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RAI - RA International News Story

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Last Trade - 07/08/20

Sector
Industrials
Size
Small Cap
Market Cap £79.0m
Enterprise Value £64.8m
Revenue £52.9m
Position in Universe 1012th / 1819

RA Intnl Group PLC - Final Results

Fri 17th April, 2020 7:00am
RNS Number : 9565J
RA International Group PLC
17 April 2020
 

RA International Group PLC

("RA International" or the "Company" and, together with its subsidiaries, "the Group")

Results for the year ended 31 December 2019

 

A year of strong progress

 

RA International Group PLC (AIM: RAI), a leading provider of services to remote and challenging locations around the world, is pleased to announce its results for the year ended 31 December 2019.

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

Restated1

 

 

 

 

 

Revenue

 

 

69,064

54,805

Underlying profit2

 

 

13,259

12,761

Profit before tax

 

 

13,259

9,827

Basic EPS (cents)

 

 

7.4

6.3

Net Cash (end of period)3

 

 

21,393

27,804

 

 

 

 

 

Dividend per share (recommended)

 

 

1.25p

1.0p

 

 

 

 

 

 

 

Financial highlights

·      Full year revenue increased 26% to USD 69.1m (2018: USD 54.8m), of which USD 46.0m was delivered in H2 (H2 2018: 28.7m).

·      Underlying profit increased 4% to USD 13.3m (2018: USD 12.8m) of which USD 10.7m was earned in H2 2019 (2018: USD 5.5m). Exceptional costs relating to the Company's 2018 Admission to AIM make up the prior year differential in underlying profit and profit before tax.

·      Profit before tax of USD 13.3m (2018: USD 9.8m) increased by 35% and was in line with expectations.

·      Net cash at 31 December 2019 of USD 21.4m (2018: USD 27.8m). The decrease was primarily due to increased trade receivables and accrued revenue at year end resulting from an extremely active November and December.

·      Proposed final full year dividend of 1.25p per share (2018: 1.0p per share).

 

Operational highlights

·      Awarded new contracts, uplifts and extensions to existing contracts of USD 90.9m during 2019
(2018: USD 62.0m).

·      Order book of USD 141.0m (2018: USD 119.2m) at year end, up 18% from 2018 year end.

·      Further diversification of client base with revenue from government and commercial customers making up 44% in 2019 (2018: 38%).

·    Strong increase in IFM services contracts to USD 28.6m (2018: USD 23.1m) of which USD 10.4m was high value hospitality service contracts (2018: USD 6.0m).

·      Significantly expanded operations in South Sudan and Mozambique and entered Denmark and Libya executing projects in 11 countries during the year (2018: 9 countries).

·      Further streamlined the project delivery function through the implementation of a group-wide Management System (RAMS) and by adding the supply chain team to the Project Management Office.

 

Post year end highlights and outlook

·    Full COVID-19 assessment performed; with a strong balance sheet, significant cash reserves and a sustainable business model built on the expectation of operating through crisis situations (civil war, terrorism, extreme weather, disease outbreak, etc...) in often remote and challenging locations, the Company is in a strong position to mitigate disruption caused by the pandemic.

 

·     Discussions with clients regarding continuing operations have been positive and we have been commended for our ability to continue to deliver critical services. Many of our service contracts continue unabated or with scope reductions however some construction contracts have been suspended and as a result a significant value of revenue originally forecast to be generated in 2020 will shift to 2021. This is anticipated to have a material effect on 2020 forecasted results.

 

·     Despite the current global economic situation, contract awards continue. The Group has recently signed a USD 15.6 million task order with IAP Worldwide Services for the provision of supply chain services, an order from a Government client for the procurement and delivery of PPE, orders for the provision of sanitation services, and a contract to support efforts in controlling locust swarms in East Africa.

 

·      Strong Q1 with USD 17.9m of revenue and an order book of USD 138.8m at the end of March 2020.

 

Soraya Narfeldt, Chief Executive Officer, commented:

"The Company delivered considerable year-on-year revenue growth, resulting from undertaking the highest level of activity in the Company's history during the second half. Profit margins were affected by the delay in a contract award in the first half as well as the mix of business; historically, executing short-term contracts has led to long-term re-occurring revenue with the same customers. With a strong reputation for delivering projects on time and within budget, we are being invited to undertake projects in geographies outside our historical areas of focus. We entered 2020 operating in more territories than ever before and with a healthy order book of USD 141m, setting a strong base for continued profitable growth."

 

"At present, it is not possible to quantify the financial impact COVID-19 might have on the Company since the scheduling of some projects is now unclear. This said, we believe that as a provider of critical services, when COVID-19 is contained or possibly sooner, we will return to work as normal, executing against our order book and continuing to bid for new projects. Given our wealth of experience in planning for and operating through crisis situations we are uniquely placed to assist our clients in managing the impact of the ongoing pandemic.  We believe that continuing economic activity is integral to ensuring that vulnerable communities do not collapse in these unprecedented times and therefore continue to advocate with our customers to allow us to execute projects in planned timelines, taking all necessary and recommended precautions."

 

 

Notes to summary table of financial results:

(1)   The Company applied IFRS 16 Leases for the first time in 2019, using a fully retrospective approach. The nature and effect of the changes as a result of the adoption of this new accounting standard are described in note 5 of the Notes to the Consolidated Financial Statements and have resulted in the restatement of the statutory accounts for the fiscal year ended 31 December 2018.

(2)   Underlying profit represents profit before tax and non-reoccurring exceptional items.

(3)   Net cash represents cash less overdraft balances, term loans and notes outstanding.

 

 

Enquiries:

RA International Group PLC

Soraya Narfeldt, Chief Executive Officer

Lars Narfeldt, Chief Operating Officer

Andrew Bolter, Chief Financial Officer

 

Via Hudson Sandler

Cenkos Securities PLC (Nominated Adviser and Broker)

Derrick Lee

Peter Lynch

 

+44 (0)131 220 6939

Hudson Sandler LLP (Financial PR & IR)

Daniel de Belder

Bertie Berger

 

+44 (0)207 796 4133

rainternational@hudsonsandler.com

 

 

Notes to editors:

 

RA International is a global provider of services in remote and challenging locations. It specialises in three service channels: construction, integrated facilities management, and supply chain. The Company has a strong and loyal customer base, largely comprising UN agencies, western governments, and global corporations.

 

The Group provides comprehensive, flexible, mission critical support to its clients, enabling them to focus on the delivery of their respective businesses and services. RA International's focus on integrity and values alongside on-going investment in people, locations and operations has over time created a reliable and trusted brand within its sector.

 

CHAIRMAN'S STATEMENT

 

I am pleased to report a year of significant progress in the delivery of our strategic objectives. The Company continued to broaden its customer base as well as its geographic presence, whilst delivering larger and longer-term contracts.  In terms of the impact of the unprecedented challenges of COVID-19 on the Company, further commentary is provided at the end of this statement but suffice to say, as a company that is accustomed to operating and planning in crisis I believe we have both the resilience and reserves to withstand the significant global adverse consequences.

 

Until recently, we have focused solely on the needs of clients undertaking projects in African and Middle Eastern countries, but our extensive experience working in remote and challenging environments has equipped us to manage complex projects almost anywhere.

 

Although RA International had a slower start to the year than anticipated due to a delay in the commencement of one contract in the first half of the year, the heightened level of activity in the second half resulted in the Company reporting higher than expected revenue for the full year of USD 69.1m. As a result, underlying profit increased marginally to USD 13.3m.

 

During the year we won contracts with new clients and expanded the range of services offered to existing clients. Our entry point into new customers is often to provide lower value supply chain and construction services, which can lead to a short-term impact on underlying profitability. In time we look to cross-sell our other services, moving towards a one-supplier model being, we believe, the most efficient and cost-effective way for customers to deliver on their own objectives. 

 

We are encouraged by a significant order book of USD 141m as at 31 December 2019, compared to USD 119m at the end of 2018, and by our success in converting short-term business won in 2019 into more valuable recurring revenue and as a means of attracting new customers.

 

Governance and corporate culture

As a service provider to UN agencies, western governments, and global companies, we have in place a range of policies and procedures to ensure the necessary high standards are maintained. We are a signatory, participant and contributor to the United Nations Global Compact. International and local compliance and regulations play a vital role in our ability to bid for and execute contracts.

 

Since RA International's formation in 2004, our founders Soraya and Lars Narfeldt have instilled and ingrained a Company-wide belief that running a sustainable business should benefit everyone, including our customers, employees and the host communities in locations where we operate. Accordingly, we cooperate respectfully with people on the ground, building trust and goodwill not only with our staff but also communities in and around our operations. We continue to align our corporate social responsibility strategy to the UN's Sustainable Development Goals (SDGs).

 

I am pleased to report that we have published our second Sustainability Report, which can be found on our website at rainternationalservices.com/sustainability/. Our sustainability strategy focuses on three areas: People & Skills Development, Labour Rights and Resource Management. These correlate strongly with three of the UN's SDGs: SDG 4 Quality Education, SDG 7 Affordable & Clean Energy, and SDG 8 Decent Work & Economic Growth. I would encourage our stakeholders to read our Sustainability Report alongside this annual report in order to understand the scope and range of work we carry out as part of our contractual obligations. The Sustainability Report also helps to explain how in supporting communities we are able to foster strong relationships that are integral to working effectively and efficiently to the benefit of our clients.

 

People

As a result of the increased level of activity in the business, during the year the Company added to the number of people it employs. Together both local and international staff total over 2,000. We are ultimately a people business and ensuring that our staff have the right skills is a key priority, so that we can provide services efficiently and effectively for our clients and help build strong sustainable communities.  In particular, during the current ongoing COVID-19 crisis, our first priority is the health, safety, and well-being of our people and to that end, we have established robust procedures and processes particularly to address the challenges of this crisis.  On behalf of the Board, I would like to thank the highly capable Executive Management Team and all our staff for their commitment, tremendous hard work, and unstinting dedication to the Company.

 

Dividend

The Board is recommending a final dividend of 1.25p per share to be paid on 9 July 2020 to shareholders on the register as of 29 May 2020.  The ex-dividend date is 28 May 2020. The Board's intention continues to be, where possible, to maintain or increase the dividend in future years while retaining sufficient working capital to meet the needs of the business and to fund continued growth. The Board believes the continued growth in our customer base and the pursuit of a one-supplier model will provide a basis for continued earnings growth in the future.

 

Outlook and COVID-19 update

As an organisation that operates in challenging environments, including areas with ongoing conflict and social unrest, the Company has a wealth of experience in both planning and operating during crises. The Board continues to monitor the COVID-19 situation closely and has taken several actions to mitigate the potential risk to the Company's employees and customers by implementing a comprehensive business continuity plan. 

 

Our priority is the health and safety of our employees, customers, suppliers, and other partners. In connection with safeguarding their well-being during this unprecedented situation, the Company has, among other initiatives:

 

1)    Similar to those in past crisis situations, created a COVID-19 Response Team and established a comprehensive COVID-19 Database capturing all information pertaining to the Company's handling and preparedness of the pandemic;

2)    Adopted WHO recommended guidelines to reduce exposure and transmission of COVID-19, including social distancing, disinfection, and temperature testing;

3)    Administered WHO recommended training with respect to sanitization and disinfection, quarantine procedures and medical testing;

4)    Distributed and delivered medical PPE and COVID-19 test kits;

5)    Established quarantine centres where deemed required, along with risk mitigation procedures for handling and administering support services to these centres;

6)    Increased food stock to over 90 days supply at operating locations reliant on imported goods; and

7)    Undertaken a full risk assessment and action plan within the framework of the Group business continuity plan.

 

The Board recognises that COVID-19 will have a material effect on the Company's 2020 financial results. Some contracts have been suspended to ensure social distancing is maintained, and some contracts have been modified whereby the Group will undertake a reduced service offering.  Additionally, some contracts forecast to commence in H2 2020 are now likely to start in 2021.

 

Despite the impact COVID-19 is expected to have on the Company's 2020 trading, the Board is confident in the Company's ability to trade as a going concern. With significant cash on hand, high-quality receivables, no debt, and no capital commitments, the Company is well placed to manage a period of reduced activity. Further details are shown in note 2 to the Consolidated Notes to the Financial Statements.

 

It is at present difficult to predict when the various lockdowns and social distancing directives will cease, however in forming its opinion on the future financial viability of the Company the Board has assumed that most contracts affected by the current pandemic will return to normal operating circumstances within a three to six-month period. These expectations are primarily based on feedback from our clients, many of whom have reiterated that RA International is critical to their ability to execute their objectives, which are often linked to globally significant initiatives. In some cases, movement restrictions have a limited impact on our contracts given the essential nature of our work for our customers.

 

Additionally, the Board has reviewed, opined on, and challenged information prepared by the executive team. This information includes the following:

 

1)    The Group business continuity plan;

2)    An analysis of the issues affecting each country of operations and the plans in place or being implemented to enhance the well-being of employees, safeguard assets, and ensure full operational capacity is maintained;

3)    An analysis of each ongoing project which identifies operational challenges and client communications relating to COVID-19;

4)    A financial impact analysis for each project being undertaken; and

5)    Multiple financial scenarios detailing both the potential effect of COVID-19 on 2020 financial performance and the Company's ability to trade as a going concern.

 

The documents are updated regularly and reviewed weekly, and the Board has access to the internal COVID-19 Database used to capture the information and drive the decision-making process.

 

As more information becomes available the Board will provide updates to its shareholders.

 

Sangita Shah

Non-Executive Chair

17 April 2020

 

OPERATING REVIEW

 

Highlights

·      USD 91m of new contracts, contract uplifts and extensions awarded during 2019.

·      USD 69.1m revenue for the full year, with a record USD 46.0m delivered in H2.

·      Expanded operations in South Sudan and Mozambique and entered Libya and Denmark.

·      Additional bids and pipeline growth with new and existing clients outside of our current geographies.

Overview

We continued to make good progress against our strategic objectives to broaden our client base, deliver contracts across all three service channels and diversify our operations geographically.

 

As expected, the second half of the year was far busier than the first half with a number of large projects commencing during the six-month period. We delivered revenue of USD 69.1m for the full year (2018: USD 54.8m), which was ahead of expectations. Group revenue in H2 2019 was 46.0m, which is 60% higher than our previous most active six-month period (H2 2018: USD 28.7m); the significant activity uplift affirmed the robustness of the back-office function which received considerable investment around the time of the Company's Admission to AIM in 2018.

 

We have continued to capture new contracts whilst executing existing contracts and as a result, have grown our order book. In total, we were awarded USD 91m of new contracts, contract uplifts and extensions during 2019, with the average contract duration remaining over 4 years when weighted by value. As at 31 December 2019 the Group reported an order book of USD 141m (2018: USD 119m) which is scheduled to be delivered over 5 years. The increase in the order book was driven by new customers and existing customers requesting we participate in complex projects being undertaken in and outside of our current geographies.

 

Contract order book

2018

Opening order book

USDm 112

2018

Contract awards, uplifts and extensions

62

2018

Contracted revenue delivered

(55)

2019

Opening order book

119

2019

Contract awards, uplifts and extensions

91

2019

Contracted revenue delivered

(69)

2020

Opening order book

141

 

The Group expanded its operations in South Sudan and Mozambique as well as entered Libya and Denmark.  As a result, we executed projects in 11 countries in 2019 compared to 9 in 2018. 

 

We have continued to diversify our client base, and while supporting humanitarian projects remains the largest contributor to revenue, we have grown the government and commercial contract base so that together they represented 44% of total revenue in 2019 (2018: 38%).

 

Our entry point into many clients is to offer supply chain or construction services, which are typically short-term contracts and can result in profit margin fluctuations over reporting periods. Over time we aim to convert these contracts into higher value or recurring revenue business, moving up the value chain into IFM, and eventually towards acting as a single supplier where we can seamlessly build and service clients' infrastructure. During 2019 we were awarded several large supply chain or basic construction contracts, leading to a short-term impact on gross profit margins, but which have already led to new more profitable contracts in 2020.

 

Contracts

We continue to advocate the benefits of a 'one-supplier' model as a way for clients to improve efficiencies. In 2019 we were able to provide hybrid services, where we executed across two or more service channels, to approximately half our clients, an increase on the previous year.  Notable contract wins in 2019 are included in the below table.

 

Our delivery record remains excellent, reflecting our commitment to delivering projects on time and to a high standard, helping to attract new clients and strengthen the relationships with existing ones.

 

The Danish project is an example of where we were able to demonstrate our capabilities and build trust with a new customer.  This contributed to the Company being awarded new work in East Africa less than two months later and this new contract was then uplifted by USD 9.1m in December.  The great job our team is doing on the project is leading to additional opportunities in other geographies.

 

 

Significant contracts won in 2019

Term

Service Channel

 

Master service agreement with IAP to supply global supply chain services. The first task order issued was for up to USD 8.5m.

 

2019-2023

 

Supply chain

 

Significant contract with Facilities Development Corporation to provide construction services in connection with the refurbishment and upgrade of the U.S. Embassy in Denmark.

 

2019-2022

 

Construction

 

 

USD 9.8m contract to provide vehicle and equipment fleet operation and first line maintenance services in up to 10 locations for a large humanitarian organisation in East Africa.

 

2019-2024

 

IFM

 

USD 9.0m contract with a Western Government to provide construction and facilities management services in East Africa.

2019-2022

 

Construction / IFM

USD 10.7m construction contract with a large humanitarian client to provide accommodation facilities for peacekeeping troops in a Central African country. 

 

2019-2020

 

Construction

USD 7.8m contract with a large humanitarian organisation to supply and install modified shipping containers as accommodation and offices in an East African country.

2019-2020

 

 

Supply Chain / Construction

 

USD 10.9m contract with Cherokee Nation Mechanical, LLC, working on behalf of the U.S. Department of State, to provide construction services at a U.S. Embassy in East Africa.

2019-2020

 

Construction

 

 

IFM

We were very pleased with the growth in IFM services which grew year-on-year from USD 23.1m to USD 28.6m.  IFM service agreements typically last from three to five years, giving the Company greater future earnings visibility and allowing us to establish a solid platform on which to grow the business.  We have also increased the breadth of customers and improved the quality of contracts. Significantly we grew revenue from Hospitality Services, whereby we lease our own facilities and offer life support services to customers (similar to managing hotels), to USD 10.4m in 2019 (2018: USD 6.0m).

 

Our investment in Mozambique continues this drive into Hospitality Services. We acquired a 15-hectare parcel of land and the first development phase, which will accommodate approximately 100 guests, is due to complete by June 2020. We will continue to develop the area as demand requires however, as presently planned, once completed the camp will have the capacity to accommodate over 500 guests and will offer recreation areas, office centres, warehouses and workshops.

 

Construction

Construction revenue reduced year-on-year from USD 29.5m to USD 27.6m due to the delay in the start of a contract as previously announced, and which commenced in the second half of 2019.

 

The announcement towards the end of 2019 of the Cherokee Nation Mechanical contract, now valued at USD 11.2m, gave rise to a strong order book for construction contracts at the start of 2020.  Since the year end we have seen an increase in demand and a corresponding increase in the number of bids submitted for hybrid construction and long-term service contracts, with the majority of construction services initially scheduled to be delivered in 2020. As a result of COVID-19, we expect many of these new projects will now commence in 2021.

 

Supply chain

Revenue from supply chain activities increased significantly, from USD 2.2m in 2018 to USD 12.8m in 2019.  The increase was predominantly the result of the Company supplying and installing approximately 500 modified shipping containers for a large humanitarian organisation and the work being undertaken for IAP.

 

As stated previously, offering supply chain services is often an entry point into many customers and can lead to larger and longer-term contracts. This proved the case in 2019 where we were awarded construction contracts by a government client for whom we had previously supplied goods. 

 

Central operations

The increased level of activity in the second half tested the robustness of the investment made in our back-office function for the first time, and I am pleased to report that we were more than able to handle the workload. The Project Management Office ("PMO") was focused on implementing contracts, while our enabling departments ensured the resources needed to meet contractual obligations were available while providing compliance oversight.

 

The Company has undergone a significant recruitment and training drive, as well as adding and redistributing resources to the PMO. By the end of 2019, in total 122 new positions were added, and a significant number of employees were promoted into more senior roles. As at 31 December 2019, the number of staff we employed totalled 2,011 (2018: 1,889). 

 

Local labour participation as a percentage of total employees reduced to 61% (2018: 69%). The reduction in local labour participation resulted from the contract commencement delay in the first half of the year.  We expect local labour participation to revert to former levels in  the near future.

 

 

As At 31 December

2015

2016

2017

2018

2019

Total number of employees

919

1,840

1,890

1,889

2,011

 

COVID-19

Our operational approach to managing the ongoing COVID-19 pandemic has been firstly to ensure the health and safety of our staff, not just in terms of their physical wellbeing but also with respect to morale, and secondly to ensure we are fully operational so as to support our clients in these unprecedented times. We are the contractor of choice for many of our customers because we can be relied upon to deliver under the most challenging of circumstances.

Overall, discussions with our clients have been extremely positive since the start of the pandemic.  We have been commended for our ability to continue to operate at a full level of service in these difficult times and some customers, having recognised our significant efforts to mitigate the risk of COVID-19 transmission, are facilitating worksite access where possible. Additionally, some clients will reimburse all or a portion of additional costs incurred as a result of the pandemic and accelerate the payment of invoices during this period.  

Although some business development activity has slowed as a result of site visits being cancelled, we are retraining staff to offer sanitisation services and other in-demand activities, and pursuing new opportunities such as medical infrastructure construction, the management of isolation facilities and the disinfection of larger spaces including offices and public facilities. We are also supplying much needed PPE to a government customer and have had inquiries for the same service from other potential clients. Additionally, while the adjudication process of bids outstanding has slowed, we are still receiving contact awards; in April we announced a new USD 15.6m task order from IAP, and we hope to announce further awards in the coming months.

We believe we have a responsibility to all stakeholders during this time of crisis and have confidence in the sustainability of our business model. We work across three customer segments, operate in over ten countries at any given time, and provide a broad range of services, many of which are essential during times of crisis. We have relentlessly and unforgivingly focused on investing in diversification over the past few years, in terms of geography, customer concentration, and service channel, and we believe this strategy will continue to set us apart and allow us to mitigate the impacts of adverse events taking place on a local or global scale.

We are recognised as part of the essential supply chain for our customers in the health, welfare and protection of their employees. Understanding the vulnerability of many of the communities in which the Company operates, we continue to advocate with these customers to allow us to execute our projects in planned timelines, taking all necessary and recommended precautions.  We believe that continuing economic activity is integral to ensuring that vulnerable communities do not collapse in these unprecedented times.

Outlook

The momentum of the second half of 2019 continued into the start of 2020 with a heightened level of activity as we continued to deliver on a greater number of larger, long-term contracts. Whilst COVID-19 will have a material effect on our 2020 financial results, we believe the impact will be limited to project delays rather than cancellations. We see this as a temporary issue and when COVID-19 is contained, or possibly sooner, we will return to work as normal, executing against our USD 139m order book and continuing to bid for new and exciting projects.

 

Soraya Narfeldt

Chief Executive Officer

17 April 2020

 

 

FINANCIAL REVIEW

 

Overview

The Company's financial performance for the fiscal year ended 2019 was ahead of our expectations from a revenue perspective and broadly in line in terms of profitability. Reported revenue was USD 69.1m (2018: USD 54.8m) representing an increase of 26% when compared to the previous year.  This translated into an underlying profit of USD 13.3m (2018 restated: USD 12.8m) reflecting the mix of business executed in 2019 and a delay experienced in commencing a construction project in H1 2019.  Statutory profit was USD 12.9m (2018 restated¹: USD 9.8m).

 

 

 

2019

USD'000

2018

USD'000

Restated1

Revenue

69,064

54,805

Underlying operating profit2

14,734

14,168

Operating profit

13,640

13,581

Underlying profit3

13,259

12,761

Profit before tax

13,259

9,827

Basic EPS (cents)

7.4

6.3

Net Cash (end of period)4

21,393

27,804

 

Revenue

2019 revenue was weighted towards the second half as a result of a delay in the commencement of one large contract in H1 2019, with the Company generating the highest half-year revenue total in its history in H2 2019. The USD 46.0m of turnover in H2 2019 was 60% higher than in H2 2018.

 

The Company does not typically experience seasonality, rather the weighting in the second half was the result of winning contracts with an aggregate value of USD 66m in H1 2019, with the majority of these contracts commencing in the third quarter of the year. Additionally, the timing of revenue from short-term contracts (STCs) executed during the year was significantly weighted to the second half: USD 0.8m in H1 2019 and USD 10.8m in H2 2019. Overall, STC revenue increased to USD 11.6m in 2019 compared with USD 8.3m in 2018. This was USD 1.6m below expectations stated in our interim report and resulted from client requested schedule changes to two projects. As a result, USD 2.7m of revenue originally expected to be recognised in H2 2019 will now be recognised in H1 2020.

 

Profit

Gross profit margin in 2019 decreased to 31.7% (2018 restated1: 37.6%) due to a number of factors:

 

1.     The H1 2019 delay in a significant contract award led to a reported H1 2019 gross margin of 31.0%, down from 38.1% when the operating location affected is excluded. H2 2019 gross margin from this operating location was 36.0%;

2.     H2 2019 gross margin was 32.1% as a result of an increase in the proportion of revenue being generated from supply chain business and short-term construction projects. 24% of second half revenue was from supply chain activities whereas historically this figure has averaged approximately 5%. While we anticipate supply chain activities will continue to contribute significantly to Group revenue, we do not anticipate it will continue to grow as a percentage of total revenue. We also anticipate margin from supply chain activities to increase as we undertake more complex supply chain projects; and  

3.     We commenced a number of hybrid contracts in 2019, where we were supplying and installing infrastructure and supplying, constructing and servicing infrastructure. In all cases, the lower-margin work was substantially complete at the end of 2019 and as a result the margins from these projects are forecast to increase in 2020. While we will continue to bid for and hopefully be awarded hybrid contracts, as we grow the effect individual contracts have on gross margin should diminish.

 

Underlying operating profit, which is used by the Company's management to assess operating performance, increased by 4% to USD 14.7m (2018 restated1: USD 14.2m).  Underlying profit also increased by 4% to USD 13.3m (2018 restated¹: USD 12.8m) and underlying margin was 19.2% (2018 restated1: 23.3%) again reflecting the mix of business executed in 2019, timing of profits earned from hybrid contracts, and the contract delay experienced in the first half of the year. While net finance costs decreased by USD 0.4m in 2019, these savings were offset by the Company incurring a full year of holding company expenses resulting from its Admission to AIM in mid-2018.

 

Comparability of Performance Measures

Many companies who provide IFM services use EBITDA as a primary performance measure. We do not as we employ significantly more capital than traditional IFM providers. Hospitality Services, which is capital intensive, makes up a large percentage of our IFM revenue and we perform construction services (where the primary IFRS performance measure is often profit before tax).

We presently use Underlying profit and Underlying operating profit as our primary performance measures, operating profit and profit before tax being the related IFRS metrics. As the Group matures and evolves, we will intermittently reassess these performance measures to ensure they are the most relevant for evaluating Group and management performance respectively. Please refer to note 18 of the Notes to the Consolidated Financial Statements for further information relating to Alternative Performance Measures (APMs).

 

 

 

2019

USDm

2018

USDm

Profit

12.9

9.8

Tax expense

0.4

-

Profit before tax

13.3

9.8

Exceptional items

-

2.9

Underlying profit

13.3

12.8

Finance costs

0.7

0.8

Investment revenue

(0.3)

-

Operating profit

13.6

13.6

Depreciation

2.6

1.5

EBITDA

16.2

15.1

 

 

 

 

The Company incurred a tax charge of USD 0.4m in 2019 (2018: nil) relating to income tax paid and accrued in connection with contracts undertaken for commercial customers.

 

Earnings per share

Earnings per share for 2019, both basic and diluted, was 7.4 cents per share (2018 restated¹: 6.3 cents per share).

 

Cash flow

The Company targets a 100% cash conversion ratio but significant increases in operational activity in the second half of 2019, as they did in 2018, led to short-term divergences.

 

Cash flow generated from operations during the year was USD 8.9m (2018 restated¹: USD 11.4m) which represents 66% cash conversion5 (2018 restated¹: 84%). The primary factor contributing to the short-term differential was a USD 7.4m increase in year end net working capital resulting primarily from an increase in accrued revenue of USD 7.5m. Approximately half of the USD 10.9m year end accrued revenue balance relates to a contract to supply and install modified shipping containers. Due to the fact that the Company generally requires in-country client sign off of its invoices before invoices are sent to a second country for submittal, the balance of accrued revenue normally approximates one month of revenue. Total trade receivables and accrued revenue at 2019 year end represented 101% of the Company's revenue generated in the last two months of the year (2018: 119%). The decrease in this ratio is both a function of the Company improving its trade receivable collection and a result of further diversification of its customer base.

 

 

 

2019

USDm

2018

USDm

Cash flows generated from operations before changes in working capital

16.3

15.7

Change in working capital

-7.4

-4.3

Cash flows generated from operations

8.9

11.4

Tax paid

(0.1)

-

End of service benefits and stock-based compensation costs

(0.1)

-

Net cashflow from operating activities

8.7

11.4

 

 

During 2019 the Company continued to invest in revenue generating property plant and equipment. Total capital expenditure in 2019 was USD 12.4m (2018: USD 8.7m) of which USD 6.4m relates to assets which are or will be utilised to provide Hospitality Services. These assets are primarily Company constructed hotel or commercial facilities and, in the majority of cases, the spend is linked to recently awarded long-term contracts. 

 

Additionally we invested in infrastructure, vehicles and machinery to support our growing operations in South Sudan, where the Company was awarded a USD 10.9m construction contract, and to execute additional capital intensive contracts in East Africa where there is a significant demand for contractors who can execute using internationally accepted best practices and to specific western country specifications. 

 

The Company paid a post-Admission dividend in 2019 of 1.0p per share (USD 1.3 cents), returning a total of USD 2.2m to shareholders.

 

Balance Sheet

Net assets at 31 December 2019 were USD 69.5m (2018 restated¹: USD 58.8m) with the majority of the total balance sheet comprising cash and other current assets. Net working capital, inclusive of cash, was USD 43.6m (2018: USD 43.0m) and the Company had no debt (2018: nil) or committed capital expenditure for 2020 (2019: nil).  

 

As at the end of 2019 the Company had USD 21.4m in cash (2018: USD 27.8m) and access to a short-term credit facility of USD 2.0m (2018: USD 2.0m).  Liquidity and net cash are often assessed by potential customers during the contract adjudication process. We are satisfied that both metrics are sufficient so that we can continue to bid for larger projects and have the financial capacity to mobilise multiple large projects simultaneously.

 

COVID-19

The spread of COVID-19 continues to heighten and is having a significant impact on global economic activity. Until there is clarity on the duration and severity of these events, it is not possible to quantify the financial impact COVID-19 may have on the Group; however, we have forecast our liquidity position and ability to continue to trade as a going concern under multiple financial scenarios and are confident that the going concern basis should be adopted.

 

IFRS 16

The Company implemented IFRS 16 Leases for the first time in 2019, using a fully retrospective approach. The nature and effect of the changes as a result of the adoption of this new accounting standard are described in note 5 of the Notes to the Consolidated Financial Statements and have resulted in the restatement of the statutory accounts for the fiscal year ended 31 December 2018. 

 

Dividend

The Directors have proposed a full year dividend of 1.25p per share to be paid on 9 July 2020 to shareholders on the register as at 29 May 2020.

 

 

 

 

 

Andrew Bolter

Chief Financial Officer

17 April 2020

 

 

Notes to Financial Review:

[1] The Company applied IFRS 16 Leases for the first time in 2019, using a fully retrospective approach. The nature and effect of the changes as a    

   result of the adoption of this new accounting standard are described in note 5 of the Notes to the Consolidated Financial Statements and have

   resulted in the restatement of the statutory accounts for the fiscal year ended 31 December 2018.

2 Underlying operating profit represents operating profit less holding company expenses and acquisition costs.

3 Underlying profit represents profit before tax and non-reoccurring exceptional items.

4 Net cash represents cash less overdraft balances, term loans and notes outstanding.

5 Cash conversion is calculated as cashflow generated from operations divided by operating profit.
 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

2019

2018

 

Notes

USD'000

USD'000

 

 

 

Restated

 

 

 

 

Revenue

7

69,064

54,805

 

 

 

 

Direct costs

11

(47,174)

(34,221)

 

 

────────

────────

Gross profit

 

21,890

20,584

 

 

 

 

Administrative expenses

11

(7,156)

(6,416)

 

 

────────

────────

Underlying operating profit

 

14,734

14,168

 

 

 

 

Acquisition costs

 

(46)

(82)

Holding company expenses

 

(1,048)

(505)

 

 

────────

────────

Operating profit

 

13,640

13,581

 

 

 

 

Investment revenue

 

294

34

Finance costs

 

(675)

(854)

 

 

────────

────────

Underlying profit

 

13,259

12,761

 

 

 

 

Exceptional items

13

-

(2,934)

 

 

────────

────────

Profit before tax

 

13,259

9,827

 

 

 

 

Tax expense

14

(384)

-

 

 

────────

────────

Profit and total comprehensive income for the period

 

12,875

9,827

 

 

════════

════════

 

 

 

 

Basic and diluted earnings per share (cents)

15

7.4

6.3

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

 

2019

2018

2017

 

Notes

USD'000

USD'000

USD'000

 

 

 

Restated

Restated

 

 

 

 

 

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant, and equipment

19

28,516

18,624

11,262

Goodwill

10

138

-

-

 

 

────────

────────

────────

 

 

28,654

18,624

11,262

 

 

 

 

 

Current assets

 

 

 

 

Inventories

20

6,178

4,263

2,660

Trade and other receivables

21

24,520

15,962

12,669

Cash and cash equivalents

22

21,393

27,804

7,469

 

 

────────

────────

────────

 

 

52,091

48,029

22,798

 

 

────────

────────

────────

Total assets

 

80,745

66,653

34,060

 

 

════════

════════

════════

 

 

 

 

 

Equity and liabilities

 

 

 

 

Equity

 

 

 

 

Share capital

23

24,300

24,300

272

Additional contributed capital

 

-

-

1,809

Share premium

 

18,254

18,254

-

Merger reserve

 

(17,803)

(17,803)

-

Share based payment reserve

 

47

16

-

Retained earnings

 

44,685

34,013

22,733

 

 

────────

────────

────────

Total equity

 

69,483

58,780

24,814

 

 

────────

────────

────────

 

 

 

 

 

Non-current liabilities

 

 

 

 

Term loans and notes

 

-

-

6

Lease liabilities

24

2,397

2,532

2,319

Employees' end of service benefits

25

391

350

251

 

 

────────

────────

────────

 

 

2,788

2,882

2,576

 

 

────────

────────

────────

 

 

 

 

 

Current liabilities

 

 

 

 

Term loans and notes

 

-

-

1,861

Lease liabilities

24

437

111

60

Trade and other payables

26

8,037

4,880

4,749

 

 

────────

────────

────────

 

 

8,474

4,991

6,670

 

 

────────

────────

────────

Total liabilities

 

11,262

7,873

9,246

 

 

────────

────────

────────

Total equity and liabilities

 

80,745

66,653

34,060

 

 

════════

════════

════════

 

The financial statements were approved by the Board of Directors on 17 April 2020 and signed on its behalf by:

 

 

 

 

_________________________________                                                      _________________________________

Soraya Narfeldt                                                                                                      Andrew Bolter

CEO                                                                                                                           CFO

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

Share

 

 

 

 

Additional

 

 

Based

 

 

 

Share

Contributed

Share

Merger

Payment

Retained

 

 

Capital

Capital

Premium

Reserve*

Reserve

Earnings

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

 

As at 1 January 2018 previously reported

272

1,809

-

-

-

23,020

25,101

 

 

 

 

 

 

 

 

Impact of adoption of IFRS 16

-

-

-

-

-

(287)

(287)

 

────────

────────

────────

────────

────────

────────

────────

As at 1 January 2018 restated

272

1,809

-

-

-

22,733

24,814

 

 

 

 

 

 

 

 

Total comprehensive income for the period **

-

-

-

-

-

9,827

9,827

 

 

 

 

 

 

 

 

Share exchange (note 8)

19,612

(1,809)

-

(17,803)

-

-

-

 

 

Issue of share capital (note 8)

4,416

-

18,254

-

-

-

22,670

 

 

 

 

 

 

 

 

Non-cash employee compensation (note 16)

-

-

-

-

-

1,578

1,578

 

 

 

 

 

 

 

 

Share based payments (note 16)

-

-

-

-

16

-

16

 

 

 

 

 

 

 

 

Dividends declared and paid (note 17)

-

-

-

-

-

(125)

(125)

 

────────

────────

────────

────────

────────

────────

────────

As at 31 December 2018

24,300

-

18,254

(17,803)

16

34,013

58,780

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

-

-

12,875

12,875

 

 

 

 

 

 

 

 

Share based payments (note 16)

-

-

-

-

31

-

31

 

 

 

 

 

 

 

 

Dividends declared and paid (note 17)

-

-

-

-

-

(2,203)

(2,203)

 

 

 

 

 

 

 

 

 

────────

────────

────────

────────

────────

────────

────────

As at 31 December 2019

24,300

-

18,254

(17,803)

47

44,685

69,483

 

════════

════════

════════

════════

════════

════════

════════

* Merger reserve represents the difference between the share capital of RA International FZCO and the nominal value of the shares issued by the Company to acquire RA International FZCO (note 8).

 

 

** Total comprehensive income recognised in 2018 has been restated due to the adoption of IFRS 16 (note 5).

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

2019

2018

 

Notes

USD'000

USD'000

 

 

 

Restated

 

 

 

 

Operating activities

 

 

 

Operating profit

 

13,640

13,581

Adjustments for non-cash and other items:

 

 

 

  Depreciation on property, plant, and equipment

19

2,577

1,510

  Loss on disposal of property, plant, and equipment

19

46

120

  Unrealised differences on translation of foreign balances

 

(165)

364

  Provision for employees' end of service benefits

25

174

116

  Share based payments

16

31

16

 

 

────────

────────

 

 

16,303

15,707

Working capital adjustments:

 

 

 

  Inventories

 

(1,607)

(1,587)

  Accounts receivable, deposits, and other receivables

 

(8,306)

(2,627)

  Accounts payable and accruals

 

2,559

(58)

 

 

────────

────────

Cash flows generated from operations

 

8,949

11,435

  Tax paid

14

(144)

-

  Employees' end of service benefits paid

25

(133)

(17)

  Stock-based compensation and related costs

16

-

(24)

 

 

────────

────────

Net cash flows from operating activities

 

8,672

11,394

 

 

────────

────────

 

 

 

 

Investing activities

 

 

 

Investment revenue received

 

294

34

Release of cash margin against guarantees issued

 

-

2,000

Purchase of property, plant, and equipment

19

(12,358)

(8,683)

Proceeds from disposal of property, plant, and equipment

19

170

97

Acquisition of subsidiary (net of cash acquired)

30

(106)

(565)

 

 

────────

────────

Net cash flows used in investing activities

 

(12,000)

(7,117)

 

 

────────

────────

 

 

 

 

Financing activities

 

 

 

Repayment of term loans and notes

 

-

(1,867)

Payment of lease liabilities

24

(370)

(73)

Finance costs paid

 

(675)

(853)

Dividends paid

17

(2,203)

(125)

Share listing costs

8

-

(1,332)

Issue of share capital (net of issue costs paid)

8

-

22,672

 

 

────────

────────

Net cash flows (used in) / from financing activities

 

(3,248)

18,422

 

 

────────

────────

 

 

 

 

Net (decrease) / increase in cash and cash equivalents

 

(6,576)

22,699

 

 

 

 

Cash and cash equivalents as at start of the period

22

27,804

5,469

Effect of foreign exchange on cash and cash equivalents

 

165

(364)

 

 

────────

────────

Cash and cash equivalents as at end of the period

22

21,393

27,804

 

 

════════

════════

 

 

 

 

             

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1          CORPORATE INFORMATION

 

The principal activity of RA International Group plc ("RAI" or the "Company") and its subsidiaries (together the "Group") is providing services in demanding and remote areas. These services include construction, integrated facilities management, and supply chain services. 

 

RAI was incorporated on 13 March 2018 as a public company in England and Wales under registration number 11252957. The address of its registered office is One Fleet Place, London, EC4M 7WS. The Company acquired, by way of a share for share exchange (the "Exchange") the entire issued share capital of RA International FZCO and its subsidiaries ("RA") on 12 April 2018. The Group reorganisation is treated as a common control transaction, for which there is no specific accounting guidance under IFRS. Consequently, the integration of the Company has been accounted for using merger accounting principles. The policy, which does not conflict with International Financial Reporting Standards (IFRS), reflects the economic substance of the transaction.

 

The adoption of merger accounting presents the Company as if it had always been the parent of the Group. As the Company was not incorporated until 13 March 2018, the financial statements of the Group represent a continuation of the financial statements of RA International FZCO, the former parent of the Group.

 

 

2          BASIS OF PREPARATION

 

The financial statements have been prepared in accordance with IFRS as adopted by the European Union and the Companies Act 2006. They have been prepared under the historical cost basis and have been presented in United States Dollars (USD), being the functional currency of the Group.

 

The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the years ended 31 December 2019 or 2018 but is derived from those accounts. Statutory accounts for the year ended 31 December 2019 will be delivered to the Registrar of companies in due course.  The auditor has reported on the accounts; its report was unqualified, did not contain an emphasis of matter reference and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

 

Going concern

The Group has a sufficient level of cash and access to liquidity to be able to operate for the foreseeable future and accordingly it is appropriate to prepare the financial statements on a going concern basis.

 

In assessing the basis of preparation of the financial statements the Board has undertaken a rigorous assessment of going concern, considering financial forecasts and utilising scenario analysis to test the adequacy of the Group's liquidity. These include multiple scenarios which specifically forecast the potential impact of COVID-19 on the Group's trading.

 

The Group has performed a comprehensive analysis with respect to the potential operational and financial risks associated with COVID-19. The primary impact of COVID-19 on the Group is that, as customers implement social distancing measures and repatriate their staff from remote locations, some construction contracts have been suspended and scope modifications have been made to a number of service contracts. Based on discussions with customers, the Board expects that most of these contracts will return to normal operating circumstances within a three to six-month period.

 

The Board has approved financial forecasts that take into account the potential impact of COVID-19 on the Group's operations, as well as potential downside sensitivities which include the cessation of all operations for a 3 month or 6 month period.  Under all of these scenarios the Group continues to be cash positive and further mitigations have been identified to preserve cash if required to provide additional headroom and remain cash positive if there was a worsening of conditions beyond the downside scenarios considered.

 

The Board has also assessed the Group's ability to overcome the operating challenges associated with continuing to service clients throughout the term of the pandemic and has concluded that the Group will be able to continue to meet its contractual commitments. The Group's primary activity is undertaking projects in locations where a crisis situation is either ongoing or there is a reasonable expectation that a crisis will occur during the term of the project. As a result, the Group has existing plans in place to address the operating challenges associated with restrictions on both the movement of people and goods. It also has existing infrastructure, procedures, and insurance in place to address the safety and security of its staff and assets.

 

 

3          BASIS OF CONSOLIDATION

 

The financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2019. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

 

·          Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee),

·          Exposure, or rights, to variable returns from its involvement with the investee, and

·          The ability to use its power over the investee to affect its returns.

 

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

 

·          The contractual arrangement with the other vote holders of the investee,

·          Rights arising from other contractual arrangements, and

·          The Group's voting rights and potential voting rights.

 

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Company loses control over the subsidiary. Assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

 

When necessary, adjustments are made to the financial statements of a subsidiary to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

 

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. 

 

If the Company loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest, and other components of equity while any resultant gain or loss is recognised in the profit or loss. Any investment retained is recognised at fair value.

 

Business combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at the fair value on the acquisition date. The net identifiable assets acquired, and liabilities assumed are recorded at their respective fair values on the acquisition date. Acquisition-related costs are expensed as incurred and included in acquisition costs.

 

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

 

 

4          SIGNIFICANT ACCOUNTING POLICIES

 

Revenue recognition

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has concluded that it is acting as a principal in all its revenue arrangements.

 

Sale of goods

Revenue from the sale of goods is recognised when control of ownership of the goods have passed to the buyer, usually on delivery of the goods.

 

Construction

Typically, revenue from construction contracts is recognised at a point in time when performance obligations have been met. Generally, this is the same time at which client acceptance has been received.  Dependant on the nature of the contracts, in some cases revenue is recognised over time using the percentage of completion method.

 

Services

Revenue from providing services is recognised over time, applying the time elapsed method for accommodation and similar services to measure progress towards complete satisfaction of the service, as the customers simultaneously receive and consume the benefits provided by the Group.

 

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

 

Direct costs

Direct costs represent costs directly incurred or related to the core business of the Group.

 

Contract balances

Trade receivables

A receivable represents the Group's right to an amount of consideration that is unconditional, meaning only the passage of time is required before payment of the consideration is due.

 

Accrued revenue

Accrued revenue represents the right to consideration in exchange for goods or services transferred to a customer in connection with fulfilling contractual performance obligations. If the Group performs by transferring goods or services to a customer before invoicing, accrued revenue is recognised in an amount equal to the earned consideration that is conditional on invoicing. Once an invoice has been accepted by the customer accrued revenue is reclassified as a trade receivable.

 

Customer advances

If a customer pays consideration before the Group transfers goods or services to the customer, a customer advance is recognised when the payment is received by the Group. Customer advances are recognised as revenue when the Group meets its obligations to the customer.

 

Tax

Current tax expense is based on taxable profit for the year and is recognised in profit or loss. Taxable profit may differ from net profit reported in the statement of comprehensive income because it excludes items of income and expense that are taxable or deductible in other years, and it excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. 

 

 

Property, plant, and equipment

Property, plant, and equipment are stated at cost less accumulated depreciation and any impairment in value. Capital work-in-progress is not depreciated until the asset is ready for use. Depreciation is calculated on a straight-line basis over the estimated useful lives as follows:

Buildings                                                                               Lesser of 20 years and term of land lease

Leasehold improvements                                                      10 years or term of lease

Furniture and fixtures                                                           5 years

Shipping containers                                                              20 years

IT equipment                                                                        5 years

Tools and equipment                                                            5 to 10 years

Motor vehicles                                                                     10 years

 

The carrying values of property, plant, and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down, with the write down recorded in profit or loss to their recoverable amount, being the greater of their fair value less costs to sell and their value in use.

 

Expenditure incurred to replace a component of an item of property, plant, and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off.  Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant, and equipment. All other expenditure is recognised in profit or loss as the expense is incurred.

 

An item of property, plant, and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and carrying amount of the asset) is included in the profit or loss in the year the asset is derecognised.

 

Assets' residual values, useful lives, and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if appropriate.

 

Goodwill

Goodwill is stated as cost less accumulated impairment losses. Cost is calculated as the total consideration transferred less net assets acquired.

 

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs include those expenses incurred in bringing each product to its present location and condition. Cost is calculated uses the weighted average method. Net realisable value is based on estimated selling price less any further costs expected to be incurred in disposal.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and balances with banks, which are readily convertible to known amounts of cash and have a maturity of three months or less from the date of acquisition. This definition is also used for the consolidated cash flow statement.

 

Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs to sell and its value in use. An asset's recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used maximising the use of observable inputs. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded entities or other available fair value indicators.

 

The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group's cash-generating units to which the individual assets are allocated. These budgets and forecasts generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

 

Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset.

 

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 CGU'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 was 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 the profit or loss.

 

Financial instruments

 

i)         Financial assets

 

Initial recognition and measurement

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.

 

Derecognition of financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when the rights to receive cash flows from the asset has expired.

 

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

 

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

 

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.

 

A financial asset is deemed to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

 

ii)        Financial liabilities

 

Initial recognition and measurement

Financial liabilities are initially recognised at fair value and subsequently classified at fair value through profit or loss, loans and borrowings, or payables. Loans and borrowings and payables are recognised net of directly attributable transaction costs.

 

The Group's financial liabilities include trade and other payables.

 

Subsequent measurement

The measurement of financial liabilities depends on their classification as described below:

 

Financial liabilities at fair value through profit or loss

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

 

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial liability

as at fair value through profit or loss.

 

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

 

Loans and payables

This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR 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 as finance costs in the statement of profit or loss.

 

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

 

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.

 

Employees' end of service benefits

The Group provides end of service benefits to its employees in accordance with local labour laws. The entitlement to these benefits is based upon the employees' final salary and length of service, subject to the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment. 

 

Share based payments

Employees (including senior executives) of the Group receive remuneration in the form of share based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

 

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are provided in note 16.

 

That cost is recognised in employee benefits expense, together with a corresponding increase in equity (share based payment reserve), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

 

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group's best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

 

No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

 

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

 

Contingencies

Contingent liabilities are not recognised in the financial statements, they are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.

 

Foreign currencies

The Group's financial statements are presented in USD, which is the functional currency of all Group companies. Items included in the financial statements of each entity are measured using that functional currency.

 

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange prevailing at the reporting date. All differences are taken to profit or loss. 

 

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as 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 was determined.

 

Foreign currency share capital (including any related share premium or additional paid-in capital) is translated using the exchange rates as at the dates of the initial transaction. The value is not remeasured.

 

5          CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

 

New and amended standards and interpretations

 

The Group applied IFRS 16 Leases for the first time in 2019, using a fully retrospective approach. The nature and effect of the changes as a result of the adoption of this new accounting standard are described below.

 

The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.

 

IFRS 16 Leases

IFRS 16 was issued in January 2016 and replaces IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation, and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees - leases of 'low-value' assets and short-term leases. At the commencement date of a lease, lessees recognise a liability relating to future lease payments (i.e., the lease liability) and an asset representing the right to use the underlying leased asset during the lease term (i.e., the right-of-use asset). Lessees are required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

 

Lessees are also required to remeasure the lease liability upon the occurrence of certain events such as a change in lease term or in future lease payments resulting from a change in an index or reference rate used to determine those payments. The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment

to the right-of-use asset.

 

Transition to IFRS 16

Before the adoption of IFRS 16, lease costs were recognised as expenses in the period of asset use. The Group has chosen to adopt the fully retrospective approach and as such has restated prior period results as if IFRS 16 had always been in place.

 

As a result, 2018 opening retained earnings decreased by USD 287,000 to reflect the impact of IFRS 16 in periods previous to 1 January 2018. A right-of-use asset of USD 2,092,000 was also recognised together with associated aggregate lease liabilities of USD 2,379,000 as at 1 January 2018.

 

2018 reported direct costs have decreased by USD 311,000, administrative expenses increased by USD 9,000 and finance costs increasing by USD 447,000. Earnings per share and diluted earnings per share decreased by 0.1 cents.

 

Property, plant and equipment has increased by USD 2,229,000 as at 31 December 2018, with lease liabilities increasing by USD 2,643,000. Retained earnings have decreased by USD 432,000.

 

On the Statement of Cashflows, net cash flows from operating activities increased by USD 520,000 for the year ended 31 December 2018, with net cash flows from financing activities decreasing by USD 520,000.

The Group has chosen to take advantage of the exemptions for leases of 'low-value' assets and short-term leases. Rental expense relating to these leases will continue to be fully recognised in direct costs and administrative expenses.

 

Presentation of Statement of Cash Flows

The Company has modified the presentation of the Consolidated Statement of Cash Flows to start with operating profit rather than profit before tax, so as to increase the similarity of presentation to sector comparators. The Company believes this provides a more meaningful basis for users of the financial statements. Prior period results have been restated accordingly. 

 

 

6          SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

 

The preparation of the financial statements requires management to make judgements, estimates and assumptions that may affect the reported amount of assets and liabilities, revenue, expenses, disclosure of contingent liabilities, and the resultant provisions and fair values.  Such estimates are necessarily based on assumptions about several factors and actual results may differ from reported amounts.

 

Estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

 

a) Judgments

 

Use of Alternative Performance Measures

IAS1 requires material items to be disclosed separately in a way that enables users to assess the quality of a company's profitability. In practice, these are commonly referred to as 'exceptional' items, but this is not a concept defined by IFRS and therefore there is a level of judgement involved in arriving at an Alternative Performance Measure (APM) which excludes such exceptional items. The Group considers items which are material and outside its normal operating practice to be suitable for separate presentation. Further details can be found in note 18.

 

b) Estimates and assumptions

 

Percentage of completion

The Group uses the output percentage-of-completion method when accounting for contract revenue on its long-term construction contracts. Use of the percentage-of-completion method requires the Group to estimate the progress of contracts based on surveys of work performed. The Group has determined this basis of revenue recognition is the best available measure on such contracts and where possible seeks customer verification of percentage-of-completion calculations as at financial reporting dates. 

 

The accuracy of percentage-of-completion estimates has a material impact on the amount of revenue and related profit recognised. As at 31 December 2019, USD 2,806,000 of accrued revenue had been calculated using the percentage-of-completion method (2018: USD 1,676,000), of which USD 884,000 is supported by customer verifications (2018: USD 1,035,000).

 

Revisions to profit or loss arising from changes in estimates are accounted for in the period when the changes occur.

 

7          SEGMENTAL INFORMATION

 

For management purposes, the Group is organised into one segment based on its products and services, which is the provision of services in demanding and remote areas. Accordingly, the Group only has one reportable segment.  The Group's Chief Operating Decision Maker (CODM) monitors the operating results of the business as a single unit for the purpose of making decisions about resource allocation and assessing performance. The CODM is considered to be the Board of Directors.

 

Operating segments

Revenue, operating results, assets and liabilities presented in the financial statements relate to the provision of services in demanding and remote areas.

 

Revenue by service channel:

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Integrated facilities management

 

 

28,600

23,145

Construction

 

 

27,634

29,479

Supply chain services

 

 

12,830

2,181

 

 

 

────────

────────

 

 

 

69,064

54,805

 

 

 

════════

════════

 

The Group allocates a contract to a specific service channel based on the nature of the primary deliverable to the customer.

 

Revenue by recognition timing:

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Revenue recognised over time

 

 

38,450

23,145

Revenue recognised at a point in time

 

 

30,614

31,660

 

 

 

 

 

 

 

 

────────

────────

 

 

 

69,064

54,805

 

 

 

════════

════════

 

Geographic segment

The Group primarily operates in Africa and as such the CODM considers Africa and Other locations to be the only geographic segments of the Group. The below geography split is based on the location of project implementation.

 

Revenue by geographic area of project implementation:

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Africa

 

 

68,735

48,003

Other

 

 

329

6,802

 

 

 

────────

────────

 

 

 

69,064

54,805

 

 

 

════════

════════

 

Non-current assets by geographic area:

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

Restated

 

 

 

 

 

Africa

 

 

27,527

16,607

Other

 

 

1,127

2,017

 

 

 

────────

────────

 

 

 

28,654

18,624

 

 

 

════════

════════

 

Revenue split by customer

 

 

 

2019

2018

 

 

 

%

%

 

 

 

 

 

Customer A

 

 

30

30

Customer B

 

 

13

26

Customer C

 

 

11

2

Customer D

 

 

6

13

Other

 

 

40

29

 

 

 

────────

────────

 

 

 

100

100

 

 

 

════════

════════

 

 

 

 

8          GROUP REORGANISATION

 

Share for Share Exchange

On 12 April 2018, RAI acquired 100% ownership of RA through a share for share exchange transaction (the "Exchange").   The cost of RA was established and accounted for with reference to IAS 27 which states that when a parent reorganises the structure of its group by establishing a new entity as its parent, and meets specific criteria, the new parent measures cost at the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the date of the reorganisation. In the case of the Exchange, RA was the former parent of the Group and all relevant criteria were met, as a result the cost of RA was determined to be USD 29,781,000, being the carrying amount of the equity of RA at the date of the Exchange.

 

 

 

 

 

USD'000

Equity balances of RA at date of Exchange

 

 

 

 

Share capital

 

 

 

272

Additional contributed capital

 

 

 

1,809

Retained earnings

 

 

 

27,700

 

 

 

 

────────

Total equity balances of RA at date of Exchange

 

 

 

29,781

 

 

 

 

════════

 

The consideration paid to the shareholders of RA was 139,999,998 ordinary shares of GBP 0.10 each.

 

The difference between the total equity balances of RA and the nominal value of shares issued by RAI at the date of the Exchange is recorded as a merger reserve. Upon consolidation, all intra-group transactions, balances, income and expense are eliminated, and the merger reserve is equal to the difference between the nominal value of the shares issued by RAI and the total share capital and additional contributed capital of RA at the date of the Exchange.

 

Initial Public Offering                                                                     

On 29 June 2018, RAI undertook an initial public offering (IPO) and was admitted to trade on the Alternative Investment Market (AIM), a sub-market of the London Stock Exchange. New ordinary shares of 33,575,741 were issued on the date of the IPO bringing the total number of shares outstanding to 173,575,741. These shares have a par value of GBP 0.10 and were sold by RAI at GBP 0.56 per share.

 

During the IPO process, the Group incurred USD 2,059,000 of expenses which were incremental and directly attributed to the equity raise. As per IAS 32, these costs are to be accounted for as a deduction from equity raised and as a result the net proceeds of the IPO were USD 22,672,000.

 

 

 

 

 

USD'000

Reconciliation of IPO proceeds

 

 

 

 

Proceeds from issue of share capital

 

 

 

24,731

Costs incurred and attributable to issue of share capital

 

 

 

(2,059)

 

 

 

 

────────

Net proceeds from issue of share capital

 

 

 

22,672

 

 

 

 

════════

 

 

9          GROUP INFORMATION

 

The Company operates through its subsidiaries, listed below, which are legally or beneficially, directly or indirectly owned and controlled by the Company.   

 

The extent of the Company's beneficial ownership and the principal activities of the subsidiaries are as follows:

 

Name of the entity

Country of incorporation

Beneficial ownership

Registered address

 

 

 

 

 

 

 

 

RA Africa Holdings Limited

British Virgin Islands

100%

3rd floor, J&C Building, PO Box 362, Road Town, Torola Virgin Islands (British) VG110

 

 

 

 

RA Asia Holdings Limited

British Virgin Islands

100%

3th floor, J&C Building, PO Box 362, Road Town, Torola Virgin Islands (British) VG110

 

 

 

 

RASB Holdings Limited

British Virgin Islands

100%

3th floor, J&C Building, PO Box 362, Road Town, Torola Virgin Islands (British) VG110

 

 

 

 

RA International Limited

Cameroon

100%

537 Rue Njo-Njo, Bonaprisi, PO Box 1245, Douala, Cameroon

 

 

 

 

RA International RCA

Central African Republic

100%

Avenue des Martyrs, Bangui, Central African Republic

 

 

 

 

RA International Chad

Chad

100%

N'djamena, Chad

 

 

 

 

RA International DRC SARL

Democratic Republic of Congo

100%

Kinshasa, Sis No106, Boulvevard Du 30 Juin, Dans La Commune De La Gombe EN RD, Congo

 

 

 

 

RA Property ApS

Denmark

100%

Tuborg Boulevard 12, 4 DK-2900 Helerup, Denmark

 

 

 

 

Raints Ghana Limited

Ghana

100%

PO Box 2843 Accra, Ghana

 

 

 

 

Windward Insurance PCC Limited - Berkshire Cell

Guernsey

100%

Level 5, Mill Court, la Charroterie, St Peter Port, Guernsey, GY1 1EJ

 

 

 

 

RA International Guyana Inc.

Guyana

100%

210 New Market Street, Geoegetown, Guyana

 

 

 

 

Raints Kenya Limited

Kenya

100%

770 Faith Ave, Runda Estate, Nairobi City (North), Nairobi, Kenya

 

 

 

 

RA International Limited

Malawi

100%

Hanover House, Hanover Avenue, Independence Drive, Blantyre, Malawi

 

 

 

 

Raints Mali

Mali

100%

Bamako-Niarela Immeuble Sodies Appartement C/7,  Mali

 

 

 

 

RA International Limitada

Mozambique

100%

Distrito Urbano 1, Bairro Sommarchield, Av, Kenneth Kaunda no 783 R/C, Maputo, Mozambique

 

 

 

 

Royal Food Solutions S.A

Mozambique

100%

Distrito Urbano 1, Bairro Central, Rua do Sol, 23  Maputo, Mozambique

 

 

 

 

RA International Niger

Niger

100%

Niamey, Quartier Cite Piudriere, Avenue du Damergou, CI-48, Niger

 

 

 

 

RA Contracting and Facility Management LLC

Qatar

100%

63 Aniza, Doustor St. 905, Salam International, Qatar

 

 

 

 

RA International*

Somalia

100%

Mogadishu, Somalia

 

 

 

 

RA International FZCO

South Sudan

100%

Plot no. 705, Block 3-K South, , Airport Road, Hai Matar  South Sudan

 

 

 

 

Reconstruction and Assistance Company Ltd

Sudan

100%

115 First Quarter Graif west-Khartoum, Kharthoum, Republic of Sudan

 

 

 

 

RA International Limited

Tanzania

100%

369 Toure Drive, Oysterbay, PO Box 62, Dar Es Salaam, Tanzania

 

 

 

 

RA International FZCO

UAE

100%

Office Number S101221O39, Jebel Ali Free Zone, Dubai, United Arab Emirates

 

 

 

 

RA International General Trading LLC

UAE

100%

Bay Square Building 12, Office 704, Al Abraj Street, Business Bay, PO Box 115774, Dubai, United Arab Emirates

 

 

 

 

RA SB Ltd.

UAE

100%

RAK International Corporate Centre, Ras Al Khaimah, United Arab Emirates

 

 

 

 

RA International Limited

Uganda

100%

4th Floor, Acacia Mall, Plot 14-18, Cooper Road, Kololo, Kampala, Uganda

 

 

 

 

REMSCO Uganda (SMC) Limited

Uganda

100%

4th Floor, Acacia Mall, Plot 14-18, Cooper Road, Kololo, Kampala, Uganda

 

* RA International in Somalia is not an incorporated legal entity.

 

 

10       GOODWILL

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

As at 1 January

 

 

-

-

Acquisitions

 

 

138

-

Impairment

 

 

-

-

 

 

 

────────

────────

As at 31 December

 

 

138

-

 

 

 

════════

════════

 

11       PROFIT FOR THE PERIOD

 

Profit for the period is stated after charging:

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

Restated

 

 

 

 

 

Staff costs

 

 

21,775

20,518

Materials

 

 

20,671

10,688

Depreciation

 

 

2,577

1,510

 

 

 

════════

════════

 

Staff costs relate to wages and salaries plus directly attributable expenses.

 

Amounts paid or payable by the Group in respect of audit and non-audit services to the Auditor are shown below.

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Fees for the audit of the interim accounts

 

 

25

25

Fees for the audit of the Company annual accounts

 

115

116

Fees for the audit of the subsidiary annual accounts

 

60

60

 

 

 

────────

────────

Total audit fees

 

 

200

201

 

 

 

════════

════════

 

 

 

 

 

Audit related assurance services

 

 

-

-

Non-audit related services

 

 

54

75

Fees in relation to the IPO

 

 

-

457

 

 

 

────────

────────

Total non-audit fees

 

 

54

532

 

 

 

════════

════════

 

The non-audit fees incurred in the prior year represent services undertaken by a separate EY team as part of the Group's IPO process and as part of a corporate acquisition that was completed in 2018. No members of the audit team were involved in undertaking these non-audit procedures and strict independence processes were in place.  All non-audit services, post IPO, have been assessed and approved by the Audit Committee.

 

12       EMPLOYEE EXPENSES

 

The average number of employees (including directors) employed during the period was:

 

 

 

2019

2018

 

 

 

 

 

Directors

 

 

7

4

Executive management

 

 

6

5

Staff

 

 

1,763

2,016

 

 

 

────────

────────

 

 

 

1,776

2,025

 

 

 

════════

════════

 

 

The aggregate remuneration of the above employees was:

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Wages and salaries

 

 

17,466

15,836

Social security costs

 

 

77

34

 

 

 

────────

────────

 

 

 

17,543

15,870

 

 

 

════════

════════

 

The remuneration of the Directors and other key management personnel of the Group are detailed in note 29.

 

13       EXCEPTIONAL ITEMS

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Share listing costs*

 

 

-

1,332

Stock-based compensation and related costs (note 16)

 

 

-

1,602

 

 

 

────────

────────

 

 

 

-

2,934

 

 

 

════════

════════

 

* Share listing costs represent advisory, legal, and other costs incurred in connection with the IPO which have not been accounted for as a deduction from equity raised.

 

14       TAX

 

The tax charge on the profit for the year is as follows:

 

 

 

2019

2018

 

 

 

USD'000

USD'000

Current tax:

 

 

 

 

UK corporation tax on profit for the year

 

 

-

-

Non-UK corporation tax

 

 

240

-

Adjustment for prior years

 

 

144

-

 

 

 

────────

────────

Tax charge for the year

 

 

384

-

 

 

 

════════

════════

 

 

 

 

 

 

Factors affecting the tax charge

 

The tax assessed for the year varies from the standard rate of corporation tax in the UK. The difference is explained below:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

Restated

 

 

 

 

 

Profit before tax

 

 

13,259

9,827

 

 

 

────────

────────

Expected tax charge based on the standard average rate of corporation tax in the UK of 19% (2018: 19%)

 

 

2,519

1,867

Effects of:

 

 

 

 

Expenses not deductible*

 

 

-

257

Deferred tax asset not recognised

 

 

86

39

Exemptions and foreign tax rate difference

 

 

(2,365)

(2,163)

Adjustment for prior years

 

 

144

-

 

 

 

────────

────────

Tax charge for the year

 

 

384

-

 

 

 

════════

════════

 

 

 

 

 

 

* Expenses not deductible represent the costs incurred relating to the share for share exchange and IPO.

 

The Group benefits from tax exemptions granted to its customers who are predominantly governments and large supranational organisations, as well as zero corporate tax rates in certain countries of operation. The CODM is not aware of any factors that indicate the tax rates in these countries will materially change in future periods or that tax exemptions granted will no longer be available to the Group.

 

15           EARNINGS PER SHARE

 

The Group presents basic earnings per share (EPS) data for its ordinary shares.  Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

 

Since a new parent entity was established in 2018 by means of a share for share exchange and the Group's financial statements have been presented as a continuation of the existing group, the number of shares taken as being in issue for the preceding period is the number of shares issued by the new parent entity.  As a result, the opening balance of shares used in calculating the historical weighted average number of shares presented in the comparative EPS calculation is 139,999,998, being the number of ordinary shares exchanged for the entire share capital of RA.

 

 

 

 

 

 

 

2019

2018

 

 

 

 

Restated

 

 

 

 

 

Profit for the period (USD'000)

 

 

12,875

9,827

 

 

 

 

 

Basic weighted average number of ordinary shares

 

 

173,575,741

157,109,829

Effect of warrants

 

 

-

-

Effect of employee share options

 

 

-

-

 

 

 

────────

────────

Diluted weighted average number of shares

 

 

173,575,741

157,109,829

 

 

 

 

 

 

 

 

 

 

Basic earnings per share (cents)

 

 

7.4

6.3

Diluted earnings per share (cents)

 

 

7.4

6.3

 

 

 

════════

════════

 

16           SHARE BASED PAYMENT EXPENSE

 

The Group recognised the following expenses related to equity-settled payment transactions:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Performance Share Plan

 

 

31

16

Other share based payments

 

 

-

1,602

 

 

 

────────

────────

 

 

 

31

1,618

 

 

 

════════

════════

 

Performance Share Plan

During the prior year, the Company introduced a Performance Share Plan (PSP) whereby options may be granted to eligible employees. Awards vest after a performance period of 3 years subject to continuous employment and the achievement of a hurdle total shareholder return (TSR) as at the end of the performance period. 

 

 

 

Weighted

 

Weighted

 

 

average

 

average

 

Number of

exercise

Number of

exercise

 

options

price

options

price

 

2019

2019

2018

2018

 

 

£

 

£

 

 

 

 

 

Outstanding at 1 January

2,826,085

0.10

-

-

 

 

 

 

 

Granted during the year

-

-

2,826,085

0.10

 

────────

────────

────────

────────

Outstanding at 31 December

2,826,085

0.10

2,826,085

0.10

 

════════

════════

════════

════════

 

 

Options issued under the PSP plan were valued using the Monte Carlo Simulation model which is considered to be the most appropriate for valuing options granted under schemes where there are changes in performance conditions by which the options are measured, such as for TSR based awards.

 

The fair value of the options at the grant date was USD 96,000 and a charge of USD 31,000 (2018: USD 16,000) was recognised in administrative expenses for the fiscal year ended 2019.

 

The Monte Carlo and Black-Scholes models used the following inputs:

 

Weighted average share price

 

 

 

 

56p (USD 0.74)

 

 

 

 

 

 

Expected volatility

 

 

 

 

10.10%

 

 

 

 

 

 

Risk free rate

 

 

 

 

1.24%

 Other share based payments

On Admission, in exchange for brokerage services provided to the Company during its IPO, the Company issued a warrant instrument granting its primary broker the right to subscribe for 671,514 ordinary shares of the Company. The warrants are exercisable for five years from the date of Admission at a subscription price of GBP 0.728 (USD 0.923) per ordinary share. They are non-transferrable and are subject to typical anti-dilution rights to adjust on a proportional basis for share consolidations, share splits and stock dividends.  The Company used the Black-Scholes model to value the warrants at the grant date. The fair value of the warrants is nil.

 

On Admission, the majority shareholder of RAI gifted 2,142,855 personally owned shares of the Company to certain employees of RA International FZCO as a reward for past employment service. The fair value of the shares on the grant date was GBP 0.56 (USD 0.74) per share. A charge of USD 1,602,000 was recognised in exceptional items in the prior year.

 

17           DIVIDENDS

 

During the period, a dividend of 1 pence (USD 0.01) per share (173,575,741 shares) totalling GBP 1,736,000 (USD 2,203,000) was declared and paid (2018: USD 12,500 per share (10 shares) totalling USD 125,000).

 

18           ALTERNATIVE PERFORMANCE MEASURES

 

APMs used by the Group are defined below along with a reconciliation from each APM to its IFRS equivalent, and an explanation of the purpose and usefulness of each APM. APMs are non-IFRS measures.

 

In general, APMs are presented externally to meet investors' requirements for further clarity and transparency of the Group's financial performance. APMs are also used internally by management to evaluate business performance and for budgeting and forecasting purposes.

 

Underlying Operating Profit (UOP)

The Group uses UOP as an alternative measure to Operating Profit to better compare the profitability of its operations across financial periods. UOP is calculated as Operating Profit less holding company expenses and acquisition costs.

 

On 29 June 2018, RAI listed on AIM and began to incur costs associated with being a listed company. No holding company expenses were incurred in 2017 and a full year of these expenses were incurred in 2019.  Both holding company expenses and acquisition costs do not relate to the day-to-day operating business of the Group.

 

Underlying Operating Margin is calculated as UOP divided by revenue.

 

Underlying Profit (UP)

The Group uses UP as an alternative measure to Profit Before Tax so as to better compare the profitability of the Group across financial periods. To calculate UP exceptional items are excluded from Profit Before Tax.

 

Exceptional items are excluded as they are by definition incurred outside of the normal operating practice of the Group.

 

Underlying Profit Margin is calculated as UP divided by revenue.

 

Net Cash

Net cash represents cash less overdraft balances, term loans and notes outstanding. This is a commonly used metric, helpful to stakeholders when analysing the business.

 

 

19           PROPERTY, PLANT, AND EQUIPMENT

 

 

Right-of-use

 

Machinery,

 

 

 

Assets

 

motor

 

 

 

-

 

vehicles,

 

 

 

Land and

Land and

furniture and

Leasehold

 

 

Buildings

Buildings

equipment

improvements

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Cost:

 

 

 

 

 

  At 1 January 2019 restated*

2,814

9,605

10,515

451

23,385

  Additions

561

7,288

5,090

20

12,959

  Disposals

-

(288)

(713)

-

(1,001)

 

────────

────────

────────

────────

────────

  At 31 December 2019

3,375

16,605

14,892

471

35,343

 

────────

────────

────────

────────

────────

 

 

 

 

 

 

Depreciation:

 

 

 

 

 

  At 1 January 2019 restated*

585

888

3,233

55

4,761

  Charge for the year

355

606

1,549

67

2,577

  Relating to disposals

-

(19)

(492)

-

(511)

 

────────

────────

────────

────────

────────

  At 31 December 2019

940

1,475

4,290

122

6,827

 

────────

────────

────────

────────

────────

 

 

 

 

 

 

Net carrying amount:

 

 

 

 

 

  At 31 December 2019

2,435

15,130

10,602

349

28,516

 

════════

════════

════════

════════

════════

 

 

 

Right-of-use

 

Machinery,

 

 

 

Assets

 

motor

 

 

 

-

 

vehicles,

 

 

 

Land and

Land and

furniture and

Leasehold

 

 

Buildings

Buildings

equipment

improvements

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Cost:

 

 

 

 

 

  At 1 January 2018 restated*

2,477

6,011

6,010

126

14,624

  Additions restated*

337

3,690

4,668

325

9,020

Acquired on business combination

-

17

52

-

69

  Disposals

-

(113)

(215)

-

(328)

 

────────

────────

────────

────────

────────

At 31 December 2018 restated*

2,814

9,605

10,515

451

23,385

 

────────

────────

────────

────────

────────

 

 

 

 

 

 

Depreciation:

 

 

 

 

 

  At 1 January 2018 restated*

385

560

2,391

26

3,362

  Charge for the year restated*

200

330

951

29

1,510

  Relating to disposals

-

(2)

(109)

-

(111)

 

────────

────────

────────

────────

────────

At 31 December 2018 restated*

585

888

3,233

55

4,761

 

────────

────────

────────

────────

────────

 

 

 

 

 

 

Net carrying amount:

 

 

 

 

 

At 31 December 2018 restated*

2,229

8,717

7,282

396

18,624

 

════════

════════

════════

════════

════════

 

*Balances have been restated to reflect impact of IFRS 16. See note 5 for further details.

 

Information related to lease liabilities is available in note 24.

 

The table below indicates the rents resulting from lease contracts which are not capitalised.

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Short-term leases

 

 

1,599

650

 

 

 

════════

════════

 

Short-term leases include amounts paid for vehicles and heavy equipment rental, as well as short-term property leases.

 

20       INVENTORIES

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Materials and consumables

 

 

4,839

3,241

Goods-in-transit

 

 

1,339

1,022

 

 

 

────────

────────

 

 

 

6,178

4,263

 

 

 

════════

════════

 

There was no write down to NRV made in relation to inventory as at 31 December 2019 (2018: nil)

 

21       TRADE AND OTHER RECEIVABLES

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Trade receivables

 

 

10,820

9,992

Accrued revenue

 

 

10,916

3,393

Deposits

 

 

221

213

Prepayments

 

 

1,381

584

Other receivables

 

 

1,182

1,780

 

 

 

────────

────────

 

 

 

24,520

15,962

 

 

 

════════

════════

Invoices are generally raised on a monthly basis, upon completion, or part completion of performance obligations as agreed with the customer on a contract by contract basis.

 

During the year 100% of accrued revenue was subsequently billed and transferred to trade receivables from the opening unbilled balance in the period (2018: 100%).

 

As at 31 December the transaction price allocated to remaining performance obligations was USD 141,000,000 (2018: USD 119,200,000). This represents revenue expected to be recognised in subsequent periods arising on existing contractual arrangements. The Group has not taken the practical expedient in IFRS 15.121 not to disclose information about performance obligations that have original expected durations of one year or less and therefore no consideration from contracts with customers is excluded from these amounts. All revenue is expected to be recognised within the next 5 years.

 

As at 31 December the ageing of trade receivables was as follows:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Not past due

 

 

7,396

5,912

Overdue by less than 30 days

 

 

1,058

3,249

Overdue by between 30 and 60 days

 

 

1,383

285

Overdue by more than 60 days

 

 

983

546

 

 

 

────────

────────

 

 

 

10,820

9,992

 

 

 

════════

════════

 

Trade receivables are non-interest bearing and generally have payment terms of 30 days.  No ECL was recorded as at 31 December 2019 (2018: nil) and all receivables are expected, on the basis of past experience, to be fully recoverable.

 

 

22       CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents in the consolidated statement of financial position comprised of cash at bank of USD 21,393,000 (2018: USD 27,804,000).

 

 

23       SHARE CAPITAL

 

 

2019

2018

 

USD'000

USD'000

 

 

 

Authorised, issued and fully paid

 

 

173,575,741 shares (2018: 173,575,741 shares) of GBP 0.10 (2018: GBP 0.10) each

24,300

24,300

 

════════

════════

 

 

 

 

24       LEASE LIABILITIES

 

Movements in the provision recognised in the consolidated statement of financial position are as follows:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

As at 1 January

 

 

2,643

2,379

Additions

 

 

561

337

Interest

 

 

493

447

Payments

 

 

(863)

(520)

 

 

 

────────

────────

As at 31 December

 

 

2,834

2,643

 

 

 

════════

════════

 

 

 

 

 

Current

 

 

437

111

Non-current

 

 

2,397

2,532

 

Interest of USD 493,000 (2018: USD 447,000) relating to the above lease liabilities has been included in Finance Costs for the year.

 

As at 31 December the maturity profile of lease liabilities was as follows:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

3 months or less

 

 

332

26

3 to 12 months

 

 

105

85

1 to 5 years

 

 

795

700

Over 5 years

 

 

1,602

1,832

 

 

 

────────

────────

 

 

 

2,834

2,643

 

 

 

════════

════════

 

The Group had total cash outflows relating to leases of USD 2,462,000 in 2019 (2018: USD 1,170,000). This is the total of short-term lease payments from note 19 and payments from note 24.

 

25       EMPLOYEES' END OF SERVICE BENEFITS

 

Movements in the provision recognised in the consolidated statement of financial position are as follows:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

As at 1 January

 

 

350

251

Provided during the year

 

 

174

116

End of service benefits paid

 

 

(133)

(17)

 

 

 

────────

────────

As at 31 December

 

 

391

350

 

 

 

════════

════════

 

26       TRADE AND OTHER PAYABLES

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Accounts payable

 

 

5,342

3,440

Accrued expenses

 

 

1,855

1,412

Customer advances

 

 

840

28

 

 

 

────────

────────

 

 

 

8,037

4,880

 

 

 

════════

════════

 

All customer advances recorded at 31 December 2018 were subsequently recognised as revenue in 2019 and all customer advances held at 31 December 2019 are expected to be recognised as revenue in the next 12 months.

 

27       FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

 

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group was not exposed to any significant interest rate risk on its interest-bearing liabilities.

 

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's operating activities when revenue or expenses are denominated in a different currency from the Group's functional currency, as well as cash and cash equivalents held in foreign currency accounts.

 

At 31 December 2019, the Group held foreign cash and cash equivalents of GBP 2,040,000 (USD 2,689,000). UK pound sterling is primarily held by the Group to settle payment obligations denominated in GBP. As at 31 December 2018, the Group held GBP 4,432,000 (USD 5,624,000).

 

The Group's exposure to foreign currency variances for all other currencies is not material.

 

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group is exposed to credit risk on its bank balances and receivables.

 

The Group seeks to limit its credit risk with respect to banks by only dealing with reputable banks as determined by the CODM and with respect to customers by only dealing with creditworthy customers and continuously monitoring outstanding receivables. The Company's 5 largest customers account for 73% of outstanding accounts receivable at 31 December 2019 (2018: 78%).

 

 

Receivables split by customer

 

 

 

2019

2018

 

 

 

%

%

 

 

 

 

 

Customer A

 

 

31

31

Customer B

 

 

29

5

Customer C

 

 

12

-

Other

 

 

28

64

 

 

 

────────

────────

 

 

 

100

100

 

 

 

════════

════════

 

No material credit risk is deemed to exist due to the nature of the Group's customers, who are predominantly governments and large supranational organisations.

 

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group limits its liquidity risk by ensuring bank facilities are available.

 

The Group's terms of sale generally require amounts to be paid within 30 days of the date of sale. Trade payables are settled depending on the supplier credit terms, which are generally 30 days from the date of delivery of goods or services.

 

 

As at 31 December the maturity profile of trade payables was as follows:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

3 months or less

 

 

5,333

3,428

3 to 6 months

 

 

9

12

 

 

 

────────

────────

 

 

 

5,342

3,440

 

 

 

════════

════════

 

 

Liabilities falling due within 12 months are recognised as current on the consolidated statement of financial position. Liabilities falling due after 12 months are recognised as non-current.

 

The unutilised bank overdraft facilities at 31 December 2019 amounted to USD 2,000,000 (2018: USD 2,000,000) and carry interest of 1M LIBOR +3.50% per annum (2018: 1.50%). In the prior period the facilities required a cash margin guarantee to be paid upfront; 100% margin for USD drawdowns and 120% margin for GBP drawdowns.

 

The Group manages its liquidity risk by maintaining significant cash reserves.

 

The Group's cash and cash equivalents balance is substantially all held in institutions holding a Moody's long-term deposit rating of A1 or above.

 

 

Capital management

The primary objective of the Group's capital management is to ensure that it maintains a healthy capital ratio in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes in business conditions.

 

No changes were made in the objectives, policies or processes during the year ended 31 December 2019.

 

Capital comprises share capital, share premium, merger reserve, share based payment reserve and retained earnings and is measured at USD 69,483,000 as at 31 December 2019 (2018: USD 58,780,000).

 

 

28       RELATED PARTY DISCLOSURES

 

Related parties represent shareholders, directors and key management personnel of the Group, and entities controlled, jointly controlled, or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group's management.

 

On 1 January 2018, the Group acquired 100% ownership of RA SB Ltd. from one of its shareholders, who is also a member of key management.

 

There were no outstanding balances with related parties included in the consolidated statement of financial position at 31 December 2019 (2018: nil).

 

 

29       COMPENSATION

 

Compensation of key management personnel

The remuneration of key management during the year was as follows:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Short-term benefits

 

 

1,628

1,367

Stock based compensation

 

 

31

1,672

 

 

 

────────

────────

 

 

 

1,659

3,039

 

 

 

════════

════════

 

 

The key management personnel comprise of 6 (2018: 5) individuals. Included in key management personnel are 3 (2018: 3) directors.

 

Compensation of directors

The remuneration of directors during the year was as follows:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Short-term benefits

 

 

1,291

1,071

Stock based compensation

 

 

14

569

 

 

 

────────

────────

 

 

 

1,305

1,640

 

 

 

════════

════════

 

Highest paid director

The remuneration of the highest paid director during the year was as follows:

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Short-term benefits

 

 

423

276

Stock based compensation

 

 

-

569

 

 

 

────────

────────

 

 

 

423

845

 

 

 

════════

════════

 

The amount disclosed in the tables is the amount recognised as an expense during the reporting year related to key management personnel and directors of the Group.

 

 

30       ACQUISITION OF SUBSIDIARY

 

RA SB Ltd.

On 1 January 2018, the Group acquired 100% ownership of RA SB Ltd. and its subsidiary (together "RASB"), from one of its shareholders, who is also a member of key management. The purchase consideration of USD 594,000 represents the net book value of RASB as at 1 January 2018. RA SB Ltd. is registered in Ras Al Khaimah, UAE and operates in the Republic of Sudan through its subsidiary which provides remote site services to the mining industry.  The acquisition is consistent with the Group's strategy of operating across Africa.

 

 

The fair values of the identifiable assets and liabilities of RASB as at the date of acquisition were:

 

 

 

 

USD'000

Assets

 

 

 

 

Property, plant, and equipment

 

 

 

69

Inventories

 

 

 

16

Accounts receivable, deposits, and other receivables

 

 

 

688

Bank balances and cash

 

 

 

29

 

 

 

 

 

Liabilities

 

 

 

 

Accounts payable and accruals

 

 

 

(208)

 

 

 

 

────────

Net assets

 

 

 

594

 

 

 

 

════════

 

Net cash outflow on acquisition

 

 

 

 

USD'000

 

 

 

 

 

Consideration paid

 

 

 

594

Less:

 

 

 

 

  Bank balances and cash acquired

 

 

 

(29)

 

 

 

 

────────

 

 

 

 

565

 

 

 

 

════════

 

Acquisition costs of USD 6,000 relating to the acquisition of RASB are included in acquisition costs within the prior accounting period.

 

For the year ended 31 December 2018, RASB contributed USD 1,754,000 revenue and USD 350,000 profit before finance costs to the Group results.

 

 

31       STANDARDS ISSUED BUT NOT YET EFFECTIVE

 

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

 

No other standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are expected to have a material impact on the Group.

 

 

32       SUBSEQUENT EVENTS

 

While the magnitude of the financial impact COVID-19 will have on the business cannot currently be accurately quantified, the Group will benefit from its strong balance sheet and the essential nature of many of its contracts with customers.  As a result, no impairment to the assets and liabilities on the balance sheet are expected. See note 2 for further details relating to the going concern analysis undertaken by the Board.

 

 

 

 

COMPANY STATEMENT OF FINANCIAL POSITION

 

 

 

 

2019

2018

 

Notes

USD'000

USD'000

 

 

 

 

Assets

 

 

 

Non-current assets

 

 

 

Investments

4

50,047

50,047

 

 

────────

────────

 

 

 

 

Current assets

 

 

 

Trade and other receivables

5

12,675

361

Cash and cash equivalents

 

645

669

 

 

────────

────────

 

 

13,320

1,030

 

 

────────

────────

Total assets

 

63,367

51,077

 

 

════════

════════

 

 

 

 

Equity and liabilities

 

 

 

Equity

 

 

 

Share capital

8

24,300

24,300

Share premium

 

18,254

18,254

Merger reserve

 

9,897

9,897

Share based payment reserve

 

47

16

Retained earnings

 

10,788

(1,561)

 

 

────────

────────

Total equity

 

63,286

50,906

 

 

────────

────────

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

6

81

171

 

 

────────

────────

Total equity and liabilities

 

63,367

51,077

 

 

════════

════════

 

 

The Company has taken the exemption conferred by section 408 of the Companies Act 2006 not to publish the profit and loss of the parent company within these accounts. The result for the Company for the year was a profit of USD 14,552,000 (2018: loss of USD 1,561,000).

 

The financial statements of the Company (registration number 11252957) were approved by the Board of Directors on 17 April 2020 and signed on its behalf by:

 

 

 

 

_________________________________                                                      _________________________________

Soraya Narfeldt                                                                                                      Andrew Bolter

CEO                                                                                                                           CFO

 

 

 

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

Share

 

 

 

 

 

 

Based

 

 

 

Share

Share

Merger

Payment

Retained

 

 

Capital

Premium

Reserve

Reserve

Earnings

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

As at 1 January 2018

-

-

-

-

-

-

 

 

 

 

 

 

 

Preference shares issued on incorporation

70

-

-

-

-

70

 

 

 

 

 

 

 

Issue of share capital on reorganisation

19,884

-

-

-

-

19,884

 

 

 

 

 

 

 

Share exchange

-

-

9,897

-

-

9,897

 

 

 

 

 

 

 

Issue of share capital on Admission

4,416

18,254

-

-

-

22,670

 

 

 

 

 

 

 

Share based payments

-

-

-

16

-

16

 

 

 

 

 

 

 

Redemption of preference shares

(70)

-

-

-

-

(70)

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

-

(1,561)

(1,561)

 

────────

────────

────────

────────

────────

────────

As at 31 December 2018

24,300

18,254

9,897

16

(1,561)

50,906

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

-

14,552

14,552

 

 

 

 

 

 

 

Share based payments

-

-

-

31

-

31

 

 

 

 

 

 

 

Dividends declared and paid

-

-

-

-

(2,203)

(2,203)

 

────────

────────

────────

────────

────────

────────

As at 31 December 2019

24,300

18,254

9,897

47

10,788

63,286

 

════════

════════

════════

════════

════════

════════

 

 

The attached notes 1 to 9 form part of the Financial Statements.

 

 

NOTES TO THE COMPANY FINANCIAL STATEMENTS

1    BASIS OF PREPARATION

 

The financial statements have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and the Companies Act 2006), including Financial Reporting Standard 101 'Reduced Disclosure Framework' (FRS101) under the historical cost basis and have been presented in USD, being the functional currency of the Company.

 

The Company has applied a number of exemptions available under FRS 101. Specifically, the requirement(s) of:

 

(a) paragraphs 91-99 of IFRS 13 Fair Value Measurement;

(b) paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of paragraph 79(a)(iv) of IAS 1;

(c)  paragraphs 10(d), 10(f), and 134-136 of IAS 1 Presentation of Financial Statements;

(d) IAS 7 Statement of Cash Flows;

(e)  30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;

(f)  17 of IAS 24 Related Party Disclosures and IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member: and

(g)  paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.

 

 

2    SIGNIFICANT ACCOUNTING POLICIES

 

Except noted below, all accounting policies applied to the Company are consistent with that of the Group.

 

Investments

Investments held by the company are stated at cost less provision for diminution in value.

 

 

3          EMPLOYEE EXPENSES

 

The average number of employees employed during the period was:

 

 

 

2019

2018

 

 

 

 

 

Directors

 

 

7

4

 

 

 

════════

════════

 

The aggregate remuneration of the above employees was:

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Wages and salaries

 

 

400

203

Social security costs

 

 

45

23

 

 

 

────────

────────

 

 

 

445

226

 

 

 

════════

════════

4          INVESTMENTS

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Cost and net book value

 

 

 

 

As at 1 January

 

 

50,047

-

Acquisition of RA International FZCO

 

 

-

29,781

Additional capital in RA International FZCO

 

 

-

20,266

 

 

 

────────

────────

As at 31 December

 

 

50,047

50,047

 

 

 

════════

════════

 

The Company owns 100% of the issued share capital of RA International FZCO, registered and incorporated in the UAE. The Company's principal activity is that of a holding company.

 

5          TRADE AND OTHER RECEIVABLES

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Prepayments

 

 

27

16

Due from subsidiary

 

 

12,636

297

VAT recoverable

 

 

12

48

 

 

 

────────

────────

 

 

 

12,675

361

 

 

 

════════

════════

 

Amounts due from subsidiary represent amounts due from RA International FZCO, an immediate subsidiary, and are non-interest bearing and payable on demand.

 

6          TRADE AND OTHER PAYABLES

 

 

 

 

2019

2018

 

 

 

USD'000

USD'000

 

 

 

 

 

Trade payables

 

 

19

87

Accruals

 

 

62

84

 

 

 

────────

────────

 

 

 

81

171

 

 

 

════════

════════

7          RELATED PARTY TRANSACTIONS

 

The Directors have taken advantage of the exemption under paragraph 8(j) and 8(k) of FRS101 and have not disclosed transactions with other wholly owned group undertakings. There are no other related party transactions.

 

 

8          SHARE CAPITAL

 

 

2019

2019

2018

2018

 

Number

USD'000

Number

USD'000

Authorised, issued, and fully paid:

 

 

 

 

Ordinary shares of GBP 0.10 each

173,575,741

24,300

173,575,741

24,300

 

════════

════════

════════

════════

 

9          SUBSEQUENT EVENTS

 

While the magnitude of the financial impact COVID-19 will have on the business cannot currently be accurately quantified, the Company will benefit from its strong balance sheet and the continued trading of its subsidiary, RA International FZCO. As a result, no impairment to the assets and liabilities on the balance sheet, including both its investment in and receivable balance from RA International FZCO, is expected to arise as a result of the ongoing pandemic.

 


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