LONDON (Alliance News) - Tailoring firm Bagir Group Ltd said Friday its half-year loss widened sharply as revenue fell, but costs of sales remained stubbornly stable, as it continues to await completion of a "transformative" investment.
For the six months ended June, pretax loss deepened to USD3.6 million from USD307,000 a year prior. This was after revenue fell to USD24.8 million from USD28.1 million previously.
Profit was also hurt by a flat cost of sales despite the declining revenue. Cost of sales remained fairly stable at USD23.1 million from USD23.5 million the year prior.
"During the first half of 2018, the company had a positive sales performance in line with management's expectations," Bagir Chief Executive Officer Eran Itzhak said. "Sales have been positive yet the group has continued to experience operational delays and increased production costs, which have reduced profitability and gross margin."
"Alongside our trading performance, which reflects the investment we have been making in expanding our Ethiopian production capacity, we have made significant progress since the year end with the strategic partnership with Shandong Ruyi, a global leader in textiles, which, subject to shareholder approval, will result in Shandong Ruyi investing USD16.5 million into Bagir to support of the growth of the business in particular the expansion of the Ethiopian manufacturing site," Itzhak added.
In November, Bagir announced a strategic partnership with China-based textile manufacturer Shangdong Ruyi alongside a USD16.5 million proposed investment.
In order to facilitate the Shangdong Ruyi investment, Bagir will issue 359.6 million shares at a price of 3.5 pence each, which will give the Chinese firm a 54% stake. The price was more than two-and-a-half times Bagir's share price at the time.
The deal faces a shareholder vote on October 9.
"This investment together with being in partnership with Shandong Ruyi will undoubtedly be transformative for Bagir," Itzhak said.
Shares in Bagir were 3.3% higher at 2.68 pence on Friday.
