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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rm2 International S.a. | LSE:RM2 | London | Ordinary Share | LU1914372336 | ORD USD0.01 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jul 2019 to Jul 2024
TIDMRM2
RNS Number : 7541A
RM2 International SA
14 September 2018
14 September 2018
RM2 International S.A.
Interim Results
RM2 International S.A. ("RM2" or the "Company"), the sustainable smart pallet innovator, today announces its unaudited interim results for the six months to 30 June 2018. The interim results will be made available on the Company's website this morning.
Financial summary
Hot Features
Premium
-- Revenues for H1 2018 of US$2.6 million (H1 2017: US$3.7
million)
-- Loss after tax for the period of US$17.3million (H1 2017:
US$19.2 million)
-- Completed simplification of capital structure and received
first tranche of US$36 million equity funding and undertook
an Open Offer to shareholders, raising, in aggregate,
approximately $20 million
-- Well positioned to fulfil funding conditions to drawdown
second tranche of equity funding of approximately US$17.8m
in H2 2018
Operational highlights
-- The deployment of RM2 ELIoT smart pallets with Fortune
100 and 500 companies in pilot and Phase 1 agreements
is underway
-- Completed a 100-unit trial with one of the world's leaders
in the logistics industry, serving both internal and
external customer loops
-- Streamlined the Company's operations, significantly reducing
the cost-base
-- Announced today the nomination of two high calibre individuals
with deep logistics and digital technology experience
to the Board of Directors
Kevin Mazula, RM2's CEO, commented: "Following the refinancing and simplification of the capital structure in the first half of 2018, the Company is focused on the deployment of RM2 ELIoT Smart pallets. We have delivered against our principal objectives, successfully completing initial trials of RM2 ELIoT pallets with significant industry leaders and entering into a Phase 1 contract with a Fortune 500 customer. We are pleased to see that the robust, eco-friendly RM2 ELIoT pallet, with its proprietary tracking technology, is making inroads with global industry leaders, significantly enhancing the efficiency of their supply chains".
For further information:
+44 (0)20 7638
RM2 International S.A. 9571
Kevin Mazula, Chief Executive Officer
Jean-Francois Blouvac, Chief Financial Officer
Strand Hanson Limited (Nominated & Financial +44 (0)20 7409
Adviser and Broker) 3494
James Spinney / Ritchie Balmer / James Bellman
+44 (0)20 7638
Citigate Dewe Rogerson (Financial PR) 9571
Ellen Wilton / Elizabeth Kittle
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.
Notes to Editors
RM2 International S.A. specialises in pallet development, manufacture, supply and management to establish a leading presence in global pallet supply and improve the supply chain of manufacturing and distribution businesses through the effective and efficient use and management of composite pallets. It is quoted on the AIM market of the London Stock Exchange under the symbol RM2.L. For further information, please visit www.rm2.com
RM2 INTERNATIONAL S.A.
Société Anonyme
Unaudited Consolidated Interim financial information
For the six months ended 30 June 2018
Chairman's Statement
The Company seeks to disrupt the market for ubiquitous wooden pallets by replacing them in select supply chains with its unique track and traceable, ecologically friendly RM2 ELIoT smart pallets. With the secure placement of a chipset using RM2's proprietary tracking technology in each pallet, valuable information is sent to RM2, recording the location, the temperature, and any physical shocks. This information allows customers to improve their supply chains, reduce losses, ensure the safety of their products, all the while reducing the carbon footprint. While the Company initially focused its efforts on the upper end of the supply chain, the ELIoT technology now permits the Company to work up and down the supply chain without risk of asset loss.
The Company focused on its principal objectives on the second quarter of 2018, having simplified its capital structure and successfully navigated an extremely stressed cash situation in the first quarter of 2018, culminating with conditionally raising USD 36 million in new equity through the two tranche Placing discussed below. The Company remains debt-free. With the conversion of trials with large customers into long-term contracts taking longer than anticipated, the Company's expectation of turning EBITDA positive in 2019 is challenging.
The focus of the Company's activities in the first half of 2018 was the achievement of the principal objectives, being:
1) Focusing sales efforts principally on new deployment opportunities
for RM2 ELIoT Smart pallets. The retrofitting of a portion
of inventory of non-ELIoT-enabled pallets with smart chipsets
in now in progress. While the sales effort is focused on
the deployment of smart pallets, consideration is also given
to opportunistic deployment of non-ELIoT pallets in inventory
where margins and asset-retention justify such deployment.
2) Successfully complete the initial trials of RM2 ELIoT pallets
with Fortune 500 and other significant industry leaders.
Subsequent to the reporting period, the Company successfully
completed a 100-unit trial and then entered into a pilot
agreement for an initial deployment of some 600 RM2 ELIoT
pallets with one of the world's leaders in the logistics
industry, serving both internal and external loops. Other
trials with large multi-national corporations are progressing
well. In particular, one large trial with a North American
beverage customer has concluded with strong results and discussions
on deployment terms are expected to continue over the coming
months. The initial deployment of RM2 ELIoT pallets in a
Phase 1 contract with a Fortune 500 customer announced on
April 13, 2018 was deferred and that deployment is now underway
with promising results. Other promising trials are underway
with companies in the consumer goods and telecommunications
industries.
3) Complete the transition to a high quality, low-cost outsourced
manufacturing model. As the Company has fully transition
to outsourced manufacturing, it is now focusing on the production
of RM2 ELIoT pallets. The manufacture of ELIoT modules is
underway in line with the lead times associated with the
procurement of certain electronic components. The completed
ELIoT modules are then either retrofitted into existing pallets
or installed in newly-produced pallets. As previously announced,
due to the significant delays arising under the Chinese agreement,
the Company and its partner exchanged communications with
respect to the reshaping or termination of the agreement.
There has been little progress and the outcome of these discussions
is uncertain.
4) Reduce exposure to previous low-margin non-ELIoT enabled
pallet deployment. The wind-down of the Company's principal
non-ELIoT lease contract is in its final stages, with new
issuances of pallets under the contract having ceased at
the end of the second quarter and efforts to recover pallets
in the field will continue over the forthcoming months. As
these pallets are a bespoke 45" x 45" size, the Company does
not currently intend to retrofit them and the sales team
is soliciting orders to remove them from inventory.
5) Unwind operations at the Canadian manufacturing site, streamline
operating expenses, eliminate non-value added activities
and monetize non-core legacy assets. By and large, management
fulfilled this objective during the course of the first semester
of 2018. The Company's indirect wholly-owned subsidiary,
7636156 Canada, Inc., which previously ran the Company's
manufacturing operations, filed for voluntary liquidation
in the Province of Ontario, Canada on May 1, 2018. The Fuller
Landau Group Inc. (the "Trustee") was appointed as the Licensed
Insolvency Trustee of the estate. The Trustee is proceeding
with the orderly wind-up of the entity, including the termination
of the lease for the manufacturing facility and the disposition
in July 2018 of the entity's physical assets via auction,
a significant portion of which was identified as necessary
or useful for the Group's operations and was purchased by
RM2 (Canada) Leasing, Inc. An initial meeting of creditors
was held on May 18, 2018. The Trustee reports that it is
reviewing the claims received from creditors, including affiliated
RM2 entities, and that it seeks to satisfy the claims of
creditors to the extent the estate permits and to finalize
the voluntary liquidation process as promptly as possible.
With the sale on March 9, 2018 of the office building in
Switzerland for net cash-proceeds of approximately USD 2m
and the contract to dispose of excess fiberglass rovings
through December 2018, the Company has substantially met
the objective of monetizing its remaining non-core legacy
assets.
The cost-reduction measures implemented by management are
bearing fruit, with the monthly run rate currently reduced
to USD0.8m, absent exceptional items. The Company continues
to be mindful of opportunities to reduce costs and eliminate
non-value added activities and of the necessity to retain
a lean operating structure.
6) Invest in RM2 ELIoT Smart Pallet add-on technologies. The
Company continues to develop and enhance RM2 ELIoT's capabilities.
Financial Performance
Revenue generated by the Company decreased by USD 1.1m to USD 2.6m for the period ending June 30, 2018 principally due to the wind-down mode of its large 45 x 45 non-ELIoT pallet rental contract in the USA. The sale of pallets and fiberglass rovings from inventory each accounted for USD 0.3m of revenue in the period. The Group's financial result for the period ended June 30, 2018 is a loss of USD 17.3m, an improvement of USD 1.9m versus 1H 2017. Despite a better monitoring of the overall manufacturing costs for USD 0.5m, gross margins decreased by USD 0.5m as revenue decreased by USD 1.1m. The decline in the SGA expenses by USD 0.5m is explained by the removal of 2017 one-time costs (USD 1.8m), the cost saving measures undertaken by management at the end of Q1 2018 (USD 0.4m) and the negative non-cash impact of the share-based payment (USD 1.7m) following the removal of share price performance vesting conditions on restricted shares. Additionally, the sale of the Swiss building impacted positively with USD 1.4m, the remaining positive variance of USD 0.5m comes from lower net finance activities and taxes.
The Company traversed a period of extreme financial stress which culminated with the announcement on 29 March 2018 of the Company having simplified its capital structure and conditionally raised USD36 million before fees and expenses by a placing (to be effected in two tranches) of 2,535,211,265 new Ordinary Shares (the "Placing") to existing institutional investors, certain directors and members of senior management at a Placing Price of 1 pence per Placing Share (the "Placing Price"). The net proceeds from the Placing are intended to be used to fund (i) the retrofitting of existing inventory of RM2 BlockPal pallets with RM2 ELIoT chipsets, (ii) the production of new RM2 ELIoT pallets and (iii) SG&A. On 13 April 2018, following shareholder approval at an Extraordinary General Meeting of Shareholders, the Company converted its existing convertible preferred shares to ordinary shares and issued the first tranche of 1,279,049,295 new Ordinary Shares (gross proceeds of USD 18,162,500). The issuance of the second tranche of 1,256,161,970 new Ordinary Shares (gross proceeds of USD 17,837,500 (applying the GBP: USD exchange rate of 1.42 used in the shareholders' circular relating to the Placing)) is to take place ten business days following a drawdown notice issued by the Company. It is subject to the satisfaction of certain key performance indicators, including reducing operating costs of the business to a pre-determined level, launching the next generation IoT Cat-M ELIoT pallets and achieving commercial deployment of RM2 ELIoT pallets, and reviewing the governance of the Company. The Company believes that it has already satisfied or that it is well positioned to satisfy the draw-down conditions, although determination is to be made by the Company's largest shareholder, Woodford Investment Management Limited.
In addition to the funds raised through the Placing, the Company raised gross proceeds of approximately GBP1.4m pursuant to an Open Offer which was launched on May 21, 2018. The Company issued 142,862,073 new Ordinary Shares of USD0.01 in the Company at the Placing Price of 1 pence per share.
Unrestricted cash reserves at 30 June 2018 were USD 12.9m (USD 13.3m including Trustee's activities), as compared to USD 3.9m at 31 December 2017. Cash outflow over the semester consisted of USD 5.5m of manufacturing expenses and USD 7.3m of SG&A, which was offset by the receipt of USD 19.7m from the issuance of equity and USD 2.0m net proceeds from the sale of the office building in Switzerland. Restricted cash in the amount of USD 1.9m remains on the balance sheet of 7636156 Canada, Inc., and its availability is subject to the outcome of the ongoing voluntary liquidation proceedings in Canada. Due to the significant restructuring implemented by management, the monthly cash burn of the Company has been reduced to USD 0.8m on a going-forward basis from July 2018, excluding exceptional items.
Future Funding & Outlook
The Company believes that it will have satisfied the conditions to drawdown the second tranche of the equity funding of approximately USD 17.8m (before adjusting for any GBP/USD exchange rate impact) in the course of the second semester of 2018. Determination of whether those conditions are met is at the discretion of Woodford Investment Management, the Company's largest shareholder and participant in the equity fundraise.
Having successfully achieved its objectives relating to transitioning to high-quality, outsourced manufacturing, streamlining operating costs, monetizing non-core legacy assets and moving away from non-ELIoT enabled pallet deployments, the Company is focused on activating inventory and deploying RM2 ELIoT Smart pallets in attractive contracts. The execution of the Company's roadmap faces certain challenges with respect to inserting disruptive products and technology in long-standing practices of traditional pallet supply chains, the availability of lower-cost Cat-M chipsets in the face of burgeoning global demand, and the timing of the roll-out of the Cat-M network globally which is in the hands of network operators. With the conversion of trials with large customers into long-term contracts taking longer than anticipated, the Company's expectation of turning EBITDA positive in 2019, as first noted on 9 March 2018, is challenging. The Company will provide further updates on this in due course and in the meantime, continues to implement measures to reduce its cost base.
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2018
Six months Six months Year to 31
to 30 to 30 December 2017
June 2018 Unaudited June 2017 Audited
USD Unaudited USD
USD
Continuing operations
Revenue 6 2,645,689 3,715,661 6,557,044
Cost of sales 7 (13,000,813) (13,560,841) (34,849,544)
-------------------- ------------- ---------------------
Gross profit (10,355,124) (9,845,180) (28,292,500)
Administrative expenses 8 (8,235,129) (8,697,551) (15,001,932)
Other operating expenses 9.1 (12,088) (16,010) (81,909)
Other operating income 9.2 1,486,737 199,254 500,934
-------------------- ------------- ---------------------
Operating loss (17,115,604) (18,359,487) (42,875,408)
Finance costs (635,342) (2,484,463) (2,708,809)
Finance income 460,754 1,824,454 1,945,887
-------------------- ------------- ---------------------
Loss before tax (17,290,192) (19,019,496) (43,638,330)
Income tax (34,143) (175,369) (218,694)
-------------------- ------------- ---------------------
Loss for the year (17,324,335) (19,194,865) (45,857,024)
==================== ============= =====================
Other comprehensive income
Other comprehensive income to be reclassified in profit or loss in subsequent periods:
Exchange difference
on translation
of foreign
operations (622,369) 1,052,378 1,675,226
-------------------------------------------------------------------- ------------ ------------
Other comprehensive
income for the
year, net of tax (622,369) 1,052,378 1,675,226
-------------------------------------------------------------------- ------------ ------------
Total comprehensive
income for the
year (17,946,704) (18,142,487) (42,181,798)
==================================================================== ============ ============
Loss for the year
attributable to:
Equity holders of
the parent (17,324,335) (19,194,865) (43,857,024)
==================================================================== ============ ============
Total
comprehensive
income for the
year attributable
to:
Equity holders of
the parent (17,946,704) (18,142,587) (42,181,798)
==================================================================== ============ ============
Loss per share
Basic loss per
share attributable
to ordinary equity
holders of the
parent (0.01) (0.05) (0.11) Diluted loss per share attributable to ordinary equity holders of the parent (0.01) (0.05) (0.11)
Consolidated Statement of Financial Position
For the six months ended 30 June 2018
Six months Six months Year to 31
Notes to 30 to 30 December 2017
June 2018 June 2017 Audited
Unaudited Unaudited
USD USD USD
Assets
Non-current assets
Intangible assets 12 1,148,246 1,511,365 1,276,504
Property, plant & equipment
- Other 10 25,816,044 34,272,150 28,717,071
Property, plant & equipment
- Pallet pool 11 4,757,709 9,165,499 7,026,363
Investment property - 1,342,853 -
--------------------- -------------------------- --------------------------
31,721,999 46,291,866 37,019,938
Current assets
Inventories 13 18,125,903 17,453,334 16,614,995
Trade and other receivables 14 2,839,466 4,887,239 3,550,848
Other current financial
assets 24,752 24,332 10,039
Fixed asset held for
sale - - 2,657,744
Prepayments 711,136 503,720 1,024,503
Restricted Cash 1,790,961 1,954,384 2,035,642
Cash and cash equivalents 13,290,072 13,807,697 3,866,217
--------------------- -------------------------- --------------------------
36,782,290 38,630,707 29,759,988
--------------------- -------------------------- --------------------------
Total assets 68,504,289 84,922,573 66,756,129
===================== ========================== ==========================
Equity and liabilities
Equity 17
Issued capital 50,017,820 4,035,627 4,070,627
Restricted shares - 884,999 1,348,157
Share premium 276,827,089 292,947,198 301,681,317
Retained earnings (290,170,082) (248,302,641) (272,845,748)
Share based payment reserve 22,580,014 20,448,762 20,850,588
Treasury stock (29,163) (3,423) (29,163)
Foreign currency
translation
reserve (630,381) (630,860) (8,012)
--------------------- -------------------------- --------------------------
Equity attributable to
equity holders of the
parent 58,595,296 69,379,662 55,067,766
Non-current liabilities
Interest bearing loans
and borrowings 16 - 5,274,498 -
Deferred tax liabilities 23,161 2,550 43,751
--------------------- -------------------------- --------------------------
23,161 5,277,048 43,751
Current liabilities
Interest bearing loans
and borrowings 16 - 59,033 1,745,527
Trade and other payables 9,802,920 9,083,338 9,278,493
Deferred income 10,457 625,908 563,474
Current tax liabilities 72,456 497,583 80,914
--------------------- -------------------------- --------------------------
9,885,832 10,265,862 11,668,409
--------------------- -------------------------- --------------------------
Total liabilities 9,908,993 15,542,911 11,712,160
--------------------- -------------------------- --------------------------
Total equity and
liabilities 68,504,289 84,922,573 66,779,926
===================== ========================== ==========================
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2018
Attributable to equity holders of the parent
Share capital Share premium Convertible Retained Foreign Treasury Share based Total equity
preferred earnings currency payment
shares translation reserve
reserve
Stock
USD USD USD USD USD USD USD USD
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
As at 31
December
2016
(audited) 4,003,052 282,893,809 423,280 (229,107,776) (1,683,238) (3,424) 20,073,279 76,598,983
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Loss for the
year - - - (19,194,865) - - - (19,194,865)
Other
comprehensive
income - - - - 1,052,378 - - 1,052,378
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Total
comprehensive
income - - - (19,194,865) 1,052,378 - - (18,142,487)
Shares issued
in
the period 32,575 10,053,389 - - - - - 10,085,964
Convertible
preferred
shares issued
in
the year - - 461,719 - - - - 461,719.43
Share based
payments - - - - - - 375,483 375,483
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Transaction
with
owners 32,575 10,053,389 461,719 - - - 375,483 10,923,166
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
As at 30 June
2017
(unaudited) 4,035,627 292,947,198 884,999 (248,302,641) (630,860) (3,424) 20,448,762 69,379,661
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Loss for the
year - - - (24,662,159) - - - (24,662,159)
Other
comprehensive
income - - - - 622,848 - - 622,848
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Total
comprehensive
income - - - (24,662,159) 622,848 - - (24,039,311)
Shares issued
in
the period 35,000 - - - - - - 35,000
Convertible
preferred
shares issued
in
the year - 9,021,734 463,158 - - - - 9,484,892
Cost of share
issue - (287,615) - 119,052 - - - (168,563)
Repurchase of
shares
into treasury - - - - - (25,739) - (25,739)
Share based
payments - - - - - - 401,826 401,826
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Transaction
with
owners 35,000 8,734,119 463,158 119,052 - (25,739) 401,826 9,727,415
As at 31
December
2017
(audited) 4,070,627 301,681,317 1,348,157 (272,845,748) (8,012) 29,163 20,850,588 55,067,766
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Loss for the
year - - - (17,324,335) - - - (17,324,335)
Other
comprehensive
income - - - - (622,369) - - (622,369)
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Total
comprehensive
income - - - (17,324,335) (622,369) - - (17,946,704)
Shares issued
in
the period 45,947,193 (24,536,470) - - - - - 21,410,723
Convertible
preferred
shares issued
in
the year - - (1,348,157) - - - - (1,348,157)
Cost of share
issue - (317,758) - - - - - (317,758)
Share based
payments - - - - - - 1,729,426 1,729,426.08
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
Transaction
with
owners 45,947,193 (24,854,228) (1,348,157) - - - 1,729,426.08 21,474,234
--------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------
As at 30 June
2018
(unaudited) 50,017,820 276,827,089 - (290,170,083) (630,381) (29,163) 22,580,014 58,595,296
=============== =================================== =================================== =================================== =================================== =================================== =================================== =================================== ==============================
Consolidated Statement of Cash Flows
Notes Six months Six months Year ended
to to 30 June 31 December
30 June 2017 2017
2018 Unaudited Audited
Unaudited
Cash flows from operating USD USD USD
activities
Loss before tax (17,290,192) (19,019,496) (43,638,330)
Adjustment to reconcile
profit
before tax to net cash flows
Amortization and depreciation
of non-current assets 5/6/7/8 4,830,194 4,778,298 9,875,684
Impairment of current and
non-current
assets 995,150 - 2,450,597
Provision for bad debts - 103,802 -
Share based payment charges 1,729,426 375,483 777,309
Finance income - 44,730 (27,190)
Finance expenses 87,040 16,199 45,865
Unrealized foreign exchange
gains (4,511) 377,125 531,860
Net (gain)/ loss on disposal
of PPE and intangible assets (1,249,206) 11,800 (30,824)
Variation in working capital
(Increase)/decrease in
inventories (1,514,261) (1,004,255) (165,915)
Decrease/ (increase) in trade
and other receivables 1,023,646 766,734 1,685,350
Increase/(decrease) in trade
and other payables (28,592) 4,814,167 4,946,888
(Increase)/decrease in
restricted
cash 244,681 (69,671) (150,929)
Income tax paid (91,508) (170,293) (596,028)
------------------------------ -------- ------------------------------ --------------------- ---------------------
Net cash flows from operating
activities (11,268,133) (9,064,837) (24,295,663)
Cash flows from investing
activities
(Increase)/decrease in
intangible
assets - (802) (802)
(Increase)/decrease PPE in
course of commissioning 1 (245,208) (347,767)
Decrease/ (increase) in other
PPE (796,475) (59,478) (224,760)
Proceeds from the sale of PPE 3,949,862 - 70,498
(Increase)/decrease in pallet
pool (237,752) (849,638) (1,166,989)
Loans granted to third
parties (14,713) (1,466) 12,828
Finance income received - 44,730.00 27,190.00
------------------------------ -------- ------------------------------ --------------------- ---------------------
Net cash flows from investing
activities 2,900,923 (1,111,862) (1,629,802)
Cash flows from financing
activities
Issuance of capital 13 19,744,808 10,547,740 19,899,011
Purchase of treasury shares - - (25,740)
Repayment Proceeds from other
and related party borrowings - 3,482,822 (15,383)
Interest paid (87,040) 57,699 (45,865)
Repayment of other and
related
party borrowings (1,745,527) (16,199) (32,099)
Net cash flows from financing
activities 17,912,241 14,072,062 19,779,924
------------------------------ -------- ------------------------------ --------------------- ---------------------
Net change in cash and cash
equivalents 9,545,030 3,895,363 (6,145,541)
============================== ======== ============================== ===================== =====================
(Decrease)/increase in cash
and cash equivalents 9,545,030 3,895,363 (6,145,541)
Cash and cash equivalents at
1 January 3,866,217 9,794,906 9,794,906
Exchange adjustment of cash
and cash equivalents (121,174) 117,428 216,852
------------------------------ -------- ------------------------------ --------------------- ---------------------
Cash and cash equivalents at
end of period 12 13,290,072 13,807,697 3,866,217
============================== ======== ============================== ===================== =====================
Notes (unaudited) to the Interim Consolidated Financial Information
1. Corporate information
RM2 International S.A. (the "Company") is a limited company (Société Anonyme) incorporated and domiciled in Luxembourg with the registration number B132.740. The registered office is located at Rue de la Chapelle 5, L1235 Luxembourg. The Company is the ultimate parent entity of the RM2 Group (the "Group").
The Group is principally engaged in developing, leasing and selling shipping pallets and in providing related logistical services.
This unaudited interim consolidated financial information does not constitute statutory accounts.
2. Basis of preparation
While being compliant with AIM Rule 18 minimum requirements, the unaudited interim consolidated financial information does not include all the information and disclosures required in the annual financial information, and should be read in conjunction with the Group's historical financial information for the year ended 31 December 2017.
The accounting policies and basis of preparation adopted are consistent with those followed in the preparation of the Group's historical financial information for the year ended 31 December 2017. None of the newly applicable IFRS standards and amendments had an impact on the Group's interim consolidated financial information.
2.1 Early adopted standards
The Group did not early adopt any new or amended standards and does not plan to early adopt any of the standards issued but not yet effective.
3. Significant accounting judgments, estimates and assumptions
When preparing the unaudited interim consolidated financial information, Management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgments, estimates and assumptions made by Management, and will seldom equal the estimated results.
The judgments, estimates and assumptions applied in the interim consolidated financial information, including the key sources of estimation uncertainty, were the same as those applied in the Group's historical financial information for the year ended 31 December 2017.
3.1 Going Concern
1H 2018 performance
The Group's financial result for the period ending 30 June 2018 is a loss of USD 17.3m (June 2017: loss of USD 19.2m), a decrease in the overall loss by USD 1.9m compared to the prior period. Despite a better monitoring of the overall manufacturing costs for USD 0.6m, gross margin decreased by USD 0.5m as revenue decreased by USD 1.1m. The decline in SGA expenses by USD 0.5m is explained by the removal of 2017 one-time costs (USD 1.8m), the cost saving measures undertaken by management at the end of Q1 2018 (USD 0.4m) and the negative non-cash impact of the share-based payment (USD 1.7m) following the removal of share price performance vesting conditions on restricted shares. Additionally, the sale of the Swiss building impacted positively with USD 1.4m, the remaining positive variance of USD 0.5m comes from lower net finance activities and taxes.
2018 equity funding
In 1H2108, in order to fund (i) the retrofitting of existing inventory of RM2 BlockPal pallets with RM2 ELIoT chipsets, (ii) the production of new RM2 ELIoT pallets and (iii) SG&A, the Company conditionally raised USD36 million before fees and expenses by a placing (to be effected in two tranches) of 2,535,211,265 new Ordinary Shares (the "Placing") to existing institutional investors, certain directors and members of senior management at a Placing Price of 1 pence per Placing Share (the "Placing Price"). On 13 April 2018, following shareholder approval at an Extraordinary General Meeting of Shareholders, the Company converted its existing convertible preferred shares to ordinary shares and issued the first tranche of 1,279,049,295 new Ordinary Shares (gross proceeds of USD 18,162,500).
In addition to the funds raised through the Placing, the Company raised gross proceeds of approximately GBP1.4m pursuant to an Open Offer which was launched on May 21, 2018. The Company issued 142,862,073 new Ordinary Shares of USD0.01 in the Company at the Placing Price of 1 pence per share.
In accordance with the terms of the Placing, the issuance of the second tranche of 1,256,161,970 new Ordinary Shares (gross proceeds of USD 17,837,500 (applying the GBP: USD exchange rate of 1.42 used in the shareholders' circular relating to the Placing)) is to take place ten business days following a drawdown notice issued by the Company. It is subject to the satisfaction of certain key performance indicators, including reducing operating costs of the business to a pre-determined level, launching the next generation IoT Cat-M ELIoT pallets, achieving commercial deployment of RM2 ELIoT pallets, and reviewing the governance of the Company. The Company believes that it has already satisfied or that it is well positioned to satisfy the draw-down conditions, as described below, although determination is to be made by the Company's largest shareholder, Woodford Investment Management Limited.
Management undertook measures to reduce operating costs, including headcount reductions and site closures and relocations. The cost-reduction measures implemented by management are bearing fruit and are satisfy this drawdown condition. The Company continues to be mindful of opportunities to reduce costs and eliminate non-value added activities and of the necessity to retain a lean operating structure.
On 31 July 31 2018, AT&T informed the Company that the RM2 ELIoT units with new generation Cat-M chipsets successfully passed their internal certification process, thereby permitting their usage on the AT&T network, subject to PTCBR and FCC certification. The PTCBR and FCC certification is expected to be received before the end of Q3 2018. Cat-1 RM2 ELIoT pallets are in use in Phase 1 and pilot programs with blue-chips customers in North America.
The Company has reviewed governance of the Company and believes that the resulting measures it is in the process of implementing will satisfy the relevant drawdown condition for the second tranche of the Placing.
Conclusion
The Directors have analysed the Group's situation and applied their best estimates to assumptions of the future development of the business for the 12-month beginning July 1, 2018. With the conversion of trials with large customers into long-term contracts taking longer than anticipated, the Company's expectation of turning EBITDA positive in 2019, as first noted on 9 March 2018, is challenging.
As described above, the Directors believe that the Company has already satisfied or that it is well positioned to satisfy the draw-down conditions necessary to call the second tranche of the equity funding, although determination is to be made by the Company's largest shareholder, Woodford Investment Management Limited. The issuance of the second tranche of the Placing, combined with existing resources and future revenue and continued attention to cost control, lead the Directors to believe that the Group has adequate resources to justify adopting the going concern basis in preparing its consolidated financial statements.
4. Business Review and Key Performance Indicators
The Company defines its key performance indicators to be the business revenues, the level of production and the monitoring of related ramp-up costs, the deployment of RM2 ELIoT pallets and the cash reserves of the business. Having simplified its capital structure and secured equity funding in April 2018, the Company now focuses on the execution of the underlying roadmap.
Revenues
Revenue generated by the Company in 1H2018 decreased by USD 1.1m compared to the prior period to reach USD 2.6m (1H2017: USD 3.7m). Despite an increase of USD 0.1m in the sale of pallets and a plateauing of the minor third-party asset tracking business located in Wales, the decrease in the revenue is due to the wind-down of the non-ELIoT enabled pallet contract with its largest customer in the United States with an impact to date of
USD 0.9m. After an initial sale of raw material for use in pallet production to Jabil last year (USD 0.7m for the first six months of 2017), in the period ending 30 June 2018 the Company sold USD 0.3m of fiberglass and has contracted with third party customers for the sale of a very large portion of its remaining excess inventory over the course of the second semester of 2018. In July and August 2018, a further USD 0.3m was shipped and billed to third parties.
Production and ramp-up costs
As described in the Chairman's statement, gross margins decreased by USD 0.5m as revenue dropped by USD 1.1m. Cost of goods therefore reduced by USD 0.6m. Following the voluntary liquidation of the Canadian manufacturing entity and the implementation of the new pricing mechanism agreed with Jabil, overall manufacturing expenses hitting the Profit and Loss statement in the cost of goods section decreased by USD 1.0m for the first semester, to USD 4.3m. In parallel, the Company commissioned an independent appraisal of the fair market value of idle assets in Canada. This appraisal resulted in a net impairment of USD 0.6m. Other items positively accounted for USD 0.2m.
Cost of goods amounts to USD 13.0m (USD 13.6m for the same period last year) and includes the following non-cash items totaling USD 5.1m: pallet depreciation (USD 2.6m), equipment depreciation (USD 2.2m), equipment impairment following the Canadian appraisal (USD 0.6m), and a positive variance of raw material and pallet impairment (USD 0.3m)
The cash impact of cost of goods sold is USD 7.9m, of which USD 4.0m are manufacturing ramp-up costs and USD 2.0m are logistical costs incurred pursuant to certain per-trip fee pallet contracts.
RM2 ELIoT deployment
On 13 April 2018, the Company announced a Phase 1 contract with a Fortune 500 customer which is expected to involve a significant deployment of RM2 ELIoT pallets. The initial implementation of RM2 ELIoT pallets under that contract was deferred but the deployment is now underway with promising results.
Subsequent to the reporting period, the Company successfully completed a 100-unit trial and then entered into a pilot agreement for an initial deployment of some 600 RM2 ELIoT pallets with one of the world's leaders in the logistics industry, serving both internal and external loops. Other trials with large multi-national corporations are progressing well. In particular, one large trial with a North American beverage customer has concluded with strong results and discussions on deployment terms are expected to continue over the coming months. Promising trials are also underway with companies in the consumer goods and telecommunications industries.
With growing world-wide demand for IoT objects, the Company has noticed a tightening of availability of chipsets. It has issued purchase orders for some 63,000 Cat-1 tested and fully accredited chipsets to satisfy anticipated initial demand and pending final accreditation and availability of lower-cost Cat-M chipsets.
Cash reserves
Unrestricted cash reserves at 30 June 2018 stand at USD 12.9m (USD 13.3m including Trustee's activities), compared to USD 3.9m at 31 December 2017. Restricted cash decreased by USD 0.4m to USD 1.9m due to lease payments made to the landlord of the former manufacturing site in Canada following the voluntary liquidation process. The Company raised an aggregated amount of USD 19.7m of new equity capital between the first tranche of the Placing in April 2018 and the subsequent Open Offer to shareholders. The Company's cash flow, excluding Trustee's activities, is negative by USD 10.7m in the period ending 30 June 2018.
USD 5.5m was paid for the acquisition of pallets, comprised of the agreed pricing mechanism with Jabil (USD 5.0m) and associated one-time maintenance costs (USD 0.5m).
USD 2.0m was received for the sale of the Swiss building, leaving the true cash outflow of the business being USD 7.2m. Canada's contribution was USD 1.3m. The Company also acquired for USD 1.4m (including fees and taxes) from the estate of its Canadian affiliate in voluntary liquidation certain assets identified as necessary or useful for the Group's operations. Excluding Canada and these one-time-costs such as the asset purchase (USD 1.4m), the deposit to transition to a new smaller warehouse in Canada (USD 0.2m), the monthly cash burn of the Company has been reduced to USD 0.8m on a going-forward basis from July 2018, excluding exceptional items.
5. Significant events and transactions
Refer to the Chairman's statement and Note 20, Subsequent Events.
6. Revenues and segment reporting
The Group has only one operating segment for the disclosure of revenue. However the revenue analysis is broken down by revenue stream as disclosed here below.
Operating segment is reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the Board of Directors of the parent company that makes strategic decisions.
The Group has determined the operating segments based on the reports reviewed by the Board of Directors, which are used to make strategic decisions.
The Board of Directors is responsible for the Group's entire business and considers the business to have a single operating segment that represent the production, the sale and the rent of pallets including related logistical services. The asset allocation decisions are based on a single, integrated investment strategy, and the Group's performance is evaluated on an overall basis.
The internal reporting provided to the Board of Directors for the Group's assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of IFRS.
There were no changes in the reportable segments during the year.
The Group has a diversified customer portfolio. During the period there was one client which represented more than 10% of the Group's revenues.
Turnover
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Sold pallets 224,479 71,489 291,752
Leased pallets 1,644,569 2,530,510 4,943,673
Rendering of logistical services 399,393 377,319 796,858
Disposal of raw material and
work in progress 377,248 736,344 524,761
------------------ ------------------- ------------------
Total 2,645,689 3,715,661 6,557,044
================== =================== ==================
Geographical information
The breakdown of the revenue allocation by area is as follows:
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
USA 1,392,276 3,070,426 5,170,122
Europe 1,253,413 645,235 1,386,922
----------------------- -------------------- ------------------
Total 2,645,689 3,715,661 6,557,044
======================= ==================== ==================
The parent company is based in Luxembourg. The information
for the geographical area of non-current assets are presented
for the most significant areas where the group has operations,
being Luxembourg (country of domicile), rest of Europe, North
America (including Mexico) and China.
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2018 2017
Unaudited Unaudited Audited
Luxembourg 2,048,415 2,164,410 2,105,936
Rest of Europe 1,390,517 5,136,871 295,776
North America (including Mexico) 13,751,350 33,003,868 29,149,509
China 14,531,717 5,986,717 5,468,717
----------------------- ----------------------- ------------------------
Total 31,721,999 46,291,866 37,019,938
======================= ======================= ========================
Non-current assets for this purpose consist of property, plant and equipment, investment properties and intangible assets.
7. Cost of sales
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Cost of pallets sold - Blockpal 248,307 103,440 321,731
Cost of pallets sold - raw material
/ WIP 583,634 953,916 748,198
Cost of pallets sold - services 68,691 62,301 145,605
Amortization of pallet pool 2,558,247 2,407,565 4,752,926
Amortization of production tool 2,172,640 1,930,242 4,364,527
Cost of software, licenses and
services 328,283 334,427 695,625
Production tool transfer 617,688 - -
Factory absorption Canada 524,936 2,761,118 5,657,933
Factory absorption new set-up 3,746,445 2,500,000 12,062,760
Logistic costs 1,985,853 1,835,980 4,041,928
Impairment and repairs 32,005 222,472 1,735,595
Other 134,084 894,324 322,716
------------------------- ------------------------- ------------------------
Total 13,000,813 13,560,841 34,849,544
========================= ========================= ========================
8. Administrative expenses
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Payroll costs 3,288,651 3,391,199 6,537,941
Director's expenses (*) 325,000 36,041 122,800
Travel and expenses 275,360 433,212 1,010,469
One Time Costs China (VAT, import
duties, ...) 21,463 1,839,590 1,865,656
Consultant costs (AIM, Funding,
...) 727,276 674,370 1,311,280
Audit/Tax/Legal costs 212,460 389,893 805,780
Insurance 79,119 88,636 172,163
ELIoT 600,456 328,432 1,021,504
Other 725,856 598,384 733,502
------------------------ ------------------------ -----------------------
Total cash 6,255,641 7,779,757 13,581,094
------------------------ ------------------------ -----------------------
Total cash - excluding One Time
Costs 5,909,178 5,940,167 11,715,438
Share based payment (non-cash
item) 1,729,426 375,483 777,308
Depreciation 250,062 542,311 643,530
------------------------ ------------------------ -----------------------
Total 8,235,129 8,697,551 15,001,932
======================== ======================== =======================
(*): Director's expenses are considered as "one-time costs" for the first semester 2018 as per the agreement signed with management during the equity raise. Management is committed to refund the subscription to the Company via a mechanism of salary forbearance over an 18-month-period, which started in April 2018.
9. Other operating income and expenses
9.1 Other operating income Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Net gain on disposal of PPE 1,443,163 - 30,824
Rental income 34,360 199,254 297,265
Other 9,214 - 172,845
------------------------ ------------------------ ------------------------
Total other operating income 1,486,737 199,254 500,934
======================== ======================== ========================
9.2 Other operating expenses Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Direct operating expenses on
rental-earning investment properties 12,088 16,010 76,673
Net loss on disposal of PPE - - -
Other - - 6,236
------------------------ ------------------------ ------------------------
Total other operating expenses 12,088 16,010 82,909
======================== ======================== ========================
10. Property, plant and equipment- other
Land & Building Plant & Equipment Plant & Equipment Construction Total
Others China/Mexico in progress
USD USD USD USD USD
Cost
As at 31 December
2016 (audited) 1,750,031 18,516,047 25,081,276 5,233,143 50,580,497
Additions - 59,480 - 245,208 304,688
Disposals - (21,460) - - (21,460)
Other/transfer - (213,077) 327,934 (114,857) -
Exchange differences 101,231 544,279 (57,317) 59,949 648,142
---------------------------------------------- --------------------------------------- --------------------------------------- ------------------------------------------- -------------------------------------
As at 30 June
2017 (unaudited) 1,851,262 18,885,269 25,351,893 5,423,443 51,511,867
Additions - 122,087 43,191 102,559 267,837
Transfer/reclassification (1,648,658) (57,540) (57,317) 114,857 (1,648,658)
Disposals - (75,954) - - (75,954)
Exchange differences (79,038) 499,468 57,317 60,406 538,153
---------------------------------------------- --------------------------------------- --------------------------------------- ------------------------------------------- -------------------------------------
As at 31 December
2017 (audited) 123,566 19,373,330 25,395,084 5,701,265 50,593,245
Additions - 796,475 - - 796,475
Transfer/reclassification - (2,697,325) 2,892,730 (195,405) -
Disposals - (321,225) - (6,538) (327,763)
Exchange differences - (704,854) - (87,171) (792,025)
---------------------------------------------- --------------------------------------- --------------------------------------- ------------------------------------------- -------------------------------------
As at 30 June
2018 (unaudited) 123,566 16,446,401 28,287,814 5,412,151 50,269,932
============================================== ======================================= ======================================= =========================================== =====================================
Depreciation and impairment
As at 31 December
2016 (audited) 407,496 7,163,370 3,682,648 3,537,463 14,790,977
Amortization
charge for the
period 21,009 981,455 1,253,966 - 2,256,430
Disposal - (9,659) - - (9,659)
Exchange differences 15,184.69 195,200 (8,416) - 201,969
---------------------------------------------- --------------------------------------- --------------------------------------- ------------------------------------------- -------------------------------------
As at 30 June
2017 (unaudited) 443,690 8,330,366 4,928,198 3,537,463 17,239,716
Amortization 20,208 1,294,142 1,245,428 - 2,559,778
charge for the
period
Impairment charge
for the period - (168,763) 1,235,341 1,220,766 2,287,344
Transfer (288,518) - - - (288,518)
Disposal - (48,081) - - (48,081)
Exchange differences (51,814) 169,332 8,416 - 125,934
---------------------------------------------- --------------------------------------- --------------------------------------- ------------------------------------------- -------------------------------------
As at 31 December
2017 (audited) 123,566 9,576,996 7,417,383 4,758,229 21,876,174
Amortization
charge for the
period - 1,476,499 840,526 - 2,317,025
Impairment charge
for the period - 774,937 105,001 - 879,938
Disposal - (133,806) - - (133,806)
Exchange differences - (431,201) - (54,243) (485,444)
---------------------------------------------- --------------------------------------- --------------------------------------- ------------------------------------------- -------------------------------------
As at 30 June
2018 (unaudited) 123,566 11,263,426 8,362,910 4,703,986 24,453,888
============================================== ======================================= ======================================= =========================================== =====================================
Net book value
As at 30 June
2018 (unaudited) - 5,182,976 19,924,904 708,164 25,816,044
============================= ============================================== ======================================= ======================================= =========================================== =====================================
As at 31 December
2017 (audited) - 9,796,334 17,977,701 943,036 28,717,071
============================= ============================================== ======================================= ======================================= =========================================== =====================================
As at 30 June
2017 (unaudited) 1,407,573 10,554,903 20,423,695 1,885,980 34,272,151
============================= ============================================== ======================================= ======================================= =========================================== =====================================
As at 31 December
2016 (audited) 1,342,535 11,352,677 21,398,628 1,695,680 35,789,520
11. Property, plant and equipment - Pallet pool
Pallet Pool
USD
Cost
As at 31 December 2016 23,216,363
Additions 849,638
-----------------------
As at 30 June 2017 24,066,001
Additions 317,351
-----------------------
As at 31 December 2017 24,383,352
Additions 237,752
-----------------------
As at 30 June 2018 24,621,104
=======================
Amortization and impairment
As at 31 December 2016 12,515,919
Depreciation charge for
the year 2,384,583
Impairment charge for -
the year
-----------------------
As at 30 June 2017 14,900,502
Depreciation charge for
the year 2,399,803
Impairment charge for
the year 56,684
-----------------------
As at 31 December 2017 17,356,989
Depreciation charge for
the year 2,391,194
Impairment charge for
the year 115,212
-----------------------
As at 30 June 2018 19,863,395
=======================
Net book value
As at 30 June 2018 4,757,709
=======================
As at 31 December 2017 7,026,363
=======================
As at 30 June 2017 9,165,499
=======================
12. Intangible assets
Software Trade Customer Acquired Goodwill Total
names relationships licenses
and similar
intangible
assets
USD USD USD USD USD USD
Cost
As at 1
January
2017 2,128,984 123,410 370,230 1,222,701 852,634 4,697,959
Additions - - - 802 - 802
Exchange
differences 114,031 6,610 19,830 - 45,668 186,140
------------------ ------------ ------------------ ---------------- ---------------- ----------------
As at 30 June
2017 2,243,015 130,020 390,060 1,223,503 898,302 4,884,901
Additions - - - - - -
Exchange
differences 84,532 4,900 14,700 - 33,854 137,985
------------------ ------------ ------------------ ---------------- ---------------- ----------------
As at 31
December
2017 2,327,547 134,920 404,760 1,223,503 932,156 5,022,886
Additions - - - - - -
Exchange
differences (49,166) (2,850) (8,550) - (19,691) (80,257)
------------------ ------------ ------------------ ---------------- ---------------- ----------------
As at 30 June
2018 2,278,381 132,070 396,210 1,223,503 912,465 4,942,629
================== ============ ================== ================ ================ ================
Amortization
and
impairment
As at 1
January
2017 2,128,984 70,046 222,139 213,891 485,637 3,124,697
Amortization
charge
for the year - 12,577 37,731 66,935 - 117,243
Exchange
differences 114,031 4,391 13,173 - - 131,595
------------------ ------------ ------------------ ---------------- ---------------- ----------------
As at 30 June
2017 2,243,015 91,014 273,043 280,826 485,637 3,373,535
Amortization
charge
for the year - 12,883 38,649 66,965 - 118,496
Impairment - - - - 106,599 106,599
Exchange
differences 84,532 4,039 12,116 - 47,064 147,751
------------------ ------------ ------------------ ---------------- ---------------- ----------------
As at 31
December
2017 2,327,547 107,936 323,808 347,791 639,300 3,746,382
Amortization
charge
for the year - 13,753 41,259 66,963 - 121,975
Exchange
differences (49,166) (2,825) (8,478) - (13,504) (73,973)
------------------ ------------ ------------------ ---------------- ---------------- ----------------
As at 30 June
2018 2,278,381 118,864 356,589 414,754 625,795 3,794,383
================== ============ ================== ================ ================ ================
Net book
value
================== ============ ================== ================ ================ ================
As at 30 June
2018 - 13,206 39,621 808,749 286,670 1,148,246
================== ============ ================== ================ ================ ================
As at 31
December
2017 - 26,984 80,952 875,712 292,856 1,276,504
================== ============ ================== ================ ================ ================
As at 30 June
2017 - 39,006 117,017 942,677 412,665 1,511,366
================== ============ ================== ================ ================ ================
As at 1
January
2017 - 49,364 148,091 1,008,810 366,997 1,573,262
================== ============ ================== ================ ================ ================
13. Inventories
As at 30 June As at 30 June As at 31 December
2018 2017 2017
Unaudited Unaudited
USD USD USD
Raw Material 1,600,710 2,167,831 1,478,998
Work in progress 815,136 933,925 952,969
Finished pallets 15,710,057 14,351,577 14,183,028
Total inventory 18,125,903 17,453,334 16,614,995
=============================== =============================== ===============================
14 . Trade receivables As at 30 June As at 30 June As at 31 December
2018 2017 2017Audited
Unaudited Unaudited
Trade receivables 932,589 2,660,852 1,623,565
Income tax receivables 181,082 5,251 4,457
Other tax receivables 391,701 1,261,090 1,093,409
Other receivables 1,334,094 960,046 829,417
--------------- --------------- ---------------------
Total Trade receivables 2,839,466 4,887,239 3,550,848
15 Trade payables
As at 30 June As at 30 June As at 31 December
2018 2017 2017
Unaudited Unaudited Audited
USD USD USD
Trade payables 3,665,313 5,067,751 2,907,776
Employee compensation
payables 31,620 103,137 21,629
Other tax payables 166,348 16,900 124,826
Other payables 5,939,639 3,895,550 6,224,263
-------------- -------------- ------------------
Total trade and
other payables 9,802,920 9,083,338 9,278,493
============== ============== ==================
16 Interest-bearing loans and borrowings
As at As at As at
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Effective Maturity USD USD USD
interest date
rate
Non-current
interest-bearing
loans and borrowings
30
CHF 1,700,000 Bank November
loan 1.80% 2020 - 1,776,979 -
(The loan is secured
by a mortgage on the
building held by the
Group in
Switzerland.)
Hire purchase - 12,628 -
liabilities
in excess of one year
Shareholder's current - 3,484,892 -
account
---------------------------------- ------------------------------- ----------------------------------
Total non-current - 5,274,499 -
interest-bearing
loans and borrowings
================================== =============================== ==================================
Current
interest-bearing
loans and borrowings
CHF 1,700,000 Bank 30
loan November
(settled March 2018) 1.80% 2020 - - 1,639,580
Short-term part of
long-term
bank loan - 50,000 101,900
Hire purchase
liabilities
in excess of one
year - 9,033 4,047
---------------------------------- ------------------------------- ----------------------------------
Total current
interest-bearing
loans and - 59,033 1,745,527
borrowings
---------------------------------- ------------------------------- ----------------------------------
Total
interest-bearing
loans and borrowings - 5,333,532 1,745,527
================================== =============================== ==================================
17 Share capital and reserves
2018
On 13 April 2018, the Company issued a total of 4,435,957,235 Ordinary Shares, consisting of 1,279,049,295 Ordinary Shares issued as part of the first tranche of the Placing, raising gross proceeds of USD18,162,500, and of the issuance of 3,156,907,940 new Ordinary Shares upon conversion of the outstanding 134,815,771 Convertible Preferred Shares (as further described in the Chairman's Statement). Following these issuances, no further Convertible Preferred Shares were outstanding and the Company's equity consisted of a single class of Ordinary Shares.
On 20 April 2018, a total of 15,900,000 shares were issued to Non-Executive Directors in lieu of cash compensation for the one-year period beginning July 1, 2017. The Remuneration Committee further decided on April 20, 2018 to remove restrictions related to the attainment of share price thresholds previously applied with respect to the free disposition of restricted shares. This removal of restriction applies to 22,157,680 Ordinary Shares.
On 15 June 2018, pursuant to an Open Offer to all shareholders, the Company raised gross proceeds of approximately GBP1.43m and issued 142,862,073 new Ordinary Shares.
As of 30 June 2018, the Company's issued share capital is comprised of 5,001,781,964 Ordinary Shares, of which 2,916,334 Ordinary Shares are held by the Company as non-voting treasury stock ("Treasury Shares"). The total number of voting rights in the Company is calculated as the number of outstanding Ordinary Shares, less the Treasury Shares, less the Ordinary Shares not able to be voted on due to restrictions applicable to certain holders as specified in the Company's Articles of Association, which results in a total voting rights figure of 3,434,380,332.
2017
On 17 February 2017, 757,500 restricted shares were issued to certain Directors in lieu of cash compensation for the first half of 2017 (and the second half of 2016 with respect to Frédéric de Mevius). These shares are restricted from trading until the volume weighted average quoted price of the Ordinary Shares for a consecutive 30-day period equals or exceeds GBP 1.00.
On 20 February 2017, the General Meeting of Shareholders decided the conversion of existing Convertible Preferred Shares into Class A Convertible Preferred Shares; it also decided the creation of a Class B Convertible Preferred Shares.
On 6 July 2017, 6,000,000 restricted shares were issued to key employees which are not exercisable until after three years and when the volume weighted average quoted price of the Ordinary Shares for a consecutive 30-day period equals or exceeds the lower of GBP 50p or 2.5 times the offering price of the first ordinary share placement following the issuance date of the restricted shares. Following the resignation of the recipient of 2,500,000 restricted shares, these shares were forfeited and transferred to the Company to be held as non-voting treasury stock.
In June and July 2017, the Company issued a total of 92,487,729 Class B Convertible Preferred Shares of USD 0.01 in the capital of the Company. See also Note 14.3.
As at 31 December 2017, RM2's issued share capital is 407,062,656 Ordinary Shares of USD 0.01 each and an aggregate of respectively 42,328,042 and 92,487,729 Class A and B Convertible Preferred Shares of USD 0.01 in the capital of the Company, of which 2,916,334 Ordinary Shares are held by the Company as non-voting treasury stock.
The total number of voting rights in the Company as at 31 December 2017 was 538,962,093.
2016
On 1 July 2016, the Company issued 2,755,000 options, of which 2,000,000 were issued to an executive director and certain employees and vest on the third anniversary of the grant, with an exercise price equal to GBP 0.23 and are not exercisable until the volume weighted average quoted price of the Ordinary Shares for a consecutive 30-day period equals or exceeds GBP 1.00.
500,000 were issued to certain employees and vest over three years in equal tranches on the anniversary of the grant date, with an exercise price equal to GBP 0.23 and are not exercisable until the volume weighted average quoted price of the Ordinary Shares for a consecutive 30-day period equals or exceeds GBP 1.00, and 255,000 options were issued to certain employees and vest over three years in equal tranches on the anniversary of the grant date and have an exercise price equal to GBP 0.23.
On 8 July 2016, 1,275,000 restricted shares were issued to certain Directors in lieu of cash compensation for the year. These shares are restricted from trading until the volume weighted average quoted price of the Ordinary Shares for a consecutive 30-day period equals or exceeds GBP 1.00.
On 8 July 2016, 1,000,000 restricted shares were issued (with a vesting period of one year) to one key employees which are not exercisable until after three years or when the volume weighted average quoted price of the Ordinary Shares for a consecutive 30-day period equals or exceeds GBP 1.00.
In each case, employees must retain a business relationship with the Company on the relevant anniversary date for the options or restricted shares to vest.
In July 2016, the Company issued 42,328,042 Convertible Preferred Shares of USD 0.01 in the capital of the Company. See also Note 14.3.
As at 31 December 2016, RM2's issued share capital is 400,305,156 Ordinary Shares of USD 0.01 each and 42,328,042 Convertible Preferred Shares of USD 0.01 in the capital of the Company, of which 397,334 Ordinary Shares are held by the Company as non-voting treasury stock.
The total number of voting rights in the Company as at 31 December 2016 was 442,235,864.
Ordinary shares issued and fully
paid Shares USD Par value
per
share
--------------------------- ------------ --------------------------
At 30 June 2017 (unaudited) 403,562,656 4,0356,267 USD 0.01
Issue of ordinary shares on
6 July 2017 1,500,000 15,000 USD 0.01
Issue of ordinary shares on
6 July 2017 2,000,000 20,000 USD 0.01
--------------------------- ------------ --------------------------
At 31 December 2017 (audited) 407,062,656 4,070,627 USD 0.01
Issue of ordinary shares on
13 April 2018 1,279,049,295 12,790,493 USD 0.01
Issue of ordinary shares from
convertible pref. shares on
13 April 2018 3,156,907,940 31,569,079 USD 0.01
Issue of ordinary shares on
20 April 2018 15,900,000 159,000 USD 0.01
Issue of ordinary shares on
15 June 2018 142,862,073 1,428,621 USD 0.01
At 30 June 2018 (unaudited) 5,001,781,964 50,017,820 USD 0.01
=========================== ============ ==========================
Convertible Preferred Shares
issued and fully paid
Shares USD Par value
per share
At 30 June 2017 (unaudited) 88,499,998 885,000 USD 0.01
Issue of Convertible Preferred
Shares on 17 July 2017 17,017,110 170,171 USD 0.01
Issue of Convertible Preferred
Shares on 31 July 2017 29,298,663 292,987 USD 0.01
-------------- ------------ -----------
At 31 December 2017 (audited) 134,815,771 1,348,158 USD 0.01
-------------- ------------ -----------
Issue of ordinary shares as a
result of conversion of convertible
pref. shares on 13 April 2018 (134,815,771) (1,348,158) USD 0.01
At 30 June 2018 (unaudited) - - -
=============== ============ ===========
Share premium
USD
--------------
At 31 December 2016 (audited) 282,893,809
Issue of Convertible Preferred Shares on 22 June 2017 1,954,083
Issue of Convertible Preferred Shares on 30 June 2017 8,099,306
At 30 June 2017 (unaudited) 292,947,198
Issue of Convertible Preferred Shares on 17 July 2017 3,314,720
Issue of Convertible Preferred Shares on 31 July 2017 5,707,013
Cost of shares issued (287,615)
At 31 December 2017 (audited) 301,681,317
Issue of ordinary shares on 13 April 2018 5,372,007
Issue of ordinary shares as a result of conversion of
convertible pref. shares on 13 April 2018 (27,132,132)
Issue of ordinary shares on 13 April 2018 (3,088,790)
Issue of ordinary shares on 20 April 2018 (159,000)
Issue of ordinary shares on 15 June 2018 471,445
Cost of shares issued (317,758)
At 30 June 2018 (unaudited) 276,827,089
==============
18 Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
USD USD USD
Net loss attributable to ordinary
equity holders of the parent
for basic earnings (17,324,335) (19,194,865) (43,857,023)
---------------- --------------- ------------------
As at 30 As at 30 As at 31 December
June 2018 June 2017 2017
Weighted average number of ordinary
shares for basic earnings per
share 2,375,275,308 400,903,623 403,848,177
---------------- --------------- ------------------
Weighted average number of ordinary
shares adjusted for the effect
of dilution 2,375,275,308 400,903,623 403,848,177
================ =============== ==================
Loss per share
Basic (0.01) (0.05) (0.11)
Diluted (0.01) (0.05) (0.11)
======= ======= =======
Management considers that there is no dilutive effect from the options as they would be negative.
19 Publication of announcement and the Interim Results
A copy of this announcement will be available at the Company's registered office 14 days from the date of this announcement and on its website.
This announcement is not being mailed to shareholders. The Interim Results will be posted to shareholders shortly and will be made available on the Company's website.
20 Subsequent events
Subsequent to the reporting period, the Company successfully completed a 100-unit trial and then entered into a pilot agreement for an initial deployment of some 600 RM2 ELIoT pallets with one of the world's leaders in the logistics industry, serving both internal and external loops. Other trials with large multi-national corporations are progressing well. In particular, one large trial with a North American beverage customer has concluded with strong results and discussions on deployment terms are expected to continue over the coming months. An ELIoT-enabled pallet is fitted with RM2 proprietary tracking technology which communicates its precise location, allowing misdirected or mishandled goods to be identified immediately, enabling customers to reduce loss, mishandling, spoilage and theft, thereby creating significant cost savings and supply chain efficiencies.
On 13 April 2018, the Company announced a Phase 1 contract with a Fortune 500 customer which is expected to involve a significant deployment of RM2 ELIoT pallets. The initial implementation of RM2 ELIoT pallets under that contract was deferred but the deployment is now underway with promising results.
Current deployment of RM2 ELIoT pallets utilizes Cat-1 technology. However, RM2 sees significant benefit in the transition to Cat-M technology as it comes on-stream due to its lower demand on battery resources and significantly lower-priced components. Global demand for Cat-M components is increasing rapidly and the ability of suppliers to meet all orders may be stretched. RM2 expects to transition to Cat-M as chipsets become available.
With the conversion of trials with large customers into long-term contracts taking longer than anticipated, the Company's expectation of turning EBITDA positive in 2019, as first noted on 9 March 2018, is challenging. The Company will provide further updates on this in due course and in the meantime, continues to implement measures to reduce its cost base.
New Board Appointments
The Company announced today the nomination of David Binks and Andrew Geisse to join the board of directors of the Company. Their appointment is being submitted to shareholders for confirmation at an EGM to be held on October 3, 2018.
Funding Update
The Company believes that it has already satisfied or that it is well positioned to satisfy the drawdown conditions under the Placing by the end of the year, although determination is to be made by the Company's largest shareholder, Woodford Investment Management Limited.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR DGGDCBUBBGIX
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September 14, 2018 02:00 ET (06:00 GMT)
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