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Peakhope
IFRS 15
"To recognise revenue under IFRS 15, an entity applies the following five steps:
identify the contract(s) with a customer.
identify the performance obligations in the contract. Performance obligations are promises in a contract to transfer to a customer goods or services that are distinct.
determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. If the consideration promised in a contract includes a variable amount, an entity must estimate the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods or services to a customer.
allocate the transaction price to each performance obligation on the basis of the relative stand-alone selling prices of each distinct good or service promised in the contract.
recognise revenue when a performance obligation is satisfied by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer). For a performance obligation satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied."
Source
https://www.ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-from-contracts-with-customers/
IFRS SME
"Recognition – sale of goods: An entity shall recognise revenue from the sale of goods when all the following conditions are satisfied:
(a) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods.
(b) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
(c) the amount of revenue can be measured reliably.
(d) it is probable that the economic benefits associated with the transaction will flow to the entity.
(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably."
Source
https://www.iasplus.com/en/standards/other/ifrs-for-smes
Please highlight the differences for me?
PWC have done so here, obviously, they've somehow missed the massive differences which occur when recognising revenue, someone needs to tell them.. https://viewpoint.pwc.com/dt/us/en/pwc/accounting_guides/ifrs_and_us_gaap_sim/ifrs_and_us_gaap_sim_US/chapter_16_ifrs_for__US/161_ifrs_for_small_a_US.html#pwc-topic.dita_1521022510219768
SYME have massively moved the goalposts, by email, and your all still happy with their excuses. Beggers belief.
EllllteInv
Your correct, I don't know everything, never admitted to it. But, i maintain to this day, you holders should have been given more visibility on such issues, they have caused the problems and allowed traders like myself to pocket. Who has that hurt, the shareholder.
But, also, you have to understand, an IM does not constitute POC, the signing off of that transaction by independent auditors is the time the argument ceases.
And finally, I'd suggest that if the message I displayed earlier in this thread from peakhope is correct, then the company are aware of IFRS issues, and have not bothered in any interview, meeting, comms to materially announce the customer base is limited to SME's. This is the problem I see with this company, transparency!
Ginger
Ignoring the true sale argument, i'd be very surprised for any company, in a moderate financial position, to weekly/monthly churn through inventory paying expensive fee's, it's not really in any manufacturers interest to build fees into their margins as a normal business practice.
Look, this argument is done to death, on a positive note today, at least you now have a better understanding of SYME's business model. You seem like you have something between the ears, so after you've digested the model, and then reassessed the standards, maybe you'll show me something i've missed?
Ginger
Your point 4
If the sale and rebuy was to happen within the financial year, thus in theory showing a net zero impact (obviously ignoring the fee), and ignoring the note implications and audit headaches you'd have, why wouldn't you do normal inveny financing and settle the agreement, that way, no debt on balance sheet end of year, and considerable less fees?
1) Inventory value (cost), SYME and funder gain from providing a fee for the service
2) Inventory value as above (Funder and SYME have benefitted from above fee)
3) What funder in the world will buy millions/billions of pound of inventory when the manufacturer have it unsold and need working capital, and don't have the legal ability to see it back, especially when resale is not their business model?
@GingerHippo
Article by Nicola Bonini, Head of Origination SYME
"Supply@Me’s fintech platform, for example, facilitates the sale of a company’s unsold, non-perishable inventory to a specialist inventory funder (such as a bank) via a monetisation scheme. Supply@Me then sells the value of inventory back to the company at a later date, once ordinary trading conditions have resumed. As the process involves a “true sale” of the inventory, companies are able to release cash from their warehoused goods without incurring debt. The working capital generated by IM can be used to pay suppliers and creditors in a supply chain, thus releasing the pressure upon it – even when onward movement in the chain is delayed."
https://www.globalbankingandfinance.com/how-inventory-monetisation-and-blockchain-could-alleviate-supply-chain-pressures/
Erm GingerHippo
I have bad news for you, you've misunderstood the business model. What you explain about a funder buying inventory and selling it on, perfectly legal, in fact that's just then a distribution network.
SYME business model is, the final customer buys off the manufacturer when the manufacturer has had the inventory back from the funder. That's the huge sticking point and why we are probably having this argument in the first place.
GingerHippo
The whole point of SYME is so customers (manufacturer) can enhance working capital by selling inventory today and buy back the inventory at a later date once that inventory has sold to an end customer...
How can the Manufacturer do that if it has transferred the risk and reward to the funder?
Because the only way you could potential sell the inventory would be through IFRS 15
https://www.ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-from-contracts-with-customers/
But it has to follow 5 steps, and all five steps have to be demonstratable
identify the contract(s) with a customer.
identify the performance obligations in the contract. Performance obligations are promises in a contract to transfer to a customer goods or services that are distinct.
determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. If the consideration promised in a contract includes a variable amount, an entity must estimate the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods or services to a customer.
allocate the transaction price to each performance obligation on the basis of the relative stand-alone selling prices of each distinct good or service promised in the contract.
recognise revenue when a performance obligation is satisfied by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer). For a performance obligation satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied.
If a seller does not lose control of it's asset through a sale, it is a balance sheet transaction, simple!
IFRS 9
Lol
That's for when you move an asset for none return. You can not have economic benefit or recourse from that said asset once sold. You have to give up control.
So your saying a manufacturer will produce goods/wip/or raw materials, and move them onto a funder at inventory value (no GM and also not absorbing all burden), and not have the legal ability to reclaim/buy back these assets from said funder?
Roll up customers, roll up.
No problem Ginger
I'm just getting over the chuckles of you IFRS description so at least we've both made each other smile.
So if your done laughing, can you explain to me which IFRS section allows the true sale? Allows the transaction to be posted onto the income statement, I'm all ears.
Also, the FRC don't get tipped off, they analyse the audit reports external auditors complete, with close to a 50m budget to do this yearly.
@Ginger Hippo
Page 66 of the annual report, under headline Principal activities in 2021
"During the year we received an enquiry from
the Corporate Reporting Review Team of the
Financial Reporting Council (“FRC”) in relation
to their review of the FY20 annual financial
statements. The matters raised by the FRC
included:
z The appropriateness of claims that the
Group’s inventory monetarisation solution
could be accounted for as a debt free
solution for a prospective client under IFRS.
The FRC expressed reservations that this
could be achieved based on the information
presented to them, including the accounting
advice previously commissioned by one of
the top accounting firms by the Group, but
did not pursue this matter further given the
Group is yet to facilitate the first inventory
monetarisation transaction."
So you say it's very easy and elegant. the FRC (the financial reporting council), who regulate auditors and their financial reporting, and control corporate governance, have reservations. Have you told the FRC it's easy? because I think they know a lot more than you or I.
With all due respect, I can tell you don't understand IFRS.
"Peakhope
Posted in: SYME
Posts: 2,801
Price: 0.08
No Opinion
RE: after IM price19 Jul 2022 10:13
The point is some will refuse to accept
“ true sale “ status whatever is put in front of them - ive had confirmation from syme that the IFRS for SMEs is how we are achieving this also some geographies do not accept IFRS so we already have “ true sale” status in large parts of the world - it’s funny how these supposedly in the know and without bias did not point out there are a different set of standards for SMEs - must have conveniently slipped their minds - and now they are experts in the IFRS standards for SMEs :)"
That's the full message, now the important part
" ive had confirmation from syme that the IFRS for SMEs is how we are achieving this also some geographies do not accept IFRS so we already have “ true sale” status in large parts of the world"
Let that sink in, SYME have above stated they are getting around true sale by using the SYME SME IFRS rules (which actually aren't really any different to main IFRS rules to what do I know). So SYME have basically told you, any company with over 250 staff, or turnover or balance sheet totals of more than or equal to 50m euro or 43m euro, are ineligible to use SYME as they have to adhere to standard IFRS rulings.
Bear in mind also, that IFRS is adopted to approx 140 countries in the world (including the big hitters like UK, EU, South Korea, Japan, Hong Kong, India), and US GAAP is also incredibly similar to IFRS (albeit stricter).
Does anyone understand the gravity of the potential market SYME could have just wiped from their potential customer base? Nowhere on any of it's literature does it say this product is only applicable to SMEs under IFRS jurisdiction. And they've just threw this information out in a private communication to a holder.
Now more importantly, if anyone thinks a competitive market will allow SME's to have a competitive advantage through saleable inventory, then they quickly need to try and wake up their brain.
If the above communication is truthful and correct, then I'm surprised people aren't sitting outside AZ's location with pitchforks.
"It is a true sale according to accounting standards,as AZ has already said it was in one of his interviews or in AGM."
Erm..
Not to rain on any parade....but, there was supposed material information yesterday that was said to come from the company that puts that whole statement on it's head..
If I raise it I'll no doubt be called a deramper, but, it's there if you go and look....
Peakhope
That's obviously a dig at me, so I'm going to say this slowly so you understand.....
There is no differences in the 5 principles of recognising sale between GAAP (ASC 606) IFRS (15) and IFRS SME. So why would anyone need to highlight the differences?
All three models use the five principle model to establish a sale! All three models state that control and economic benefit has to move to the buyer.
The FRC themselves have forced SYME to recogonise in their AR that they have reservations that a true sale can be achieved through the methods SYME are claiming. Yet you still somehow believe you know more than them.
Even after yesterdays RNS which has shown Venus for what they are (very different from the picture painted by SYME) you still hang on every word they say. When are you going to start holding this company to account?
Here is a link for GAAP produced by KPMG https://assets.kpmg/content/dam/kpmg/xx/pdf/2021/12/ifrs-us-gaap-2021.pdf which starts at page 248
Here is a link for IFRS SME produced by Deloitte https://www.iasplus.com/en/standards/other/ifrs-for-smes which section 23 covers revenue
But even with these independent documents, you still believe you know more..
We'll leave it there, I have linked documents showing and confirming the standards, you have said all's ok because SYME have told me.
Peakhope
For IFRS SME analysis, you'll find this document better than a FAQ. You will find that one of the most static principles in accounting is that of revenue recognition (and the basis of sale applies universally between GAAP, IFRS and IFRS SME).
https://www.iasplus.com/en/standards/other/ifrs-for-smes
Section 23 is revenue
I'm seeing this comment more and more. IFRS is used by over 100 companies worldwide, whereas GAAP is used by US companies. They have differences, but are very similar in regards to the income statement. IFRS is developed by the IASB Board, and GAAP is developed by the FASB. Revenue recognition was developed as a joint principle between the IASB and FASB so it could be comparative over both standards, but, differences still exist even when the two boards work together.
For anyone wishing to do their own, unbiased research, you will find this link very useful
https://home.kpmg/xx/en/home/services/audit/international-financial-reporting-standards/ifrs-toolkit/ifrs-us-gaap-comparison.html
Your focus would be on section 4.2 (starts on page 248 of the download)
Peakhope
One last message about my agenda...two reasons.
One.
I'm trading SYME, I've said it numerous times before, the pattern I see, SYME has somehow, and I don't know how, managed to get a lot of investors hanging on every word it says, believing everything it says, and getting excited over events which can't happen. Also whilst lending to unscrupulous lenders who play volume. This makes it a ridiculous easy trading share. I basically live the buy on rumour sell on news with SYME, and i've even in past announced trades weeks/months before I've placed them. It's been a license to print money so far. Am I wrong for doing that? The only reason I do is because AZ has made it so easy too. If you could turn the clock back, would you trade like I have?
Two.
If you walked past someone in the street, who was getting excited about a Nigerian prince sending them money, if they deposited a small sum in an overseas bank account, would you maybe tell them to check the info first, or get real confirmation from a source outside of the princes circle that the transaction was real.
Am I always correct in my beliefs and trades, absolutely not, but I'm always willing to listen and learn, and above all, carry out independent research and dig in the all the relevant places.
Anyhow, believe me or don't, not really my concern. Go back over my posts and if I've got something wrong in the past, feel free to highlight it. I might not say what you like or want to hear, but like I've said plenty of times, use what I say to get the correct responses from the company, the BOD should appease any queries you have from what I raise, that's their job.
Don't ever believe you owe the BOD anything!
AHH Burnley, you get me back talking about my beloved.
I've only heard good about him, including attitude and ability ceiling. Exactly what we need for now and future, and the whole club business plan ethos. We supposedly nearly had him in the Mick McCarthy days due to the Irish connection. Looking forward to seeing him play, a season ticket holder but live too far away, so only get to about 5 games a year.
Disappointed to see you guys down, I admit I hated dycheball but you were a good honest team, albeit with ten at the back and wood heading rocks up front. However, tactics worked against us. Looking forward to a new Burnley under Kompany, if you keep Dwight you'll storm the league. Would have preferred Leeds down to you, but we'll have to put with their fans for another year I think.
Anyhow, quick, I raise the point multiple times for a reason, to highlight the material issue so you/the group's can ask the relevant questions so best case you are comfortable with your holding, or two (worst case), if you are being led up a garden path, wouldn't it be nice to know you'd nailed some tacs into some people's coffins! Get confirmation of everything in this game, the BOD are essentially your employees, get the answers you require.
Anyhow, enough talking shop, let's not repeat the Burnley castle debacle that dominated this board for too long.
Good luck for the season.
Nope El
Not smug, and not hindsight, u raised the accounting standards issue far before the AR report, and was told u was a fake accountant. Funny, the regulators of accountants also now have the same view as me, not a bad guess for a fake accountant was it.
I have nothing against posters or holders, what I really hate is people who believe they are entitled to other people's money because they believe they are smarter than them...
Anyhow, weekend calls.