21st May 2018 10:46
LONDON (Alliance News) - RM2 International SA said Monday it will raise about GBP4.3 million through an open offer of shares as revenue declined but it narrowed its loss for 2017.
The smart pallet designer posted a 26% drop in revenue to USD6.6 million from USD8.9 million in 2016. Its pretax loss narrowed to USD43.9 million from USD52.8 million.
Excluding non-recurring items, the company posted a loss of USD22.2 million. These items include fixing not-fit-for-purpose equipment and accounting for current assets valued below book value. The agreed contributions for ramp-up costs for its Mexican partner also contributed to the poor performance.
The dip in revenue came from lower pallet velocity under rental, RM2 said, and the impact of terminated contracts for tracking of third-party assets in its Equipments Tracking business.
RM2 did not pay a dividend in 2017. The same as the year before.
The company acknowledges the path to cash break-even "remains challenging" but it is confident, with sufficient funding from the two tranches of equity in 2018, it can meet its operating and pallet deployment needs.
RM2 said it will issue up to 430.2 million new shares at 1 pence each. The share price represents a 38% discount to RM2's closing price on Thursday last week of 1.6p. Shares in RM2 were down 8.1% Monday morning to 1.47 pence each.
The open offer follows a USD36 million equity placing announced by RM2 at the end of March.
The proceeds of both fund raises will be used for the retrofitting of existing inventory, the production of new pallets and sales and general administrative costs.
Chief Executive Officer Kevin Mazula said: "We are focusing the company's sales efforts primarily on new deployment opportunities of RM2 ELIoT Smart Pallets. Our proposition is unique in helping customers to compress their supply chains. We are successfully completing trials and signing key customer contracts. We have worked hard to reduce the cost base by streamlining operating expenses, eliminating non value-added activities and unwinding the operations at the Canadian manufacturing site. The successful completion of the USD36 million equity raise, with the first tranche of USD18 million having been drawn in mid-April 2018, should enable the company to deploy a sufficient quantity of pallets to generate positive earnings before interest, tax, depreciation and amortisation in 2019."
Related Shares:
RM2.L