THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION 2014/596/EU, WHICH IS PART OF UNITED
KINGDOM DOMESTIC LAW PURSUANT TO THE MARKET ABUSE (AMENDMENT) (EU
EXIT) REGULATIONS (SI
2019/310) ("UK MAR"). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
29 February 2024
Supply@ME Capital
plc
(the
"Company", "Supply@ME" or "SYME" and, together with its
subsidiaries, the "Group")
Business, trading and funding
update
SYME, the fintech business which
provides an innovative fintech platform (the "Platform") for use by manufacturing and
trading companies to access Inventory Monetisation© ("IM") solutions enabling their
businesses to generate cashflow, provides the following business,
trading and funding update.
Summary
·
On the 3 January 2024, the Company announced that
it had commenced its overall White-Label go-to-market strategy as a
result of securing a commitment with Banco BPM S.p.A ("WL Inventory Funder" or "BBPM") to fund an initial IM
transaction with an inventory value to be monetised of up to €10
million with an existing client of BBPM (respectively the
"WL Client Company" and the
"WL Transaction").
Following this announcement, the Company and the working group (as
referred to in the RNS announcement dated 3 January 2024 and
including the WL Inventory Funder and the WL Client Company) have
been working closely to draft, review and finalise the detailed
commercial contracts which will implement the commitment received
from BBPM. Alongside this, the working group has been progressing
the onboarding of the remarketers identified, at the same time as
evaluating the opportunity for the remarketer to undertake a
separate dedicated IM transaction. SYME currently expect the
contracts to be completed by the end of March 2024 and will update
the market accordingly.
·
The Company intends to leverage the results of the
contracting process for the WL Transaction to create a standard
scalable format for future White-Label transactions with other
local commercial banks and their client companies. The Group has
recently commenced discussions with two separate Italian commercial
banks who have expressed an interest in replicating the White-Label
model utilising their existing client base, of which certain
clients may also be included in the Group's pipeline.
·
The establishment of the track record demonstrated
by the first executed IM transactions, together with the strong
reputation of BBPM, has created the opportunity for the Group to
present its business model to a number of other investment banks,
as well as dedicated asset fund managers. As a result of this, the
Group is currently working with an investment banking division of
an Italian neo banking group, who has expertise in the adoption of
the PNP Regulation[1], and two different
asset fund managers, to evaluate their potential participation in
respect of ad hoc IM programmes.
·
The Company has continued to make solid progress
in structuring a security token framework with the CH Trading Hub
which will allow a first security token issuance up to US$100
million to be subscribed in tranches, largely by institutional
investors who are active in the digital asset markets. SYME and the
CH Trading Hub are in advanced discussions with an asset manager
specialising in digital assets to secure a first commitment of
USD$5 million, together with the involvement of a regulated crypto
exchange which can support the distribution of the security token
to its investor base in order to progress the completion of the
programme. The commitment of the first USD$5 million is
currently expected to be finalised by the end of
March 2024.
·
Following the funding update provided on 5
December 2023, the Company wishes to provide a further update with
regards to the funding payments that have been made by The
AvantGarde Group S.p.A. (an entity ultimately beneficially
wholly-owned and controlled by Alessandro Zamboni, Chief Executive
Officer of the Company) ("TAG"). As at the date of this
announcement, the Group has received £2,276,963 from TAG as a
result of the contractual payments under the Debt Novation Deed,
the TAG Unsecured Working Capital Loan Agreement (which has now
been fully received by the Company) and the Top-Up Shareholder Loan
Agreement (together the "TAG
Contractual Commitments"). This amount is
£881,779 higher than had been disclosed as having
been received from TAG in the announcement dated 5 December 2023
and relates to the outstanding payments under the TAG Contractual
Commitments. The continued receipt of funds demonstrates the
ongoing commitment from TAG to support the Company and to provide
payments under the TAG Contractual Commitments, albeit on a delayed
payment schedule. An additional amount of £1,766,552 currently
remains outstanding and, accordingly has not been received by the
Company. The outstanding amount includes additional drawdowns made
by the Company under the Top-Up Shareholder Loan Agreement since 5
December 2023 of £642,685 and an amount of £500,000 that fell due
on the 31 January 2024 under the Debt Novation Deed. TAG has provided representations to the board of directors of
the Company that it will continue to provide the outstanding
amounts, and that TAG is itself in the process of securing
additional facilities to enable performance against these
representations.
Further details of each of these are
set out below.
Business
update
Background
Over the past year, the Group has
continued to make important progress to enhance its business
operating model with continued differentiation of the IM
Platform including, not only the underlying
software, but also the supporting processes, methodologies and
legal framework.
In addition, the inventory funding
framework also evolved over the past year, particularly through the
launch of an independent Swiss-based trading business
("CH Trading Hub") to
replace the Cayman based Global Inventory Fund ("GIF"), previously advised by Tradeflow
Capital Management Pte. Ltd ("TradeFlow"). The CH Trading Hub, owned
by Société Financière Européenne S.A. ("SFE"), has purchased certain
independent Stock Companies, to meet the needs of specific IM
transactions, and is in the process of assuming control of the
existing independent Stock Companies from the GIF. The CH Trading
Hub will also incorporate new independent Stock Companies as
required in the future.
The intention is that the CH Trading
Hub, through its ownership of the independent Stock Companies, will
act as an asset (inventory) management group and will invest its
equity capital to build up a dedicated internal structured
financing team and provide, when needed, equity capital, or other
funding solutions, for specific IM transactions. The CH Trading Hub
also has ownership of a dedicated securitisation company authorised
in Luxembourg which it intends to leverage to help facilitate the
access of inventory funders to IM transaction, through both the
traditional and token financing routes.
The CH Trading Hub is working
closely with the Group to maximise the opportunity for the IM
Platform and CH Trading Hub to constitute an IM infrastructure
which can be used by both banks for their White-Label offering, and
investment banks, security token arrangers and inventory funders to
adopt and implement ad hoc IM programmes. In the case of
White-Label offerings, it allows banks to leverage their existing
client base, and in the case of other potential inventory funders
it allows them to work closely with the Group to access its
pipeline of client companies who have already expressed interest in
unlocking their working capital through inventory
monetisation.
With reference to the CH Trading
Hub, it is worth noting that, as of today, Alessandro Zamboni, the
CEO of the Group, has, along with a number of other investors, a
personal non-controlling interest in SFE, with this entity acting
as equity capital partner provider for the CH Trading
Hub.
White-Label IM
As outlined above, it was announced
on 3 January 2024 that the Group has secured a commitment provided
by BBPM to fund the WL Transaction. This commenced the Group's
overall White-Label go-to-market strategy. Accordingly,
the Group has been working closely with
BBPM and the WL Client Company in drafting, reviewing and
finalising the commercial contracts and onboarding the identified
remarketers, at the same time as evaluating
the opportunity for the remarketer to undertake a separate
dedicated IM transaction. The intention
being this White-Label IM will be a first template transaction
aimed at creating a scalable format for
future White-Label transactions.
In relation to the specific WL
Transaction, the WL Inventory Funder is
preparing a loan agreement between itself and the dedicated Stock
Company, which will enable the funding to flow from BBPM to the
Stock Company to execute the purchase of the inventory from the WL
Client Company. The WL Transaction will utilise the Group's IM
Platform and inventory servicing expertise.
Discussions are also underway with
the WL Inventory Funder regarding other potential White-Label
transactions that can follow once the initial one has been
successfully executed.
Following the positive momentum
created by the announcement on the 3 January 2024, the Group is
also now liaising with two other Italian commercial banks who have
expressed an interest in replicating the White-Label model
utilising their existing client base, of which
certain clients may also be included in the Group's
pipeline.
Additionally, an asset-based lender
based in the UK has approached the Group and discussions are
ongoing to evaluate how the IM infrastructure can be adapted to
meet their needs. This could involve use of only the IM Platform,
and/or specific aspects of the inventory servicing activities
provided by the Group. This would allow the Group to demonstrate
the flexibility and adaptability of its business model through the
provision of bespoke services to interested potential inventory
funders and White-Label partners.
Finally, the Group is actively
investigating the promotion of the opportunity for commercial banks
to offer an IM facility to their existing clients, and, in this
regard, is in direct contact with the Italian Banking
Association[2] to support a dedicated
working group.
Cooperation with investment banks and asset
managers
The establishment of the track
record demonstrated by the first executed IM transactions, coupled
with the strong reputation of the WL Funder, has created the
opportunity for the Group to present its business model to
investment banks and dedicated asset fund managers in order to
evaluate their potential participation in respect of ad hoc IM
programmes. These programmes could cover the Group's existing
client pipeline and, also, new clients that match the eligibility
criteria requested by the potential inventory funders. Discussions
are ongoing around an initial single-name IM transaction and then
scaling with a wider roll-out plan.
The Group is currently working with
an investment banking division of an Italian neo banking group, who
has expertise in the adoption of the PNP Regulation and two
different asset fund managers, in order to evaluate their potential
participation in respect of such ad hoc IM programmes.
Digital assets route
In 2023, the trend towards
tokenising real-world assets has surged, positioning itself as a
significant transformative force by integrating digital
representations of physical assets onto blockchain technology. This
trend is primarily fueled by the escalating costs of capital, which
highlight capital inefficiencies, thereby urging financial
institutions to seek out tokenisation as a strategic
solution.
At the same time, the Markets in
Crypto-Assets Regulation (MiCA) created uniform European Union
market rules for crypto-assets. The regulation covers crypto-assets
that are not currently regulated by existing financial services
legislation. Key provisions for those issuing and trading
crypto-assets (including asset-reference tokens and e-money tokens)
cover transparency, disclosure, authorisation and supervision of
transactions. The new legal framework will support market integrity
and financial stability by regulating public offers of
crypto-assets and by ensuring consumers are better informed about
their associated risks.
With this background in mind, the
Group has been working on the following digital assets
routes:
·
the structuring of a security token framework with
the CH Trading Hub which will allow a first security token issuance
up to US$100 million to be subscribed in tranches, largely by
institutional investors active in the digital asset markets. The
Group and the CH Trading Hub are in advanced discussions with an
asset manager specialised in digital assets to achieve a first
commitment of USD$5 million together with the involvement of a
regulated crypto exchange which can support the placing of the
security token to its investors base, in order to complete the
programme. This initiative is expected to attract further
investment banks and asset managers with the focus on crypto to
investigate the arranging of similar initiatives.
·
On 28 June 2022, the Company announced its entry
into a strategic alliance (the "VeChain Agreement") with the VeChain
Foundation ("VeChain"), a
blockchain enterprise service provider focused on supply chain and
sustainability, to fund the first inaugural IM transaction and kick
off the "Web3" stream.
The VeChain Agreement contained two
phases, both in terms of investment opportunities and technology
development.
Phase One comprised the inaugural IM
transaction worth approximately US$1.5 million, providing a
proof-of-concept, which was announced on 12 September 2022 and, as
to date, has performed in line with the requirements of the VeChain
Agreement.
With reference to the Phase Two,
SYME and VeChain are evaluating how to implement this workstream,
also considering the new market positioning of VeChain (which is
primarily focused on creating a developing platform for Web3
adopters in the space of sustainability) and the updated regulatory
environment (which imposes specific requirements for financial
products underpinned by the blockchain technology).
The Group will update the market in
due course.
Origination
The Group continues to remain
focused on its two core jurisdictions for the origination of new
client companies: Italy and UK. However, the Group will evaluate on
a case-by-case basis potential opportunities in new jurisdictions,
particularly if this is driven by the appetite of potential
inventory funders.
Additionally, considering the
White-Label go-to-market strategy and the collaboration taking
place with other banks and asset fund managers, the Group is
conducting a full review of its pipeline, including the assessment
of current pipeline clients against specific IM funding criteria
that is in the process of being formulated. The objective of the
Group is to create pipeline figures which actually demonstrate the
commitment of the client company and, also, the preliminary
eligibility of the client within potential IM programmes. Further
details will be provided within the Annual Report for the year
ended 31 December 2023 ("FY23").
Trading
Update
The FY23 Annual Report is currently
being prepared and is expected to be published at the end of April
2024. During the second half of FY23, the Group continued to
recognise revenue from:
·
Completion of due diligence activities for new
potential client companies (pre-IM); and
·
Usage of the IM Platform and performance of
inventory servicing activities in relation to those IM transactions
that have been facilitated over the Platform (post-IM).
The Group's revenue from continuing
operations recognised in the second half of the 2023 is currently
expected to be broadly in line with that generated in the first six
months of 2023. It should be noted that this figure is still the
subject of the year end audit procedures.
With respect to the pre-IM revenue,
there were no new origination fees generated in the second half of
2023 due to the delay in the completion of the initial inventory
purchase relating to the first UK IM transaction that was announced
by the Company on 3 July 2023. This delay has largely been the
result of the IM being managed alongside an existing floating
charge facility which has required this client company to gain
specific waivers. While this has resulted in delays to this deal,
it has proven that an IM transaction model is able to work
alongside existing financing facilities.
On 30 June 2023, the Company
announced the disposal of the majority 81% stake of TradeFlow (the
"TradeFlow Restructure").
In connection with the TradeFlow Restructure, the Company announced
that the Group and TradeFlow also entered a Platform licence
agreement (the "Platform Licence
Agreement") pursuant to which TradeFlow has been granted a
non-exclusive white-label licence for an initial three-year period
to use the Group's IM Platform on a non-exclusive basis and limited
to the APAC region. The consideration for which is a payment by
TradeFlow of £1,000,000 over the duration of the initial three-year
period. Following the signing of the Platform Licence Agreement,
the two parties have been undergoing discussions regarding the
point in time when the access to the Platform will be activated and
as a result, to date, the consideration payment has not been
requested or received by the Company.
The Company has recently received an
early stage expression of interest with regard to the 19% ownership
stake that it currently holds in TradeFlow and which it is in the
process of evaluating. Alongside this, the board of directors of
SYME is in the process of considering and evaluating its longer
term options with regards to its remaining 19% stake in
TradeFlow.
Funding
update
Debt Novation Deed
On 30 June 2023, the Company stated, as part of the TradeFlow Restructure, that it
had entered into an English law governed debt novation deed
with the buyers of the 81% majority stake in TradeFlow (the
"Buyers") and TAG on 30 June 2023 (the "Debt Novation Deed"). The Debt
Novation Deed created the obligation for TAG to settle the
£2,000,000 cash payment that was due from the Buyers to the
Company, as a result of the sale of the 81% majority stake in
TradeFlow, in three tranches:
·
£500,000 which was due on 30 June 2023. As
at the date of this announcement, this instalment has been received
in full;
·
£1,000,000 which was originally due on 30
September 2023. The due date for this instalment was extended to 31
October 2023 under the English law governed side letter agreement
(the "Side Letter
Agreement"), cast as a deed on 28 September 2023. Details of
the Side Letter Agreement can be found in the announcement made by
the Company dated 29 September 2023; and
·
£500,000 which is due by 31 January
2024.
As at the date of this announcement,
£523,037 of the £2,000,000 receivable is currently outstanding and
has not been received by the Company. The payment of the £1,476,963
has been received through a split of £998,683 in cash, £420,670 by
way of formal debt novation agreements with specific suppliers
whereby the debt held by the Group was novated to TAG with no
recourse by to the Group, and £57,610 by way of offset against
amounts owed by the Group to TAG. The Company is now charging a
late fee to TAG calculated at a compounding rate of 15% per annum
on any amounts of the instalments not transferred to the Company by
the relevant due date, in accordance with the Side Letter
Agreement.
TAG Unsecured Working Capital Loan Agreement
On 30 June 2023, the Company stated, as part of the TradeFlow Restructure, that it
had amended the current obligations of TAG under the English law
governed fixed term unsecured working capital loan agreement that
was entered into by the Company and TAG on 28 April 2023 (the
"TAG Unsecured Working Capital
Loan Agreement"). Following the amendment to the TAG
Unsecured Working Capital Loan Agreement, the full amount available
to be drawn down by the Company from TAG was £800,000 and this draw
down was notified to TAG by the Company on 30 June 2023. As at the
date of this announcement, the full £800,000 of this draw down has
been received by the Company in cash and as a result, no further
amounts remain outstanding under this facility.
Top-Up Shareholder Loan Agreement
On 29 September 2023, the
Company stated, as part of the interim results
announcement, that it entered into an English Law governed top-up
unsecured shareholder loan agreement with TAG (the "Top-Up Shareholder Loan Agreement"),
pursuant to which TAG agreed to provide the Company with a
shareholder loan facility of up to £3,500,000 to cover the
Company's working capital and growth needs up to 30 June 2025 (the
"Top-Up Facility"). The
details of the Top-Up Shareholder Loan Agreement can be found in
the Company's announcement dated 29 September
2023.
To date, the Company has issued draw
down notices to TAG for a total amount of £1,243,515 under the
Top-Up Shareholder Loan Agreement. As at the date of this
announcement, the full amount of this draw down is currently
outstanding and has not been received by the Company. Under the
Top-Up Shareholder Loan Agreement, the Company is now charging a
late fee to TAG calculated at a compounding rate of 15% per annum
on any amounts not transferred to the Company by the due date set
out in the Top-Up Shareholder Loan Agreement.
As a result of the business and
funding update detailed above, the Board are continually reviewing
the cashflow position of the Group, on a prudent basis, and are
currently exploring additional funding options to diversify the
sources of funding for the Group and to mitigate the risk of being
dependent on the TAG Contractual Commitments.
For the purposes of UK MAR, the
person responsible for arranging release of this announcement on
behalf of SYME is Alessandro Zamboni, CEO.
Contact information
Alessandro Zamboni, CEO, Supply@ME
Capital plc, investors@supplymecapital.com
Notes
SYME and its operating subsidiaries
provide its Platform for use by manufacturing and trading companies
to access inventory trade solutions enabling their businesses to
generate cashflow, via a non-credit approach and without incurring
debt. This is achieved by their existing eligible inventory
being added to the Platform and then monetised via purchase by
third party Inventory Funders. The inventory to be monetised
can include warehoused goods waiting to be sold to end-customers or
goods that are part of a typical import/export
transaction.