Supply@ME Capital : 4868KB

Supply@ME has launched its unique Inventory Monetisation services and agreed its first White-Label commitment

Annual Report and Accounts 2023

Supply@ME's business model is unique and learning through the challenges presented during 2023 will enable the business to serve a greater range of client business models and inventory funder appetites

Contents

Strategic Report	Financial Statements
4	Highlights	116	Independent Auditor's Report
6	Chairman's Statement	121	Consolidated Statement of Comprehensive Income
7	Chief Executive Officer's Statement	122	Consolidated Statement of Financial Position
8	Supply@ME Inventory Monetisation - Key Features	123	Consolidated Statement of Changes in Equity
9	Our Delivery Model	125	Consolidated Statement of Changes in Cash Flows
13	How we adapt to scale the business	127	Notes to the Consolidated Financial Statements
15	How we follow the tokenisation trend	177	Company Statement of Financial Position
17	Serviceable Obtainable Market	178	Company Statement of Changes in Equity
20	Case study - Retreading	179	Notes to the Company Financial Statements
21	Key strategic priorities
29	Our Team	Information
32	Our Leadership Team	197	Company information
34	Team Q&A	198	Glossary

1. Engaging with our Stakeholders

1. Financial Review

1. Environmental, Social and Governance Review

1. Task Force on Climate-Related Financial Disclosures

1. Principal Risks and Uncertainties

Corporate Governance Report

1. Corporate Governance Introduction
2. Directors' Information

71 Statement of Compliance with the QCA Corporate Governance Code

1. Report of the Nomination Committee

1. Report of the Audit Committee

1. Directors' Remuneration Report

1. Report of the Directors

Company registration number: 03936915

Strategic

Report

Highlights

During 2022 Supply@ME demonstrated that the concept of Inventory Monetisation ("IM") works. Building on this progress, during 2023 and early 2024 the business has continued to learn and develop its track record. This had been demonstrated by the first traditional monetisation of inventory in Italy and the signing of an agreement for monetisation of inventory in the UK. The strategic partnership with the a group of private investors and subject matter experts of working capital solutions to launch an independent Swiss-based trading business ("CH Trading Hub") and the secured commitment of USD$5 million from an asset manager specialised in digital assets to start the overall US$100 million security token also demonstrates progress. In addition, the Group has successfully agreed the first White-Label commitment with Banco BPM S.p.A ("BBPM") to fund up to €10 million of an existing client's inventory, launching a new revenue stream for the Company. This is complimented by the recent

announcement of the relationship between Supply@ME and an Italian neo bank to provide funding, initially for €35 million as part of an overall programme up to €135 million, of inventory in relation to the Supply@ME Italian client pipeline.

This Annual Report and Accounts for the year ended 31 December 2023 (the "Annual Report and Accounts") explains the foundations which have been established to enable delivery of the business model to clients with a wide range of inventory through of the development of methodologies across varying business models. It will also highlight the opportunities available through the development of our delivery model in collaboration with the CH Trading Hub and the possibilities available through traditional and non-traditional funding routes. Taking these factors together, the Board believes this outlines why the Group's current financial performance does not demonstrate its longer-term potential.

Financial KPIs

Total revenue from continuing	Adjusted operating (loss) from	(Loss) before tax from continuing
operations	continuing operations*	operations
£0.2m	(£3.6m)	(£4.2m)
£0.1m in 2022	(£4.6m) in 2022	(£7.7m) in 2022
(Loss) from discontinued	Total Group assets	Total Group net (liabilities)
operations	£2.2m	(£3.8m)
(£0.2m)
(£2.2m) in 2022	£8.3m at 31 December 2022	(£2.0m) at 31 December 2022

*Adjusted operating loss is the operating loss from continuing operations before impairment charges and fair value adjustments.

4Supply@ME Capital Plc Annual Report and Accounts 2023 Strategic Report

Operational KPIs

Warehoused goods monetisation pipeline at 19 April 2024

£ 330.7 m

£374.6m at 21 April 2023

The pipeline KPI represents the current potential value of warehoused goods inventory to be monetised rather than pipeline revenue expected to be earned by the Group. 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 the most practicable date possible prior to the issue of this annual report (being 19 April 2024). and has been calculated on a consistent basis as the prior year comparative. It should be noted that of the current pipeline figure of £330.7 million, there is one single client that accounts for approximately 57% of the total pipeline.

As referenced in the business, trading and funding update announcement issued by the Company on 29 February 2024, the Group is in the process of conducting a full review of its pipeline and is progressing with requesting a formal letter of interest from each client company in its pipeline for which there is currently not a signed term sheet in place. As at 19 April 2024, approximately 9% of the £330.7 million current pipeline figures are supported by either signed term sheets or the signed new letter of interest. This percentage is expected to grow as the new process becomes fully embedded.

5Supply@ME Capital Plc Annual Report and Accounts 2023 Strategic Report

Chairman's Statement

Dear Shareholders,

I am pleased to share this statement after my first full year as Chair of Supply@ME. The reasons I joined the Company continue to hold true, the passion and enthusiasm of the team and desire to help Supply@ME with its mission of unlocking barriers for investors to be able to fund inventory and ultimately help businesses access a new type of working capital solution.

The unique solution which Supply@ME offers is starting to gain traction in the market which is demonstrable by the tangible progress made during 2023 of the first traditional Inventory Monetisation being executed in Italy. A further such transaction was also fully contracted with the first UK Company during 2023, albeit there has been a delay in execution of this transaction largely as a result of the Inventory Monetisation being managed alongside an existing floating charge facility which has required this client company to gain specific waivers from existing lenders. While this has resulted in delay to completing the deal, it nonetheless serves as further proof an IM transaction model can work in the UK, including alongside existing financing facilities. To deliver the first IM transactions the Group has connected through its IM Platform the client company, inventory funder and stock company to facilitate the execution of the IM transactions. This in itself requires confidence from all stakeholders in the accountancy, legal and technology frameworks and internal processes designed to facilitate Inventory Monetisation transactions over the Platform. I look forward to seeing both the client and inventory funder base grow as the model begins to scale.

The increased interest in tokenisation of assets is an area of opportunity for Supply@ME, which will be discussed in more detail in this year's Annual Report and Accounts. The viability of tokenisation of inventory had already been demonstrated by the Group's strategic partnership with VeChain Foundation ("VE Chain") and was further solidified by the progress made in structuring a security token framework with the CH Trading Hub, owned by Société Financière Européenne S.A. ("SFE"), which will allow a first security token issuance up to USD$100 million to be subscribed in tranches, largely by institutional investors who are active in the digital asset markets.

A significant milestone for the Company has been the signing of the first White-Label commitment from BBPM to fund up to €10 million of inventory of an existing client of the bank. This in my view will open up an additional market for the Supply@ME Platform and will create the opportunity for the Group to work closely with a range of financial institutions and their existing client base using the Group's unique model. The agreement with BBPM also recognises the deep expertise of the team as inventory servicing specialists.

Despite the positive steps set out above, 2023 has not been without it challenges, the Board and team have invested a significant amount of time focusing on ensuring the Group has sufficient funding to realise its potential, potential which is not representative of either the financial results or the diminishing share price during 2023. I would like to take the opportunity to thank our shareholders for their continued support and appreciation of the potential of our unique product.

I am excited about the prospects for 2024, we have a market relevant product, which is gaining recognition and interest, a strong team who have pulled together to weather some challenging waters and I look forward to seeing the Supply@ME Group reach its large addressable market.

Albert Ganyushin,

Chairman

30 April 2024

6Supply@ME Capital Plc Annual Report and Accounts 2023Strategic Report

Chief Executive Officer's Statement

Dear Shareholders,

In 2022 we proved the Supply@ME model through conducting the first IM transaction using funds from a non-fungible token ("NFT") issuance. From the work that the team and I have conducted during 2023 and to date in 2024, I strongly believe there continue to be huge opportunities for the applicability for our model through tokenisation which will be discussed in this year's Annual Report and Accounts.

Following the inaugural IM transaction, we continued the progress into 2023 and have taken the IM model to institutional investors. Firstly, through the Open Market Inventory Monetisations taking place that were announced during 2023, and the agreement with the Italian neo bank recently announced. Secondly, by the accumulation of work conducted during the year which resulted in the signing of the White-Label commitment from BBPM to deliver inventory funding to an existing client of BBPM through our IM Platform. The significance of the engagement of institutional investors and highly reputable banks in these transactions cannot be understated. It demonstrates the credibility of the model we have been working to develop.

We made changes to our business model during 2023 in recognition of the evolution of the regulation of the fund management industry and to cater to the needs of potential inventory funders who wanted to see a segregated structure of the Platform provider, the Supply@ME Group and the investment adviser, previously TradeFlow Capital Management Pte. Limited ("TradeFlow") and their Cayman-based global inventory fund ("GIF"). This separation came about as the result of the disposal of the 81% stake in the TradeFlow business

which was completed on 30 June 2023 (the "TradeFlow

Restructuring"). The TradeFlow Restructuring is 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.

During 2023 and early 2024 Supply@ME has developed an alternative IM infrastructure through collaboration with a group of private investors and subject matter experts of working capital solutions to launch the CH Trading Hub, to replace the GIF. The CH Trading Hub, owned by SFE, is assuming control of the independent stock companies from the GIF to manage the overall trading businesses using the Platform and the associated inventory servicer activities provided by the Group. This structure is designed to enable us to scale the offering of the Group as specialist inventory servicer with a stable partner in the CH Trading Hub. We share more detail about this structure in the Our Delivery Model section of this report on pages 9-12.

Additionally, the CH Trading Hub will handle the token route. In this regard, the Group is studying together with VE Chain how to implement the phase 2 within the signed strategic agreement and it is working with the CH Trading Hub to launch 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. The first tranche of this can be seen by the recent announcement of a secured commitment of USD$5 million from an asset manager specialised in digital assets.

Despite the positive steps set out above, 2023 was a challenging year for the Company from a funding perspective, which has impacted the team. I want to take this opportunity to thank the Board and the Supply@ME team for their ongoing support and commitment to our unique product. I am proud of how the team has collaborated to navigate these challenges and the unwavering commitment shown to creating our Inventory Monetisation product.

I am excited to take the Group forward into 2024, we are focused on continuing to evolve the processes, technologies and methodologies which support our various client's business models and inventory types, see pages 13-14 for more detail, and ultimately create a new market for inventory funding. Whether that be through Open Market Inventory Monetisations, tokenisation of inventory as an asset and democratisation of the sale of this through digital asset exchanges, or White-Label transactions with financial institutions, the progress that is being steadily made should start to show through the expansion of our track record and our ability to first break even and then to scale.

Alessandro Zamboni,

Chief Executive Officer

30 April 2024

7Supply@ME Capital Plc Annual Report and Accounts 2023 Strategic Report

Supply@ME Inventory Monetisation - Key Features

Supply@ME is disrupting the industry with its unique model. Not only does it offer a new approach to businesses with cash flow needs, but it is doing so at a much more competitive rate than traditional lenders. Outlined below

are some of the ways in which Supply@ME offers a more complete, flexible service, that reflects client's needs than traditional inventory funders or other competitors.

	Supply@ME	Traditional	Other
		inventory funders	competitors
			
Purely focused on inventory
Non-credit approach			
Non-intrusive of other financing options			
Legal true sale			
Platform based			
Supply chain resilience enabler			
Quick initial yes or no			
Initial amount subject to due diligence			
Fixed due diligence fee and timescale			
Revolving facility			
Cross border			
Event led independent valuations			
Positive impact on key ratios			
Tax deductible costs			
With fewer drawbacks or restrictions
Linked to other facilities on the balance sheet			
Debt facility			
Interest payable			
Security taken on Inventory or other assets			
Covenants in place			
Management accounts and borrowing base certificates			
Use of funds pre-determined			
Advance rate subject to Net Orderly Liquidation Value			
Regular independent evaluations			
ICT maturity required (to transfer data)			
Inventory segregation (if required)			
Inventory tracking (if required)			

8Supply@ME Capital Plc Annual Report and Accounts 2023Strategic Report

Our Delivery Model

During 2023 we have continued to enhance our business operating model with continued development of our FinTech IM Platform, including not only the underlying software but also the supporting processes, methodologies, and legal framework.

The inventory funding framework evolved further in 2023 through the launch of an independent CH Trading Hub. The CH Trading Hub, owned by 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 advantages to the Supply@ME Group of this new collaboration with the CH Trading Hub are detailed below:

• Firstly, the CH Trading hub is located in Switzerland which is traditionally an important trading hub (in particular for raw materials and commodities) and a region establishing itself as a global leader in the custody of digital assets partly through its creation of a digital asset ecosystem that allows for innovation and diversity within a clear regulatory framework1. These characteristics are more desirable to potential inventory funders compared to the previous location of the GIF, being the Cayman Islands.
  The CH Trading Hub has already seen increased interest from potential inventory funders as a result of this new structure.
• Secondly, this change responds to an evolution in the regulation of the fund management industry. In particular, the Monetary Authority of Singapore, Singapore's financial regulator, had advised that TradeFlow should separate its licensed fund management activities from the rest of the TradeFlow business. Potential inventory funders had also provided feedback that the segregation of the Platform provider and the investment adviser would help to eliminate any perceived conflicts of interest between these two roles. The completion of the TradeFlow Restructuring on 30 June 2023 resulted in the clear differentiation of the responsibility of both Supply@ME and TradeFlow, and lead to the opportunity to collaborate with a group of private investors and subject matter experts in working capital solutions to launch the CH Trading Hub.

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 invest its equity capital to build up a dedicated internal structured financing team and provide, when needed, equity capital 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 the IM transaction, through both the traditional and token financing routes.

As a result of the above, the CH Trading Hub is working closely with the Group to maximise the opportunity for the IM Platform and to constitute an Inventory Monetisation infrastructure which can be used by both banks for their White-Label offering, and investment banks, security token arrangers and other inventory funders to adopt and implement ad-hoc Inventory Monetisation programmes. In the case of White-Label offerings it allows banks to leverage their already wide client base, and in the case of other potential inventory funders it allows them to work closely with Supply@ME to access its pipeline of client companies who have already expressed interest in unlocking their working capital through Inventory Monetisation.

1 Swiss Digital Asset Custody Report 2023, The Capital Markets and Technology Association

9Supply@ME Capital Plc Annual Report and Accounts 2023Strategic Report

Our Delivery Model

The diagram below illustrates the role of the Supply@ME Group in the overall Inventory Monetisation infrastructure outlined on the previous pages .

		SFE Société Financière
		Européenne SA
		7	Inventory Hub
			Parent Company
Inventory Funders	4	Stock Companies		2	6
Provide Debt
				Platform Provider
		3	Inventory	and Servicer
		5	monetisation
		Client Company		0	1

Inventory Monetised

Originator of contracts with Stock Company and provider of due diligence services

Green circle = funds flowing to Supply@Me Group

0	1	2	3	4	5	6	7
Due Diligence	Origination fees	License fee	Sub-license fee	Interest paid	Fixed profit	Service fee	Return provided
fees charged to	charged to client	charged annually	charged annually	annually by Stock	charged by Stock	charged annually	in connection
client company	company by	by Supply@ME	by Stock	Company to the	Company to	by Supply@ME	with equity
by Supply@ME	Supply@ME	Group to Stock	Company to	Inventory Funder	Client Company	Group to Stock	contribution or
Group	Group	Company	Client Company		as they buy back	Company	shareholder loan
					the inventory		from Stock
							Company to SFE

As shown above, in a typical Open Market IM transaction (being an IM transaction from the pipeline originated by the Group and funded by third-party investors), Supply@ME acts as the due diligence provider and originator in respect of the client company, and as the IM Platform provider and inventory servicer in respect of the independent stock company. For each Open Market IM transaction, the Group generates revenues from the following activities:

• Pre-InventoryMonetisation activities carried out directly with the client company wishing to have their inventory monetised, including due diligence in respect of the client company itself and its potential eligible inventory, and origination of the full IM contracts with the relevant stock company
• Post-InventoryMonetisation activities carried out directly with the relevant stock company including the usage of the Supply@ME platform under a Software as a Service ("SaaS") contract and the support and administration activities such as the monitoring, controlling, and reporting on the inventory monetised.

This model can be flexed and adapted based on the requirements of the inventory funders particularly in the case of White-Label partners. For example the level of due diligence required on a particular client company may vary if it is already a client of a White-Label inventory funder, or they may not require the use of a stock company in

a particular structure, in which case some of the Post- Inventory Monetisation fees (such as the SaaS license fee) may be charged directly to the White-Label inventory funder rather than to the relevant stock company.

During 2023, the Supply@ME platform has further developed its White-Label offering. Coupled with security protocols and other Platform modules the Group has a clear understanding of the costs and timelines to deliver modules for a White-Label partner which will sit within a ring-fenced set of Microsoft Azure resources. This is in part due to the Group establishing its own dedicated Microsoft Azure cloud environment which allows for multi-tenancy, meaning that true White-Label capabilities exist in deploying a 'just tech' solution to any partners should they wish to proceed directly and not through a independent stock company.

White-Label partners, with training and support from the Supply@ME team, can acquire the necessary Platform modules and manage their own Inventory Monetisation solutions using their own personnel and entity structures as agreed with each White-Label partner. In this scenario, the Supply@ME team will be able to provide on-going training and Platform module support to provide an optimal solution for any White-Label partner with the adaptability to meet their individual requirements.

10Supply@ME Capital Plc Annual Report and Accounts 2023Strategic Report