We shouldn’t be surprised that RedT – a producer of novel storage systems for small off-grid to large industrial-scale projects – has been drawing in capital as it seeks to tailor its technologies and build capacity to meet “an eight-fold increase in secured orders and a sixfold increase in production since April 2017”.
However, its shares' recent poor run suggests shareholders are showing fatigue in the face of its constant demand for more cash. Having raked in €16.5m through share issues in 2017, it finished the year with only €4.7m more net cash than when it started, which explains why it needed to raise another £3.9m through a share placing in April. The net operating cash outflow for 2017 was €10.6m (£9.27m).
Capital issues aside, the bulk of revenues (92 per cent) were generated by its legacy Camco carbon trading and consultancy business. This is essentially a low-margin operation, non-related to the roll-out of its vanadium redox flow battery technologies, so the group duly hived off Camco Africa and ceased its Carbon activities in January 2018.
Overall, the operating loss for 2017 came in at €7.9m, against €5.7m in 2016, largely a reflection of an increase in headcount from 24 to 60 during the period. VSA Capital gives a 10-year discounted cash-flow-derived target price of 22p and, prior to the results, the broker had positive free cash flow penciled in for 2019, although investors probably shouldn't hold their breath on that one.
| REDT ENERGY (RED) | ||||
| ORD PRICE: | 6.9p | MARKET VALUE: | £50m | |
| TOUCH: | 6.8-7p | 12-MONTH HIGH: | 12.6p | LOW: 5.9p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 3.2¢* | NET CASH: | €7.4m | |
| Year to 31 Dec | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2015 | 11.1 | -0.7 | na | nil |
| 2016 | 10.8 | -5.8 | -1.2 | nil |
| 2017 | 11.8 | -8.2 | -1.3 | nil |
| % change | +9 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1 = €1.14. *Includes intangible assets of €15m, or 2¢ a share. | ||||
