Adjustment for impairment charge 
Impairment charges                                         349            916 
Adjustments for non-cash costs related 
 to the disposal of the discontinued 
 operations 
Foreign currency translation reserve 
 reclassified to other comprehensive 
 income                                                     62              - 
Gain arising on restructuring of discontinued 
 operations                                              (718)              - 
                                                 -------------  ------------- 
                                                           135          2,069 
Other non-cash adjustments                                  86             10 
Other depreciation and amortisation                         43             16 
(Decrease) / increase in provisions                       (21)              3 
Decrease in accrued income                                   5              1 
Decrease in trade and other receivables                    426             27 
(Decrease) / increase in trade and 
 other payables                                          (572)            407 
Other decreases in net working capital                     224            229 
                                                 -------------  ------------- 
Cash flows from operations                             (2,119)        (1,825) 
Interest paid in cash                                     (24)            (2) 
Income taxes paid in respect of prior 
 period amounts owing                                        -          (268) 
                                                 -------------  ------------- 
Net cash flows from operating activities               (2,143)        (2,095) 
                                                 -------------  ------------- 
 
Cash flows from investing activities 
Purchase of tangible assets                                  -            (4) 
Purchase of intangible assets                            (388)          (164) 
Increase in non-current assets                               -           (19) 
Cash outflow on disposal of discontinued 
 operations                                              (324)              - 
                                                 -------------  ------------- 
Net cash flows from investing activities                 (712)          (187) 
                                                 -------------  ------------- 
 
Cash flows from financing activities 
Net cash inflow from new long-term 
 borrowings                                                405          3,050 
Cash repayment of other long-term borrowings              (33)        (1,685) 
Cash inflow from issue of new ordinary 
 shares                                                  2,274          1,660 
Other finance costs paid in cash                           (1)          (183) 
Share issue costs paid in cash                           (255)              - 
Cash repayment of loan notes and convertible 
 loan notes                                                  -        (1,357) 
Cash flows from financing activities                     2,390          1,485 
 
Net movement in cash and cash equivalents                (465)          (797) 
Foreign exchange differences to cash 
 and cash equivalents on consolidation                    (19)           (25) 
Cash and cash equivalents as at 1 January                  581          1,727 
Cash and cash equivalents at the end 
 of the period                                              97            905 
                                                 =============  ============= 
 
 

The above unaudited condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE 6 MONTH PERIODED 30 JUNE 2023

   1    Company information 

Supply@ME Capital plc (the " Company " ) is a public limited company incorporated in England and Wales. The address of its registered office 27/28 Eastcastle Street, London, W1W 8DH, United Kingdom. Supply@ME Capital's ordinary shares are admitted to listing on the standard segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange plc.

These unaudited condensed consolidated interim financial statements of the Company and its subsidiaries (the " Group " ) have been approved for issue by the board of directors of the Company (the " Board " ) on 28 September 2023.

   2    Basis of preparation 

Accounting convention

These unaudited interim financial statements for the half-year reporting period ended 30 June 2023 has been prepared in accordance with Accounting Standard IAS 34 ("Interim Financial Reporting" ).

The interim report does not include all the notes of the type normally included in annual unaudited financial statements. Accordingly, this report is to be read in conjunction with the annual report and accounts for the year ended 31 December 2022 (the " 2022 Annual Report " ) and any public announcements made by the Company during the interim reporting period.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period with the exception of the estimation of income tax (refer to note 9 for further details).

New and amended standards adopted by the group

No new or amended standards became applicable for the current reporting period that impacted the Group. The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting any new or amended standards in the current interim reporting period.

   3    Significant changes in the current reporting period 

Below provides a summary of the significant changes that occurred during the six month period ended 30 June 2023.

New Equity Subscription Agreement

On 28 April 2023, the Company and Venus Capital S.A. ("Venus Capital") entered into a new equity subscription agreement, pursuant to which Venus Capital committed to subscribe for 4,500,000,000 new Ordinary Shares (the "Subscription Shares") at GBP0.0005 per Subscription Share (the "Subscription Agreement"). The issue of the Subscription Shares was made over two tranches (in line with the Subscription Agreement) as set out below:

 
 
        *    an initial tranche of 3,375,000,000 Subscription 
             Shares for gross proceeds of GBP1,687,500 (or 
             GBP1,603,125 net of a 5% commission chargeable by 
             Venus Capital). This tranche of Subscription Shares 
             were admitted to a Standard Listing and to trading on 
             the Main Market on 5 May 2023; and 
 
 
        *    a second tranche of 1,125,000,000 Subscription Shares 
             for proceeds of up to GBP562,500 gross (or up to 
             GBP534,375 net a 5% commission chargeable by Venus 
             Capital). This tranche of Subscription Shares were 
             admitted to a Standard Listing and to trading on the 
             Main Market on 30 May 2023. 
 

In addition to the GBP112,500 of commission chargeable by Venus Capital (as set out above):

 
 
        *    GBP112,500 was paid to Venus Capital in respect of 
             agreed costs and expenses incurred by Venus Capital 
             in connection with the Subscription Agreement; and 
 
 
        *    New warrants were required to be issued to Venus 
             Capital at a ratio of one warrant for every two 
             Subscription Shares issued under the Subscription 
             Agreement. This resulted in an obligation for the 
             Group to issue 2,250,000,000 new warrants to Venus 
             Capital ("New Venus Warrants") which existed at 30 
             June 2023. The New Venus Warrants are each 
             exercisable into one new ordinary share at a price 
             equal to 0.065 pence per share up to a final exercise 
             date of 31 December 2026. As at 30 June 2023, the 
             obligation to issue these share warrants to Venus 
             Capital has been recognised within equity as 
             "warrants to be issued" within the share-based 
             payment reserve. 
 

The fees referred to above were agreed through the commission and fee letter signed with Venus Capital and the new warrant instrument agreement, both of which were also dated 28 April 2023.

In connection with the above, the final exercise date of the existing 8,175,000,000 warrants issued to Venus Capital during 2022 in connection with the Capital Enhancement Plan was extended from 31 December 2025 for 12 months to 31 December 2026, through a deed of amendment to the existing warrant instruments dated 28 April 2023.

As at 30 June 2023, the Group had a total of 10,425,000,000 warrants outstanding with Venus Capital, including 8,175,000,000 previously issued to Venus Capital during 2022 and 2,250,000,000 to be issued to Venus Capital as at 30 June 2023. During the six-month period ended 30 June 2023, no warrants held by Venus Capital have been converted.

Extension to the expiry date of the warrants issued in connection with the Open Offer carried out on 17 August 2022

On 22 July 2022, the Group announced the Open Offer, giving existing shareholders the opportunity to subscribe for up to 641,710,082 new ordinary shares in the Group on the basis of one Open Offer share for every 66 existing ordinary shares held at an offer price of 0.05 pence per Open Offer share. The Open Offer closed on 17 August 2022 and on 18 August 2022, the Group announced it would allot and issue 641,710,082 new ordinary shares to those qualifying shareholders and that this would raise GBP320,855 gross (and GBP269,855 net of fees and expenses) for the Group.

In addition to the new ordinary share that were issued, the Group also issued 320,855,008 warrants to the qualifying shareholders on the basis of one warrant for every two ordinary shares received as a result of the Open Offer (the " Open Offer Warrants "). These warrants were able to be exercised at any time up to 31 December 2025 and have an exercise price of 0.065 pence per warrant.

In line with the extension to the expiry date of the existing 8,175,000,000 warrants held by Venus Capital, the shareholders who participated in the Open Offer were asked if they would like to vote to extend the expiry date of the Open Offer Warrants from 31 December 2025 by 12 months to 31 December 2026. This resolution was successfully passed at the Group's 2023 Annual General Meeting, and a deed of amendment to the existing Open Offer warrant instrument was signed, on 23 June 2023. As at 30 June 2023, the Group had 235,751,597 Open Offer Warrants outstanding. During the six month period ended 30 June 2023, 35,595,411 Open Offer Warrants were converted into new ordinary shares raising GBP23,137 for the Group.

The AvantGarde Group S.p.A ( "TAG") unsecured Working Capital loan agreement

On the 28 April 2023, the Company and TAG, the Group's major shareholder, entered into a fixed term unsecured working capital loan agreement (the "TAG Unsecured Working Capital facility"). Under the TAG Unsecured Working Capital facility, TAG shall provide, subject to customary restrictions, a facility of up to GBP2,800,000, in tranches up to 31 January 2024, to cover the Company's interim working capital and growth needs.

The due date for repayment by the Company of amounts (if any) drawn under the TAG Unsecured Working Capital facility is 1 February 2028. Any sums drawn under the TAG Unsecured Working Capital facility will attract a non-compounding interest rate of 10% per annum, and any principal amount (excluding accrued interest) outstanding on 1 February 2028 will attract a compounding interest rate of 15% per annum thereafter. Interest will be due to be paid annually on 31 March of each relevant calendar year.

TradeFlow Restructuring

On 30 June 2023 the Company announced that had entered into relevant commercial agreement to restructure the ownership of TradeFlow Capital Management Pte. Limited (" TradeFlow ") (the "TradeFlow Restructuring") to better serve the needs of the Group's client companies and funders of both businesses, and to create value for the Company's shareholders by eliminating any perception of conflicts of interest between the two businesses and providing both businesses with greater commercial opportunities through the clear differentiation of responsibilities of the individual entities.

In the months prior to the finalisation of the TradeFlow Restructuring, the Board noted an evolution in the regulation of the fund management industry. The Monetary Authority of Singapore, Singapore's financial regulator, has approved that TradeFlow should separate its licensed fund management activities from the rest of the TradeFlow business. In light of these market developments, the Company and TradeFlow have mutually agreed that it is in the best interests of Group's shareholders to separate the Platform (fintech business) from the fund management activities (regulated business), in order to clarify the Group's market position and improve the growth prospects for both businesses.

The key highlights of the TradeFlow Restructuring are set out below:

 
 
       *    The Group reduced its ownership in TradeFlow from 
            100% to 19% by selling 81% of the issued share 
            capital in TradeFlow to Tom James and John Collis 
            (the "Buyers"), creating a clear separation between 
            Group's inventory monetisation (" IM ") fintech 
            Platform (the "Platform") and TradeFlow's regulated 
            fund management business. 
 
 
       *    This separation is aimed at removing any potential or 
            perceived future conflicts of interest between the 
            two businesses and associated regulatory and 
            commercial hurdles, which will in turn improve the 
            growth prospects of both businesses. 
 
 
       *    The consideration for the Group's 81% stake in 
            TradeFlow was GBP14,386,100 (the "Cash Quantum") of 
            which GBP12,386,100 was netted off against potential 
            future amounts owed by the Group to the Buyers under 
            the terms of an earn-out letter relating to the 
            original acquisition of TradeFlow dated 1 July 2021 
            (the "TradeFlow Acquisition"). 
 
 
       *    TAG assumed the obligation of the Buyers to pay the 
            Company the remaining GBP2,000,000 of the Cash 
            Quantum (the "TAG Amount") by way of a novation. The 
            TAG Amount will be repaid by TAG to SYME in multiple 
            tranches, with the final tranche being payable by 31 
            January 2024. In consideration for assuming the 
            GBP2,000,000 obligation of the Buyers, TAG acquired 
            1,026,525,520 existing ordinary shares of nominal 
            value GBP0.00002 each in the capital of the Company 
            from the Buyers. 
 
 
       *    The TAG Amount was offset against the current 
            obligations of TAG under TAG Unsecured Working 
            Capital facility, of which further details are set 
            out above. The amendment to the TAG Unsecured Working 
            Capital facility was agreed on 30 June 2023 and this 
            reduced the obligations under the TAG Unsecured 
            Working Capital facility to up to GBP800,000. 
 
 
       *    The acquisition of the 1,026,525,520 existing 
            Ordinary Shares by TAG from the Buyers did not create 
            any dilution to existing Shareholders and the deemed 
            price per Ordinary Share to be acquired from the 
            Buyers was approximately 0.195 pence, approximately 
            50% above the closing price on 29 June 2023 of 0.13 
            pence per ordinary share. 
 
 
       *    Additionally, TradeFlow entered into a three-year 
            white-label licence agreement with Supply@ME 
            Technologies S.r.l., a wholly owned subsidiary of the 
            Group, with respect to use of the Platform, on a 
            non-exclusive basis and limited to the Asia-Pacific 
            ("APAC") region, for a total consideration of 
            GBP1,000,000 payable over a three-year period. 
 
 
       *    The finalisation of the TradeFlow Restructuring 
            commercial agreements on the 30 June 2023 cancelled 
            any obligations on the Group that arose when the 
            Buyers provided written notice to the Board, on 24 
            March 2023, of their intention to exercise their 
            rights to buy back 100% of the share capital of 
            TradeFlow. 
 

The accounting for the TradeFlow Restructuring has been reflected in the unaudited interim financial statements for the six months ended 30 June 2023. The gain arising on the restructuring of the TradeFlow operations recorded in the unaudited condensed consolidated statement of comprehensive income was GBP718,000, and the value of the retained 19% investment in TradeFlow has been valued at GBP352,000 as at 30 June 2023. The TradeFlow operations contributed a loss of GBP185,000 (inclusive of the gain arising on the restructuring of the TradeFlow operations referred to above) in the current interim period ended 30 June 2023. Refer to note 21 to these interim financial statements for further details.

Settlement of outstanding debt with a significant creditor

On 2 May 2023, the Group entered into a settlement agreement with an existing creditor of Supply@Me Srl, a wholly owned subsidiary of the Group. This settlement agreement reduced the total amount that was owed by the Group, to this supplier, in exchange for payment of the new agreed amount by a specific date. The total amount owed to this specific creditor prior to the settlement agreement being signed was EUR1,130,250. This amount was reduced to EUR700,000 as a result of the negotiations proceeding the signing of the settlement agreement. This resulted in a gain of EUR420,250 or GBP376,000 which has been recorded as other operating income in the condensed consolidated statement of comprehensive income for the six months ended 30 June 2023.

   4    Going Concern 

At the 30 June 2023 the Group had cash and cash equivalents from continuing operations of GBP97,000 (31 December 2022: GBP257,000 cash and cash equivalents from continuing operations, GBP324,000 cash and cash equivalents from discontinued operations) and net consolidated current liabilities of GBP1,305,000 (31 December 2022: GBP828,000). The Group has posted a total comprehensive loss for the six-month period ended 30 June 2023 of GBP2,146,000 (six-month period ended 30 June 2022: total comprehensive loss GBP6,447,000) and retained losses were GBP30,395,000 as at 30 June 2023 (31 December 2022: losses GBP27,649,000).

During the six-month period the Company continued to source additional funding with the primary aim of allowing it to meet its working capital and growth needs as it focuses on scaling up the Group's business model and the continued investment into the Group's Platform. In sourcing this new funding, the focus has been on creating a more stable source of Group funding. These new sources of funding were announced in conjunction with the issue of the 2022 Annual Report on 28 April 2023 and included:

 
 
       *    the Subscription Agreement with Venus Capital for the 
            issue of the Subscription Shares which raised gross 
            proceeds of GBP2,250,000 during H1 2023; and 
 
 
       *    the TAG Unsecured Working Capital facility, which was 
            then amended on 30 June 2023 in conjunction with the 
            finalisation of the TradeFlow Restructuring. On 30 
            June 2023, the Company issued a draw down notice to 
            TAG under the amended TAG Unsecured Working Facility 
            for the full GBP800,000 available. As at 30 June 
            2023, no funds had been received from TAG in respect 
            of this facility. As set out in note 23, subsequent 
            to 30 June 2023, and prior to the release of these 
            interim financial statements, TAG had provided an 
            amount of GBP245,000 in relation to the GBP800,000 
            drawn down by the Company on the 30 June 2023 under 
            the amended TAG Unsecured Working Capital facility. 
 

Further details of these two sources of funding, including the amendment made to the TAG Unsecured Working Capital facility as part of the TradeFlow Restructuring on 30 June 2023, are set out in note 3 to these condensed consolidated interim financial statements.

In addition following the 30 June 2023, the Company has been continuing to explore additional options of funding to support the Group while a positive revenue track record is established. As at the date of issue of these interim financial statements, the Company also announced the binding commitment in respect of a top up unsecured shareholder loan agreement with TAG, dated 28 September 2023 ( " TAG Top-Up Shareholder Loan Agreement " ). Details of this include:

 
 
       *    The ability of the Company to draw down up to 
            GBP3.5million in monthly instalments over the period 
            to 30 June 2025; 
 
 
       *    On a monthly basis the Board will assess (acting in 
            good faith and in its sole and absolute discretion) 
            if the Group's projected cash balance on the last 
            business day of the coming calendar month will be 
            less than GBP250,000 following the Group's scheduled 
            balance of receipts and payments for the next month 
            by reference to, inter alia, the Group's contracted 
            receivables, revenues and payables due for receipt or 
            payment in the next month, the Group's contracted 
            fixed operating expenditure and/or capital 
            expenditure due for payment in the next month, the 
            cash inflows in the next month arising from any 
            warrants that have been contractually exercised and 
            any projected unrestricted cash amounts resulting 
            from any contractually agreed alternative equity, 
            debt or hybrid financing (including, but not limited 
            to, pursuant to a pre-emptive offering of ordinary 
            shares and a non-pre-emptive offering of ordinary 
            shares) for such month; 
 
 
       *    If the above assessment results in the Group's 
            projected cash balance on the last business day of 
            the coming calendar month being less than GBP250,000, 
            the Company may draw down an amount under the TAG 
            Top-Up Shareholder Loan Agreement which is no greater 
            than the GBP amount to ensure that the Group's bank 
            balances in the coming month shall be equal to 
            GBP250,000; 
 
 
       *    Repayment of any sum drawn down under the TAG Top-Up 
            Shareholder Loan Agreement will be due five calendar 
            years (calculated on the basis of a year of 360 days) 
            from the date which funds are received by the Company 
            subject to the relevant draw down request; and 
 
 
       *    Any sums drawn down by the Company under the TAG Top 
            Up Unsecured Shareholder Loan will attract a 
            non-compounding interest rate of 10% per annum, and 
            any principal amount (excluding accrued interest) 
            outstanding on a relevant due date shall attract a 
            compounding rate of 15% per annum thereafter. 
            Interest will be due to be paid annually on 31 March 
            of each relevant calendar year. 
 

Taking into account the factors above and in order to consider their assessment of the Group as a going concern, the Directors have reviewed the forecast cashflows for the next 12 months. The cashflow forecasts take into account that the Group meets its day to day working capital requirement through its cash resources. The Directors have prepared the forecast using their best estimates, information and judgements at this time, including the outstanding funding contracted to be receivable from the amended TAG Unsecured Working Capital and the TAG Top-Up Shareholder Loan Agreement, and the GBP1.5million still be receivable in connection with the TradeFlow Restructuring. The Directors have also considered the expected cashflows arising from due diligence fees and fees projected to be received from the use of the Group's innovative Platform to facilitate inventory monetisation transactions.

Despite the facts outlined above, there is currently an absence of a historical track record relating to multiple inventory monetisation transactions being facilitated by the Group's Platform and the Group being cash flow positive. As such the Directors have prudently identified uncertainty in the cash flow model. This uncertainty arises with respect to both the future timing and growth rates of the forecast cashflows arising from the Group's inventory monetisation revenue streams. In this regard, if these future revenues are not secured as the Directors envisage, it is possible that the Group will have a shortfall in cash and require additional funding during the forecast period. In addition, certain cashflows in relation to the funding agreements noted above have not yet been fully received. These amounts have been factored into the cash flow forecasts in line with contractual commitments received from the counterparties. As such there is a risk that these cash flows might not be received or might not reach the Group in the time frame expected despite the various contractual commitments in place.

On the basis of the factors identified in the above paragraph, the Directors believe there are material uncertainties which may cast significant doubt upon the entities ability to continue as a going concern.

The Directors do however remain confident in the business model and believe the Group could be managed in a way to allow it to meet its ongoing commitments and obligations through mitigating actions including cost saving measures and securing alternative sources of funding should this be required. This includes the application by certain of the Company's subsidiaries to access specialised loans for SME businesses provided by Italian commercial banks with the support of government guarantees, which will allow the Group to access a lower cost of capital.

As such the Directors consider it appropriate to prepare these interim condensed consolidated financial statements on a going concern basis, taking into account the material uncertainties noted above, and have not included the adjustments that would result if the Company and Group were unable to continue as a going concern.

   5    Revenue and operating segments 

IFRS 8 ("Operating segments") requires the Group's operating segments to be established on the basis of the components of the Group that are evaluated regularly by the chief operating decision maker, which has been determined to be the Board of Directors. At this early stage of development, the Group's structure and internal reporting are continually developing. Prior to the acquisition of TradeFlow on 1 July 2021, the Board of Directors considered that the Group operated in a single business segment of due diligence and all activities were undertaken in Italy.

Following the acquisition of TradeFlow, the Board of Directors managed the Group as two operating segments being inventory monetisation (largely comprising the Group's Supply@ME subsidiaries) and investment advisory (comprising the TradeFlow operations), alongside the head office costs (largely comprising the Company). To date the inventory monetisation segment has been focused on the development of the IM platform, the provision of due diligence services and the facilitation of the initial IM transactions that took place during 2022 and to date during 2023.

During the second half of 2022, the management team and the Board of Directors of the Company began work in respect of the TradeFlow Restructuring, and on 24 March 2023 the Company made an announcement regarding the 100% buy back option that had been exercised by the TradeFlow directors. As a result, the TradeFlow operations have been classified as a discontinued operation under IFRS 5 ("Non-current assets held for sale and discontinued operations") for the purposes of the consolidated annual financial statement for the year ended 31 December 2022 and these condensed consolidated interim financial statements. Further to the above, the TradeFlow Restructuring transaction was finalised on 30 June 2023 resulting in the Group reducing its ownership in TradeFlow from 100% to 19% through the disposal of 81% of the issued share capital in TradeFlow to the Buyers.

As such, the Group has reverted back to a single segment from its continuing operations for the current interim period ended 30 June 2023, being inventory monetisation, alongside the head office costs (largely compromising the Company). This split has been shown below alongside the comparative from the prior interim period which has not been restated.

The key metrics assessed by the Board of Directors include revenue and adjusted operating profit (before acquisition related costs and impairment charges) which are presented below. Revenue is presented by basis of IFRS 15 ("Revenue from Contracts") revenue recognition and by service line.

 
                                                                             Consolidated 
                                 Inventory Monetisation  Head office                Group 
                                              Unaudited    Unaudited            Unaudited 
Six months to 30 June 2023                      GBP'000      GBP'000              GBP'000 
                                 ----------------------  -----------  ------------------- 
Revenue from continuing 
 operations 
Due Diligence fees                                   40            -                   40 
Inventory monetisation fees                          37            -                   37 
                                 ----------------------  -----------  ------------------- 
Revenue from continuing 
 operations                                          77            -                   77 
                                 ======================  ===========  =================== 
Operating loss from continuing 
 operations impairment charges                    (489)      (1,492)              (1,981) 
                                 ======================  ===========  =================== 
 
As at 30 June 2023 
Balance sheet 
Assets                                              852        2,554                3,406 
Liabilities                                     (4,332)      (1,182)              (5,514) 
                                 ----------------------  -----------  ------------------- 
Net assets /(liabilities)                       (3,480)        1,372              (2,108) 
                                 ======================  ===========  =================== 
 

All the Group's revenue from due diligence fees is recognised at a point in time. Of the revenue generated from inventory monetisation fees, GBP11,000 is generated from origination fees which is recognised at a point in time, and the remaining GBP26,000 is generated from usage of the Group's IM Platform and services provided by the Group in connection with the IM transaction. This GBP26,000 of inventory monetisation fees is recognised over time and the amount recognised in the current financial period relates to the performance obligations satisfised during the six-month period ended 30 June 2023.

Geographical analysis

The Group's inventory monetisation operation is currently predominately located in Europe, while the investment advisory operations (classified as a discontinued operation) were predominately located in Singapore.

 
Comparative segmental reporting 
                                 Inventory  Investment               Consolidated 
                              Monetisation    Advisory  Head office         Group 
                                 Unaudited   Unaudited    Unaudited     Unaudited 
Six months to 30 June              GBP'000     GBP'000      GBP'000       GBP'000 
 2022 
                             -------------  ----------  -----------  ------------ 
Revenue 
Due Diligence fees                       -           -            -             - 
Investment Advisory fees                 -         209            -           209 
                             -------------  ----------  -----------  ------------ 
Revenue by operating 
 segment                                 -         209            -           209 
                             =============  ==========  ===========  ============ 
Operating loss before 
 acquisition related costs 
 and impairment charges              (286)       (584)      (1,648)       (2,518) 
                             =============  ==========  ===========  ============ 
 
As at 30 June 2022 
Balance sheet 
Assets                                 347         993        6,917         8,257 
Liabilities                        (4,023)     (3,279)      (4,993)      (12,295) 
                             -------------  ----------  -----------  ------------ 
Net assets /(liabilities)          (3,676)     (2,286)        1,924       (4,038) 
                             =============  ==========  ===========  ============ 
 
   6    Finance costs from continuing operations 
 
                                                6 months       6 months 
                                                      to             to 
                                            30 June 2023   30 June 2022 
                                               Unaudited      Unaudited 
                                                GBP '000       GBP '000 
                                           -------------  ------------- 
Interest expense - loan notes/ 
 convertible loan notes                                -          1,464 
Interest expense - long-term borrowings               21              2 
Other interest expense                                 1              - 
Total finance costs                                   22          1,466 
                                           =============  ============= 
 
   7    Operating loss from continuing operations 

The Group's operating loss from continuing operations before impairment charges has been arrived at after charging:

 
                                             6 months       6 months 
                                                   to             to 
                                         30 June 2023   30 June 2022 
                                            Unaudited      Unaudited 
                                             GBP '000       GBP '000 
                                        -------------  ------------- 
Amortisation of internally developed 
 IM platform                                       39             13 
Depreciation                                        2              2 
Staff costs                                       912          1,001 
Professional and legal fees                     1,065            771 
Contractor costs                                  183            120 
Insurance                                          46             59 
Training and recruitment costs                      2              6 
Long-term incentive plan ("LTIP")                  44              - 
 

In addition to the above, the Group incurred the following costs from continuing operations relating to impairment charges as detailed below:

 
                                                   6 months    6 months 
                                                         to          to 
                                                    30 June     30 June 
                                                       2023        2022 
                                                  Unaudited   Unaudited 
                                                   GBP '000    GBP '000 
                                                 ----------  ---------- 
Impairment charges (note 12)                            349         151 
                                                 ----------  ---------- 
Total impairment charges                                349         151 
                                                 ==========  ========== 
 
The following acquisition related costs, impairment charges, 
 and costs/(gains) relating to the restructuring of the TradeFlow 
 ownership, have been recognised in the discontinued operations: 
                                                   6 months    6 months 
                                                         to          to 
                                                    30 June     30 June 
                                                       2023        2022 
                                                  Unaudited   Unaudited 
                                                   GBP '000    GBP '000 
                                                 ----------  ---------- 
Amortisation of intangible assets arising 
 on acquisition (note 21)                               442         406 
Acquisition related earn-out payments                     -         747 
Impairment charges                                        -         765 
Foreign currency translation gain reclassified 
 to other comprehensive income                           62           - 
Gain arising on the restructuring of the 
 TradeFlow ownership (note 21)                        (718)           - 
                                                 ----------  ---------- 
                                                      (214)       1,918 
                                                 ==========  ========== 
 
   8    Other operating income from continuing operations 
 
                                                  6 months    6 months 
                                                        to          to 
                                                   30 June     30 June 
                                                      2023        2022 
                                                 Unaudited   Unaudited 
                                                  GBP '000    GBP '000 
                                                ----------  ---------- 
Gain arising on settlement of outstanding 
 creditor balance                                      376           - 
Interest receivable on outstanding receivable 
 balance                                                 9           - 
Other operating costs                                    -        (11) 
                                                ----------  ---------- 
Total other operating income from continuing 
 operations                                            385        (11) 
                                                ==========  ========== 
 

The gain arising on settlement of outstanding creditor balance relates to the settlement agreement, dated 2 May 2023, with an existing creditor of the Group. This settlement agreement reduced the total amount that was owed by the Group, to this supplier, in exchange for payment of the new agreed amount by a specific date. The total amount owed to this specific creditor prior to the settlement agreement being signed was EUR1,130,250. This amount was reduced to EUR700,000 as a result of the negotiations proceeding the signing of the settlement agreement. This resulted in a difference of EUR420,250 or GBP376,000 which has been recorded as other operating income in the condensed consolidated income statement of the Group for the six months ended 30 June 2023.

   9    Taxation from continuing operations 

Income tax expense for the period to 30 June 2023 primarily represents a tax charge of GBP21,000 arising in respect of the gain on settlement of outstanding creditor balance as described in note 8 above, as well as the interest charged on income taxes during the six-month period ended 30 June 2023 in line with the IAS 12 ( " Income Taxes " ).

To date any accumulated tax losses resulting from net losses in the condensed consolidated financial statement have not been recognised in the balance sheet given the Group does not have a track record of generating profits against which these accumulated losses could be offset.

10 Dividends

During the six-month period ended 30 June 2023 the Group did not pay a dividend (six months to 30 June 2022: no dividend).

The Directors do not foresee a dividend being payable in the next financial year as the Group will be concentrating on growing its market share and enhancing its technology and capabilities.

11 Earnings / (loss) per share

The calculation of the basic earnings/(loss) per share ( " EPS " ) is based on the loss for the six-month period of GBP2,561,000 (2022 - loss GBP6,190,000) and on a weighted average number of ordinary shares in issue of 55,136,008,130 (2022: 38,271,981,611). The basic EPS is (0.0046) pence (2022: (0.0162)).

The calculation of the basic EPS from continuing operations is based on the loss for the six-month period from continuing operations of GBP2,376,000 (2022 - loss GBP3,580,000) and on a weighted average number of ordinary shares in issue of 55,136,008,130 (2022: 38,271,981,611). The basic EPS from continuing operations is (0.0043) pence (2022 - (0.0094) pence).

The calculation of the basic EPS from discontinued operations is based on the loss for the six-month period from discontinued operations of GBP185,000 (2022 - loss GBP2,610,000) and on a weighted average number of ordinary shares in issue of 55,136,008,130 (2022: 38,271,981,611). The basic EPS from discontinued operations is (0.0003) pence (2022 - (0.0068) pence).

The Company has share warrants and employee share scheme options in issue as at 30 June 2023, which would dilute the earnings per share if or when they are exercised in the future. A summary of these is set out below and further detail of these share warrants and employee share options can be found in note 20.

 
                                       30 June 2023   30 June 2022 
                                          Unaudited      Unaudited 
                                                No.            No. 
                                     --------------  ------------- 
Warrants and employee share 
 options 
Share warrants - issued               9,372,584,030    785,683,276 
Share warrants - to be issued         2,250,000,000  5,086,149,157 
Long-term incentive plan ("LTIP") 
 options                              1,195,831,529              - 
Acquisition related earn-out 
 share-based payments                             -  1,282,550,632 
Total                                12,818,415,559  7,154,383,065 
                                     ==============  ============= 
 

No dilution per share was calculated for either period in the table above as with the reported loss they are all anti-dilutive.

12 Intangible assets

 
                                                                                    Internally 
                           Customer                                                  developed 
                      Relationships    Brand  CTRM Software  AI Software  Goodwill    platform    Total 
                            GBP'000  GBP'000        GBP'000      GBP'000   GBP'000     GBP'000  GBP'000 
                     --------------  -------  -------------  -----------  --------  ----------  ------- 
Cost or valuation 
At 1 January 
 2022                         4,829      205          1,429          425     2,199       2,544   11,631 
Additions                         -        -              -            -         -         164      164 
                     --------------  -------  -------------  -----------  --------  ----------  ------- 
At 30 June 2022               4,829      205          1,429          425     2,199       2,708   11,795 
Amortisation 
At 1 January 
 2022                           186       20            143           43         -         771    1,163 
Charge for the 
 period                         193       21            148           44         -          13      419 
                     --------------  -------  -------------  -----------  --------  ----------  ------- 
At 30 June 2022                 379       41            291           87         -         784    1,582 
Impairment 
At 1 January 
 2022                             -        -              -            -       800       1,773    2,573 
Impairment charges                -        -              -            -       765         151      916 
At 30 June 2022                   -        -              -            -     1,565       1,924    3,489 
Net book value 
At 30 June 2022 
 (Unaudited)                  4,450      164          1,138          338       634           -    6,724 
                     ==============  =======  =============  ===========  ========  ==========  ======= 
 
Cost or valuation 
At 1 January 
 2023                             -        -              -            -         -       3,669    3,669 
Additions                         -        -              -            -         -         388      388 
                     --------------  -------  -------------  -----------  --------  ----------  ------- 
At 30 June 2023                   -        -              -            -         -       4,057    4,057 
Amortisation 
At 1 January 
 2023                             -        -              -            -         -         818      818 
Charge for the 
 period                           -        -              -            -         -          39       39 
                     --------------  -------  -------------  -----------  --------  ----------  ------- 
At 30 June 2023                   -        -              -            -         -         857      857 
Impairment 
At 1 January 
 2023                             -        -              -            -         -       2,851    2,851 
Impairment charges                -        -              -            -         -         349      349 
                     --------------  -------  -------------  -----------  --------  ----------  ------- 
At 30 June 2023                   -        -              -            -         -       3,200    3,200 
Net book value 
At 30 June 2023 
 (Unaudited)                      -        -              -            -         -           -        - 
                     ==============  =======  =============  ===========  ========  ==========  ======= 
 

The following intangible assets arose on the acquisition of TradeFlow during the year ended 31 December 2021; Customer relationships, Brand, Commodity Trade Risk Management ( " CTRM " ) software, Artificial Intelligence and back-office ( " AI " ) software and Goodwill. The carrying value of these assets at the date of acquisition is shown in the table above. As at 31 December 2022, the TradeFlow operations were reclassified as discontinued operations and as such the net book value of the intangible assets relating to the TradeFlow operations have been reclassified to assets of the disposal group held for sale at this date. On 30 June 2023, the Group completed the TradeFlow Restructuring and as such the assets and liabilities of TradeFlow, including the intangible assets referred to above, are no longer consolidated by the Group as of 30 June 2023. Further details are set out in note 21.

Impairment assessment - Internally developed IM Platform

The Directors considered the continued current period losses of the Group's Italian subsidiary, to which the Internally developed IM platform relates, and the full impairment of this intangible asset in the prior year, as impairment indicators and therefore, in accordance to IAS 36 ("Impairment of Assets"), considered if at 30 June 2023 this intangible asset required further impairment in relation to the additions made during the period, or if some so the prior impairment charges could be reversed.

The full going concern statement, set out in note 4, noted there is currently an absence of a historical recurring track record relating to inventory monetisation transactions being facilitated by the Group's Platform, the generation of the full range of fees from the use of its Platform from more than a limited number of inventory monetisation transactions, and the Group being cash flow positive. As such the Directors have prudently identified a material uncertainty in relation to the going concern statement. The Directors have also concluded that these uncertainties also apply to the discounted cash flow model used in this impairment test also. In particular, there is uncertainty that arises with respect to both the future timing and growth rates of the forecast discounted cash flows arising from the use of the Internally developed IM Platform intangible asset.

As such, the Directors have prudently decided to continue to impair the full carrying amount of this asset as 30 June 2023. This impairment loss may subsequently be reversed and if so, the carrying amount of the asset will be increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the investment in prior years.

Impairment assessment - TradeFlow

The finalisation of the TradeFlow Restructuring occurred on 30 June 2023 and as a result from this date the assets and liabilities of TradeFlow, including the intangible assets acquired in connection with the acquisition of TradeFlow in July 2021, are no longer consolidated by the Group. As such the Group did not recognise any additional impairment charges with respect to the TradeFlow goodwill and other acquired intangible assets during the six-month period ended 30 June 2023. The details of the calculation of the gain arising on the restructuring of the TradeFlow operations recognised in these condensed consolidated interim financial statements can be found in note 21.

The impairment charges recognised in the prior periods resulted from impairment tests carried out by the Directors at previous balance sheet dates. These tests were required in accordance with IAS 36 ( " Impairment of Assets " ) given the Directors had identified indicators of impairment of the TradeFlow Cash Generating Unit ( " CGU " ) at the respective prior balance sheet dates.

13 Trade and other receivables

 
                                 30 June 2023  31 December 
                                    Unaudited         2022 
                                                   Audited 
                                     GBP '000     GBP '000 
                                 ------------  ----------- 
 
Trade receivables                          14            7 
Receivable from related party           2,000            - 
Other receivables                         908        1,179 
Prepayments                                11           33 
                                        2,933        1,219 
                                 ============  =========== 
 

The receivable from related party represents the GBP2,000,000 due from the Group's major shareholder, TAG, that arose on the 30 June 2023 as a result of TAG assuming the obligation, by way of a debt novation deed, of the Buyers (in the TradeFlow Restructuring transaction) to pay the Company the remaining GBP2,000,000 due under the share purchase agreement. This receivable from TAG will be repaid by TAG in multiple tranches, with the final tranche being payable by 31 January 2024. As the final repayment date is within 12 months of the balance sheet date, this receivable has been classified as a current asset. As set out in note 23, subsequent to 30 June 2023, and prior to the release of these interim financial statements, TAG had paid the first GBP500,000 to the Company in respect of the outstanding GBP2,000,000 receivable as at 30 June 2023.

14 Trade and other payables

 
                                           30 June 2023  31 December 
                                              Unaudited         2022 
                                                             Audited 
                                               GBP '000     GBP '000 
                                           ------------  ----------- 
Trade payables                                    1,715        2,209 
Other payables                                      748          747 
Current portion of long-term borrowings             106          158 
Social security and other taxes                   1,456          977 
Accruals                                            263          402 
Contract liabilities                                 47           94 
                                                  4,335        4,587 
                                           ============  =========== 
 

15 Long-term Borrowings

 
                                            30 June  31 December 
                                               2023         2022 
                                          Unaudited      Audited 
                                           GBP '000     GBP '000 
                                         ----------  ----------- 
Bank borrowings (non-current portion)           741          748 
                                         ----------  ----------- 
                                                741          748 
                                         ==========  =========== 
 

On 13 October 2022, the Company announced that its subsidiary, Supply@ME Technologies S.r.l, had entered into a new long-term loan facility with Banco BPM S.p.A (the "Banco BPM Facility"). The obligations of Supply@ME Technologies S.r.l under the Banco BPM Facility are guaranteed by the Company. The key commercial terms of the Banco BPM Facility include:

   a.   EUR1 million in principal amount; 
   b.   275 basis points over Euribor interest rate; and 

c. a five-year repayment term (the final payment to be made on 11 October 2027), including an initial six months of interest only repayments, followed by 54 months of combined principal and interest repayments.

Fees totalling EUR52,000 were incurred in connection with the arrangement of the Banco BPM Facility. These costs have been capitalised and will be spread over the term of the Banco BPM Facility. The amount include in the table above represents the non-current portion of the Banco BPM Facility. The current portion is set out in note 14 above.

16 Provisions

 
                                                        Provision       Provision 
                                    Post-employment     for risks         for VAT 
                                           benefits   and charges   and penalties    Total 
                                            GBP'000       GBP'000         GBP'000  GBP'000 
                                    ---------------  ------------  --------------  ------- 
At 31 December 2022 (Audited)                    38            85             345      468 
Fx translation adjustment                       (2)           (2)            (11)     (15) 
                                    ---------------  ------------  --------------  ------- 
Carrying amount at 1 January 
 2023                                            36            83             334      453 
Released to profit and loss                       -          (15)               -     (15) 
Provided for during the 
 period                                           3             -               -        3 
Paid at the end of the employment 
 relationship                                  (10)             -               -     (10) 
                                    ---------------  ------------  --------------  ------- 
At 30 June 2023 (Unaudited)                      29            68             334      431 
                                    ===============  ============  ==============  ======= 
 

Post-employment benefits

Post-employment benefits include severance pay and liabilities relating to future commitments to be disbursed to employees based on their permanence in the company. This entirely relates to the Italian subsidiary where severance indemnities are due to each employee at the end of the employment relationship. Post-employment benefits relating to severance indemnities are calculated by estimating the amount of the future benefit that employees have accrued in the current period and in previous years using actuarial techniques. The calculation is carried out by an independent actuary using the "Projected Unit Credit Method".

Provision for risks and charges

Provision for risks and charges includes the estimated amounts of penalties for payment delays referring the tax payables recorded in the Italian subsidiary financial statements which, at the closing date, are overdue.

Provision for VAT and penalties

In advance of the Group's first monetisation transaction, a number of advance payments have been received by the Group's Italian subsidiary from potential client companies in accordance with agreed contractual terms. These payments have been recognised as revenue in accordance with local accounting rules. These advance payments, for which an invoice has not yet been issued, have been made exclusive of VAT. As at 30 June 2023, the Group has included a provision relating to a potential VAT liability, including penalties, in respect of these advance payments of GBP195,000 (31 December 2022: GBP201,000).

At the point in the future when the associated monetisation transaction takes place, the potential VAT liability will be settled by the Group. At this same point in time, the Directors expect to be able to recover the VAT from the client companies as invoices in respect of the monetisation transactions are issued. The timing of these future monetisation transactions currently remains uncertain and as such no corresponding VAT receivable has been recognised as at 30 June 2023, however there is a contingent asset of GBP138,000 as at 30 June 2023 (31 December 2022: GBP143,000) in respect of this.

An additional amount of GBP144,000 was added to the provision during the second half of 2022 to reflect the fact that the Italian intercompany invoice was issued late and this balance reflects potential VAT penalties that may arise due to the timing of the invoice. This balance remains provided for at 30 June 2023, however has been revalued to GBP139,000 as at 30 June 2023.

From time to time, during the course of business, the Group maybe subject to disputes which may give rise to claims. The Group will defend such claims vigorously and provision for such matters are made when costs relating to defending and concluding such matters can be measured reliably. There were no cases outstanding as at 30 June 2023 that meet the criteria for a provision to be recognised.

17 Share capital

Allotted, called up and fully paid shares

 
                                         30 June 2023        31 December 2022 
                                           Unaudited              Audited 
                                        No. 000  GBP '000     No. 000  GBP '000 
                                     ----------  --------  ----------  -------- 
Ordinary shares of GBP0.00002 
 each                                61,157,163     1,223  56,621,568     1,132 
Deferred shares of GBP0.04 
 each                                    63,084     2,523      63,084     2,523 
2018 deferred shares of GBP0.01000 
 each                                   224,194     2,242     224,194     2,242 
                                     ----------  --------  ----------  -------- 
Total                                61,444,441     5,988  56,908,846     5,897 
                                     ==========  ========  ==========  ======== 
 

New shares allotted during the interim period to 30 June 2023

New ordinary shares issued to Venus Capital in connection with Equity Subscription Agreement

On the 28 April 2023, the Company and Venus Capital entered into a new equity subscription agreement, pursuant to which Venus Capital committed to subscribe for 4,500,000,000 new ordinary shares at GBP0.0005 per share. The issue of these new ordinary shares to Venus Capital was made over two tranches as set out below:

 
 
        *    an initial tranche of 3,375,000,000 new ordinary 
             shares for gross proceeds of GBP1,687,500 (or 
             GBP1,603,125 net of a 5% commission chargeable by 
             Venus Capital). This tranche of new ordinary shares 
             were admitted to a Standard Listing and to trading on 
             the Main Market on 5 May 2023; and 
 
 
        *    a second tranche of 1,125,000,000 new ordinary shares 
             for proceeds of up to GBP562,500 gross (or up to 
             GBP534,375 net a 5% commission chargeable by Venus 
             Capital). This tranche of new ordinary shares were 
             admitted to a Standard Listing and to trading on the 
             Main Market on 30 May 2023. 
 

New ordinary shares issued to fulfil the conversion of Open Offer warrants

Further to the issue of new ordinary shares on the 18 August 2022 as a result of the Open Offer, the Company also issued 320,855,008 warrants to certain qualifying shareholders who participated in its open offer (the "Open Offer Warrants"). Following the issue of the Open Offer Warrants, certain holders have elected to exercise their Open Offer Warrants and this resulted in the following share issues during the six-month period ended 30 June 2023:

 
 
       *    On 11 January 2023, the Company issued 67,471 of new 
            ordinary shares as an Open Offer Warrant conversion. 
 
 
       *    On 31 January 2023, the Company issued 1,800,019 of 
            new ordinary shares as an Open Offer Warrant 
            conversion. 
 
 
       *    On 3 March 2023, the Company issued 494,481 of new 
            ordinary shares as an Open Offer Warrant conversion. 
 
 
       *    On 5 May 2023, the Company issued 227 of new ordinary 
            shares as an Open Offer Warrant conversion. 
 
 
       *    On 24 May 2023, the Company issued 1,145,518 of new 
            ordinary shares as an Open Offer Warrant conversion. 
 
 
       *    On 6 June 2023, the Company issued 19,337,713 of new 
            ordinary shares as an Open Offer Warrant conversion. 
 
 
       *    On 14 June 2023, the Company issued 12,749,982 of new 
            ordinary shares as an Open Offer Warrant conversion. 
 

Rights, preferences and restrictions

Ordinary shares have the following rights, preferences, and restrictions:

The ordinary shares carry rights to participate in dividends and distributions declared by the Company and each share carries the right to one vote at any general meeting. There are no rights of redemption attaching to the ordinary shares.

Deferred shares have the following rights, preferences, and restrictions:

The deferred shares carry no rights to receive any dividend or distribution and carry no rights to vote at any general meeting. On a return of capital, the Deferred shareholders are entitled to receive the amount paid up on them after the Ordinary shareholders have received GBP100,000,000 in respect of each share held by them. The Company may purchase all or any of the Deferred shares at an appropriate consideration of GBP1.

2018 Deferred shares have the following rights, preferences, and restrictions:

The deferred shares carry no rights to receive any dividend or distribution and carry no rights to vote at any general meeting.

Reconciliation of allotted, called up and fully paid shares

 
                                                   As at 30 June 2023 
                                                      No. 000  GBP 000 
                                                  -----------  ------- 
As at 1 January 2023 (Audited)                     56,908,846    5,897 
New ordinary shares issued to Venus 
 Capital in connection with Equity Subscription 
 Agreement dated 28 April 2023                      4,500,000       90 
New ordinary shares issued to fulfil 
 the conversion of Open Offer Warrants                 35,595        1 
As at 30 June 2023 (Unaudited)                     61,444,441    5,988 
                                                  ===========  ======= 
 

18 Financial instruments

Financial assets at amortised cost

 
                                Carrying value             Fair value 
                               30 June  31 December     30 June  31 December 
                                  2023         2022        2023         2022 
                             Unaudited      Audited   Unaudited      Audited 
                               GBP'000      GBP'000     GBP'000      GBP'000 
                            ----------  -----------  ----------  ----------- 
Cash and cash equivalents           97          257          97          257 
Trade receivables                   14            7          14            7 
Receivable from related 
 party                           2,000            -       2,000            - 
Other receivables                  908        1,179         908        1,179 
                            ----------  -----------  ----------  ----------- 
                                 3,019        1,443       3,019        1,443 
                            ==========  ===========  ==========  =========== 
 

Valuation methods and assumptions :

The directors believe due to their short term nature, the fair value approximates to the carrying amount.

Financial liabilities at amortised cost

 
                           Carrying value             Fair value 
                          30 June  31 December     30 June  31 December 
                             2023         2022        2023         2022 
                        Unaudited      Audited   Unaudited      Audited 
                          GBP'000      GBP'000     GBP'000      GBP'000 
                       ----------  -----------  ----------  ----------- 
Long-term borrowings          847          906         847          906 
Trade payables              1,715        2,209       1,715        2,209 
Other payables                748          747         748          747 
                            3,310        3,862       3,310        3,862 
                       ==========  ===========  ==========  =========== 
 

Valuation methods and assumptions:

The directors believe that the fair value of all financial liabilities at amortised cost approximate to their carrying values.

The Group has no derivative financial instruments as at 30 June 2023 (31 December 2022: nil)

Valuation methods and assumptions:

Further information relating to the valuation of the derivative financial instruments is available in note 23 of the annual financial statements for the year ended 31 December 2022.

19 Financial risk management

Note 23 to the annual financial statements for the year ended 31 December 2022 include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to interest rate risk, credit risk, foreign exchange risk and liquidity risk.

20 Share-based payments

Share warrants issued to Mercator

During 2021 the Group entered into a funding facility with Mercator which included the Group issuing loan notes in exchange for funding. These loan notes were linked to a convertible loan note facility, which was able to be used should the Group elect not to repay any of the interest or principal relating to the loan notes in cash. Both the loan note and convertible loan note agreements required share warrants to be issued representing 20% of the face value of any loan notes or convertible loans issued. The warrants have a term of 3 years from issue and an exercise price of 130% of the lowest closing VWAP over the ten trading days immediately preceding the issue of the warrants. Under the terms of amendment agreement signed with Mercator dated 26 April 2022, no further warrants were required to be issued on the monthly repayments due following April 2022.

The total number of share warrants issued during the year ended 31 December 2022 was 439,040,922, which together with the total of 522,791,511 issued during the year ended 31 December 2021 takes the total number of share warrants issued to Mercator as at 30 June 2023 to 961,832,433 (31 December 2022: 961,832,433). Details of the outstanding share warrants issued to Mercator are set out in the table below. There have been no movement in these share warrants during the six month period ended 30 June 2023.

 
     Date of issue          Number of warrants       Exercise price               Expiry date 
                             outstanding at 30 
                                     June 2023 
                                           No. 
---------------------  -----------------------  -------------------  ------------------------ 
     1 October 2021                443,726,030           GBP0.00316            1 October 2024 
     1 November 2021                29,197,856           GBP0.00314           1 November 2024 
     1 December 2021                49,867,625           GBP0.00184           1 December 2024 
     4 January 2022                 77,763,767           GBP0.00174            4 January 2025 
     2 February 2022                79,179,799           GBP0.00171           2 February 2025 
     4 March 2022                  105,948,198           GBP0.00128              4 March 2025 
     10 June 2022                  176,149,158           GBP0.00085              10 June 2025 
                       ----------------------- 
     Total                         961,832,433 
                       ======================= 
 

The total fair value of the above share warrants issued to Mercator has been fully expensed in the prior periods, including GBP236,000 in the six-month period ended 30 June 2022. No further costs have been recognised in the current interim period ended 30 June 2023, and none of these warrants have been converted during the same period.

Share warrants issued to Venus Capital under Capital Enhancement Plan

On the 27 April 2022, the Group announced it had entered into a subscription agreement with Venus Capital in connection with the Capital Enhancement Plan. The subscription agreement specified that the Group was required to issue one warrant for every two shares issued in connection with the mandatory tranches of the new shares issues. This was a total of 3,425,000,000 share warrants. The subscription agreement specified that the Group was required to issue one warrant for every five shares issued in connection with the optional tranches of the new shares issues. This was a total of 1,500,000,000 share warrants. Additionally, an amount of 3,250,000,000 share warrants were issued to Venus Capital in connection with the signing of the subscription agreement on 26 April 2022. As such the Group issued a total of 8,175,000,000 share warrants to Venus Capital during the year ended 31 December 2022, and as at the 30 June 2023, these all remain outstanding. The initial terms of the warrants specified that they could be exercised at any time up to 31 December 2025 and have an exercise price of 0.065 pence per warrant.

As these share warrants were issued as a cost of issuing new ordinary shares to Venus Capital they fall into of scope of IFRS 2 ("Share-based payments"). The total fair value of the above share warrants issued to Venus Capital under the Capital Enhancement Plan was GBP4,795,000 and this amount has been fully recognised during 2022.

Share warrants issued to retail shareholders under the Open Offer

On 22 July 2022, the Group announced the Open Offer, giving existing shareholders the opportunity to subscribe for up to 641,710,082 new ordinary share in the Group on the basis of one Open Offer share for every 66 existing ordinary shares held at an offer price of 0.05 pence per Open Offer share. The Open Offer closed on 17 August 2022 and on 18 August 2022, the Group announced it would allot and issue 641,710,082 new ordinary shares to those qualifying shareholders and that this would raise GBP320,855 gross (and GBP269,855 net of fees and expenses) for the Group.

In addition to the new ordinary share that were issued, the Group also issued 320,855,008 warrants to the qualifying shareholders on the basis of one warrant for every two ordinary shares received as a result of the Open Offer. The initial terms of the warrants specified that they could be exercised at any time up to 31 December 2025 and have an exercise price of 0.065 pence per warrant.

As these share warrants were issued as a cost of issuing the new Open Offer ordinary shares they fall into of scope of IFRS 2 ("Share-based payments"). The total fair value of the above share warrants to be issued in connection with the Open Offer was GBP261,000 and this amount has been fully recognised during 2022.

Subsequent to the issue of the Open Offer warrants, and prior to 30 June 2023, an amount of 85,103,411 (31 December 2022: 49,508,000) of these warrants have been converted in exchange for new ordinary shares and as at 30 June 2023 there is a balance of 235,751,597 Open Offer warrants which remained outstanding. On the exercise of the Open Offer warrants, the fair value amount is reclassified from the share-based payment reserve to retained losses as set out in the Groups condensed consolidated statement of changes in equity for the six months ended 30 June 2023.

Share warrants issued to Venus Capital under April 2023 Equity Subscription Agreement

On the 28 April 2023, the Company announced it had and entered into a new subscription agreement with Venus Capital, pursuant to which Venus Capital committed to subscribe for 4,500,000,000 new ordinary shares over two tranches as set out below:

 
 
   *    an initial tranche of 3,375,000,000 new ordinary 
        shares were admitted to a Standard Listing and to 
        trading on the Main Market on 5 May 2023; and 
 
 
   *    a second tranche of 1,125,000,000 new ordinary shares 
        were admitted to a Standard Listing and to trading on 
        the Main Market on 30 May 2023. 
 

Under the new subscription agreement, new warrants are required to be issued to Venus Capital at a ratio of one warrant for every two subscription shares issued under the new subscription agreement. This resulted in an obligation for the Group to issue 2,250,000,000 new warrants to Venus ("New Venus Warrants") which existed at 30 June 2023. These new warrants are each exercisable into one new ordinary share at a price equal to 0.065 pence per share up to a final exercise date of 31 December 2026.

As these share warrants were issued as a cost of issuing new ordinary shares to Venus Capital they fall into of scope of IFRS 2 ("Share-based payments"). As such, the Directors were required to determine the fair value of the equity-settled share-based payments at the date on which they were granted. The fair value was determined using a Black-Sholes model which required certain judgements to be made in determining the most appropriate inputs to be used. The key judgemental point was the expected volatility rate of the Company's share price over the relevant period prior to the grant of the warrants. The assumption applied in the model for the warrants to be issued to Venus Capital ranged from of 88%. This was based on the actual volatility of the Company's shares over the historical period from March 2020 (the date of the reverse take over) to the valuation date.

The total fair value of the above new share warrants issued to be Venus Capital under the April 2023 Equity Subscription Agreement was GBP1,717,000 and this amount has been fully recognised during the six-month period ended 30 June 2023. Given this amount directly related to the cost of issuing new ordinary shares to Venus Capital, the total amount of GBP1,717,000 have been offset against the share premium balance in accordance with IAS 32 ("Financial Instruments"). This amount was offset against the related share premium that was created in connection with the relevant issue of ordinary share to Venus Capital.

Extension to the expiry date of the warrants issued in connection with the Open Offer carried out on 17 August 2022 and the warrants issued to Venus Capital during 2022

In connection with the new equity subscription agreement that was signed with Venus Capital on 28 April 2023, the final exercise date of the existing 8,175,000,000 warrants issued to Venus Capital during 2022, under the Capital Enhancement Plan, were agreed to be extended from 31 December 2025 for 12 months to 31 December 2026, through a deed of amendment to the existing warrant instruments. This deed of amendment was also dated 26 April 2023.

In line with the extension to the expiry date of the existing 8,175,000,000 warrants held by Venus Capital, the shareholders who participated in the Open Offer during 2022 were asked if they would like to vote to extend the expiry date of the warrants issued during the Open Offer from 31 December 2025 by 12 months to 31 December 2026. This resolution was successfully passed at the 2023 Annual General Meeting, and a deed of amendment to the existing warrant instrument was signed, on 23 June 2023.

As outlined above, both of these warrants had been valued previously in line with IFRS 2 ("Share-based payments"). The modification to the expiry date has therefore also been valued in line with IFRS 2 with the change in fair value calculated as the difference between the fair value of the modified equity instrument and that of the original equity instrument, both of which are estimated a the date of the modification being 28 April 2023 for the relevant warrants held by Venus Capital, and 23 June 2023 for this warrants issued in connection with the Open Offer.

The change in the fair value due to the extension of the expiry date on those warrants still outstanding at 30 June 2023 was GBP346,000. Given this amount directly related to the cost of issuing new

Ordinary shares in the past to Venus Capital or under the Open Offer, the amount of GBP132,000 has been offset against the share premium balance in accordance with IAS 32 ("Financial Instruments"). This amount was offset against the related share premium that was created in connection with issue of the relevant Venus Capital warrants / Open Offer share issue. The remaining fair value amount of GBP214,000 has been recognised in retained losses.

A summary of the share warrants outstanding as at 31 December 2022 is detailed in the table below:

 
                                                           Number of  Number of warrants 
                                                warrants outstanding         outstanding 
                                                          at 30 June      at 31 December 
                                                                2023                2022 
                                                                 No.                 No. 
                                                           Unaudited             Audited 
                                               ---------------------  ------------------ 
Share warrants issued to Mercator                        961,832,433         961,832,433 
Share warrants issued to Venus Capital                 8,175,000,000       8,175,000,000 
Share warrants issued to retail shareholders             235,751,597         271,347,008 
Share warrants to be issued to Venus 
 Capital                                               2,250,000,000                   - 
Total                                                 11,622,584,030       9,408,179,441 
                                               =====================  ================== 
 

A summary of the fair value of the share warrants recorded during the period are detailed in the table below:

 
                                                     6 months to       6 months 
                                                    30 June 2023             to 
                                                       Unaudited   30 June 2022 
                                                                      Unaudited 
                                                         GBP'000        GBP'000 
                                                   -------------  ------------- 
 
Share warrants issued to Mercator                              -            236 
Share warrants issued to Venus                                 -          3,019 
Share warrants issued to retail shareholders                   -              - 
Share warrants to be issued to Venus 
 Capital                                                   1,717              - 
Change in fair value due to extension 
 of expiry date of existing share warrants 
 issued to Venus Capital and retail shareholders 
 in prior periods                                            346              - 
Total                                                      2,063          3,255 
                                                   =============  ============= 
 

Employee share scheme awards

October 2022 Employee share scheme

On 31 October 2022, the Group awarded an long-term incentive plan ("LTIP") conditional on performance conditions to certain employees, being the achievement of specified Total Shareholder Return ("TSR") (market condition) performance, as well as continued employment. The TSR performance relates to a three-year period over the 2022, 2023 and 2024 financial years and the required TSR performance is set out in the table below with the adjusted share price measurement period being the average closing mid-market price of a share price over a three-month period ending on the last dealing day of the performance period.

 
Adjusted share price per   Percentage of TSR award 
 share                      vesting 
-------------------------  ----------------------- 
Below 0.6945 pence         0% 
Equal to 0.6945 pence      25% 
1 penny or greater         100% 
 

Vesting is on a straight-line basis between target levels. In addition to the satisfaction of the TSR performance condition, the Group's Remuneration Committee must also be satisfied that the potential level of vesting of the LTIP is appropriate in all circumstances.

The vesting date of these share awards is 31 October 2025, and the continued employment covers up until this date. The share awards issued to the Chief Executive Officer are subject to an additional two years holding period following the vesting date.

For those share schemes with market related vesting conditions, the fair value is determined using the Monte Carlo model at the grant date. The total share-based payment charge recognised in the condensed consolidated income statement for the six month period ended 30 June 2023 was GBP33,000 (the six months to 30 June 2022: nil). As all social security charges with respect to the share awards will be the responsibility of the employee, no expense has been recognised by the Group in respect of these charges.

The following table summarised the movements in the number in share awards issued by the Company:

 
                                                2023    2022 
                                                 No.     No. 
                                      --------------  ------ 
  Outstanding at 1 January (audited)     874,783,094       - 
  Conditionally awarded in period                  -       - 
  Exercised during the period                      -       - 
  Forfeited or expired in period        (22,500,000)       - 
                                      --------------  ------ 
  Outstanding at 30 June (unaudited)     852,283,094       - 
  Exercisable at 30 June (unaudited)               -       - 
                                      ==============  ====== 
 

May 2023 Employee share scheme

On 19 May 2023, the Group awarded its second LTIP conditional on performance conditions to certain employees, being the achievement on continued employment, the achievement of performance conditions relating to the specified Total Shareholder Return ("TSR") (market condition) performance (50%) and the specific GBP amount of inventory monetised (non-market condition) (50%). Each of the performance conditions relate to a three-year period over the 2023, 2024 and 2025 financial years and the required performance is as follows:

 
 
     *    with respect to the TSR element the adjusted share 
          price measurement period is the average closing 
          mid-market price of the share price over a 
          three-month period ending on the last dealing day of 
          the performance period, being 31 December 2025. If 
          the average share price during the measurement period 
          is 0.15p then 25% of the aware will vest, and this 
          increases on a straight-line basis to 0.3p for 100% 
          of vesting; and 
 
 
     *    with respect to the GBP amount of inventory monetised, 
          the measurement period is by the end of the 
          performance period, being 31 December 2025. 25% of 
          the award will vest if GBP300m of inventory is 
          monetised (in aggregate) over the three-year 
          performance period, increasing on a straight line to 
          100% of the award to vest if GBP400m of inventory is 
          monetised (in aggregate) over the same three year 
          performance period. For the award to vest the Group's 
          Remuneration Committee must also be satisfied that 
          the inventory was monetised on acceptable commercial 
          terms. 
 

As with the October 2022 LTIP award in addition to the satisfaction of the performance conditions set out above, the Group's Remuneration Committee must also be satisfied that the potential level of vesting of the LTIP is appropriate in all circumstances.

The vesting date of these share awards is 19 May 2026, and the continued employment covers up until this date. The share awards issued to the Chief Executive Officer are subject to an additional two years holding period following the vesting date.

For those share schemes with market related vesting conditions, the fair value is determined using the Monte Carlo model at the grant date. The total share-based payment charge recognised in the condensed consolidated income statement for the six month period ended 30 June 2023 was GBP11,000 (H1 2022: nil). As all social security charges with respect to the share awards will be the responsibility of the employee, no expense has been recognised by the Group in respect of these charges.

The following table summarised the movements in the number in share awards issued by the Company:

 
                                               2023    2022 
                                                No.     No. 
                                      -------------  ------ 
  Outstanding at 1 January (audited)              -       - 
  Conditionally awarded in period       343,548,435       - 
  Exercised during the period                     -       - 
  Forfeited or expired in period                  -       - 
------------------------------------  -------------  ------ 
  Outstanding at 30 June (unaudited)    343,548,435       - 
  Exercisable at 30 June (unaudited)              -       - 
====================================  =============  ====== 
 

Acquisition related earn-out payments

The terms of the TradeFlow acquisition completed in July 2021 included related earn-out payments that, which together with the initial cash payment and issue of equity, form the total legal consideration agreed between the parties.

This acquisition related earn-out payments are determined by reference to pre-determined revenue milestone targets in each of the 2021, 2022 and 2023 financial years. These payments may be forfeited by the selling shareholders should they, in certain circumstances, no longer remain employed prior to the end of each earn-out period. As such, under the IFRS Interpretations Committee's interpretation of paragraph B55 of IFRS 3 ("Business Combinations"), the fair value of these earn-out payments have been accounted as a charge to the income statement (as deemed remuneration) rather than as consideration. The terms of the agreements also allow this acquisition related earn-out payments to be settled in either cash or equity at the discretion of the Company. As it is the Company's intention to settle these payments in equity, they were previously fair valued at the grant date in line with IFRS 2 ("Share-based payments").

In connection with the TradeFlow Restructuring that was completed on the 30 June 2023, any future potential earn-out payments were offset against the initial cash consideration amount and as such, no further acquisition related earn-out amounts were recognised during the current interim period for the six months ended 30 June 2023.

The expense recognised in the income statement in the comparative interim period for the six months ended 30 June 2022 was GBP747,000, which represented the estimated fair value of the earn-out payments based on managements judgements at that time.

21 Discontinued operations and TradeFlow Restructuring

During the second half of 2022, the Board of Directors of the Company began the process of the TradeFlow Restructuring, and as such in the financial statements for the year ended 31 December 2022, it was considered that the TradeFlow operations meet the criteria to be classified as held for sale at the balance sheet date in accordance with IFRS 5 ("Non-current Assets Held for Sale and Discontinued Operations"). This is due to the fact that as at this date the details of the TradeFlow Restructuring had all been agreed in principle between the parties and was expected to be completed post year-end. As a result the TradeFlow operations were available for immediate sale in its present condition and it was highly probably that that sale would be completed at 31 December 2022. With the classification as discontinued operations, the TradeFlow operations have been excluded from the segmental reporting note (note 5).

Subsequently, on 30 June 2023 the Company announced that had entered into relevant binding commercial agreements to complete the TradeFlow Restructuring. Further details as to the rationale for the restructuring of the TradeFlow ownership can be found in note 3 above. The TradeFlow Restructuring resulted in the Group reducing its ownership in TradeFlow from 100% to 19% by selling 81% of the issued share capital in TradeFlow to the Buyers. The consideration for the Group's 81% stake in TradeFlow was GBP14,386,100 of which GBP12,386,100 was netted off against potential future amounts owed by the Group to the Buyers under the terms of an earn-out letter relating to the original acquisition of TradeFlow in July 2021.

This resulted in a remaining GBP2,000,000 consideration to be receivable by the Group. On the 30 June 2023, the Group's major shareholder, TAG, assumed the obligation of the Buyers to pay the Company the remaining GBP2,000,000 by way of a debt novation deed. The GBP2,000,000 will be repaid by TAG to SYME in multiple tranches, with the final tranche being payable by 31 January 2024. In consideration for assuming the GBP2,000,000 obligation of the Buyers, TAG acquired 1,026,525,520 existing ordinary shares of nominal value GBP0.00002 each in the capital of the Company from the Buyers.

The accounting for the TradeFlow Restructuring has been reflected in the interim financial statements for the six months ended 30 June 2023. During the period from 1 January 2023 and up until the date of completion of the TradeFlow Restructuing, being 30 June 2023, the TradeFlow operations continued to meet the criteria to be classified as held for sale in accordance with IFRS 5 ("Non-current Assets Held for Sale and Discontinued Operations"). The TradeFlow operations contributed a loss of GBP185,000 (inclusive of the gain arising on the restructuring of the TradeFlow operations referred to below) in the current interim period ended 30 June 2023.

On the 30 June 2023, the assets and liabilities of TradeFlow, including the intangible assets acquired on the acquisition of TradeFlow in July 2021, are no longer consolidated by the Group, and instead the value of the new 19% investment of GBP352,000 was recognised on the balance sheet, together with the GBP2,000,000 remaining consideration to be received from TAG. The difference between these items resulted in a gain arising on the restructuring of the TradeFlow operations recorded in the unaudited condensed consolidated interim financial statements of GBP718,000.

Consistent with the full interim financial statements, the financial information of the TradeFlow operations for the six-month period ended 30 June 2023 is unaudited. An audit of this financial information will be conducted as part of the preparation of the annual financial statements for the year end 31 December 2023.

The results of the TradeFlow operations for the period are presented below:

 
                                                        6 months to        6 months to 
                                                      30 June 2023*       30 June 2022 
                                                          Unaudited          Unaudited 
                                                           GBP '000           GBP '000 
                                                 ------------------  ----------------- 
    Revenue                                                     684                209 
    Administrative expenses                                 (1,037)              (775) 
    Other operating income                                       24                 11 
    Operating loss before acquisition 
     related costs, impairment charges 
     and costs/(gains) relating to the 
     restructuring of the TradeFlow ownership                 (329)              (555) 
-----------------------------------------------  ------------------  ----------------- 
    Amortisation of intangible assets                         (442)              (406) 
    Acquisition related earn-out                                  -              (747) 
    Impairment                                                    -              (765) 
    Foreign currency translation loss 
     reclassified to other comprehensive 
     income                                                    (62)                  - 
    Gain arising on restructuring of TradeFlow 
     ownership                                                  718                  - 
-----------------------------------------------  ------------------  ----------------- 
    Operating loss                                            (115)            (2,473) 
                                                 ------------------  ----------------- 
    Finance costs                                             (145)              (206) 
                                                 ------------------  ----------------- 
    Loss before tax                                           (260)            (2,679) 
    Deferred tax credit                                          75                 69 
                                                 ------------------  ----------------- 
    Loss for the period                                       (185)            (2,610) 
                                                 ==================  ================= 
 
 

*Represents the results for the six-month period prior to the finalisation of the TradeFlow Restructuring on 30 June 2023.

The net cash flows from the TradeFlow operations were as follows:

 
                                             6 months to    6 months to 
                                           30 June 2023*   30 June 2022 
                                               Unaudited      Unaudited 
                                                GBP '000       GBP '000 
                                          --------------  ------------- 
 
Net cash flow from operating activities            (405)        (1,305) 
Net cash flow from investing activities                -            (1) 
Net cash flow from financing activities              405          2,111 
                                          --------------  ------------- 
Net cash outflow                                       -            805 
                                          ==============  ============= 
 

*Represents the cash flows for the six-month period prior to the finalisation of the TradeFlow Restructuring on 30 June 2023.

The calculation of the gain arising on the restructuring of the TradeFlow ownership is shown below:

 
                                               6 months to    6 months to 
                                              30 June 2023   30 June 2022 
                                                 Unaudited      Unaudited 
                                                  GBP '000       GBP '000 
                                             -------------  ------------- 
Accounting fair value of the 81% ownership 
 of the TradeFlow operations disposed 
 of by the Group                                     2,000              - 
Accounting fair value of 19% ownership 
 of the TradeFlow operations retained 
 by the Group                                          352              - 
                                             -------------  ------------- 
                                                     2,352 
Less: 
Accounting fair value of net assets 
 disposed of by the Group                          (1,634)              - 
                                             -------------  ------------- 
Gain arising on the restructuring 
 of the TradeFlow ownership                            718              - 
                                             =============  ============= 
 

The value of the 19% ownership of the TradeFlow operations retained by the Company was calculated with reference to the specifics set out in the TradeFlow Restructuring share purchase agreement dated 30 June 2023 (the " TradeFlow SPA " ). These specifics included:

 
    a. The TradeFlow SPA set out the total legal consideration 
     for the 81% of the TradeFlow business and required an cash 
     amount of GBP2,000,000 to be payable to the Company by the 
     Buyers as a result of the TradeFlow Restructuring; 
     b. Based on the amount agreed in a) above, the estimated accounting 
     fair value of 100% of the TradeFlow operations is assumed 
     to be GBP2,469,000; and 
     c. Based on the numbers set out in a) and b) above, the fair 
     value of the 19% investment in TradeFlow retained by the Company 
     as at 30 June 2023 is GBP469,000. Management then applied 
     a discount of 25% to this fair value to take account of the 
     fact that the Group no longer controls TradeFlow operations. 
     This discount applied is a management judgement that will 
     continue to be reassessed at each reporting date. 
 

The major classes of assets and liabilities of the TradeFlow operations as at 31 December 2022 and 30 June 2023, immediately prior to the finalisation of the TradeFlow Restructuring, are shown below:

 
                                     30 June 2023*  31 December 
                                                           2022 
                                         Unaudited 
                                            GBP000      Audited 
                                                         GBP000 
                                     -------------  ----------- 
Assets 
Intangible assets                            5,841        6,283 
Tangible assets                                  2            4 
Trade and other receivables                    174          101 
Contract assets                                119          132 
Cash and cash equivalents                      305          324 
                                     -------------  ----------- 
Assets of disposal group held for 
 sale                                        6,441        6,844 
Liabilities 
Trade and other payables                       482          430 
Long-term borrowings                         3,440        3,171 
Deferred tax liability                         885          960 
                                     -------------  ----------- 
Liabilities of disposal group held 
 for sale                                    4,807        4,561 
 
Net assets                                   1,634        2,283 
                                     =============  =========== 
 
 

*Represents the assets and liabilities of the TradeFlow operations as at 30 June 2023 immediately prior to the finalisation of the TradeFlow Restructuring.

TradeFlow loan-term borrowings

On 1 April 2022, TradeFlow settled the outstanding unsecured loan notes earlier than the original maturity date of 23 October 2023. This involved the settlement of the principal amount of USD$1,700,000, the additional redemption premium cost of USD $300,000 and accrued interest of USD $100,000. These loan-term borrowings were replaced by a second long-term loan facility, with the same third party, for USD $3,800,000, which has a maturity date of 31 March 2026. The replacement long-term borrowings bears a simple fixed interest rate of 7.9% per annum and has an additional redemption premium cost of USD$200,000 which is payable at the time the principal is repaid. In accordance with IFRS 9 ( " Financial Instruments " ) the second long-term loan facility resulted in a substantial modification to the previous loan note facility.

Both the unsecured loan notes and the new loan facility include an redemption premium cost which is payable together with the settlement of the principal amount of the facility. This redemption premium cost is recognised over the expected life of the facility using the effective interest rate method. Due to the early settlement of the unsecured loan notes this resulted in the unrecognised portion of the redemption premium cost being accelerated. This contributed an additional finance cost of GBP122,000 during the six-month period ended 30 June 2022.

On 22 May 2023, TradeFlow signed an additional loan agreement with the same third party as the loan agreement signed on 1 April 2022. This new loan agreement was for USD $500,000, which has a maturity date of 31 March 2026. The new long-term borrowings bears a simple fixed interest rate of 7.9% per annum and has an additional redemption premium cost of USD$50,000 which is payable at the time the principal is repaid. As with the existing long-term borrowings, the redemption premium cost is recognised over the expected life of the facility using the effective interest rate method.

22 Related party transactions

During the six-month period to 30 June 2023, the following are treated as related parties:

Alessandro Zamboni

Alessandro Zamboni is the Chief Executive Officer of the Group and is also the sole director of The AvantGarde Group S.p.A as well as holding numerous directorships across companies including RegTech Open Project plc. Both of these entities are related parties due the following transactions that took place over the current or prior interim periods.

Alessandro Zamboni and The AvantGarde Group S.p.A ( " TAG " ) and its subsidiaries

Alessandro Zamboni is the CEO of the Group and is also the sole director of The AvantGarde Group S.p.A. As at 30 June 2023 TAG current holds 24.03% of the Company's total ordinary shares in issued in Supply@ ME Capital plc (as at 31 December 2022: 22.5%).

Following the reverse takeover in March 2020, the Group entered into a Master Service Agreement with TAG in respect of certain shared service to be provided to the Group. During the six month period ended 30 June 2023, the Group incurred expenses of GBP25,000 (period ended 30 June 2022: GBP26,000) to TAG in respect of this agreement.

During the six month period ended 30 June 2023, the Group also incurred costs of GBP8,000 from TAG (period ended 30 June 2022: nil) in relation certain ICT services provided.

As at 30 June 2023 there is an outstanding amount owed by the Group of GBP16,000 to TAG in relation to the services outlined above (30 June 2022: nil).

The TAG Group includes other companies which the Group had entered into transactions with such as the Future of Fintech Srl. Alessandro Zamboni is also the sole director of both this company. As at 30 June 2023 there is an outstanding amount owed to the Group of GBP6,000 from Future of Fintech in relation to severance pay accrued by former employees which has been transferred to the Group by the related party (30 June 2022: GBP6,000).

TAG and TradeFlow Restrucutring

As set out in notes 3,13 and 21 above, on 30 June 2023, TAG assumed the remaining GBP2,000,000 consideration arising from the TradeFlow Restructuring, to be receivable by the Group from the Buyers, by way of a debt novation deed. The GBP2,000,000 will be repaid by TAG to SYME in multiple tranches, with the final tranche being payable by 31 January 2024. As at 30 June 2023 the full GBP2,000,000 receivable was outstanding (30 June 2022: nil). As set out in note 23, subsequent to 30 June 2023, and prior to the release of these interim financial statements, TAG had paid the first GBP500,000 to the Company in respect of the outstanding GBP2,000,000 receivable as at 30 June 2023.

TAG Unsecured Working Facility

As set out in note 3 above, on the 28 April 2023, the Company and TAG entered into a fixed term unsecured working capital loan agreement (the "TAG Unsecured Working Capital facility"). Under the TAG Unsecured Working Capital facility, TAG shall provide, subject to customary restrictions, a facility of up to GBP2,800,000, in tranches up to 31 January 2024, to cover the Company's interim working capital and growth needs. In conjunction with the TradeFlow Restructuring, which was completed on 30 June 2023, the GBP2,000,000 receivable by the Company that was assumed by TAG from the Buyers, was offset against the current obligations of TAG under TAG Unsecured Working Capital facility, of which further details are set out above. The amendment to the TAG Unsecured Working Capital facility was agreed on 30 June 2023 and this reduced the obligations to the Company under the TAG Unsecured Working Capital facility to up to GBP800,000.

The due date for repayment by the Company of amounts (if any) drawn under the TAG Unsecured Working Capital facility is 1 February 2028. Any sums drawn under the TAG Unsecured Working Capital facility will attract a non-compounding interest rate of 10% per annum, and any principal amount (excluding accrued interest) outstanding on 1 February 2028 will attract a compounding interest rate of 15% per annum thereafter. Interest will be due to be paid annually on 31 March of each relevant calendar year.

On 30 June 2023, the Company issued a draw down notice to TAG under the amended TAG Unsecured Working Facility for the full GBP800,000 available. As at 30 June 2023, no funds had been received from TAG in respect of this facility. As set out in note 23, subsequent to 30 June 2023, and prior to the release of these interim financial statements, TAG had provided an amount of GBP245,000 in relation to the GBP800,000 drawn down by the Company on the 30 June 2023 under the amended TAG Unsecured Working Capital facility.

RegTech Open Project ( " RTOP " ) S.p.A and RegTech Open Project plc ( " RTOP plc ")

RTOP plc is a regulatory technology company focussed on the development of an integrated risk management platform for Banks, Insurance Companies and Large Corporations. Alessandro Zamboni is a non-executive director of RTOP plc and Albert Ganyushin is the Chair of the board of directors of RTOP plc. TAG also is the majority ultimate beneficial shareholder of RTOP plc. Prior to RTOP plc's listing of its ordinary shares on the standard segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc in August 2023, the operations of this RTOP plc were run through RTOP S.p.A and Alessandro Zamboni was the sole director of RTOP S.p.A.

In July 2022, the Company entered into an agreement with RegTech Open Project S.p.A, pursuant to which RTOP S.p.A was engaged to build and create a number of modules for the Company, including "data factory" (i.e., data ingestion and business rule application), and, during the year ended 31 December 2022, GBP270,000 has been paid by the Company to RTOP S.p.A pursuant to that agreement. As at 31 December 2022 there is an outstanding amount accrued by the Group of GBP58,000 to RTOP S.p.A in relation to this specific agreement.

During the six month period ended 30 June 2023, no further activities were undertaken with RTOP S.p.A, with the exception of the payment of the amounts that had been accrued at 31 December 2022. As such no amounts were outstanding with RTOP S.p.A at 30 June 2023 (30 June 2022: nil).

As part of RTOP Plc's listing onto the main market of the London Stock Exchange in August 2023, the contract referred to above was novated to RTOP plc.

TradeFlow Capital Management Pte. Ltd. ( " TradeFlow " )

On 30 June 2023, the TradeFlow entered into a three-year white-label licence agreement with Supply@ME Technologies S.r.l., a wholly owned subsidiary of the Group, with respect to use of the Platform, on a non-exclusive basis and limited to the Asia-Pacific (" APAC ") region, for a total consideration of GBP1,000,000 payable over a three-year period. As at 30 June 2023, no amounts have been billed in respect of this contract.

Eight Capital Partners Plc

David Bull, an Independent Non-Executive Director and audit committee chair was the CEO of Eight Capital Partners Plc from 22 June 2021 until 12 August 2022. Following the reverse takeover in March 2020, the Company entered into a Master Service Agreement with Eight Capital Partners Plc in respect of certain shared service to be provided to the Group. This agreement was terminated in early 2022 and as such there were no expenses in respect of this agreement with Eight Capital Partners Plc were incurred during the six-month period ended 30 June 2023 (six-month period ended 30 June 2022: GBP3,000).

23 Events occurring after the reporting period

Shares issued post 30 June 2023 relating to Open Offer Warrant Conversions

 
 
      *    On 5 July 2023, the Company announced the exercise of 
           9,150,232 Open Offer Warrants by certain Qualifying 
           Shareholders, and the issue of 9,150,232 Open Offer 
           Warrant Shares. 
 
 
      *    On 17 August 2023, the Company announced the exercise 
           of 8,676,602 Open Offer Warrants by certain 
           Qualifying Shareholders, and the issue of 8,676,602 
           Open Offer Warrant Shares. 
 
 
      *    On 12 September 2023, the Company announced the 
           exercise of 2,390,091 Open Offer Warrants by certain 
           Qualifying Shareholders, and the issue of 2,390,091 
           Open Offer Warrant Shares. 
 
 
      *    On 26 September 2023, the Company announced the 
           exercise of 2,245,089 Open Offer Warrants by certain 
           Qualifying Shareholders, and the issue of 2,245,089 
           Open Offer Warrant Shares. 
 

TAG and TradeFlow Restrucutring

Subsequent to 30 June 2023, and prior to the release of these interim financial statements, TAG had paid the first GBP500,000 to the Company in respect of the outstanding GBP2,000,000 receivable as at 30 June 2023.

Pursuant to the Debt Novation Deed that was signed in connection with the TradeFlow Restructuring and TAG assuming the GBP2,000,000 debt to the Company from the Buyers, TAG agreed with the Company to settle the TAG Amount in three tranches: GBP500,000 on 30 June 2023 (which, as at the as referred to above, has been paid to the Company by TAG); GBP1,000,000 on 30 September 2023; and GBP500,000 on 31 January 2024.

On 28 September 2023, the Company and TAG entered into an English law governed side letter agreement ("Side Letter Agreement"), cast as a deed, in relation to the outstanding TAG Amount, pursuant to which TAG agreed to pay to the Company GBP1,000,000 on 31 October 2023, and GBP500,000 on 31 January 2024.

In signing the Side Letter Agreement, TAG has agreed to pay a 15% per annum compounding rate of interest on the GBP1,000,000 of principal amount of the TAG Amount for the period of 30 September 2023 to 31 October 2023, and shall incur a 15% per annum compounding rate of interest on any outstanding principal amount of the TAG Amount following the agreed payment dates.

TAG Unsecured Working Facility

Subsequent to 30 June 2023, and prior to the release of these interim financial statements, TAG provided an amount of GBP245,000 in relation to the funds drawn down by the Company, being GBP800,000, on the 30 June 2023 under the amended TAG Unsecured Working Capital facility.

Top-Up Shareholder Loan Agreement

On 28 September 2023, the Company and TAG entered into an English law governed top-up unsecured shareholder loan agreement (the "Top-Up Shareholder Loan Agreement"), pursuant to which TAG agreed to provide the Company with a further facility of up to GBP3,500,000 to cover the Company's working capital and growth needs up to 30 June 2025 (the "Top-Up Facility").

Details of this Top-Up Facility are set out below:

 
 
            *    The Company has the ability to draw down up to GBP3.5 
                 million in monthly instalments over the period to 30 
                 June 2025; 
 
 
            *    On a monthly basis the Board will assess (acting in 
                 good faith and in its sole and absolute discretion) 
                 if the Group's projected cash balance on the last 
                 business day of the coming calendar month will be 
                 less than GBP250,000 following the Group's scheduled 
                 balance of receipts and payments for the next month 
                 by reference to, inter alia, the Group's contracted 
                 receivables, revenues and payables due for receipt or 
                 payment in the next month, the Group's contracted 
                 fixed operating expenditure and/or capital 
                 expenditure due for payment in the next month, the 
                 cash inflows in the next month arising from any 
                 warrants that have been contractually exercised and 
                 any projected unrestricted cash amounts resulting 
                 from any contractually agreed alternative equity, 
                 debt or hybrid financing (including, but not limited 
                 to, pursuant to a pre-emptive offering of ordinary 
                 shares and a non-pre-emptive offering of ordinary 
                 shares) for such month; 
 
 
            *    If the above assessment results in the Group's 
                 projected cash balance on the last business day of 
                 the coming calendar month being less than GBP250,000, 
                 the Company may draw down an amount under the TAG 
                 Top-Up Shareholder Loan Agreement which is no greater 
                 than the GBP amount to ensure that the Group's bank 
                 balances in the coming month shall be equal to 
                 GBP250,000; 
 
 
            *    Repayment of any sum drawn down under the TAG Top-Up 
                 Shareholder Loan Agreement will be due five calendar 
                 years (calculated on the basis of a year of 360 days) 
                 from the date which funds are received by the Company 
                 subject to the relevant draw down request; 
 
 
            *    Any sums drawn down by the Company under the TAG Top 
                 Up Unsecured Shareholder Loan will attract a 
                 non-compounding interest rate of 10% per annum, and 
                 any principal amount (excluding accrued interest) 
                 outstanding on a relevant due date shall attract a 
                 compounding rate of 15% per annum thereafter. 
                 Interest will be due to be paid annually on 31 March 
                 of each relevant calendar year. 
 

Cautionary Statement

These Interim Results have been prepared in accordance with the requirements of English Company Law and the liabilities of the Directors in connection with these Interim Results shall be subject to the limitations and restrictions provided by such law.

These Interim Results are prepared for and addressed only to the Group's shareholders as a whole and to no other person. The Group, its Directors, employees, agents, or advisers do not accept or assume responsibility to any other person to whom these Interim Results are shown or into whose hands it may come, and any such responsibility or liability is expressly disclaimed.

These Interim Results contain forward looking statements, which are unavoidably subject to risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. It is believed that the expectations set out in these forward-looking statements are reasonable, but they may be affected by a wide range of variables which could cause future outcomes to differ from those foreseen. All statements in these Interim Results are based upon information known to the Group at the date of this report. Except as required by law, the Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

APPIX 2 - ENTRY INTO TOP-UP SHAREHOLDER LOAN AGREEMENT AND SIDE LETTER AGREEMENT

Top-Up Shareholder Loan Agreement

On 28 September 2023, the Company and TAG entered into an English law governed Top-Up Shareholder Loan Agreement, pursuant to which TAG shall provide, subject to customary restrictions, the Top-Up Loan Facility of up to GBP3,500,000 to cover the Company's working capital and growth needs up to 30 June 2025.

The Company may draw down on the Top-Up Facility on a monthly basis if the Board assess (acting in good faith and in its sole and absolute discretion) that the Group's projected cash balance on the last Business Day of the coming calendar month will be less than GBP250,000 following the Group's scheduled balance of receipts and payments for the next month by reference to, inter alia, the Group's contracted receivables, revenues and payables due for receipt or payment in the next month, the Group's contracted fixed operating expenditure and/or capital expenditure due for payment in the next month, the cash inflows in the next month arising from any Warrants that have been contractually exercised and any projected unrestricted cash amounts resulting from any contractually agreed alternative equity, debt or hybrid financing (including, but not limited to, pursuant to a pre-emptive offering of Ordinary Shares and a non-pre-emptive offering of Ordinary Shares) for such month. In such circumstances, the Company may draw down an amount of the Top-Up Facility which is no greater than the GBP amount to ensure that the Group's bank balances in the coming month shall be equal to GBP250,000.

The due date for repayment by the Company of each respective amount (if any) drawn under the Top-Up Shareholder Loan Agreement shall be five calendar years (calculated on the basis of a year of 360 days) from the day on which the funds are received by the Company subject to the relevant drawn down request. Any sums drawn under the Top-Up Shareholder Loan Agreement shall attract a non-compounding interest rate of 10% per annum, and any principal amount (excluding accrued interest) outstanding on the relevant due date shall attract a compounding interest rate of 15% per annum thereafter.

Pursuant to the Top-Up Shareholder Loan Agreement, the Company gave certain customary warranties and undertakings to TAG, and TAG gave certain customary warranties to the Company.

Side Letter Agreement

As disclosed in the Secondary Supplementary Prospectus published on 30 June 2023, the Company entered into an English law governed share purchase agreement with the Buyers on 30 June 2023, pursuant to which, the Company sold 81% of the issued share capital of TradeFlow Capital Management Pte. Limited . The GBP2,000,000 TAG Amoun t (as defined in the Second Supplementary Prospectus) was novated from the Buyers to TAG on the terms of an English law governed Debt Novation Deed entered into between the Company, the Buyers and TAG on 30 June 2023. Pursuant to the Debt Novation Deed, TAG agreed with the Company to settle the TAG Amount in three tranches: GBP500,000 on 30 June 2023 (which, as at the date of this announcement, has been paid to the Company by TAG); GBP1,000,000 on 30 September 2023; and GBP500,000 on 31 January 2024. On 28 September 2023, the Company and TAG entered into an English law governed Side Letter Agreement, cast as a deed, in relation to the outstanding TAG Amount, pursuant to which TAG agreed to pay to the Company GBP1,000,000 on 31 October 2023, and GBP500,000 on 31 January 2024.

TAG has agreed to pay a 15% compounding rate of interest on the GBP1,000,000 of principal amount of the TAG Amount for the period of 30 September 2023 to 31 October 2023, and shall incur a 15% compounding rate of interest on any outstanding principal amount of the TAG Amount following the agreed payment dates.

The entry by (i) the Company and TAG into the Top-Up Shareholder Loan Agreement and (ii) the Company and TAG into the Side Letter Agreement each constituted a material related party transaction for the purposes of DTR 7.3 and were, accordingly, voted upon by the independent Directors (excluding Alessandro Zamboni, who, in each case, constituted a "related party" (as such term is defined in IFRS)), and such independent Directors consider each such material related party transaction in respect of the Top-Up Shareholder Loan Agreement and the Side Letter Agreement to be fair and reasonable from the perspective of the Company and its Shareholders who are not a related party.

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September 29, 2023 02:00 ET (06:00 GMT)

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