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RM2 International: another cash guzzling Woodford failure

02/07/2019 · RM2 International SA (RM2) 


Two piles of pallets made by RM2 in a warehouse

The suspension of trading in the shares of pallet maker RM2 International is yet another embarrassment for Neil Woodford. While the failure of this business has looked inevitable for some time, don’t be misled by its current small size, over the years this business burned through a great deal of Woodford’s clients’ money.

AIM-quoted RM2 International (LON: RM2), specialises in the development and manufacture of innovative pallets. The company sought 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. Unfortunately, things haven’t worked out as originally intended.

RM2 arrived on AIM in January 2014 with a market capitalisation of £278m, raising £137m of new money at the time. Invesco funds, then managed by Neil Woodford and his team, were the largest shareholders, owning 40%, having invested a further £72m at IPO. The issued share capital post IPO was US$222m with accumulated losses at 31 December 2014 already $118m (£93.5m).

Funds managed by Woodford Investment Management appear to have started acquiring the position from Invesco from the beginning of 2015. Fast forward three and a half years to 30th June 2018 (the last reported interim results) and accumulated losses had risen to a staggering $290m with a total…

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