Source - RNS
RNS Number : 0099L
RM2 International SA
28 September 2016
 

28 September 2016

RM2 International S.A.

 

Interim Results

 

RM2 International S.A. ("RM2" or the "Company"), the sustainable composite pallet innovator, announces its unaudited results for the six months to 30 June 2016.

 

Financial Highlights

Revenues for the first six months of 2016 of US$3.7 million (H1 2015: US$1.8 million)

Loss after tax for the period of US$24 million (H1 2015: US$25.0 million)

Debt free with cash balances of US$4.3 million at 30 June 2016 (H1 2015: US$35.9 million) and US$20.4 million at 31 August 2016

After the reporting period end, issuance of US$20 million of convertible preferred shares with a cumulative preferred 9% annual dividend on July 18th, 2016

 

Operational Highlights

Recurring revenues being generated from customers across a range of key industries

Long-term, scalable contracts signed with some of the largest and most recognisable companies in their sectors

Management team strengthened with the appointment of Kevin Mazula as COO

Commencement of pallet deployment with Canada's largest retailer, Loblaw's

Strategic, cost-saving manufacturing agreement with Zhenshi Group for pallet production in China

After the reporting period end, second contract manufacturing agreement for pallet production in Mexico with Jabil Circuits Inc.

 

John Walsh, Chief Executive Officer of RM2, commented:

 

"The first half of 2016 has been a period of significant strategic progress for RM2.  In March, Canada's largest retailer, Loblaw's, began accepting RM2's pallets in its supply chain.  This was quickly followed by an agreement with Zhenshi for the production of our pallets in China at a significantly reduced cost.  After the period end, we struck a further agreement with Jabil for the mass production of our pallets in Mexico.  When fully operational, this will mean that RM2 will have a well-balanced manufacturing capability in both North America and Asia, allowing us to flex production more efficiently between two highly qualified and professional manufacturers to better meet the demands of our customers. 

 

"Demand for our innovative and environmentally friendly BLOCKPal pallet remains strong and we are in advanced discussions with a number of new customers. We expect to make a number of further announcements in the coming months."

 

 

For further information, please contact:

 

RM2 International S.A.

+44 (0)20 8820 1412

John Walsh, Chief Executive Officer

Jean-Francois Blouvac, Chief Financial Officer

 

 

 

RBC Capital Markets

+44 (0)20 7397 8900

Tristan Lovegrove

Jonathan Hardy

Ema Jakasovic

 

 

 

Citigate Dewe Rogerson

+44 (0)20 7638 9571

Simon Rigby

Rob Newman

Ellen Wilton

 

 

 

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 

 

 

Consolidated Statement of Comprehensive Income

 


Notes

Six months to

30 June 2016

Unaudited

Six months to

30 June 2015

Unaudited

(Restated)

Year to

31 December 2015

Audited

 



USD

USD

USD

Continuing operations





Revenue

5

3,707,836

1,771,391

8,000,137

Cost of sales

6

(16,845,329)

(17,187,856)

(44,512,394)

Gross profit


(13,137,494)

(15,416,465)

(36,512,257)











Administrative expenses

7

(10,625,475)

(10,287,482)

(21,380,565)

Other operating expenses

8

(36,132)

(64,014)

(175,768)

Other operating income

8

142,151

740,357

904,676

Operating loss


(23,656,950)

(25,027,604)

(57,163,914)






Impairment of financial asset





Finance costs


(2,179,083)

(867,840)

(3,632,886)

Finance income


1,936,151

659,861

1,955,972

Loss before tax


(23,899,882)

(25,235,583)

(58,840,828)






Income tax


87,907

(172,828)

160,230

Loss for the period


(23,811,975)

(25,408,411)

(58,680,598)






Other comprehensive income





Other comprehensive income to be reclassified in profit or loss in subsequent periods:





Exchange difference on translation of foreign operations


(201,940)

(1,527,059)

(4,264,343)

Other comprehensive income for the year, net of tax


(201,940)

(1,527,059)

(4,264,343)






Total comprehensive income for the year


(24,013,915)

(26,935,470)

(62,944,941)






Loss for the year attributable to:





Equity holders of the parent


(23,811,975)

(25,408,411)

(58,680,598)






Total comprehensive income for the year attributable to:





Equity holders of the parent


(24,013,915)

(26,935,470)

(62,944,941)






Losses per share





Basic losses per share attributable to ordinary equity holders of the parent

17

(0.06)

(0.08)

(0.17)

Diluted losses per share attributable to ordinary equity holders of the parent

17

(0.06)

(0.08)

(0.17)

 

 

Consolidated Statement of Financial Position


Notes

 

30 June 2016

Unaudited

30 June 2015

Unaudited

31 December 2015

Audited



USD

USD

USD

Assets





Non-current assets





Property, plant & equipment - others

9

41,803,207

35,710,996

36,252,950

Property, plant & equipment - pallet pool

10

16,997,686

10,844,907

17,484,281

Investment property


1,338,940

1,371,280

1,357,720

Intangible assets

11

2,646,054

3,006,148

3,349,359



62,785,888

50,933,332

58,444,310






Current assets





Inventories

12

21,863,720

15,985,591

19,846,627

Trade and other receivables


5,012,559

5,179,826

8,315,843

Other current financial assets


67,624

74,310

62,074

Prepayments


664,068

808,044

1,942,980

Restricted cash


1,951,144

2,027,062

1,816,039

Cash and cash equivalents


4,282,928

35,860,977

34,515,597



33,842,043

59,935,811

66,499,160






Total assets


96,627,931

110,869,142

124,943,470






Equity and liabilities





Equity





Issued capital

16

3,980,302

3,230,302

3,980,302

Share premium

16

263,317,090

219,357,851

263,317,090

Retained earnings


(200,106,113)

(143,021,951)

(176,294,138)

Share based payment reserve


19,585,089

18,339,362

19,044,095

Foreign currency translation reserve


(330,207)

(128,322)

(2,865,606)

Treasury Stock


(3,424)

(3,424)

(3,424)

Equity attributable to equity holders of the parent


86,442,737

97,773,818

107,178,319






Non-current liabilities





Interest bearing loans and borrowings

15

1,848,920

2,030,092

1,844,875

Deferred tax liabilities


46,949

251,493

184,330



1,895,869

2,281,585

2,029,205






Current liabilities





Interest bearing loans and borrowings

15

58,034

18,680

116,440

Trade and other payables

14

7,037,065

9,789,422

14,466,289

Deferred income


661,673

634,004

630,841

Current  tax liabilities


532,554

371,453

522,376



8,289,325

10,813,739

15,735,946






Total liabilities


10,185,194

13,095,324

17,765,151






Total equity and liabilities


96,627,931

110,869,142

124,943,470

 

 

Consolidated statement of changes in equity



Attributable to equity holders of the parent



Share capital

Share premium

Retained earnings

Foreign currency translation reserve

 

Treasury Shares

Share based payment reserve

Total equity



USD

USD

USD

USD

USD

USD

USD

As at 31 December 2014 (audited)


3,227,772

219,357,851

(117,613,540)

1,398,737

-

16,958,803

123,329,623

Loss for the period


-

-

(25,408,411)

-

-

-

(25,408,411)

Other comprehensive income


-

-

-

(1,527,059)

-

-

(1,527,059)

Total comprehensive income


-

-

(25,408,411)

(1,527,059)

-

-

(26,935,470)

Shares issued in the period


2,530

-

-

-

-

-

2,530

Purchase of shares into treasury


-

-

-

-

(3,424)

-

(3,424)

Share based payments


-

-

-

-

-

1,380,559

1,380,559

Transaction with owners


2,530

-

-

(3,424)

1,380,559

1,379,665

As at 30 June 2015 (unaudited)


3,230,302

219,357,851

(143,021,951)

(128,322)

(3,424)

18,339,362

97,773,818










Loss for the period


-

-

(33,272,187)

-

-

-

(33,272,187)

Other comprehensive income


-

-

-

(2,737,284)

-

-

(2,737,284)

Total comprehensive income


-

-

(33,272,187)

(2,737,284)

-

-

(36,009,471)

Shares issued in the period


750,000

44,672,999

-

-

-

-

45,422,999

Cost of share issue


-

(713,760)

-

-

-

-

(713.760)

Share based payments


-

-

-

-

-

704,733

704,733

Transaction with owners


750,000

-

-

-

704,733

45,413,972

As at 31 December 2015 (audited)


3,980,302

263,317,090

(176,294,138)

(2,865,606)

(3,424)

19,044,095

107,178,319

Loss for the period


-

-

(23,811,975)

-

-

-

(23,811,975)

Other comprehensive income


-

-

-

2,535,399

-

-

2,535,399)

Total comprehensive income


-

-

(23,811,411)

2,535,399

-

-

(21,276,576)

Share based payments


-

-

-

-

-

540,994

540,994

Transaction with owners


-

-

-

-

540,994

540,994

As at 30 June 2016 (audited)


3,980,302

263,317,090

(200,106,113)

(330,207)

(3,424)

19,585,089

86,442,736

 

Consolidated Statement of Cash Flows


Notes

Six months to

30 June 2016

Unaudited

Six months to

30 June 2015

Unaudited

 Year ended

31 December 2015

Audited

Cash flows from operating activities


USD

USD

USD

Loss before tax


(23,899,882)

(25,235,583)

(58,840,828)






Adjustment to reconcile profit before tax to net cash flows





Amortisation and depreciation of non-current assets


4,440,260

2,567,701

6,835,642

Provision for bad debts


44,902

90,750

-

Share based payment charges


540,994

1,380,559

2,085,292

Transaction costs on capital operations, including IPO


-

-

-

Finance income


(68,726)

(67,166)

(68,726)

Finance expenses


60,240

25,608

60,240

Unrealised foreign exchange gains


256,062

817,728

(355,126)

Net loss/(gain) on disposal of PPE and intangible assets


5,797

(421,682)

(435,591)






Variation in working capital





(Increase)/decrease in inventories


(2,017,093)

(8,968,403)

(12,829,439)

Decrease/(increase)/in trade and other receivables


4,544,547

642,028

(3,541,287)

Increase/(decrease) in trade and other payables


(7,398,391)

3,509,526

8,759,729

Decrease/(increase)/ in restricted cash


(135,105)

-

333,936

Income tax paid


(15,336)

(90,450)

(171,882)






Net cash flows from operating activities


(23,641,731)

(25,749,384)

(58,168,040)






Cash flows from investing activities





Net purchase of from intangible assets


(18,066)

-

(900,035)

Purchase of PPE in course of commissioning


(1,469,914)

(8,666,039)

(15,578,162)

Net purchase of other PPE


(3,474,426)

(2,819,557)

60,507

Purchase of pallet pool


(1,668,992)

(8,842,115)

(17,895,718)

Loans granted to third parties


(5,552)

(14,762)

(2,524)

Finance income received


68,726

67,166

68,726

Net cash flows from investing activities


(6,568,224)

(20,275,307)

(34,247,206)






Cash flows from financing activities





Issuance of capital

16

-

2,530

45,425,529

Purchase of treasury shares


-

(3,424)

(3,424)

Transaction costs on capital operations, charged against share premium account

16

-

-

(713,760)

Proceeds from other and related party borrowings



70,284

(3,223)

Repayment of other and related party borrowings


(54,361)

(28,273)

(117,575)






Finance costs


(60,240)

(25,608)

(60,240)






Net cash flows from financing activities


(114,601)

15,509

44,527,307






Net change in cash and cash equivalents


(30,324,556)

(46,009,182)

(47,887,939)






Increase/decrease in cash and cash equivalents


(30,324,558)

(46,009,182)

(47,887,939)

Cash and cash equivalents at 1 January


34,515,597

82,882,794

82,882,794

Exchange adjustment of cash and cash equivalents


91,887

(1,012,635)

(479,258)

Cash and cash equivalents at end of period


4,282,928

35,860,977

34,515,597

 

 

 

 

Notes (unaudited) to the Interim Consolidated Financial Information

 

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.

 

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 2015.

 

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 2015.  None of the newly applicable IFRS standards and amendments had an impact on the Group's interim consolidated financial information.

 

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.

 

Significant accounting judgements, estimates and assumptions

 

When preparing the unaudited interim consolidated financial information, Management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by Management, and will seldom equal the estimated results.

 

The judgements, 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 years ended 31 December 2015.

 

Going Concern

 

The Group's financial result for the first half of 2016 was a loss of USD 24.0m and the cash outflow was USD 30.2m, mainly attributable to the manufacturing activity during the first three months of the year. Cash reserves at 30 June 2016 were USD 4.3m. Following the receipt of the proceeds from the issuance of convertible preferred shares, the cash balance at 31 August 2016 was USD 18.4m, excluding restricted cash.

 

The financial performance of the Group was again heavily impacted by manufacturing activities during the first quarter. The re-sizing of the manufacturing operations in Canada, initiated in early January 2016, generated a drop in the cost per unit by circa 20%, but the absolute value of production cost remained too high to be sustainable. The factory produced significantly above the standard cost, contributing more than USD 12.0m to the operating loss of USD 24.0m.  Following the suspension of production in Canada, the plant's headcount continues to decrease, and at end of August 2016 was down to 53. The plant's cash outflow consists of payroll, rental of building and clearing the accounts payables backlog and is now below USD 900,000 per month.

 

The precise timing of the commencement of manufacturing in China is principally dependent on the lead-time required to clear customs for the equipment sent from Canada. The pultrusion machines shipped from Canada on July 15th are currently awaiting customs clearance in Shanghai. The Group is actively working with Zhenshi on revisions to their agreements arising from the review by the Customs authorities and on preparing answers to other queries raised by the Customs authorities.  Once these matters are attended to and the initial shipment is cleared, the Group will send further Fabrication, Assembly and Coating equipment to China. The equipment will be housed in a 20,000 square metre facility to be built out by an affiliate of Zhenshi. The RM2 production process will utilise 10,000 square metres, leaving spare capacity for future expansion.

 

The commercial pipeline remains promising and the inventory built prior to the cessation of production is being allocated to major customers. A significant sale of pallets, to be delivered in Q4 2016 is under signature process with a major US-based company. The Group continues to conduct pre-sale trials in the US of its BLOCKpal product among international companies in retail, food & frozen industries and FMCG sectors.

 

The business plan and cash flow forecast for the next 12-month period starting from June 1, 2016 which is considered as the going concern analysis period, have been updated by management using the same conservative assumptions used in the last going concern assessment. Management confirmed recurring net cash outflows of c. USD 2.0m per month (including both commercial entities and the plant).  The expected sale of pallets in Q4 2016 is not factored into the net monthly cash outflow of USD 2.0m and could bring additional cash inflows up to USD1.0m per month in the course of 2017, subject to the delivery schedule required by the customer. The one-time-costs relating to the transition to China previously estimated at USD 8.8m now amount to USD 9.9m as the Group has decided to upgrade some equipment before commissioning. At the end of August, only USD 1.6m has been paid regarding these one-time-costs.

 

While there are currently material uncertainties as mentioned in the FY2015 financial statements which may cast significant doubt on the Group's ability to continue as a going concern, it is possible that the Group may be unable to realize its assets and discharge its liabilities in the normal course of business.  Management has, however, identified four strategic cash-contribution-projects, any one of which will contribute significantly to ensuring the going concern of the Group. In addition to the significant sale of pallets to be delivered before year-end, management has undertaken a better monetization of the current pool of pallets and the real estate building in Switzerland. Further, management continues to work towards the placement of an additional USD 10.0m of convertible preferred shares as authorized by the General Assembly. Depending on which combination of these initiatives is realized and their related size, the Group may recognize by year-end adequate accounting impairment (non-cash items) on the values of these assets. However, these four items allow the Group to confirm its confidence in the going concern status of the Company through June 2017 and beyond.  These assumptions are the Directors' best estimate of the future development of the business. The Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future and accordingly, continue to adopt the going concern basis in preparing the consolidated financial statements.

 

Business review and Key Performance Indicators

 

The business report considers the key performance indicators to be the levels of production, the sales or leasing of pallets and the cash reserves of the business.

 

Following the signature of the manufacturing agreement with the Chinese partner Zhenshi in April 2016, the Group initiated the decommissioning of equipment at the Canadian manufacturing site as of 4 April, 2016, producing only marginal quantities of samples, with determination of the future of the Canadian site remaining for further consideration by the Board. Approximately 92,000 pallets were produced in Canada in the first four months of 2016.  The addition of new manufacturing equipment as forecasted amounted to USD 5.0m., bringing the net book value of industrial assets to USD 40.0m.

 

As the Group moves toward an outsourced production model, the Group has carefully managed the inventory and the commercial deployment over the first half of 2016. 20,000 pallets have been deployed in the field, taking the total active pool size to 250,000 pallets.  The pallet inventory has grown to 160,000 pallets, which will be allocated to future contracts until outsourced production starts in the course of 2017. The revenue generated by the lease activity in the first half of 2016 was USD 2.7m, which almost equals the full year 2015 rental revenue. The Group expects to contract a significant sale of pallets in the last quarter.

 

The Group has announced the issuance of convertible preferred shares with a cumulative preferred 9% dividend payable each year, which has been supported by existing investors for USD 20.0m. Funds were received on July 18th, 2016.

 

Cash reserves, excluding restricted cash, at 30 June 2016 were USD 4.3m (Dec 2015 USD 34.5m).

 

Cash reserves, excluding restricted cash, at 31 August 2016 were USD 18.4m.

 

Significant events and transactions

 

The Group's management believes that the Group is well positioned despite the continuing difficult economic circumstances. Factors contributing to the Group's manageable position are:

 

No significant decline in order intake was experienced on larger projects. Further, the Group has several long-term contracts with a number of its customers

The Group has entered deep discussions with major banks to set up a large financing that will enable the Group to produce and deploy a significant number of pallets

The Group's major customers have not experienced financial difficulties. Credit quality of trade receivables as at 30 June 2016 is considered to be good

 

Overall, the Group is in a manageable position thanks to a high quality commercial pipeline, which will be deployed in a profitable way once an adequate financing is in place. The Group's objectives and policies for managing capital, credit risk and liquidity risk are described in its recent annual financial statements.

 

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 1 client who represents more than 10% of the Group's revenues.

 

Turnover

 


Six months to

30 June 2016 Unaudited

Six months to

30 June 2015 Unaudited

Year ended

31 December 2015

Audited





Sold pallets

288,520

215,828

3,755,015

Leased pallets

2,722,840

816,221

2,740,530

Rendering of logistical services

696,476

739,342

1,504,592


3,707,836

1,771,391

8,000,137

 

Geographical information


Six months to

30 June 2016 Unaudited

Six months to

30 June 2015 Unaudited

Year ended

31 December 2015

Audited

USA

2,811,930

856,565

6,308,906

Europe

895,906

914,826

1,691,232


3,707,836

1,771,391

8,000,137

 

 

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 and North America.


Six months to

30 June 2016 Unaudited

Six months to

30 June 2015 Unaudited

Year ended

31 December 2015

Audited









Luxembourg

2,280,246

2,247,274

3,249,373

Rest of Europe

6,425,322

8,095,908

6,379,028

North America

54,080,320

40,590,150

48,815,909


62,785,888

50,933,332

58,444,310

 

Non-current assets for this purpose consist of property, plant and equipment, investment properties and intangible assets.

 

Cost of sales


Six months to

30 June 2016 Unaudited

Six months to

30 June 2015 Unaudited

Year ended

31 December 2015

Audited









Cost of pallets sold - blockpall

238,726

152,668

2,128,000

Cost of pallets sold - services

112,162

162,384

279,748

Amortization of pallet pool

2,241,473

619,244

2,293,955

Cost of software, licenses and services

691,405

734,892

1,551,590

Factory absorption

12,042,106

14,485,152

32,325,152

Impairment and repairs

(7,831)

-

1,921,988

Other

1,527,288

1,033,516

4,011,961


16,845,329

17,187,856

44,512,394





 

Factory absorption is the variance between actuals costs to produce pallets and the standard costs used in valuing the pallets produced in inventory and assets. The total cost of the production facility for which the total manufacturing capacity is circa 3 million pallets was not fully absorbed by production in the year and the under absorption is shown as a cost of sales.

 

Administrative expenses


Six months to

30 June 2016 Unaudited

Six months to

30 June 2015 Unaudited

Year ended

31 December 2015

Audited





Administration payroll

1,084,038

1,102,090

1,939,126

Selling and distribution

5,023,559

3,997,019

9,853,251

Share based payment (non-cash item)

540,994

1,380,559

2,085,292

Depreciation

959,716

772,420

1,354,516

Other

3, 017,167

3,035,394

6,148,380


10,625,475

10,287,482

21,380,565

 

Other operating income and expenses

 

Other operating income

Six months to

30 June 2016 Unaudited

Six months to

30 June 2015 Unaudited

Year ended

31 December 2015

Audited





Net gain/ (loss) on disposal of PPE

-

421,682

435,591

Rental income

142,151

153,683

289,570

Other

-

164,992

179,515

Total other operating income

142,151

740,357

904,676





 

Other operating expenses

Six months to

30 June 2016 Unaudited

Six months to

30 June 2015 Unaudited

Year ended

31 December 2015

Audited





Direct operating expenses on rental-earning investment properties

36,132

12,934

124,688

Other

-

51,080

51,080

Total other operating expenses

36,132

64,014

175,768





 

Property, plant and equipment- other


Land & Building

Plant & Equipment

Construction in progress

Total


USD

USD

USD

USD

Cost





As at 31 December 2014 (audited)

1,737,167

21,613,060

9,048,229

32,398,456

Additions

-

3,241,239

8,666,039

11,907,278

Exchange differences

(6,521)

(1,039,920)

(324,687)

(1,371,128)

As at 30 June 2015 (unaudited)

1,730,646

23,814,379

17,389,581

42,934,606

Additions

26,952

(2,893,107)

6,912,123

4,045,967

Disposals

-

(23,469)

-

(23,469)

Other / transfers

-

8,648,204

(8,648,204)

-

Exchange differences

(11,371)

(1,879,609)

(565,969)

(2,456,950)

As at 31 December 2015 (audited)

1,746,227

27,666,398

15,087,531

44,500,155

Additions

-

3,474,469

1,469,914

4,944,383

Disposals

-

(30,654)

-

(30,654)

Other/transfer

-

3,037,026

(3,037,026)

-

Exchange differences

8,438

1,603,138

914,718

2,526,294

As at 30 June 2016 (unaudited)

1,754,665

35,750,376

14,435,137

51,940,178











Depreciation and impairment





As at 31 December 2014 (audited)

171,447

2,429,000

3,537,463

6,137,910

Depreciation charge for the period

32,240

1,153,426

-

1,185,666

Exchange differences

(530)

(99,436)

-

(99,966)

As at 30 June 2015 (unaudited)

203,157

3,482,990

3,537,463

7,223,610

Depreciation charge for the period

29,415

1,297,725

-

1,327,140

Disposals

-

(23,469)

-

(23,469)

Impairment charge for the year

-

87,062

-

87,062

Exchange differences

(2,553)

(364,586)

-

(367,139)

As at 31 December 2015 (audited)

230,019

4,479,722

3,537,463

8,247,204

Depreciation charge for the period

33,151

1,698,761

-

1,731,912

Disposal

-

(24,857)

-

(24,857)

Exchange differences

1,373

181,338

-

182,711

As at 30 June 2016 (unaudited)

264,543

6,334,964

3,537,463

10,136,970






Net book value





As at 30 June 2016 (unaudited)

1,490,122

29,415,412

10,897,673

41,803,208

As at 31 December 2015 (audited)

1,516,208

23,186,675

11,550,067

36,252,951

As at 30 June 2015 (unaudited)

1,527,489

20,331,389

13,852,118

35,710,996






 

Property, plant and equipment - Pallet pool

 




Pallet Pool








USD

Cost




As at 31 December 2014 (audited)



2,886,081

Additions



8,842,115

As at 30 June 2015 (unaudited)



11,728,197

Additions



9,053,602

As at 31 December 2015 (audited)



20,781,799

Additions



1,668,994

As at 30 June 2016 (unaudited)



22,450,793





Depreciation and impairment




As at 31 December 2014 (audited)



131,575

Depreciation charge for the period



751,713

As at 30 June 2015 (unaudited)



883,288

Depreciation charge for the period



2,414,230

As at 31 December 2015 (audited)



3,297,518

Depreciation charge for the period



2,155,588

As at 30 June 2016 (unaudited)



5,453,106





Net book value




As at 30 June 2016 (unaudited)



16,997,687

As at 31 December 2015 (audited)



17,484,281

As at 30 June 2015 (unaudited)



10,844,909





 

Intangible assets


Software

Trade names

Customer relationships

Acquired licences and similar intangible assets

Goodwill

Total


USD

USD

USD

USD

USD

USD

Cost







As at 31 December 2014 (audited)

2,679,607

155,328

465,983

297,033

1073,153

4,671,104

Additions

-

-

-

-

-

-

Exchange differences

32,010

1,856

5,567

-

12,819

52,252

As at 30 June 2015 (unaudited)

2,711,617

157,184

471,550

297,033

1,085,972

4,723,356

Additions

-

-

-

900,035

-

900,035

Exchange differences

(158,130)

(9,167)

(27,499)

-

(63,329)

(258,125)

As at 31 December 2015 (audited)

2,553,487

148,017

444,051

1,197,068

1,022,643

5,365,266

Additions

-

-

-

18,065

-

18,065

Exchange differences

(243,192)

(14,097)

(42,291)

-

(97,396)

(396,975)

As at 30 June 2016 (unaudited)

2,310,295

133,920

401,760

1,215,133

925,247

4,986,356

 

 

 

 














Depreciation and impairment







As at 31 December 2014 (audited)

893,131

31,062

93,186

47,032

-

1,064,411

Amortization charge for the period

421,670

45,855

137,566

-

-

605,090

Exchange differences

41,009

1,675

5,023

-

-

47,707

As at 30 June 2015 (unaudited)

1,355,810

78,592

235,775

47,032

-

1,717,208

Amortization charge for the period

457,348

(15,283)

(45,849)

29,732

-

425,948

Exchange differences

(110,838)

(4,106)

(12,306)

-

-

(127,250)

As at 31 December 2015 (audited)

1,702,319

59,203

177,620

76,764

-

2,015,906

Amortization charge for the period

406,958

14,154

42,462

70,450

-

605,090

Exchange differences

(184,031)

(6,397)

(19,202)

-

-

47,707

As at 30 June 2015 (unaudited)

1,925,246

66,960

200,880

147,214

-

2,340,301








Net book value














As at 30 June 2016 (unaudited)

385,049

66,960

200,880

1,067,919

925,247

2,646,054

As at 31 December 2015 (audited)

851,168

88,814

266,431

1,120,304

1,022,643

3,349,359

As at 30 June 2015 (unaudited)

1,355,807

78,592

235,775

250,001

1,085,972

3,006,148

 

*Goodwill relates to the Equipment Tracking acquisition in 2013

 

Inventories


As at

30 June 2016 Unaudited

USD

As at

30 June 2015 Unaudited

USD

As at

31 December 2015 Audited

USD





Raw Material

6,908,874

7,314,957

10,456,947

Work in process

1,874,083

2,761,851

2,268,138

Finished pallets

13,080,763

5,908,783

7,121,542

Total inventory

21,863,720

15,985,591

19,846,627

 

Trade receivables


As at

30 June 2016 Unaudited USD

As at

30 June 2015 Unaudited USD

As at

31 December 2015 Audited USD





Trade receivables

2,134,719

1,491,809

3,541,955

Income tax receivables

7,317

3,178

66

Other tax receivables

1,251,627

2,845,690

2,373,410

Other receivables

 

1,618,895

839,149

2,400,412

Total Trade receivables

5,012,559

5,179,826

8,315,843

 

Trade payables


As at

30 June 2016 Unaudited USD

As at

30 June 2015 Unaudited USD

As at

31 December 2015 Audited USD





Trade payables

5,034,648

7,519,744

12,139,283

Employee compensation payables

67,870

947,848

270,431

Current tax liabilities

243,717

750,556

423,531

Other payables

 

1,690,828

571,274

1,633,044

Total Trade payables

7,037,064

9,789,422

14,466,289

 

Interest-bearing loans and borrowings


Effective interest rate

Maturity date

As at

30 June 2016

Unaudited

As at

30 June 2015

Unaudited

As at

31 December 2015

Audited




USD

USD

USD







Non-current interest-bearing loans and borrowings






CHF 1,875,000 Bank loan

1.8 %

30 November 2020

 

1,840,885

 

2,020,661

1,814,060

(The loan is secured by a mortgage on the building held by the Group in Switzerland.)












Hire purchase liabilities in excess of one year



8,035

9,431

30,815







Total non-current interest-bearing loans and borrowings



 

1,848,920

 

2,030,092

 

1,844,875







Current interest-bearing loans and borrowings






Short-term part of long term bank loan

Variable

On-demand

50,000

-

100,000

Hire purchase liabilities in excess of one year



8,034

18,860

16,440

Total current interest-bearing loans and borrowings



 

58,034

 

18,860

 

116,440







Total interest-bearing loans and borrowings



1,906,954

2,048,952

1,961,315

 

 






Share capital and reserves

 

2016

 

There have been no issues of shares during the period.

 

2015

 

On 12 March 2015, 253,000 restricted shares were granted to certain employees. The restricted shares vest three years from the date of grant if the recipients are still employed by the Group at such time.

On 17 June 2015, the Company repurchased 333,334 previously issued restricted shares. These shares are held as non-voting treasury shares. These shares have been acquired from two former employees benefiting from the ESOP plan. These shares have been acquired at nominal value.

On 21 October 2015, the Company issued 75,000,000 ordinary shares at GBP 0.40 per share.

On 3 November 2015, the Company awarded 5,500,000 options over its ordinary shares of USD 0.01 each under its 2013 Stock Option and Incentive Plan to its non-executive directors. The options have an exercise price of 46.5p, being the closing share price on 2 November 2015, and duration of 10 years. The options will vest over a 3 year period in equal annual instalments but cannot be exercised until the stock closes above a thirty day average closing price of 100p.

On 3 November 2015, the Company awarded 800,000 options over its ordinary shares of USD 0.01 each under its 2013 Stock Option and Incentive Plan to some employees. The options have an exercise price of 46.5p, being the closing share price on 2 November 2015, and duration of 10 years. The options will vest over a 3 year period in equal annual instalments.

As at 31 December 2015, RM2's issued share capital was 398,030,156 Ordinary Shares of USD 0.01 each in the capital of the Company.

2014

 

 

On 6 January 2014 the Company completed the IPO issuing, 155,903,548 shares at £0.88 on AIM and receiving net proceeds, after payment of fees of USD 215,760,052. Following repayment of USD71,679,712 of development loans, fees and interest, the Company's balance sheet was free of debt (other than the mortgage on the office building in Switzerland) and retained USD144,080,340 to finance capital expenditure, production of inventory and overheads. The premium arising on the newly issued IPO shares has been taken to the Share Premium Account.

 

On 6 January 2014 the Company issued 4,157,428 Ordinary Shares at par to a significant shareholder.

 

On 24 January 2014, 2,316,405 restricted shares were granted to certain Directors having Performance Conditions (see note 22).

 

On 3 April 2014, 900,000 restricted shares were granted to a consultant subject to certain vesting conditions.

 

On 13 June 2014, 2,317,000 restricted shares were granted to certain employees, 1,000,000 of which were subject to Performance Conditions, and 1,317,000 of which were subject to certain vesting conditions.

 

On 22 September 2014 1,000,000 restricted shares were granted subject to certain Performance Conditions.

 

Following such issuances, the Company had 322,777,156 Ordinary Shares issued.

 

Ordinary shares issued and fully paid


Shares

USD

Par value per share













At 30 June 2014 (unaudited)

321,777,156

3,217,772

USD 0.01





Subscription for restricted shares on 22 September 2014

1,000,000

10,000

USD 0.01





At 31 December 2014

322,777,156

3,227,772

USD 0.01





Subscription for restricted shares on 2 March 2015

253,000

2,530

USD 0.01









At 30 June 2015

323,030,156

3,230,302

USD 0.01





Subscription for new shares on 21 October 2015

75,000,000

750,000

USD 0.01





At 31 December 2015

398,030,156

3,980,302

USD 0.01





At 30 June 2016

398,030,156

3,980,302

USD 0.01





As at 30 June 2015 and 30 June 2014, the share capital issued composed of one Class of Ordinary Shares having equal rights.

 

Share premium


USD



At 30 June 2014 (unaudited)

219,357,851



At 31 December 2014 (audited)

219,357,851



At 30 June 2015 (unaudited)

219,357,851



Subscription for new shares on 21 October 2015

44,672,999

Transaction costs on issue of shares

(713,760)



At 31 December 2015 (audited)

263,317,090





At 30 June 2016 (unaudited)

263,317,090



 

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 to

30 June 2016 Unaudited

Six months to

30 June 2015 Unaudited

Year ended

31 December 2015

Audited


USD

USD

USD





Net loss attributable to ordinary equity holders of the parent for basic earnings

(23,811,975)

(25,408,411)

(58,680,598)






As at

30 June 2016

As at

30 June 2015

As at

31 December 2015

Weighted average number of ordinary shares for basic earnings per share

398,030,156

322,930,913

337,569,983

Weighted average number of ordinary shares adjusted for the effect of dilution

398,030,156

322,944,891

337,569,983





Loss per share




Basic

(0.06)

(0.08)

(0.17)

Diluted

(0.06)

(0.08)

(0.17)





Management considers that there is no dilutive effect from the options as they would be negative.

 

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 sent to shareholders. The Interim Results will be posted to shareholders shortly and will be made available on the website.

 

Subsequent event

 

Strategic alliance

 

On September 26, 2016, the Company announced that it has entered into a strategic cost-saving manufacturing agreement with Jabil Circuit, Inc. ("Jabil") for the mass production of the RM2 BLOCKpal pallet in Mexico. The agreement with Jabil, a global leader in digital manufacturing and supply chain solutions, will allow RM2 to scale production to market demand.  Initial production is expected to be deployed in Q1 2017. Pallets produced at the facility will initially be deployed with RM2's customers in North America.

 

This agreement is complementary to the agreement announced in April this year for the production of pallets by Zhenshi Holdings Groups Ltd in China, allowing RM2 to address the volume demands of its clients. Production costs at the two facilities are expected to be similar.  The initial aggregate annual outsourcing capacity of the Company remains at c1.5 million pallets. 

 

Under this five-year, renewable agreement, the Company provides existing machinery on a bailment basis to Jabil and makes no initial capital outlay. Should the Company not order a minimum of 143,000 pallets per quarter, it is liable to a pay an under-production gross-up payment to Jabil to enable Jabil to recover USD2 million in capital commitment to the project.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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