RM2.L Regulatory News (RM2)

RM2 International S.A.

Annual Results 2013

RM2 International S.A. ("RM2" or the "Company"), the vertically-integrated innovator in pallet development, manufacture, supply and management, announces its financial results for the year ended 31 December 2013.

Highlights

· Successful AIM IPO in January 2014, raising £137.2m of development capital to further expand production capacity and to enable large-scale asset commercialisation and deployment

· New production facility expected to be fully operation on schedule in July 2014, more than doubling pultrusion production capacity and delivering additional operating efficiencies, putting the business in a much stronger position to meet expected demand

· BLOCKPal now in use by further potential customers and commercial terms agreed with a number of large-scale, blue chip corporations in retail, food, glass, packaging, beverages and spirits sectors

· Bill Sanders appointed to the newly-created position of Group COO in May 2014

Chairman of RM2, Ian Molson, commented:

"2013 was a year of critical development and preparation. The successful IPO at the beginning of this year marks the start of the next phase for RM2 as we transition towards large-scale asset commercialisation and deployment."

Chief Executive Officer, John Walsh, commented:

"Since the IPO at the start of the year we have fine-tuned our operations and developed a deeper understanding of the requirements of our prospective customers. We have been very encouraged by the response from existing and potential customers and remain very confident that we have the technology and strategy to disrupt a global market."

For further information:

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

Chairman's and CEO's Statement

We are pleased to announce RM2's results for the year ended 31 December 2013. The whole of the reported period is prior to our successful AIM IPO in January 2014.

We are happy to report that the transition to our new 265,000 square foot production facility in Ontario is progressing according to schedule and that it is expected to be fully operational, and delivering the expected operating efficiencies as of 1 July 2014, in line with earlier guidance. We are confident that the changes made to both the production processes and the design of the BLOCKPal pallet during the first half of this year will put us in a stronger position as we significantly expand production in the new facility.

Further to the announcement of 1 May 2014, the BLOCKPal pallet is now in use by further potential customers. In addition, RM2 has agreed commercial terms with, and is working to finalise contracts to deploy significant assets in the supply chain of, a number of large-scale, blue chip corporations in our target sectors, specifically retail, food, glass, packaging, beverages and spirits. Whilst these companies, in common with the majority of our potential customers, have complex systems and make changes to their critical processes cautiously and deliberately, the Company remains confident of converting, over the next three to six months, the detailed contractual discussions into long-term orders of significant scale.

We are also ensuring that the terms of the customer contracts allow RM2 the flexibility to provide additional financing of our capital requirements with matching invoice discounting or other debt facilities. The Company's cash position remains strong and sufficient to meet the requirements of our current production schedule.

Our recent progress represents just the start of RM2's asset deployment. We believe that our strategy of targeting contracts of significant scale with market-leading companies, and the ratification of our products within their supply chains, will assist and accelerate deployment of our assets into other companies within those sectors.

Outlook

Our immediate focus remains on ensuring that the business is well-positioned to significantly increase production in the short-term and on securing and further developing our contracted customer base.

In these early months following our IPO, we have responded to the feedback from, and the needs of, our existing and target customers and have developed a deeper understanding of their systems and operations. We remain convinced that RM2 has a vastly scalable opportunity in the global pallet market and possesses the technology and strategy to succeed.

We would like to take this opportunity to thank our staff and our shareholders and look forward to reporting to you again as the business progresses.

Ian Molson, Chairman and John Walsh, Chief Executive Officer

Posting of Annual Report and Notice of AGM

The Company confirms that it has posted its Audited Consolidated Accounts for the year ended 31 December 2013 and (in compliance with Luxembourg law) its Company-only Accounts for the year ended 31 December 2013 to shareholders together with the Notice of Annual General Meeting and the associated form of proxy. Both sets of accounts, the Notice and related documents will be available shortly on the Company's website and can be downloaded from www.rm2.com.

The Annual General Meeting will be held at 10 rue Nicolas Adames, L-1114 Luxembourg on 24 June 2014 at 8:30 a.m.

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of cash flows

Consolidated statement of changes in equity

Notes

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 Rue de la Chapelle 5, 1235 Luxembourg. The Company is the ultimate parent entity of the RM2 Group (the "Group").

The Group is principally engaged in developing and selling shipping pallets and to provide related logistical services.

2 Basis of preparation

The consolidated financial statements comprises the consolidated financial information of the Group as at 31 December 2013 and are prepared under the historic cost convention with the exception of certain items which are measured at fair value as disclosed in the accounting policies below.

The accounting policies which follow set out the policies applied in preparing the consolidated financial statements.

2.1 Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and as adopted by the European Union ("EU").

2.2 Basis of consolidation

The consolidated financial statements comprise the financial information of the Group and its subsidiaries. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial information of the subsidiaries is prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance.

Subsidiaries and business combinations

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The Group uses the acquisition method of accounting to account for the acquisition of subsidiaries.

The consideration transferred on acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the consideration transferred over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the consideration transferred acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in profit or loss. Acquisition costs are written off to profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The subsidiaries of the Group are listed in note 22.

3 Summary of significant accounting policies

The principal accounting policies are summarised below:

3.1 Foreign currencies

The Group's consolidated financial statements are presented in United States Dollars ("USD"), which is also the parent company's functional currency. For each entity the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions and balances

Transactions in foreign currencies are initially recorded by the Group's entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

Differences arising on settlement or translation of monetary items are recognised in profit or loss. These are recognised in other comprehensive income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively).

Group companies

On consolidation, the assets and liabilities of foreign operations are translated into USD at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

3.2 Going concern

The consolidated financial statements have been prepared assuming the Group will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations. In assessing whether the going concern assumption is appropriate, management has considered the company's existing working capital and management are of the opinion that the Group has adequate resources to undertake its planned program of activities for the 12 months from the date of approval of the consolidated financial statements.

On 6 January 2014, the parent company of the Group RM2 International SA completed a successful Initial Public Offering (IPO) the London Stock Exchange AIM market, raising gross proceeds of approximately £137.2 million (equivalent to approximately USD 225 million) to expand its production capacity and to fund the production of pallets for rental and sale. Following the IPO, the Group terminated the DPEI Warrant Agreement by paying USD 40,000,000 and repaid all of the bridging loans as detailed in Note 9 and 25. The Group expects to expand its production and add pallets to its rental pools in North America and Europe in 2014, following successful trials with potential customers.

3.3 Property, plant and equipment

Initial recognition and measurement

Property, plant and equipment ("PPE") are tangible assets used by the Group for its own production or supply of goods or services, or for administrative purposes and are expected to be used during more than one period. PPE is recognised when it is probable that future economic benefits associated with the asset will flow to the Group and if the cost can be measured reliably.

PPE is initially recognised at cost. Such cost includes the purchase price and all cost incurred in bringing the assets to the location and condition for its operation in the manner intended by management. The cost of the PPE includes also the borrowing costs for long-term construction projects if the recognition criteria are met.

The Group has recognised most of the inventory costs within the cost of the property, plant and equipment for which the inventories have been used in order to produce samples which are considered as part of the cost of the property, plant and equipment.

When significant parts of property, plant and equipment will be required to be replaced, the Group will recognise such parts as individual assets with specific useful lives and depreciate them accordingly. Likewise, when a major inspection will be performed, its cost will be recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs will be recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use will be included in the cost of the respective asset if the recognition criteria for a provision are met.

Subsequent measurement

PPE is subsequently measured at cost less any accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings 30 years

Plant and equipment 3 to 20 years

PPE under construction not depreciated

An item of PPE and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.

The residual values, useful lives and methods of depreciation of PPE are reviewed at each financial year end and adjusted prospectively, if appropriate. Further explanation on management estimates and assumptions is disclosed in note 4.

The Group has not applied revaluation on any of its PPE.

3.4 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Group as a lessee

Leases where a significant portion of the risks and rewards of ownership is retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's commencement date at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in long-term and short-term borrowings. The interest element of the finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.

The Group does not have any assets under financial lease.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.

3.5 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

The Group was in the start-up phase during the year ended 31 December 2013. Cash from borrowings were primarily used to explore opportunities, pay salaries and other operating expenses. No specific borrowings were made for the construction or production of an asset. Therefore, the Group did not capitalise any borrowing costs during any period up to this date.

3.6 Investment property

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, the Group has decided to measure investment properties using the cost model. Investment properties are measured similarly to property, plant and equipment.

The fair value, which reflects market conditions at the reporting date, is disclosed in the notes to the consolidated financial statements.

Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the income statement in the period of de-recognition.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

3.7 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.

The useful lives of intangible assets are assessed as finite, except goodwill.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to definite is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

Amortisation is calculated on the straight-line method to write off the cost of each asset to their residual values, over their estimated useful life. The annual amortisation periods are as follows:

Software 10 years

Trade names 5 years

Customer Relationship 5 years

Licences 3 to 5 years

Goodwill Not amortized

3.8 Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are considered as an intangible asset when the Group can demonstrate:

- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale

- Its intention to complete and its ability to use or sell the asset

- How the asset will generate future economic benefits

- The availability of resources to complete the asset

- The ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost of sales. During the period of development, the asset is tested for impairment annually.

To date no amounts have been capitalised in respect of the development phase of internal projects as management have assessed that they are unable to demonstrate that they have met all of the recognition criteria.

3.9 Inventories

Inventories are stated at the lower of cost or net realizable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows:

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

When the net realizable value of stock is lower than its cost, provisions for impairment are created to reduce the value of the stock to its net realizable value.

The cost of inventories is recognised as an expense in the period in which the related revenue is recognised.

3.10 Impairment on non-financial assets

Assets that are subject to amortisation and other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset's net selling price and value in use or fair value less cost to sell determined by using discounted cash flow method. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

The key assumptions used in the computation of the value in use or fair value less cost to sell of an asset are detailed in the note on intangible assets. The future discounted cash flow method used to determine the value in use or fair value less cost to sell is usually, but not always, based on cash flow projections over for the next 5 years.

Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or cash-generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation reserve. Goodwill has not been impaired.

3.11 Financial instruments

3.11.1 Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit and loss, loans and receivables, held-to-maturity investments and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

All financial assets are recognised initially at fair value plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group's financial assets include cash and short-term deposits, trade and other receivables, other current and non-current assets which are classified in the category of loans and receivables and available-for-sale financial assets. The Group does not have held-to-maturity investments.

3.11.2 Subsequent measurement

This category has two sub-categories: "financial assets held for trading", and those designated at fair value through profit and loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or is so designated by management. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Assets in this category are classified as current assets if they are either held for trading or are expected to be realized within 12 months of the balance sheet date.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with changes in fair value recognised in finance income or finance costs in the statement of comprehensive income.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

The Group has no financial assets designated as held for trading.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets.

After initial measurement, they are subsequently measured at amortised cost using the effective interest rate method ("EIR"), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of comprehensive income. The losses arising from impairment are recognised in the finance costs in the statement of comprehensive income.

Available-for-sale financial investments include equity and debt securities. Equity investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is reclassified to the statement of comprehensive income in finance costs and removed from available-for-sale reserve.

3.11.3 De-recognition

A financial asset is derecognised when:

The rights to receive cash flows from the asset have expired;

The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset; and

When the Group has transferred its rights to receive cash flows from an asset or has entered into a 'pass-through' arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset.

In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

3.11.4 Impairment of financial assets

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include, but is not limited to, indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments.

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial assets' original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of comprehensive income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the statement of comprehensive income. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the statement of comprehensive income.

In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered as indicator that the securities are impaired. 'Significant' is evaluated against the original cost of the investment and 'prolonged' against the period in which the fair value has been below its original cost. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised on equity instruments are not reversed through the statement of comprehensive income. Increases in their value after impairment are recognised directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the statement of comprehensive income.

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the statement of comprehensive income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the statement of comprehensive income, the impairment loss is reversed through the statement of comprehensive income.

3.12 Financial liabilities

3.12.1 Initial recognition and measurement

Financial liabilities are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

The Group's financial liabilities include trade and other payables, borrowings and long-term payables.

3.12.2 Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivatives financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the statement of comprehensive income.

The Group has not designated any financial liabilities upon initial recognition as at fair value through profit or loss.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised as well as through the effective interest rate method amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of comprehensive income.

Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer the settlement of the liability for at least 12 months after the balance sheet date.

3.12.3 De-recognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are subsequently modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income.

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

3.13 Trade receivables

Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all the amounts due according to the original terms of receivables. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of expected cash flows, discounted at the effective interest rate for similar borrowers. The amount of the provision is recognised in the statement of comprehensive income.

3.14 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at fair value. For the purposes of the cash flow statement, cash and cash equivalents are comprised of cash on hand and deposits held on call with banks having an original maturity of 3 months of less. In the statement of financial position, bank overdrafts are included in borrowings under current liabilities net of any related restricted cash.

3.15 Taxes

Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. A provision is made for corporation tax for the reporting period using the tax rates that have been substantially enacted for each company at the reporting date in the country where each company operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of comprehensive income.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretations and establishes provisions where appropriate.

Deferred income tax

Deferred income tax is provided for using the liability method on all temporary differences arising from tax bases of assets and liabilities and the carrying amounts in the financial statements. The deferred tax is calculated on currently enacted tax rates that are expected to apply when the temporary differences reverse. Where an overall deferred taxation asset arises, it is only recognised in the financial statements where its recoverability is foreseen with reasonable certainty.

Deferred income tax is provided on temporary difference arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

3.16 Pensions and other post-employment benefits

The Group does not operate any defined benefit pension plan or provide additional post-employment healthcare benefits to employees.

3.17 Provisions, contingent assets and liabilities

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement. Provisions are not recognised for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised.

Contingent assets

Contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

Contingent assets are not recognised in the consolidated financial statements. However, when the realisation of income from the contingent asset is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.

Contingent liabilities

Contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, or is a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are not recognised in the consolidation financial statements.

3.18 Equity, reserves and dividend payments

Issued share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Other components of equity include the following:

- Foreign currency translation reserve - comprises foreign currency translation differences arising from the translation of financial statements of the Group's foreign entities into US Dollars.

- The share premium account - comprises an amount of USD 30.441.102 corresponding to a share premium available to compensate existing and future losses or to increase the subscribed share capital, resulting from the reduction of nominal value of the shares from USD 0.45 to USD 0.01 dated October 11, 2013.

- Retained earnings - includes all current and prior period retained profits and losses.

All transactions with owners of the parent are recorded separately within equity.

Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date.

3.19 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the invoiced value for the sale of goods net of value added tax rebates and discounts which represents the fair value of the consideration received or receivable. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised:

Sales of goods

Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods have been transferred to the buyer and the collectability of the related receivables is reasonably assured, regardless of when the payment was made.

The Group has completed minimal sales of goods to third parties as of 31 December 2013.

Rendering of services

Revenue relating to software development that is contracted on a time and materials basis is recognised as the services are performed.

Revenue relating to the sale of software licenses is recognised over the period to which the license relates. Revenue from services provided is determined by management's assessment of the percentage completed of each contract. Management determine the percentage of completion by considering the work performed to date based upon internal reports and agreed project milestones.

Interest income

For all financial assets at amortised cost and interest bearing financial assets classified as available for sale, interest income is recorded using the effective interest rate method, which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial asset or shorter period, where appropriate, to the net carrying amount of the financial asset. Interest income is included in finance income in the statement of comprehensive income.

Rental income

Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and included in revenue due to its operating nature.

Rental income is recognised within other operating income as it is not considered as related to the primary activity of the Group.

3.20 Changes in accounting policies and disclosures

The Group applied, for the first time, certain standards and amendments for the preparation of these consolidated financial statements:

None of these new standards, amendments or interpretations had a material effect on these consolidated financial statements.

At the date of approval of these consolidated financial statements, the following IFRS Standards and Interpretations, which have not been applied in these Financial Statements, were issued but not yet effective. These new Standards, Amendments and Interpretations are effective for accounting periods beginning on or after the dates shown below:

IFRS Standards and Interpretations issued (and EU adopted) but not yet effective:

IFRS Standards and Interpretations issued by IASB but not yet EU approved:

The Group cannot early adopted these amended standards and interpretations. The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the reported results.

4 Significant accounting judgements, estimates and assumptions

The preparation of financial statements in conforming with adopted IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and assumptions are based on historical experience and other factors considered reasonable at the time, but actual results may differ from those estimates. Revisions to these estimates are made in the period in which they are recognised.

4.1 Judgments

In the process of applying the Group's accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognised in the consolidated financial information:

Non-current assets held for sale

The Group has not discontinued operations during the year presented in these consolidated financial statements.

In 2012, the Group had decided to dispose of certain non-current assets as their carrying value would be principally recovered through sale transactions rather than continuing use. These assets were machinery and equipment related to the investment in Mafic S.A. These assets have been disposed of in 2012.

At the year end the Group did not hold any non-current assets held-for-sale

Investment in Mafic S.A.

The investment in Mafic S.A. was disposed of during the year by way of a contribution in kind of 842,000 shares of Mafic S.A. to Basalt Holding S. à r. l.

The Group then cancelled 12,286,000 Class J shares and disposed of the entire share capital of Basalt Holding S. à r. l. to the holders of the Class J shares.

Management considers that the fair value of the disposed investment in Mafic S.A. was represented by the fair value of the investment held in Basalt Holding S. à r. l. as the disposal was made by an exchange of financial assets. The final fair value of Mafic S.A. on disposal was determined in consideration of the actual value transferred to holders of Class J shares, corresponding to the nominal value of the Class J shares.

Management has recorded the difference between the carrying value of Mafic S.A., prior to disposal, and the actual liquidated value of Class J shares as representative of the gain realised on the transaction, the amount has been recorded within financial income. For further detail, refer to notes 9 and 16.

Recognition of deferred tax assets

The assessment of the probability of future taxable income against which deferred tax assets can be utilised is based on the Group's latest approved forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset in the foreseeable future, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties are assessed individually by management based on the specific facts and circumstances.

The Group has not recognised any deferred tax assets in respect of losses carried forward as there is no certainty of recovery. For further detail on deferred tax, refer to note 17.

Research and development expenditure

Research and development expenditure has been fully written off to the statement of comprehensive income. Management have taken into account the inherent risks in all research and development expenditure and specifically that expenditure being incurred by the business in the year ended 31 December 2013 and have concluded that the requirements of IAS 38 to capitalise development expenditure have not been met.

Receivable from Plastics Research Corporation

The litigation between the Group and Plastics Research Corporation ("PRC") was terminated through the signature of a settlement agreement between the parties dated 17 November 2012. As per the settlement agreement, PRC must pay USD 13,500,000 to RM2 as indemnity for the transfer of the equipment (the "Equipment") to PRC.

The receivable is repayable in several instalments starting 2 years after the settlement agreement date. During this period, PRC must only reimburse the interest accrued on the receivable and is secured by the Equipment.

Management has estimated that the effective interest rate to amortise the receivable was 7%.

Due to delay in payment of the interest receivable by PRC, Management has estimated that there were significant uncertainties in relation to the future reimbursement of the capital amount. Therefore, Management had in 2012 decided to record full impairment of the outstanding nominal amount of the receivable.

 The settlement agreement also provides for royalty payments to be made by PRC to the Group in relation to future sales made by PRC with the Equipment. The royalty to be paid is computed based on the quantity of manufactured items sold and the quantity of composite ground generated and sold by PRC during the 7 years following the settlement agreement's date, with a cap of USD 11,000,000.

Management also determined that there was very low probability that PRC will generate sales from the use of the Equipment and consequently determined that the fair value of the royalty receivable was nil.

In November 2013, PRC defaulted on the interest payment due and subsequently, in 2014, ownership of the Equipment was transferred to the Group in application of the security agreement. The Group will decide whether to dispose of the Equipment, or redeploy the assets within the Group. Full provision has been made for interest due in respect of the interest receivable and not paid in the year.

Restricted Shares

The Group has issued restricted share and intends to issue share options following the approval of the 2013 Share Option Scheme.

Management has considered that the restricted shares issued to date should be measured similarly to share options. As per agreement, the shares granted vest immediately and are accompanied by a restricted share agreement. Management has considered that the restrictions on shares were representative of market related vesting conditions, as the holders of the restricted shares can only dispose of their shares if the quotation price reaches different thresholds.

Management has considered that achievement of these conditions would require time corresponding to the advantage provided to the holders of restricted shares. Management has estimated that Tranche 1 and 2 would be achieved within 5 years and Tranche 3 within 10 years, therefore, Management has applied those durations as vesting periods for the instruments. For further detail on share-based payments transactions, refer to note 19.

Employee Stock Option Plan ("ESOP")

Under the Companytion Plan (tion P)evement of these conditions wo the Company had approved to grant options. The terms of these awards were modified prior to their issuance following the end of the fiscal year. Refer to Note 25.

Therefore, management considered that there was no cost to be measured and accounted for the share options granted as at 31 December 2013. For further detail on share-based payments transactions, refer to notes 19 and 25.

Accrued liabilities

An amendment to a contract was made in January 2014 which resulted in the payment in respect of past consultancy services by the Group. In reviewing the contract and the payment the Group has recorded a liability for the payment in the 2013 consolidated financial statements as all the costs related to past services rendered. For further detail, refer to note 16.

As part of the bridging facility until the successful IPO a premium was payable to cancel outstanding warrants in the Company. When considering the premium, the period to which it relates and as the IPO was completed on 6 January 2014, management considers that the cost of this cancellation had to be recognised pro ratatemporis as a finance charge in the 2013 consolidated financial statements.

Machinery depreciation

The Group has been developing its machinery and products throughout the year under review. The Group's machinery and products were not in full operation at the end of the year and there was no significant income derived from the machinery. The Group therefore has not depreciated the machinery in the year and will depreciate against future income when the machinery becomes fully operational in manufacturing finished product for sale or internal use. For detail on property, plant and equipment, refer to note 6.

4.2 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial information were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Share-based payments

The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share (options), volatility and risk-free interest rate, dividend yield and making assumptions about them.

During the year, the Company entered into several share-based payment transactions:

- 2012 Equity Incentive Plan - issued shares

- 2013 Equity Incentive Plan - restricted shares

The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 19.

Measurement of property, plant and equipment and investment property

The Group holds a building property which is used for both Group administrative purpose and rental to third parties. Therefore, the management has determined that the building accounting should be split between the part used by the Group, classified as property, plant and equipment, and the part rented to third parties, classified as investment property.

The initial cost of acquisition of the building is for both the building construction and the land. In determining the part of the acquisition cost related to the land, by default of split of cost upon acquisition, the management has made the assumption that 25% of the initial cost was related to the land.

In determining the measurement of each part of the building (PPE and investment property), the management has determined the split based on the surface used for each purpose. Management has also determined that the depreciation should be made using straight line method and over a useful life of 30 years.

Due to the inability of the management to determine the residual value at the end of the useful life, the depreciation is computed on the entire value of the building cost.

Impairment of inventory

In 2012, during the development of the machine, several samples were produced. Management has estimated for those samples which were not deemed to be part of the cost of property, plant and equipment that full impairment of these inventories should be recorded due to the inability of the Group to sell these samples.

The Group has reviewed the estimates used in the valuation of the inventory in 2012 and has considered that there is value in the samples produced in 2012. Therefore, management has reversed the impairment for USD 1,447,797 as at 31 December 2013, refer to note 10.

Fair value of financial instruments

The Group had significant financial instrument in the form of warrants issued to DPEI.

As a result of an agreement entered into on 8 November 2013, the warrants were cancelled and the Company recognised a liability for the termination of the warrants. The liability has been measured in reference to the amount actually paid by the Company in early January 2014. For further detail on warrants, refer to note 13.

Business combinations

The directors have identified the separable net assets acquired and have valued those assets using discounted cash flows for the expected revenue from those assets. The separable assets identified are the software, client list and brand name.

Management measured assets acquired and liabilities assumed by reference to their fair value at acquisition date. Management has determined the fair value of separable identified assets using discounted cash flow ("DCF") of the entity over the next 6 years. In determining the net present value of each asset, the Group has applied discount rate of 13%.

For further detail on the Group's business combination, refer to note 5.

5 Business combinations and acquisition of non-controlling interests

5.1 Acquisitions in 2013

Acquisition of Equipment Tracking Limited

During the period covered by theses consolidated financial statements, the Group acquired the remaining 97% of the voting shares of Equipment Tracking Limited. The Group had an equity investment representing 3% of the voting shares of Equipment Tracking Limited as at 31 December 2012.

On 27 September 2013, RM Total Solutions International BV signed an agreement to acquire the entire issued share capital of Equipment Tracking for £2 million. Completion of the acquisition of Equipment Tracking occurred on 10 December 2013. Control of the business was considered effective at the time of the consideration was paid.

The assets and liabilities acquired are as follows:

Equipment Tracking was founded in 1995 (having traded as Adventures in Business Limited until the incorporation of Equipment Tracking in 2004). Its pallet tracking and management software TACS (Track Asset, Control Spend), which the Company previously licensed, assists customers in managing complex pallet and equipment flows. It has serviced some of the world's largest suppliers of consumer goods.

The TACS system offers customers services which provide 'real time' equipment balances throughout their supply chains.

These services can replace or strengthen existing tracking systems and are designed to enable l customers to improve their pallet pool management. The TACS system was designed to provide customers with greater visibility over costs and, where possible, the ability to reduce the direct and indirect costs associated with goods movements between customers and suppliers. This offers major cost savings to the Group and its customers, increasing the Group's offer and attraction of the pallet pool business. In addition to the Group, the TACS system also gives the benefits of a back office system that can not only track the Group's assets, but also generate movement statistics, invoicing data and measurement against performance criteria, which justifies the goodwill in the acquisition.

The fair value of the separable net assets has been identified and the goodwill in the business has been calculated at USD 1,150,189 relating to the value attributed to the organisation.

Included in the results for the year is revenue and loss of USD 98,939 and USD 17,740 respectively representing the results since the date of acquisition. The results for the full year, had Equipment Tracking been owned for the full year, would have shown revenue and losses of USD 1,079,163 and USD 14,935, respectively.

No contingent liabilities were considered in determining the fair value of assets acquired and liabilities assumed.

Acquisition of additional interest in RM2 Europe Sp. Zoo

On 8 October 2013, the Group acquired an additional 20% interest in the voting shares of RM2 Europe Sp. Zoo increasing its ownership interest to 100%. The consideration of USD 68,193 was part of the settlement agreement with STM Technologies, Inc., the non-controlling shareholders made on 27 September 2013. The carrying value of the additional interest in RM2 Europe Sp. Zoo was USD 68,193. Following is a schedule of additional interest acquired in RM2 Europe Sp. Zoo:

6 Property, plant and equipment

The Group has no restrictions on the realisability of its property, plant and equipment. The Group has capital commitments on the development and acquisition of property, plant and equipment in Canada for USD 2,386,380 (CAD 2,535,529)

As at 31 December 2013 the Group had several items of property, plant and equipment which were temporarily idle. The carrying amount of these items is USD 2,452,532 (2012: USD 1,745,341). This amount corresponds to machines for the production of pallets which have been completed and for which the production has not started. There was no amount of depreciation charge as per prior periods as these machines were still in the construction phase.

There were no borrowing costs capitalised during any period.

6.1 Security on property, plant & equipment for liabilities

The Group has granted a security interest over the property held in Switzerland in return for the CHF 2,100,000 bank loan (USD 2,361,135) (2012: CHF 2,100,000 - USD 2,704,000).

7 Investment property

The investment property is a building used by the Group for both administrative purpose and for rental. The cost of the property related to the administrative purpose is classified within property, plant and equipment. The cost for the rental part is classified as investment property.

7.1 Results from investment property

7.2 Fair value of investment property

The investment property is measured at cost. The fair value of the property as at 31 December 2013 has been determined by Regie Chatel S.A., an independent external appraiser, on 20 January 2014. This valuation is the only external valuation made by the Group for the investment property. Regie Chatel S.A. is a specialist in valuing such investment properties. The fair value of the property has been determined using the rental income and the construction value. The valuation has been determined with the following primary inputs:

This valuation is the first valuation performed on the property and for the purpose of these consolidated financial information.

8 Intangible assets

The Group has no intangible assets pledged as security for liabilities.

The Group has no contractual commitment for the acquisition of intangible asset.

As these assets were recognized late in the year 2013, the software, trade names, customer relationships resulting from the Equipment Tracking Limited business combination were not depreciated during the year 2013.

9 Financial assets and liabilities

9.1 Available-for-sale investment - unquoted equity shares

In 2012, the available-for-sale financial assets consist in the investments in shares of a non-listed company, which was valued based on non-market observable information. In 2013, the Group acquired the remaining shares of this company which is now consolidated.

9.2 Loan notes

In 2012, the Group had loan note receivables with two entities: PRC and Mafic. In 2013, the Group has no more loan note receivables with Mafic S.A. as this amount has been reimbursed. The net book value of the loan note receivables with PRC is nil.

9.2.1 Loan notes PRC

The Group entered into an agreement with Plastics Research Corporation ("PRC") for the development and production of specific shipping pallets. The machine has been developed on land rented by PRC from a third party (the "Redlands Facility"). The development of the production facility has required the acquisition of equipment (the "Equipment") which is located at the Redlands Facility. In the course of the development of the Equipment, several disputes arose between the Group and PRC. The disputes were settled by an agreement of the parties entered into on 15 November 2012.

As per the Settlement Agreement, it has been agreed that:

- PRC has ownership and possession of all Equipment in the Redlands Facility;

- PRC shall pay to RM2 S.A. the principal sum of USD 13,500,000 (the "Indebtedness") as a non-royalty payment; and

- PRC shall pay to RM2 S.A. royalties for the sales of pallets and composite compound up to USD 11,000,000 (the "Royalty Payments").

The outstanding balance of the indebtedness as at 31 December 2013 amounts to USD 14,109,415 (in 2012: USD 13,747,704) and includes interest of USD 609,415 (in 2012: USD 247,704).

The loan bears interest at the effective interest rate of 7% per annum and has a maturity date as at 15 November 2019.

Management has determined that there was significant risk on the recoverability of the capital amount of the Indebtedness for USD 13,500,000 and decided to record a full impairment on the investment (for further detail, refer to note 4). The impairment on the loans and receivables was incurred as the Group has estimated that the recoverability of the receivable resulting from the resolution of the litigation with PRC was uncertain as a result of the delinquent payment made by PRC.

As at 31 December 2012, the carrying amount of the loan notes PRC is USD 247,704, which corresponds to the balance of accrued interest. As at 31 December 2013, the carrying amount of the loan notes PRC is USD nil, as PRC is in default.

As a result from the transfer of the Equipment by the Group to PRC in exchange of the payment of the receivables of USD 13,500,000, the Group has generated a gain on the de-recognition of the Equipment of USD 906,399.

In November 2013, PRC defaulted on the interest payment due. Subsequently in 2014, ownership of the Equipment was transferred to the Group, pursuant to the security agreement. The Group will decide whether to dispose of the Equipment, or redeploy the assets within the Group. The Equipment is fully impaired in the consolidated financial statements. Full provision has been made for interest due in respect of the interest receivable and not paid in the year of USD 609,414.

9.2.2 Loan notes Mafic

The Group has incurred costs related to the development of new technology for the production of pallets using Basalt fibre. During the development process, the Group determined that they did not want to use this fibre for the production of their pallets.

The Group entered into negotiation with Mafic for the sale of the development costs incurred in relation with this project. An agreement was concluded with Mafic S.A. in September 2013.

The Group recognised a loan note receivable with Mafic S.A. for USD 4,451,000 as at year end 2012. The receivable has been fully paid in September 2013.

9.3 Interest-bearing loans and borrowings

*Note: An affiliate of JKD Capital also received a USD 500,000 arrangement fee

CHF 2,100,000 bank loan

The loan is secured by a mortgage on the building held by the Group in Switzerland for a total value of CHF 2,470,000 (USD 2,777,144) and by transfer of rental income to the lender.

9.3.1 Domestic Private Equity Investors LLC ("DPEI") Bridge Facility

The Group had entered into a bridge facility with DPEI for the financing of its operations on 30 June 2010. As a result of the Group restructuring operations in 2011, the bridge facility had been fully reimbursed during the year 2011.

The Group also issued warrants on the same date to DPEI granting to DPEI the right to purchase up to 10% of the fully diluted share capital of the Company. The right exists as long as the outstanding warrant shares represent more than 5% of the share capital of the Company. The fair value of the warrants is immaterial.

On 8 November 2013 the agreement was amended such that the right to warrants would be terminated following a successful IPO before 31 March 2014 on the condition that the company pay DPEI USD 40m. This occurred in January 2014 and has been considered as a cost of the facility in the year ended 31 December 2013.

The number of warrant shares granted to DPEI at each year end is as follows (taking into account the termination described in the preceding paragraph):

9.4 Hedging activities and derivatives

The Group has not entered into any hedging activity during each period covered by the consolidated financial information.

9.5 Fair values

The Group estimates that the fair value of the financial assets and liabilities approximates their carrying amount as these are mainly composed of short-term receivables and payables.

9.5.1.1 Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

- Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

- Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly

- Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data

As at 31 December 2012, the Group held the following financial instruments carried at fair value in the statement of financial position:

The Group has no financial instruments at fair value as at 31 December 2013.

9.5.1.2 Reconciliation of fair value measurements of Level 3 financial instruments

The Group carries unquoted equity shares as available-for-sale financial instruments classified as Level 3 within the fair value hierarchy.

The Group has equity interests in two unlisted entities with which it entered into a research and collaboration agreement.

A reconciliation of the beginning and closing balances including movements is summarised below:

On 27 September 2013, the Company participated in a contribution in kind of 842,000 shares of Mafic S.A. in order to incorporate and hold 100% of the issued share capital of Basalt Holding S. à r. l., a newly incorporated Luxembourg company. This resulted in the recognition of a financial gain of USD 16,464,380. Subsequently, a value correction amounting to USD 3,304,857 has been deducted from the value acquisition of Basalt Holding S. à r. l. participation.

On 11 October 2013, the Group cancelled 12,286,000 Class J shares with a nominal value of USD 0.45 each and disposed of the entire share capital of Basalt Holding S. à r. l. as a payment in kind to the holders of the Class J shares. The financial loss on the disposal is USD 8,171,070. The difference between the gain, the value correction and the loss recognised on this transaction is the value of the cancellation of the share capital.

On 10 December 2013, the Group purchased the remaining 97% of Equipment Tracking Limited, see note 5.

10 Inventories

The Group produced some sample items in 2012. The Group has determined that the recoverable value of those samples which were not deemed to be part of the cost of property, plant and equipment samples was nil and decided to make full impairment of the inventory cost. During the year ended 2012, the Group recorded a value adjustment on the inventory for USD 1,447,797.

As at 31 December 2013, the Group has assessed the carrying value of the inventory and consider that there is value in the samples produced and therefore has reversed the impairment.

The cost of inventory recognised as an expense during the year was USD 47,755. In 2012, there was no cost of inventory recognised as an expense as the Group has not made any sale transaction during this period.

The Group does not have any pledge on its inventory.

11 Trade and other receivables

The ageing of the trade receivables as at 31 December 2013 is detailed below:

The Group has no provision for impairment of receivables.

The balance of other receivables included an advance payment made to STM related to the acquisition of a licence for the Mafic project (see note 9) for USD 1,000,000 as at 31 December 2012 (2013: USD Nil).

The other tax receivables primarily relate to Harmonised Sales Tax (VAT) balances due in Canada.

12 Cash and short-term deposits

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.

At the period ended, the Group does not have any undrawn committed borrowing facilities.

The Group has not pledged any part of its short-term deposits to fulfil collateral requirements.

The Group has no restricted cash at any period ended. For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 31 December:

13 Share capital and reserves

2012

On 20 January 2012, the Extraordinary General Meeting of the Company decided to increase the share capital of the Company by an amount of USD 55,164,140 through partial incorporation of share premium into capital to raise its former amount of USD 122,860 to USD 55,287,000.

The Extraordinary General Meeting also decided to reduce the par value of the shares of the Company from USD 1 per share to USD 0.45 per share by the issuance of 67,573,000 new shares equivalently distributed in each class of shares.

The Extraordinary General Meeting decided to increase the authorized share capital of the Company by an amount of USD 67,340,143.50 to raise its current amount of USD 232,860 to USD 67,573,003.50 equivalently distributed in each class of shares with the same rights.

As at 31 December 2012, each ordinary share issued has a nominal value of USD 0.45 and has been fully paid-up.

2013

On 11 October 2013, the Company's issued share capital was reorganised. The Company's share capital was decreased by USD 9,956,043 (to reflect absorption of historic losses and reimbursement in kind to shareholders consisting of all the shares held by the Company in Basalt Holding S. à r. l.).

Linked to such decrease in issued share capital, the ordinary shares designated as Class J ordinary shares were cancelled. This took the Company's total issued share capital to USD 45,330,956, consisting of 110,574,000 ordinary shares of USD 0.45 each.

Immediately following this, the nominal value of the ordinary shares was reduced from USD 0.45 to USD 0.01.

Following such reorganisation, the Company's issued share capital was USD 1,105,740, consisting of 110,574,000 ordinary shares of USD 0.01 each.

On 6 November 2013, the Company issued an additional 22,275,000 ordinary shares taking the Company's total issued share capital to 132,849,000 ordinary shares of USD 0.01 each.

On 14 November 2013, the Company's shareholders resolved to reorganise the Company's share capital such that, with effect from Admission, each of the classes of ordinary share designated as Class A-I be converted into a single class of ordinary share, being the Ordinary Shares.

On 26 November 2013, 11,025,000 Ordinary Shares were issued to certain founders of the Company, taking the Company's total issued share capital to 143,874,000 Ordinary Shares.

On 3 December 2013, 12,308,775 Restricted Shares were granted to certain Directors, taking the Company's total issued share capital to 156,182,775 Ordinary Shares.

The restricted shares are issued with performance criteria. The Performance Conditions are linked to the volume weighted average quoted price of the Ordinary Shares (the "Average Price") for a consecutive 30 day period (the "Relevant Period"). If the Average Price is 50 per cent higher than the Placing Price for the Relevant Period, the Performance Condition in respect of one-third of the Restricted Shares shall be fulfilled. If the Average Price is 75 per cent higher than the Placing Price for the Relevant Period, the Performance Condition in respect of a further one-third of the Restricted Shares shall be fulfilled. If the Average Price is 100 per cent higher than the Placing Price for the Relevant Period, the Performance Condition in respect of the final third of the Restricted Shares shall be fulfilled. If any Performance Conditions are not fully satisfied by 19 November 2023, the Director shall transfer any of his remaining Restricted Shares to the Company at a purchase price equal to the nominal value of the Restricted Shares, being USD 0.01 each.

The holders of the Restricted Shares cannot sell, transfer, mortgage, charge, encumber or otherwise dispose of any of the Restricted Shares as long as the performance conditions are not fully satisfied. These Restricted Shares are considered by Management as share-based payments and performance conditions as market vesting conditions. For further detail on the share-based payments transactions refer to note 19.

13.1 Authorised shares