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Supply@ME Interims – truly dismal and also just unbelievable: over to the FCA

By Tom Winnifrith | Friday 29 January 2021

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

We know from audited 2019 results released yesterday that as at this week, Supply@ME Capital (SYME) has still not signed one contract with a customer and has no cash with which to service any customers. Yes it has provided term sheets but that is not the same thing. I might well provide a term sheet to Cheryl Cole later today about a servicing proposition I have. But that, I am sad to say, would not be a binding contract! And without a contract or even a purchase order you simply, as a PLC, cannot book any revenues. Which brings us to today’s release of half calendar year 2020 results from the con that is Supply@ME Capital.

Revenue is shown as £368,000. What?  The company states “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.”

But Supply has no contracts and has done no business at all. So how can it have revenues? Surely this is pure fiction. When it comes to the full year, even discredited Crowe UK cannot sign off on this.

And so to the balance sheet. You will remember that, on the back of a prospectus claiming a NAV of £226 million on March 23, Supply raised £2.24 million gross (£1.896 million net) at 0.68p. Of course, we now know that the NAV was fiction and the period end Net Asset value was just £1.002 million. Net tangible assets were MINUS £52,000!

In terms of net current assets, the position is grim. They come in at minus £55,000 so given that the business is cash consumptive it was technically insolvent just over three months after listing. The shell Supply reversed into sat on £91,000 cash and that if added to the net cash raised at the RTO should give a March 23 cash number of £1.987 million. The June 30 cash number was £892,000. So that is more than a million quid up in smoke in just over three months. Given that seven months after the half year end the company still has no real sales so cannot hope to have any income…do the math! Its current position in terms of cash must be uber grim.

One wonders how a business which has not signed a contract with any customer can somehow have accumulated trade receivables as at June 30 of £2.159 million. Go figure.

The going concern statement is prepared by the directors, not auditors, as these are interims and says:

These interim financial statements have been prepared on a going concern basis following an assessment by the Directors. The Directors have reviewed the forecast cashflows for the next 12 months and consider the Group to be a going concern.

The cashflow forecasts are based on the enlarged group following the reverse acquisition in March 2020 and therefore relate to cashflows arising from the group’s Fin Tech platform that focusses on inventory monetisation facilities. The Directors have prepared the forecast using their best estimates however the company is in its start-up phase.

On the basis of the above, the directors have a material uncertainty in relation to its going concern status as noted in the recently filed financial statements for the period ended 31 December 2019. The Directors have prepared scenario-based models which include adjustments for the uncertainties noted and additional cost saving measures that could be implemented if there is a delay in the revenue generation. On the basis of these scenarios and that they are in advanced negotiations with potential investors and there has been significant interest in the product the Directors consider it appropriate to prepare the financial statements on a going concern basis. These interim financial statements do not include any adjustments that may be required if the going concern status was not considered appropriate.

So the directors are saying that as of yesterday they had 12-month models showing this is a going concern but for some reason fail to disclose the cash position as at now. I cannot think why.  There is an admission that this is a start up and a concession that there may be a “delay in revenue generation.” How does that tally with revenues being generated in H1 even though the company had not signed a single bloody contract?

the directors have a material uncertainty in relation to its going concern status.” You don’t say. That has to be the understatement of the year.

So why are shares not yet readmitted to the Standard List?  Technically they need to apply to the FCA for the listing to be restored, under rule 5.4. I suspect that process is underway.

If I was running the FCA, I would only restore the listing after some sort of a cleansing RNS and specifically Supply needs to provide a trading update for the year ending 31 December 2020 with revenue figures, a closing cash balance and a statement on whether it expects to require funding. But then again, I’d be a balanced regulator ensuring that companies were transparent. The FCA staffers are a bunch of clowns whose only expertise is preparing papers on how the City can tackle global warming, the gender pay gap and the evils of Brexit and in shitting on their organisation’s plush carpets.

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