Here are my notes from the AGM
General
- Decent turn out (around 20 people), mostly seriously looking men in suits with the odd retailer like me. Interestingly everyone thought I was a professional, must have been the jeans I was wearing
- Lots of questions before the meeting started and afterwards - meeting ran for at least 2 hours.
- Mood in the room cautiously optimistic.
Impressions of Matt Darby
- Not slick, but genuine. Was his first time chairing a listed company meeting and it showed.
- Knows the industry and the company very well (16 years).
- Can tell this is more than just a job for him. RAN is his baby and he will do everything he can to save it.
Positives
- Expect to have US$4.5 to $5 million in cash at the end of June and enough cash to last well into 2019. Matt was very confident that outside of unexpected surprises that there would be no need for a CR.
- Totally focused on sales and driving costs out of the business. Aiming to break even this year.
- Currently have 100 customers, but that only 20 are worth keeping as previous management were selling the pallets below cost. Matt commented that they basically started from scratch on the 1st March this year.
- Sales focused on SME (500 - 5000 pallets per month). Turn around time from initial contact to commitment is relatively fast, but there can be a 3 to 4 month delay as the customer works through their stockpile of wooden pallets.
- A large blue-chip customer bought a month ago and just bought again at double the size.
- Average sale price per pallet has increased from $6.50 to $10.50 and is now profitable.
- More costs to be driven from the business.
- Plastic cost has come down from $500/t to $250/t.
- Wood prices have risen significantly.
- No lack of plastic - can import if needed at low cost.
- In house CNC allows them to make the pallet molds cheaply and customize as needed.
- No need for any extra capex for a long time. Only using 3 out of the 10 lines most of the time.
- New sales incentive and sales system will be in place from July.
- Matt said he is sleeping well now, not so much last year. He seemed very positive about the future of the business while trying to not over promise.
Negatives
- Need sales of 60,000 pallets a month to break even. This is about 3x the current sales rate. This will be less if more costs are driven from the business.
- Ramadan is going to hurt sales for the quarter - might be disappointing.
- China deal written off. Was a terrible deal where they were selling for $6.50 a pallet when it was costing them over $10 a pallet to produce.
- Problems on-going with the Australian supplier of the plastic cleaning equipment. Is not effecting production, but $4 million in equipment is sitting doing not much. May end in litigation.
- Matt confident that the potential laid out in the prospectus is still there and is now even better. Lot of blue sky.
Horror stories from the previous management (mostly from other shareholders)
- Had 250 staff and were spending over US$550K a month. This has been reduced down to $150K and should drop down to 120K from June.
- Every single mold ordered last year (20) was the wrong size.
- Only had two sales staff for the whole of Indonesia.
- Sales staff paid not on volume or price, but a flat rate. Many apparently didn't leave their house!
- No CRM in place, sales pipeline, nor any plan for customer acquisition (I find this amazing)!
- The Chinese customer was given 90 day terms not FOB!
Opinion
Overall I am very positive. I think we will see continued SP weakness in the short to medium term as I don't think the upcoming quarter will be fantastic thanks to Ramadan. I am feeling much more confident about the longer term future. RAN has a great product that they are able to produce at a competitive price, provided they can ramp sales then the future could be very rosy. Don't mortgage your home and invest in RAN, but the odds look positive.
