Interim Statement: 12 month period to 31.03.20.

SUPPLY@ME CAPITAL PLC (PREVIOUSLY ABAL GROUP PLC)

 

NOTES TO THE FINANCIAL STATEMENTS

 

FOR THE 12 MONTH PERIOD ENDED 31 MARCH 2020

 

 

 

1.   Company information

Supply@Me Capital plc is a public limited liability company incorporated in England and Wales. The address of its registered office 27/28 Eastcastle Street, London, W1W 8DH, United Kingdom. Supply@Me Capital's shares are listed on the London Stock Exchange.

 

The Interim Financial Statements have been approved for issue by the Board of Directors on 30 June 2020.

 

2.   Basis of Preparation

The Interim Financial Statements are for the 12 months ended 31 March 2020 and are presented in Sterling, which is the functional currency of the Group. They have been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include all of the information required in annual financial statements in accordance with IFRS and should be read in conjunction with the consolidated financial statements for the year ended 31 March 2019.

 

The Interim Financial Statements have been prepared in accordance with the accounting policies adopted in the Group's most recent annual financial statements for the year ended 31 March 2019, with the exception of the policies noted below.

 

In accordance with IFRS 10 Consolidated Financial Statements, the condensed consolidated financial statements include the financial results of Supply@Me S.r.l. at the accounting reference date of 31 December 2019 (2019 - 31 December 2018) as it is impracticable to present financial data as at 31 March for the purposes of these interim financial statements.  Supply@Me S.r.l. is shortening the year end to 30 September 2020 so as to be co-terminous with Supply@Me Capital plc in the consolidated financial statements for the period ended 30 September 2020.

 

Prior to the completion of the reverse acquisition, as disclosed in note 3, the current directors considered Supply@Me Capital plc did not meet the definition of a business in accordance with IFRS 3.  Consequently, the reverse acquisition has not been accounted for as business combination, but as share based payment.

 

Significant changes in accounting policies

Revenue recognition

Revenues are recorded net of returns, discounts and rebates as well as directly related taxes connected to the provision of services.

 

Revenues for services are recognised on the basis of performance and in accordance with the related contracts.  Revenues relating to contract work in progress are recognised proportionately with the progress of the works.

 

Revenue is deferred where it relates to the provision of future services and is subsequently recognised when key milestones are reached.

 

Intangible assets

Intangible assets are recognised at their cost price plus any associated costs of bringing the asset into use.  Development costs not meeting the criteria for capitalisation are expensed in the period in which they are incurred.

 

Amortisation begins from the month the asset is brought into use at the following rates:

Acquisition of company branch	20% straight line
Software development	20% straight line
Research and development	20% straight line
Legal project development	20% straight line
Website and marketing	20% straight line

 

At the end of each accounting period the Group assesses the recoverable amounts of intangible assets.  Where there is an indication of impairment, an impairment loss is recognised for the amount by which the assets carrying value exceeds its recoverable amount.  Impairment losses are recognised in the profit and loss.

 

New and revised accounting standards and interpretations

IFRS 16 Leases became effective for annual periods beginning on or after 1 January 2019.  The Directors have considered the impact of this new standard in the preparation of these interim statements.  At this time, the group does not have any lease arrangements and therefore no adjustments are considered necessary as a result of this new standard.

 

 

3.   Significant changes in the current reporting period

On 23 March 2020, Supply@Me Capital plc completed the following transactions, details of which are disclosed in the prospectus dated 4 March 2020:

·      reverse acquisition of Supply@Me S.r.l., a company registered in Italy;

·      placing of 331,604,094 shares; and

·      admission to the Official List and trading on the London Stock Exchange's Main Market (Standard list).

 

Shares were issued pursuant to the reverse acquisition of Supply@ME Srl on the basis of an independent professional valuation commissioned by the Board on behalf of the Company that ascribes to such consideration shares an issue price of £0.006945 per consideration share as described in the prospectus.

 

The transaction was effected by way of the issue of consideration shares.  Due to Supply@Me Capital plc effectively having no substance, and in fact Supply@Me S.r.l. was acting as the parent of the Group, the consolidated Group is accounted for as a capital reorganisation rather than a business combination.  These interim financial statements have been prepared on the basis that Supply@Me S.r.l. is the accounting acquirer and Supply@Me Capital plc the accounting acquiree.

 

As such, from an accounting perspective, the previous comparatives, and any results prior to 23 March 2020 of Supply@Me Capital plc have not been presented and the assets and liabilities of Supply@Me S.r.l. have been recorded in the consolidated financial statements at their pre-combination amounts.

 

4.   Revenue and operating segments

There is one continuing class of business, being the investment in the financial technological sector.  Given that there is only one continuing class of business, operating within Italy no further segmental information has been provided.

 

 

 

5.   Exceptional costs

		12 months to 31 March 2020	Year ended 31 March 2019
		£ '000	£ '000
Deemed cost of listing		224,845	-

 

As explained in note 2, the reverse acquisition of Supply@Me S.r.l. does not meet the requirements of IFRS 3 Business Combinations so has been accounted for under IFRS 2 Share Based Payments.  Under IFRS 2, the "goodwill" element of the transaction is expensed as the deemed costs of obtaining the listing.

 

6.   Taxation

Income tax liabilities for the period to 31 March 2020 have been estimated at the prevailing rates applicable in each jurisdiction.

 

7.   Earnings per share

The calculation of the Basic earnings per share (EPS) is based on the loss attributable to equity holders of the parent for the period of £225,267,000 divided by the weighted average number of ordinary shares in issue of 2,516,584,573.  No EPS comparative is provided as the share capital of Supply@Me S.r.l. is not made up of distributable shares.

 

8.   Intangible assets

	Acquisition of company branch	Software development	R&D	Legal project development	Website and marketing	Total
Cost
At 1 April 2019	461	-	-	-	-	461
Additions	-	189	159	88	26	462
At 31 March 2020	461	189	159	88	26	923
Amortisation
At 1 April 2019	115	-	-	-	-	115
Charge for the year	69	4	14	5	2	94
At 31 Mach 2020	184	4	14	5	2	209
Net book value
At 31 March 2020	277	185	145	83	24	714
At 31 March 2019	346	-	-	-	-	346

 

 

 

9.   Share capital

Allotted, called up and fully paid shares

	2020		2019
	No.	£ '000	No.	£ '000
Ordinary shares of £0.00002 each	32,754,944,590	655	-	-
Deferred shares of £0.04 each	63,084,290	2,523	-	-
2018 deferred shares of £0.009998 each	224,193,710	2,241	-	-
Capital of Supply@Me S.r.l.	-	-	-	136
Total	33,042,222,590	5,420	-	136

 

New shares allotted

On 23 March 2020, the Group completed a reverse acquisition transaction with Supply@Me S.r.l.  It was considered that Supply@Me S.r.l. was the accounting acquirer in the transaction and so the comparative share capital is that of Supply@Me S.r.l.  Upon completion of the transaction, the share capital of Supply@Me Capital plc has been disclosed, to represent that of the legal acquirer.  32,322,246,220 ordinary shares were issued as consideration.

 

Also on 23 March 2020, 331,604,094 ordinary shares were issued through a placing which raised gross proceeds of £2,240,000.

 

10.  Reserves

Analysis of the movement in reserves is disclosed in the Statement of Changes in Equity on page 7.

 

11.  Related party transactions

With reference to the RTO as detailed in the prospectus, the following are treated as related parties:

 

The AvantGarde Group SpA

The AvantGarde Group currently holds 72.95 per cent of the shares in Supply@Me Capital plc.

 

Previous to the date of the RTO:

 

·      The AvantGarde Group SpA had provided a loan to Supply@Me S.r.l. of £318,049.  As at 31 March 2020 the amount due to The AvantGarde Group SpA was £318,049 (2019 - £nil); and

 

·      The AvantGarde Group SpA had paid various costs on behalf of Supply@Me S.r.l.  As at 31 March 2020 the amount due to The AvantGarde Group was £204,556 (2019 - £154,671).

 

The shareholders of the AvantGarde Group SpA are as follows:

 

·      iWEP Ltd, iWolf Ltd and White Amba LLP

iWEP controls more than 20 per cent. of the share capital of The AvantGarde Group and is wholly owned by iWolf and White Amba.  The beneficial owner of iWEP, iWolf and White Amba is Dominic White.

 

·      Orchestra Group, AZ Company Srl and AvantGarde 4.0 Srl

Orchestra Group SpA controls more than 20 per cent. of the share capital of The AvantGarde Group SpA and is controlled by AZ Company Srl and AvantGarde 4.0 Srl.

 

·      Finance Partners Group SpA

Finance Partners Group SpA owns 17.66 per cent of The AvantGarde Group SpA.

 

Eight Capital Partners Plc

Eight Capital Partners Plc is a current shareholder in the Company, holds a 40 per cent interest in Finance Partners Group SpA and additionally has Dominic White on its Board.

 

 

 

Epsion Capital Ltd

Epsion Capital, is a wholly owned subsidiary of Eight Capital Partners Plc and conducted the placing for the RTO.

 

Dominic and Susan White

Dominic White is on the Board of The AvantGarde Group as well as holding numerous directorships across companies that are related parties (iWEP Ltd, iWolf Ltd, White Amba LLP and Eight Capital Partners Plc).

 

Alessandro Zamboni

Alessandro Zamboni is on the Board of The AvantGarde Group SpA as well as holding numerous directorships across companies that are related parties (AZ Company Srl). 

 

12.  Dividends

During the twelve month period to 31 March 2020, the Company did not pay a 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. 

 

13.  Going Concern

The financial statements have been prepared on a going concern basis following an assessment by the Directors.

 

When making this assessment the Directors have taken into consideration the substantial, downward movements in world equity markets since late February 2020. Market volatility and uncertainty is expected to continue for some time, due to the COVID-19 and the effect of measures taken to combat it.

 

Having conducted cash flow and working capital projections, taking account of the impact of further possible adverse changes in the current economic climate, the Directors are satisfied that the Group is able to manage its current business risks.

 

Accordingly, the Directors do not believe a material uncertainty currently exists that would have an effect on the going concern of the Group and have prepared the financial statements on a going concern basis.

 

Clearly, as an early stage business, SYME's financial strength depends on two key factors: Inventory Funding and matching this funding to an inventory customer base.  Its ability to continue as a going concern will be determined by its success in these two areas.

 

14.  Principal Risks and Uncertainties

Following the onset of the COVID-19 pandemic, we implemented a number of business continuity measures.  In particular, following the Government announcement on 24 March 2020 that the public should not leave homes to travel to work if they could work at home, we limited office attendance to short visits by essential IT colleagues and other key workers necessary to maintain the continuity of operations and systems. All other staff support the business through remote home working.

 

The pandemic has created many uncertainties and we have adapted the business rapidly to reflect the sudden change in its risk profile. This has resulted in changes to our operational risk profile. However, in other respects the key risks and uncertainties associated with our strategic objectives remain broadly the same. An overview of those risks, along with the associated risk management and controls, follows:

 

Increased operational risk

The remote working of staff and the inaccessibility of the Group's normal offices in Italy and London presents heightened operational risks.  The extent of use of remote IT access has increased threat of external fraud and cyber-attack. Our critical business services have been reviewed and, in some instances, it has been necessary to amend the usual routines and procedures. 

 

 

 

Early-stage business

Supply@ME is still at an early stage of its development and has not generated material revenues from its operations to date. The generation of revenues is difficult to predict and there is no guarantee that the Group will generate significant revenues in the foreseeable future.  There are a number of operational, strategic and financial risks associated with early stage companies. Supply@ME faces risks frequently encountered by smaller, growing companies seeking to bring new products and services to the market. There can be no assurance that the prospective agreements being discussed with potential funders will complete at the expected level or at all, which would materially and adversely affect Supply@ME's ability to provide its inventory monetisation service, or even if such funding were to be forthcoming, there can be no assurance that sufficient numbers of corporate customers would use the service to assure Supply@ME's growth or viability in the future.

 

If the Group is unable to maintain or increase originations through its Platform or if existing customers or funders do not continue to participate on its Platform, its business, results of operations, financial condition or prospects will be adversely affected.

 

To grow its business, the Group must increase originations through its Platform by attracting and retaining new and existing trading and manufacturing companies who meet its working capital needs in the different territories where the Group intends to operate, as well as new and existing funders interested in investing into Supply@ME's securitisation notes.

 

The Group's operations are also reliant on sufficient investor funding. The Group's ability to attract funders to its Platform and secure sufficient funding from investors depends on, among other things, its ability to provide attractive investor returns and corresponding appropriate liquidity, compliance with the terms and conditions of funding agreements with investors.

 

Any of these events could have a material adverse effect on the Group's business, results of operations, financial condition or prospects.

 

The Group's success and future growth depend significantly on its successful marketing efforts, increasing its brand awareness, and its ability to attract new funders and customers.

 

Supply@ME's current business model involves the substantial majority of its funders and customers being acquired via direct and indirect channels. The Group's success and future growth therefore depend significantly on its marketing and sales efforts and its ability to attract new customers to the Platform. The Group intends to dedicate significant resources to its marketing efforts, particularly as it continues to grow and expand into new territories. The Group's ability to attract funders and customers (trading and manufacturing companies) depends in large part on the success of these marketing efforts and the success of the marketing channels the Group uses to promote its Platform.

 

The supply chain financing market is competitive and evolving.

 

Although Supply@ME provides an alternative platform focused on inventory monetisation (the innovation is that, for customers the transaction is not, strictly speaking, a financing transaction), the Group competes with lenders and lending platforms, as well as financial products, that attract borrowers, investors or both. With respect to borrowers, the Group primarily competes with traditional financial institutions, such as banks, asset based lenders, online platforms and captive networks. With respect to investors, the Group primarily competes with other investment vehicles and asset classes offered by a large number of financial and other institutions.

 

 

Contacts

 

Dominic White, Non-Executive, Chairman

 

Alessandro Zamboni, CEO

 

Paul Vann, Walbrook                                                                                         +44 (0)20 7933 8780

 

Brian Norris, Cicero/AMO                                                                                   +44 (0)20 7947 5317

 

 

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 Company's shareholders as a whole and to no other person. The Company, 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 Company at the date of this report. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.