TIDMSYME
RNS Number : 1419U
Supply @ME Capital PLC
24 March 2023
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 (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.
24 March 2023
Supply@ME Capital plc
(the " Company " or " SYME ", and together with its subsidiaries
and subsidiary undertakings, the "Group")
Board changes and TradeFlow update
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, provides the
following update to the market:
Board changes
Dr. Thomas (Tom) James and John Collis tendered their
resignations as statutory directors of the Company ("Directors")
after market close on 23 March 2023, and the board of Directors
("Board") has accepted their resignations in those capacities with
immediate effect.
Neither Dr. James nor Mr. Collis sat on any of the committees of
the Board, and, accordingly, there will be no interruption in the
compliance of the Company with the QCA Corporate Governance
Code.
Dr. James and Mr. Collis will continue in their various roles in
respect of the Company's wholly owned subsidiary, TradeFlow Capital
Management Pte. Limited ("TradeFlow") and its subsidiaries and
subsidiary undertakings (together with TradeFlow, the "TradeFlow
Group").[1]
TradeFlow update
On 22 July 2022, the Company announced that it was reviewing its
relationship with TradeFlow and, by extension, the TradeFlow Group.
Since that time, the Board has been working with Dr. James and Mr.
Collis (together, the "TradeFlow Directors") to document the
restructuring of the Company's ownership of TradeFlow and so as to
enable the TradeFlow Directors to buy back 81% of TradeFlow from
the Company (the "TradeFlow Restructuring").
A key driver behind the TradeFlow Restructuring has been an
evolution in the regulation of the fund management industry. In
particular, the Monetary Authority of Singapore, Singapore's
financial regulator, has informed the TradeFlow Directors that
TradeFlow should separate its licensed fund management activities
from the rest of its business. In addition, the Company is aware
that sentiment from recent test-marketing of the Global Inventory
Fund (the "GIF") has confirmed that potential investors of the GIF
also wish to see a segregated structure of the Platform provider
and the investment adviser. In light of these market developments,
the Company, the TradeFlow Directors and their respective advisers
have been working to implement the TradeFlow Restructuring in order
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. This separation was expected to create value for
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.
The Company was planning to announce the completion of the
TradeFlow Restructuring in tandem with the publication of the
Group's 2022 Annual Report and Accounts ("2022 ARA") at the end of
April 2023, and to publish a supplementary prospectus in
conjunction therewith, subject to the approval of the Financial
Conduct Authority (the "FCA"). However, immediately after tendering
their resignations as Directors, the TradeFlow Directors provided
further written notice to the Board of their intention to exercise
their rights to buy back 100% of the share capital of TradeFlow
(the "Buy Back"), pursuant to certain earn out arrangements entered
into in connection with the Company's acquisition of TradeFlow (the
"TradeFlow Acquisition"), the completion of which was announced on
6 July 2021 ("Completion"); the relevant Buy Back provisions state
that: [2]
"The [TradeFlow Directors] may at any time during the 24 months
following Completion, [Buy Back TradeFlow] at the lower of:
(a) at the fixed price of GBP40,000,000; or
(b) at a fair value less a discount of any shortfall in the
support to be provided by the Company in a working capital budget
of not less than GBP2,500,000 or as mutually agreed. Any such
valuation will take into account any component of the [purchase
price for 100% of the shares of TradeFlow] that will have already
been settled. The parties shall use the same methodology as used by
the valuer in calculating the Company's valuation as per the report
made available by [the TradeFlow Directors] to [the Company] dated
28 March 2021 ("Fair Value").
Any determination of Fair Value shall be carried out at by an
independent valuer qualified as a Certified Valuation Analyst by
NACVA jointly instructed by the parties as expert and following the
guidelines and requirements of the International Valuation
Standards (effective as of 31 January 2020) issued by the
International Valuation Standards Council."
Shareholders should note that the Board was prepared for this
eventuality, and will take into account the following information
when agreeing the terms of any Buy Back with the TradeFlow
Directors:
-- TradeFlow was valued at approximately GBP31 million at the
time of the TradeFlow Acquisition by an independent valuation
company. This figure was included in announcements published by the
Company on 26 May 2021 and 6 July 2021.
-- On Completion, the Company paid GBP4.0 million in cash and
issued 813 million new ordinary shares in the capital of the
Company ("Ordinary Shares"), each such Ordinary Share being issued
with a contractually agreed value of 1.1 pence each (or
GBP8,943,000 in aggregate), to the TradeFlow Directors
("Consideration Shares"). As specified in the 2021 Annual Report
and Accounts, the fair value of the 813 million Consideration
Shares issued was GBP3.1 million based on the then prevailing
market price per Ordinary Share.
-- The difference between the fair value of GBP31 million and
the fair value of the amounts transferred by the Company to the
TradeFlow Directors on Completion comprised future earn-out
payments that would be made to the TradeFlow Directors if certain
revenue milestones were met from financial year ended 31 December
2021 ("FY-21") through to financial year ended 31 December
2023.
-- On 18 July 2022, the TradeFlow Directors were each issued
with 106,762,760 new Ordinary Shares in relation to settlement of
post-Acquisition earn out payments for FY-21 .
-- As part of the TradeFlow Restructuring, the Company recently
commissioned an updated valuation report for the TradeFlow Group.
This valuation report was produced by the same independent
valuation company as was commissioned in connection with the
Acquisition. This most recent valuation was dated 6 January 2023
and valued the TradeFlow Group as at 30 September 2022 at GBP25.6
million.
Shareholders should also note that at the time of publication of
this announcement, the identity of the "independent valuer" has yet
to be agreed between the Board and the TradeFlow Directors, the
timing of the assessment of the "Fair Value" is not yet certain,
though the Board notes that the provisions require any Buy Back to
occur during "24 months from Completion" (i.e., by early July
2023). In the meantime, TradeFlow shall remain a wholly owned
subsidiary of the Company, and the Board do not view the
developments detailed in this announcement as comprising a
significant new factor warranting disclosure in a supplementary
prospectus to the Company's prospectus of 3 October 2022.
For the avoidance of doubt, however:
- if the Board and the TradeFlow Directors agree to implement
the Buy Back prior to the publication of the 2022 ARA at the end of
April 2023, the Board will seek to publish a standalone
supplementary prospectus detailing that significant new factor
(i.e., the Buy Back), followed by a further supplementary
prospectus in conjunction with the publication of the 2022 ARA;
- if the Board and the TradeFlow Directors agree to implement
the Buy Back in conjunction with the publication of the 2022 ARA at
the end of April 2023, the Board will seek to publish a
supplementary prospectus documenting both significant new factors
(i.e., the Buy Back and the publication of the 2022 ARA); and
- if no agreement as regards the Buy Back is reached prior to
the publication of the 2022 ARA at the end of April 2023, the Board
will seek to publish a supplementary prospectus in connection with
the publication of the 2022 ARA, and a further supplementary
prospectus in connection with the Buy Back,
in each case, subject to FCA approval.
The Company will, of course, update the market in a timely
fashion once further details have been agreed between Board and the
TradeFlow Directors in accordance with its legal and regulatory
obligations.
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
MHP Group, SupplyME@mhpgroup.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. SYME announced in August 2021 the launch
of a global Inventory Monetisation programme which will be focused
on both inventory in transit monetisation and warehoused goods
monetisation. This programme will be focused on creditworthy
companies and not those in distress or otherwise seeking to
monetise illiquid inventories.
[1] 85% of Tijara Pte. Limited and 50% of TradeFlow Capital
Management Systems Pte. Limited, respectively, are owned by the
Company indirectly via TradeFlow.
[2] The language specified in square-brackets is in place of
defined terms.
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END
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