REG - RA Intnl Group PLC - Final Results
26/05/2022 07:00
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RNS Number : 8987M RA International Group PLC 26 May 2022
RA INTERNATIONAL GROUP PLC
("RA International", "RA", the "Group" or the "Company")
Results for the year ended 31 December 2021
RA International Group plc (AIM: RAI) a specialist provider of complex and
integrated remote site services to Humanitarian, Governmental and Commercial
organisations globally, announces its full year results for the year ended 31
December 2021.
HIGHLIGHTS
· Revenue of USD 54.6m (2020: USD 64.4m) and underlying EBITDA of USD
6.7m (2020: USD 14.2m), in-line with the guidance provided in our pre-close
trading statement.
· Statutory loss before tax of USD 32.2m including USD 31.5m in
non-underlying charges relating to our Mozambique project of which USD 5.9m
relates to cash costs and USD 23.4m is a provision to impair the carrying
value of assets. We are pursuing opportunities to dispose of USD 7.2m of
project related assets located in storage and remain confident that
development works will restart in Mozambique, although timing is difficult to
predict
· Resilience of IFM services continues to be a feature, with revenue
for the year of USD 31.2m (2020: USD 31.3m); IFM represents 56% of contract
order book value
· 2021 year-end order book of USD 100m, with USD 40m of new contracts,
contract uplifts and extensions awarded during the year and adjusted for the
removal of the USD 60m Mozambique contract
· Government and humanitarian clients represented 95% of 2021 revenue
(2020: 92%), with government an increasing proportion of the mix (47% of 2021
revenue). These are stable, high-value clients that support our strategy to
diversify geographically through customer-led growth
· In 2021 we established a US subsidiary, RA Federal Services, to
target further growth with relevant US federal government departments, which
we see as a significant growth opportunity
· Maturity of the USD 10m MTN debt programme has recently been extended
to 2024 and additional working capital facilities are available as required to
support implementing material new project awards
· Reflecting the Board's cautious view on the operating environment in
the near-term, the Board is not recommending a dividend for the FY21 financial
year
2021 2020
USD'm USD'm
Revenue 54.6 64.4
Underlying EBITDA(1) 6.7 14.2
Underlying EBITDA margin 12.3% 22.0%
(Loss)/Profit before tax (32.2) 6.6
EPS, basic (cents) (18.7) 3.8
Underlying EPS, basic (cents) (2) 0.1 5.6
Dividend per share Nil 1.35
Net (debt)/cash (end of period) (3) (1.5) 11.2
Commenting on the 2021 results and outlook, Soraya Narfeldt, CEO of RA
International, said:
"We responded with agility and resilience to the major external challenges we
faced in 2021 and delivered on significant projects for our clients, building
our reputation as a trusted partner. Looking ahead, it remains difficult to
forecast with real authority how the current year will play out but we are
continuing to stabilise the business post the pandemic and its effects, and
see the scope for a return to accelerated contract awards as and when a more
normalised operating environment returns. In the meantime, we take great
confidence in the strength of our offering, which is differentiated by our
technical capability, proven ability to innovate and continue to perform under
extraordinarily challenging circumstances, and by our attractive pricing,
particularly where we self-perform.
As we execute on our plans, our main priorities for this year are to grow the
pipeline, particularly with US federal Government departments, build balance
sheet liquidity, and drive value from recent investment in our business,
systems and processes. We thank shareholders for their patience over what has
been a challenging period and we look forward to realising the value from
supporting our customers as they emerge from the residual challenges of the
last two years."
Online Investor Presentation
RA International management will host an online investor presentation and
Q&A session at 11am BST on Monday, 30 May 2022.
Anyone wishing to participate should register with PI World at:
https://bit.ly/RAI_FY21_results_webinar
(https://bit.ly/RAI_FY21_results_webinarI%E2%80%99ll)
A replay will be available subsequently on the Company website.
Notes to Highlights:
(1) Underlying EBITDA is calculated by adding depreciation, non-underlying
items and share based payment expense to operating profit.
(2) Underlying EPS reflects underlying operating profit after deducting net
finance costs and taxation, divided by the weighted average number of ordinary
shares outstanding during the period.
(3) Net cash represents cash less overdraft balances, term loans and notes
outstanding. A negative net cash balance is referred to as net debt.
Enquiries:
RA International Group PLC Via Bamburgh Capital
Soraya Narfeldt, Chief Executive Officer
Lars Narfeldt, Chief Operating Officer
Andrew Bolter, Chief Financial Officer
Canaccord Genuity Limited (Nominated Adviser and Broker) +44 (0) 207 523 8000
Bobbie Hilliam
Alex Aylen
Bamburgh Capital Limited (Investor Relations & Media) +44 (0) 131 376 0901
Murdo Montgomery investors@raints.com (mailto:investors@raints.com)
Background to the Company
RA International is a leading provider of services to remote locations. The
Company offers its services through three channels: construction, integrated
facilities management and supply chain, and services three main client groups:
humanitarian and aid agencies, governments and commercial customers,
predominantly in the oil and gas and mining sectors. It has a strong customer
base, largely comprising UN agencies, western governments and global
corporations.
The Company provides comprehensive, flexible, mission critical support to its
clients enabling them to focus on the delivery of their respective businesses
and services. Focusing on integrity and values alongside making on-going
investment in its people, locations and operations has over time created a
reliable and trusted brand within its sector.
CHAIR'S STATEMENT
2021 was a year where the employees of our Company had to respond to two major
external challenges as they dealt with the effects of COVID-19 and the tragic
events in Mozambique. On behalf of the Board, I would like to acknowledge the
difficulties our people have experienced and to thank them for their sense of
purpose, community, and commitment in dealing with these challenges.
It is clear that for our customers the effects of COVID-19 have been
particularly pronounced. This has caused further delays to mobilising project
activity across our business, stalling the momentum that was building in the
third quarter of last year. We remain confident that we will re-establish this
momentum but we are cautious on timings.
Against this backdrop, the Group still delivered USD 54.6m of revenue and
underlying EBITDA of USD 6.7m. The loss before tax of USD 32.2m recorded for
the year highlights impairment charges we have recorded in relation to our
operations in Northern Mozambique, where there remains significant
uncertainty. As we outline in this report, we are working hard to recover
value from these assets.
The market opportunity remains attractive for RA and, as a Board, we have
assessed how we align our strengths and resources with these market
opportunities to best drive sustainable profitable growth. We came to market
in 2018 looking to expand our customer base more broadly beyond our
established humanitarian client base.
We have made great strides in developing the government side of our business,
and Soraya provides the substance of this in her review. We believe our work
with western Governments, particularly US and UK overseas departments, is
likely to be a core part of our success going forward. As such, we are looking
to reallocate greater investment to this side of the business, particularly in
the US through developing RA Federal Services ("RAFS") - our US subsidiary. As
we do this, we will still look to undertake projects with Commercial customers
and build on our extensive relationships with the UN and other humanitarian
organisations.
At the right time, we also see the opportunity for this organic investment to
be complemented by bolt-on M&A strengthening our past performance in
attractive undeserved markets.
In line with the Board's cautious approach to the prevailing environment, with
suppressed levels of activity in terms of contract awards and project starts
continuing to be a feature in 2022, the Board is not recommending the payment
of a final dividend. The Board's intention is to reinstate the dividend as
soon as is practicable, taking into consideration the financial strength of RA
and its confidence in its future performance. More generally on cash and the
balance sheet, the Board remains confident in our position to fund existing
project activity, to mobilise on new projects, and to bid successfully for
tenders.
Environmental, social, governance, and corporate culture
A great deal of work was done behind the scenes in 2021 to set the future
direction for RA's sustainability activities and ensure progress continues to
be made with regards to our environmental and social activities. This included
a rigorous refresh of our materiality - looking at our own priorities and the
expectations of our stakeholders and selecting areas of investment where we
feel we can do more and have a greater impact. Through this we identified
eight key focus areas where we will set specific targets and appoint dedicated
managers to drive improvements.
In parallel, the Group reviewed and affirmed its purpose, mission, and values,
providing a strong foundation for our corporate culture, the types of projects
we want to take on, and the organisations we want to work with and for. We now
include key sustainability indicators relating to shared values, social,
environmental and governance alignment, and country related risks within our
project selection process.
The Group also refreshed its system for identifying, monitoring, and managing
risk, and established a Group Risk Assessment Committee ("GRAC") to support
the EMT in managing the principal risks that are most likely to have the
largest negative impact on the business.
More detail on RA's approach to doing business the right way is set out in our
2021 Sustainability Report.
A final note
The Board remains focused on delivering value for shareholders and believes
the refreshed strategic focus outlined above supports this through targeting a
high-quality customer base and international diversification supporting
significant contract visibility, sustained earnings growth, and strong free
cash generation.
On behalf of the Board, I would like to commend the leadership team and all
our staff for their ability to respond to the challenges of the last two
years. Adaptability and finding solutions in difficult
situations is embedded in RA's culture, and this was proven many times over in
2021.
Sangita Shah
Non-Executive Chair
26 May 2022
CHIEF EXECUTIVE OFFICER'S REVIEW
As we work through the residual challenges of the last two years, we should
not lose sight of the strengths of the business. As we outlined in our
pre-close trading statement, the second half of the year saw unprecedented
operating constraints, causing inefficiencies and exceptional delays in
executing projects, in tender issues, awards, and in project mobilisations.
This impacted our profitability for the second half of 2021 and stalled our
order book momentum.
Whilst we are not reporting the financial performance we would want to for
this period, it is primarily a function of the broader environment and events
which are out of our control. Revenue of USD 54.6m and underlying EBITDA of
USD 6.7m are markedly lower than the prior year and reflect the full-year
impact of the pandemic and the events in Mozambique. The Group reported a loss
before tax of USD 32.2m, which included a USD 31.5m non-underlying expense
relating to Mozambique. Investors will be aware that this area was subject to
an insurgency attack in March 2021 and, as at the time of these results, the
local situation had not yet stabilised sufficiently to see sizable commercial
activity restarting. We are working hard to realise value from our investments
made relating to this project, which will support our cash position.
To give further context to these headlines, 2021 was very disruptive from an
operational perspective. Clearly, our customers' spending over the last two
years has been focused on mitigating the impact of COVID-19 and less on
project development. As a result, government and humanitarian agencies have
suffered from staff shortages which impacted requests for proposals, bids, and
project execution. In September 2021 we believed that these challenges were
abating, however this view was superseded by a return to government-imposed
lockdowns and restrictions which led to further delays and uncertainty.
Despite these ongoing challenges, we exited 2021 with an order book backlog of
USD 100m, reflecting USD 40m of new contract awards, uplifts, and extensions,
offset by the force majeure declaration relating to the Palma Project and the
subsequent removal of that contract from the order book.
Contract order book:
USD'm
Opening order book 187
New contracts, contract uplifts and extensions 40
Contracts suspended, cancelled etc. (includes Mozambique) (72)
Contracted revenue delivered (55)
────────
Closing order book as at 31 December 2021 100
════════
Our pipeline activity remains very solid but given the extended delays we
continue to experience and the current run-rate of new business awards and
project starts, we are adopting a very conservative position in terms of
forecasting the extent to which new project activity lands in the current
financial year. We are confident that as and when a more normal operating
environment returns, we will re-establish significant order book growth but
the timelines for this are beyond our control, meriting the cautious approach.
The fundamental strengths of the business remain. We are delivering on some 20
high-value IFM projects which represent 56% of the order book and provide
long-term visibility typically at above Group average profit margins. We are
delivering on multiple construction projects, with many expected to be the
first phase of much larger contracts. This is augmented by our supply chain
activities which represent around 10% of order book, and again include
projects of significant value.
In terms of an update on our operational involvement in the Cabo Delgado
province in Mozambique, we continue to believe that given the considerable
multi-national commercial investment and the significance to both Mozambique
and the international community, the project will come to fruition - although
timing is difficult to predict. Given the prevailing uncertainty, the Board
has taken the prudent approach of impairing the assets and associated costs
related to the project. Whilst we have taken this impairment charge, we are
working hard to realise value from these assets which would bolster our cash
resources. We remain well-positioned to provide the originally planned
services as and when they are required.
Clearly Group profitability and cash have been impacted by the prevailing
environment but as Andrew details in his review, we have taken the requisite
steps to strengthen our liquidity position and have sufficient resources to
fulfil our project deployments and bid for the types of projects we want.
Our refreshed strategy plays to our strengths across significant market
opportunities
We continue to drive long-term value by executing on our customer-led growth
strategy underpinned by a core principle of doing business the right way. Our
focus on sustainability is a key differentiator for us as our customers become
increasingly aware of the benefits of incorporating environmental and social
considerations into their projects.
While our commercial projects remain in the pipeline, and we will continue to
bid for new contracts which meet our risk adjusted return profile, we have
reflected on our strong track record and competitive advantage in supporting
blue-chip customers in the humanitarian and government sectors relative to the
emerging opportunity we have in the commercial sector.
We are particularly encouraged about the success and opportunities we have
with western Governments, and where we are building a specialist capability
with respect to supporting US Government ("USG") activity overseas. In 2021,
this was evidenced by key contracts signed with the US Navy, USAID, and
Cherokee Nation Mechanical.
In addition, we are looking to prioritise work with UK Government departments
including the Ministry of Defence, the Foreign, Commonwealth & Development
Office, as well as other international government agencies.
The table below highlights this trajectory with a marked increase in
Government revenues, particularly since 2020.
2014 2015 2016 2017 2018 2019 2020 2021
Humanitarian 87% 81% 85% 74% 62% 55% 48% 48%
Government 6% 8% 9% 21% 31% 32% 44% 47%
Commercial 7% 11% 6% 4% 8% 12% 8% 5%
It is worth breaking this down further to illustrate the success we have
established with US federal Government overseas budgets. This has been a
strategic focus of the business over the last four to five years, has been a
significant driver of our financial performance over the last couple of years,
and is expected to contribute an increased proportion of Group revenue going
forward.
Over the last two financial years, US Government related revenues have
contributed approximately one-third of Group revenues. This figure was 25% in
2019 and below 10% prior to that. This growth reflects a targeted approach to
business development, particularly with the US Department of Defense and the
US Department of State, including USAID and the Bureau of Overseas Building
Operations ("OBO") projects. These departments have contributed materially to
the marked growth in Government revenues since 2020, including the following
landmark projects:
- USD 5.7m contract to provide Training and Life Support Services in Central
African Republic for the US Department of Defense,
- USD 15.1m Embassy Upgrade Project in East Africa for the US Department of
State, and
- USD 21.5m contract to provide comprehensive life support and maintenance
services at a joint USAID/ Embassy compound.
This success has been based on establishing partnerships with US companies to
bid for and deliver US Government work, across a number of different contract
frameworks:
- Indefinite Delivery/Indefinite Quantity ("IDIQ") Contract Vehicles, of
which our seat on the USD 249m IDIQ for design and construction services
supporting the island of Diego Garcia is a good example,
- Single Contracts, where we deliver life support and construction contracts
for Embassies and are presently executing projects on three continents,
- Sole Source Teaming Agreements, where we have a successful partnership with
Cherokee Nation Mechanical, and
- Broader partnerships and JVs, including with IAP, who awarded us a USD
24.1m contract to procure and deliver food to multiple locations across
Africa.
In 2021, we established a wholly owned US based subsidiary, RAFS, to bid
directly on USG projects and accelerate growth in this area. RAFS has an
independent Board of Directors and we have reallocated resources and personnel
from our support hubs in Dubai and Kenya to the US business. Overall, we are
investing USD 1.5m to USD 2.0m through 2023 in building our US capability
through RAFS as we look to build on our USG momentum.
Strategically, RAFS allows us to be more competitive in our tenders and
complements our existing relationships with organisations such as Cherokee
Nation Mechanical and Sincerus where a partnership arrangement makes sense.
Establishing RAFS has already broadened discussions and the scope of
opportunities available to us given the clear advantages our proposition
offers:
- track record to self-perform large scale USG contracts across the range of
our services including through our "one-supplier" model,
- our offering is particularly competitive where we self- perform as we
combine technical capability through past performance and a clear cost
advantage,
- we operate in markets which are underserved by existing providers, and/or
where US organisations look to partner with local sub-contractors that do not
have the capability to deliver to requisite international standards, and
- our ability to offer additional value through our industry leading ESG
credentials, the breadth and depth of
- our experience, including our humanitarian work, our reputation as
acknowledged specialists in our field.
Overall, we expect government clients to become an increasingly important part
of our business, providing high-quality earnings, decreasing the risk profile
of our clients, and diversifying geographically through customer-led growth.
We continue to explore broader opportunities that play to our core strengths.
For example, we are in discussions with DFIs such as the Development Finance
Corporation, with a view to establish relationships as a project manager for
DFI funded works. RA adds value through its social and environmental impact
and strong governance. DFIs fund large infrastructure projects across Africa
and Asia which fall within operational geographies. We are also exploring ECA
funded projects. UKEF, the export credit agency of the British Government, has
more than tripled its investment in Africa to GBP2.3b.
Current trading and outlook
We responded with agility and resilience to the major external challenges we
faced in 2021 and delivered on significant projects for our clients, building
our reputation as a trusted partner. Looking ahead, it remains difficult to
forecast with real authority how the current year will play out but we are
continuing to stabilise the business post the pandemic and its effects, and
see the scope for a return to accelerated contract awards as and when a more
normalised operating environment returns. In the meantime, we take great
confidence in the strength of our offering, which is differentiated by our
technical capability, proven ability to innovate and continue to perform under
extraordinarily challenging circumstances, and by our attractive pricing,
particularly where we self-perform.
As we execute on our plans, our main priorities for this year are to grow the
pipeline, particularly with US federal Government departments, build balance
sheet liquidity, and drive value from recent investment in our business,
systems and processes. We thank shareholders for their patience over what has
been a challenging period and we look forward to realising the value from
supporting our customers as they emerge from the residual challenges of the
last two years.
Soraya Narfeldt
Chief Executive Officer
26 May 2022
FINANCIAL REVIEW
Revenue of USD 54.6m and underlying EBITDA of USD 6.7m summarise our financial
performance for the year. Results are in line with the guidance we provided in
a trading update on 16 February 2022 and reflect a challenging operating
environment and the result of events taking place in Cabo Delgado, Mozambique
which, in addition to having a material impact on our revenue and
profitability in 2021, has significantly altered the makeup of our balance
sheet.
We have addressed these challenges and the impact of the Palma Project both
strategically, as Soraya has touched upon, but also from a financial
standpoint. In 2022 we completed a USD 12.0m debt raise through the issuance
of loan notes maturing in November 2024. As part of this exercise, USD 8.4m of
the USD 10.0m of notes outstanding at 31 December 2021, maturing in the second
half of 2022, were cancelled. Additionally, we have put in place a long-term
working capital facility to support the business, if required, in implementing
material new project awards.
In September 2021 we highlighted the significant increase in inventory caused
by the suspension of the Palma Project and the corresponding impact on cash.
The unwinding of this balance continues to progress (decrease of USD 0.6m
since the end of H1 21) and we expect this to accelerate in 2022.
Overall, despite the external difficulties faced by the business during 2021,
the Company remains in a strong position to bid for and execute large projects
and significant opportunities remain to increase liquidity in 2022.
Highlights:
2021 2020
USD'm USD'm
Revenue 54.6 64.4
Gross profit 12.0 18.8
Gross profit margin 22.0% 29.2%
Underlying EBITDA 6.7 14.2
Underlying EBITDA margin 12.3% 22.0%
(Loss)/Profit before tax (32.2) 6.6
(Loss)/Profit before tax margin (59.0%) 10.3%
EPS, basic (cents) (18.7) 3.8
Underlying EPS, basic (cents) 0.1 5.6
Net cash (end of period) (1.5) 11.2
Revenue
Reported revenue for 2021 of USD 54.6m (2020: USD 64.4m) represents a USD 9.8m
or 15% decrease year on year. This both contrasts the momentum the Company had
entering 2020 with the challenging operating situation that has continued to
develop since the onset of COVID-19 and highlights the financial impact of the
events in Mozambique.
As was communicated to the market shortly after the event in March, this
project was anticipated to generate USD 10.0m of revenue in 2021.
In September 2021 we advised that we were encouraged by a recent uptick in
construction contracts being awarded, which although relatively small in terms
of contract value were seen as an important indicator of returning to a more
normal operating environment. This led to construction revenue increasing by
23% in the second half of 2021, albeit full year construction revenue
decreased by 26% when compared with 2020.
IFM revenue continues to be resilient and broadly constant from
period-to-period. Lower income from our hotel facility in Somalia was offset
by revenue from new contracts awarded during the year. Consistent with prior
year, approximately 75% of supply chain revenue was earned from long-term
contracts, often three to five years in length.
Consistent with prior year, approximately 75% of supply chain revenue was
earned from long-term contracts, often three to five years in length.
H2 2021 H1 2021 H2 2020 H1 2020
USD'm USD'm USD'm USD'm
Integrated facilities management 15.8 15.4 15.3 15.9
Construction 8.0 6.2 8.4 10.7
Supply chain 4.6 4.6 5.3 8.8
──────── ──────── ──────── ────────
28.4 26.2 29.1 35.4
════════ ════════ ════════ ════════
Profit margin
Gross margin in 2021 was 22.0% (2020: 29.2%), with a significant variance
between H1 2021 and H2 2021 (29.2% and 15.5% respectively). Gross profit
decreased by USD 6.8m when compared with 2020 and is reflective of:
2021
USD'm
Decrease in revenue 2.4
Increased direct cost depreciation 0.9
Credit provision 0.5
Decrease in project margins - Construction 0.6
Decrease in project margins - IFM 2.2
Decrease in project margins - Supply Chain 0.2
───────
Total 6.8
Decreased margins from construction activities resulted from a number of near
nil margin contracts being executed in H2 2021 which relate to the initial
phase of what may become much larger projects. General inefficiencies were
also encountered given the fitful nature of project execution during the
period.
Approximately half of the decrease attributed to IFM services relates to lower
occupancy in our Somalia hotel facility, with the remainder being the effect
of general inefficiencies and inflationary pressures.
In H2 2021 inflationary pressure was primarily seen on food and beverage
imports and logistics costs, however in some locations we are seeing
significant wage inflation as well. We have recently been successful in
agreeing price increases on some IFM contracts, however, we anticipate
continued margin pressure in 2022. We continue to work with our long-term
suppliers, and plan to leverage our existing inventory holdings to mitigate
inflationary effects where possible.
Reconciliation of (loss)/profit to underlying EBITDA:
2021 2020
USD'm USD'm
(Loss)/Profit (32.1) 6.6
Tax expense (benefit) (0.1) 0.1
──────── ────────
(Loss)/Profit before tax (32.2) 6.6
Finance costs 1.3 1.0
Investment income (0.1) (0.3)
──────── ────────
Operating (loss)/profit (30.9) 7.3
Non-underlying items 32.2 3.0
──────── ────────
Underlying operating profit 1.3 10.4
Share based payments 0.5 0.1
Depreciation 4.9 3.7
──────── ────────
Underlying EBITDA 6.7 14.2
════════ ════════
Underlying EBITDA margin was 12.3% in 2021 (2020: 22.0%), reflecting lower
gross margin and a USD 2.3m increase in administrative expenses driven by
centralisation efforts enacted in 2020 and investment made in establishing
RAFS during 2021. Outside of a planned investment in RAFS of between USD 1.5m
to USD 2.0m, we anticipate the strategic shift to de-emphasise commercial
projects will lead to administrative cost savings in 2022.
During the year, the Company incurred non-underlying costs of USD 32.2m (2020:
USD 3.0m).
Non-underlying items:
2021 2020
USD'm USD'm
COVID-19 costs 0.8 1.4
Other share based payments - 1.2
Restructuring costs - 0.3
Acquisition costs - 0.2
Palma Project, Mozambique 31.5 -
──────── ────────
32.2 3.0
════════ ════════
COVID-19 costs of USD 0.8m are almost entirely incremental staff costs and PPE
relating to the pandemic. Further detail on these costs can be found in note 9
of the consolidated financial statements.
Non-underlying costs related to the Palma Project can broadly be classified
into two categories, the impairment of assets related to the project, and
incremental costs
incurred by the Company as a direct result of the attack and subsequent
project suspension.
Asset impairment
The full carrying value of Palma Project assets, totalling USD 25.6m has been
impaired, however it is important to note that of this balance, we consider
only USD 2.1m to be a realised loss while the remainder, USD 23.4m, has been
impaired through the establishment of a provision. These assets will be
assessed to establish if there is a basis for reversal of the impairment
provision at each reporting date or when an event transpires which may
indicate a material change in the value of these assets.
Of the USD 23.4m in assets where a provision has been established, USD 7.2m
relates to equipment and material located within various secure storage
locations in Africa and the Middle East ("Offsite Assets"). These assets were
either on-route to Palma at the time of the March attack and diverted to or
held at safe storage facilities, or assets which we were able to relocate from
our Mozambique camp during the second half of 2021. Given the uncertainty as
to when development activities will recommence in Northern Mozambique and the
cost of storage, we believe it to be in the best interest of stakeholders that
the Group sell these assets in the short term, both so as to recover maximum
value and cease incurring storage costs. These assets may also be utilised in
new projects during 2022.
The USD 2.1m that is considered permanently impaired is primarily made up of
assets which have been damaged, stolen, or otherwise deemed unusable in the
future. We have lodged an insurance claim relating to a significant portion of
this balance and are currently in discussions with our insurers.
Incremental costs
In 2021, the Group incurred USD 4.5m in incremental costs directly related to
the Mozambique attack and resulting contract suspension. These costs are
primarily made up of logistics and storage charges relating to the Offsite
Assets referenced above, but also include evacuation costs and mental health
counselling provided to staff post incident.
The Group has also recorded a provision of USD 1.4m for unavoidable costs
associated with the Offsite Assets. This provision will be reassessed as at
the date of our 2022 interim reporting or as the Offsite Assets are disposed.
As with those assets identified as permanently impaired, we have lodged an
insurance claim relating to a significant portion of incremental costs and are
currently in discussions with our insurers.
Further details of these balances and the process we followed when assessing
the level of impairment to be recorded can be found in note 9.
A breakup of the USD 31.5m non-underlying expense related to Mozambique is
below:
2021 2020
USD'm USD'm
Provision for asset impairment 23.4 -
Permanent asset impairment 2.1 -
Incremental costs incurred but unpaid 1.1 -
Provision for unavoidable costs 1.4 -
──────── ────────
28.0 -
Incremental costs incurred and paid 3.4 -
──────── ────────
Total 31.5 -
════════ ════════
Finance Costs net of Investment Revenue increased to USD 1.3m (2020: USD 0.7m)
as the Company incurred a full year of interest expense related to loan notes
issued in 2020 and 2021 and realised USD 0.2m less in foreign exchange gains.
The average loan balance outstanding in 2021 was USD 7.1m compared with USD
2.1m in 2020.
Earnings per share
Basic loss per share was 18.7 cents in the current period (2020: 3.8 cents).
Adjusting for non-underlying items, underlying earnings per share was 0.1
cents (2020: 5.6 cents).
Cash flow
Our cash balance decreased by USD 9.1m during the year (2020: decrease of USD
3.8m), primarily resulting from asset purchases and costs incurred relating to
Mozambique.
Summary cash flows:
2021 2020
USD'm USD'm
Operating Profit (30.9) 7.3
Asset impairment 28.0 -
Depreciation 4.9 3.7
Other items pre-working capital adjustments 1.0 1.7
──────── ────────
3.0 12.7
Working capital adjustments (7.8) 8.7
Tax & end of service benefits paid (0.2) (0.2)
──────── ────────
Net cash flows from operating activities (5.1) 21.1
Investing activities (excluding Capital Expenditure) 0.9 0.3
Capital Expenditure (3.5) (24.5)
──────── ────────
Net cash flows used in investing activities (2.6) (24.1)
Financing activities (excluding borrowings) (5.2) (6.8)
Proceeds from borrowing 3.9 6.1
──────── ────────
Net cash flows used in financing activities (1.3) (0.7)
Net change in cash during the period (9.1) (3.8)
Cash outflows from operations were USD 4.8m in the year (2020: inflows of USD
21.3m) reflecting lower profitability and a variance of USD 16.5m in working
capital adjustments (negative USD 7.8m in 2021 and positive USD 8.7m in 2020).
At the end of 2021, USD 3.4m of the USD 9.4m carrying value of inventory
related to prefabricated camp assets purchased in 2020 and partially used in
the Palma Project. The Company will utilise these assets on certain projects
if they commence in 2022 but is also pursuing a sale which may lead to a
significant cash benefit being realised. USD 3.2m of inventory which has been
provided for, relates to Offsite Assets, which if sold, may also lead to a
significant cash uplift.
2021 2020
USD'm USD'm
Gross inventory 12.7 9.1
Provision for asset impairment (3.3) -
──────── ────────
Carrying value of inventory 9.4 9.1
Prefabricated camp assets (3.4) (2.1)
──────── ────────
Normalised inventory balance 6.0 7.0
════════ ════════
Trade receivables and accrued revenue increased by USD 4.5m as at the end of
2021 when compared with prior period. This variance is primarily due to timing
with regards to invoicing and collection but does reflect a USD 2.1m build-up
of accrued revenue relating to one UN construction project. The full balance
has been invoiced in 2022.
We entered 2021 anticipating capital expenditure of between USD 7.0m and USD
10.0m, with the majority of spend relating to finalising the construction of
our camp facility near Palma, Mozambique. Instead, as a result of the attack
and contract suspension, capital expenditure for 2021 totalled USD 3.5m. Our
underlying business is not particularly capital intensive; unless linked to a
significant new project award, we anticipate 2022 capital expenditure to be
between USD 1.0m and USD 2.0m.
Balance sheet and liquidity
Net assets at 31 December 2021 were USD 37.3m (2020: USD 72.1m). Our balance
sheet has been reshaped by the events in Mozambique and related impairment
charge and whilst we cannot impact the timing of recommencement of oil and gas
development activities which may trigger a recovery of asset impairment, with
considerable work already undertaken we are confident that significant
opportunities exist to improve our liquidity profile in the short term. These
primarily relate to the sale of the Offsite Assets and USD 3.4m prefabricated
camp.
Breakdown of net assets:
2021 2020
USD'm USD'm
Cash and cash equivalents 8.5 17.6
Loan notes (10.0) (6.5)
──────── ────────
Net cash (1.5) 11.2
Net working capital 13.8 14.4
Non-current assets 30.9 51.0
Tangible owned assets 25.5 47.3
Right-to-use assets 5.4 3.5
Goodwill - 0.1
Lease liabilities and end of service benefit (5.9) (4.5)
──────── ────────
Net assets 37.3 72.1
════════ ════════
During the second half of 2021, we raised USD 3.5m of debt under the
Medium-Term Note ("MTN") programme launched in 2020. This debt was raised to
ensure the Company maintained adequate available cash to execute certain large
projects in the pipeline. In May 2022, we completed a refinancing and
fundraising exercise to synchronise and extend the maturity of the loan notes
issued under the MTN programme.
USD 12.0m of loan notes were issued, of which USD 8.4m relates to a
refinancing of notes outstanding at 31 December 2021 and USD 3.6m relates to
new investment. Notes issued in 2022 mature in November 2024.
Notes outstanding at 31 December 2021 which were not refinanced will be repaid
in the second half of 2022 as per the original maturity date. Further details
of the MTN programme and refinancing can be found in note 24 and 34 of the
consolidated financial statements.
In addition to refinancing the MTNs, we have also established a GBP 10m
long-term debt facility. This facility, while not expected to be utilised,
provide us with increased "available cash". Liquidity and available cash are
often assessed by potential customers during the contract adjudication
process. Given the above actions taken and possible cash benefits from the
sale of fixed assets and inventory we remain satisfied, despite the financial
impacts of Mozambique, that both our cash position and liquidity profile as a
whole are sufficient so that we can continue to bid for larger projects and
have the financial capacity to mobilise multiple large projects
simultaneously.
Dividend
The Board is not recommending the payment of a final dividend in line with its
cautious approach to the prevailing environment. The Board's intention is to
reinstate the dividend as soon as is practicable, taking into consideration
the financial strength of RA and its confidence in its future performance.
Andrew Bolter
Chief Financial Officer
26 May 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
2021 2020
USD'000 USD'000
Notes
Revenue 7 54,595 64,441
Cost of sales 9 (42,050) (45,647)
Credit provision 20 (505) -
Gross profit 12,040 18,794
Administrative expenses (10,719) (8,429)
9
Underlying operating profit 1,321 10,365
Non-underlying items (32,222) (3,046)
9
Operating (loss)/profit (30,901) 7,319
Investment revenue 55 278
Finance costs (1,314) (970)
(Loss)/Profit before tax (32,160) 6,627
Tax benefit/(expense) 80 (61)
11
(Loss)/Profit and total comprehensive income for the year (32,080) 6,566
Basic earnings per share (cents) 12 (18.7) 3.8
Diluted earnings per share (cents) 12 (18.5) 3.8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Notes 2021 2020
USD'000 USD'000
Assets
Non-current assets
Property, plant, and
equipment
16 25,512 47,358
Right-of-use 5,374 3,528
assets
17 - 138
Goodwill
18
30,886 51,024
Current assets
Inventories 9,397 9,142
19
Trade and other 16,522 12,666
receivables
20
Cash and cash 8,532 17,632
equivalents
21
34,451 39,440
Total assets 65,337 90,464
Equity and liabilities
Equity
Share 24,300 24,300
capital
22
Share premium 18,254 18,254
Merger reserve (17,803) (17,803)
Treasury (1,199) (1,363)
shares
23
Share based payment reserve 534 177
Retained earnings 13,223 48,509
Total equity 37,309 72,074
Non-current liabilities
Loan - 6,471
notes
24
Lease 5,206 3,720
liabilities
25
Employees' end of service 731 517
benefits
26
5,937 10,708
Current liabilities
Loan 10,000 -
notes
24
Lease 834 318
liabilities
25
Trade and other 9,835 7,364
payables
27
Provisions 1,422 -
28
22,091 7,682
Total liabilities 28,028 18,390
Total equity and liabilities 65,337 90,464
CONSOLIDATED STATEMENT IN CHANGES IN EQUITY
For the year ended 31 December 2021
Share based payment reserve
Share capital Share premium Merger reserve Treasury shares Retained earnings
Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1 January 2020 24,300 18,254 (17,803) - 47 44,685 69,483
Total comprehensive income for the period - - - - - 6,566 6,566
Share based payments (note 13) - - - - 130 - 130
Dividends declared and paid (note 14) - - - - - (2,674) (2,674)
Purchase of treasury shares (note 23) - - - (2,600) - - (2,600)
Issuance of treasury shares (note 23) - - - 1,237 - (68) 1,169
As at 31 December 2020 24,300 18,254 (17,803) (1,363) 177 48,509 72,074
Total comprehensive - - - - - (32,080) (32,080)
income for the period
Share based payments - - - - 487 - 487
(note 13)
Dividends declared and - - - - - (3,206) (3,206)
paid (note 14)
Issuance of treasury - - - 164 (130) - 34
shares (note 23)
As at 31 December 2021 24,300 18,254 (17,803) (1,199) 534 13,223 37,309
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Notes 2021 2020
USD'000 USD'000
Operating activities
Operating (loss)/profit (30,901) 7,319
Adjustments for non-cash and other items:
Depreciation on property, plant, and 4,855 3,731
equipment
16, 17
(Profit)/Loss on disposal of property, plant, and (16) 93
equipment
16
Unrealised differences on translation of foreign balances 133 5
Provision for employees' end of service 433 209
benefits
26
Share based 487 1,299
payments
13
Non-underlying items - Palma Project, 28,035 -
Mozambique
9
3,026 12,656
Working capital adjustments:
Inventories (5,071) (2,964)
Trade and other receivables (4,284) 12,240
Trade and other payables 1,513 (616)
Cash flows (used in)/generated from operations (4,816) 21,316
Tax paid 11 (20) (117)
Employees' end of service benefits paid 26 (219) (83)
Net cash flows (used in)/from operating activities (5,055) 21,116
Investing activities
Investment revenue received 55 278
Purchase of property, plant, and equipment 16 (3,478) (24,450)
Proceeds from disposal of property, plant, and equipment 16 823 24
Net cash flows used in investing activities (2,600) (24,148)
Financing activities
Proceeds from borrowings 24 3,916 6,084
Repayment of lease liabilities 25 (742) (564)
Finance costs paid (1,314) (970)
Dividends paid 14 (3,206) (2,674)
Purchase of treasury shares 23 - (2,600)
Proceeds from share options exercised 23 34 -
Net cash flows used in financing activities (1,312) (724)
Net decrease in cash and cash equivalents (8,967) (3,756)
Cash and cash equivalents as at start of the period 21 17,632 21,393
Effect of foreign exchange on cash and cash equivalents (133) (5)
Cash and cash equivalents as at end of the period 21 8,532 17,632
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
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.
2 BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with UK
adopted international accounting standards. They have been prepared under the
historical cost basis and have been presented in United States Dollars
("USD"). All values are rounded to the nearest thousand (USD'000), except
where otherwise indicated.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2021 or 2020 but is derived
from those accounts. Statutory accounts for the year ended 31 December 2020
have been delivered to the Registrar of companies and those for 2021 will be
delivered in due course. The auditor has reported on both sets of accounts;
its reports were 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
In assessing the basis of preparation of the financial statements the Board
has undertaken a rigorous assessment of going concern, considering financial
forecasts covering a period to 30 June 2023 and utilising scenario analysis to
test the adequacy of the Group's liquidity. The primary uncertainties facing
the business at present are related to the timing and success of contract
awards, as well as the time frame and value at which unutilised fixed assets
and inventory can be used or sold.
In addition to a Base Case scenario, additional scenarios were prepared which
reflect the primary uncertainties facing the business. One forecasts a
worst-case trading environment whereby the Group is not awarded any new
contracts in the future. Another assumes that the Group is unable to sell or
dispose of a significant value of currently unutilised assets and as a result
continues to incur the related storage costs throughout the going concern
period, additionally all working
capital assumptions were assumed to deteriorate to levels unseen previously.
Under all scenarios, the Group has concluded that it has sufficient cash
reserves and facilities to fund trading, capital investment, and principal and
interest repayments associated with loan notes maturing during the period.
During May 2022, the Group refinanced its debt so as to extend and synchronise
the maturity date. Of the USD 10m loan notes outstanding at 31 December 2021,
USD 1.6m were not refinanced and will be repaid utilising the USD 3.6m of new
funding raised through this new programme. The loan notes now mature in
November of 2024. The Group also has access to a GBP 10m long-term debt
facility which is not expected to be utilised at any point throughout the
going concern period.
Under all scenarios reviewed by the Board the Group continues to have
sufficient cash reserves to operate for the foreseeable future. Any scenario
whereby trading performance is worse than those modelled is considered to be
remote given the level of committed contracted work in place. On that basis,
the Board is therefore satisfied that it is appropriate to adopt the going
concern basis of accounting in preparing the financial statements.
Climate change
In preparing the financial statements, the management has considered the
impact of the physical and transition risks of climate change and identified
this as an emerging risk but have concluded that it does not have a material
impact on the recognition and measurement of the assets and liabilities in
these financial statements as at 31 December 2021.
3 BASIS OF CONSOLIDATION
The financial statements comprise the financial statements of the Company and
its subsidiaries as at 31 December 2021. 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 (supply chain)
Revenue from the sale of goods and the related logistics services 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. Dependent on the nature of
the contracts, in some cases revenue is recognised over time using the
percentage of completion method on the basis that the performance does not
create an asset with an alternative use and the Group has an enforceable right
to payment for performance completed to date. Contract revenue corresponds to
the initial amount of revenue agreed in the contract and any variations in
contract work, claims, and incentive payments are recognised only to the
extent that it is highly probable that they will result in revenue, and they
are capable of being reliably measured.
Services (integrated facilities management)
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.
Cost of sales
Cost of sales represent costs directly incurred or related to the revenue
generating activities of the Group, including staff costs, materials, and
depreciation.
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.
Borrowing costs
Borrowing costs directly attributable to the construction of an asset are
capitalised as part of the cost of the asset. Capitalisation commences when
the Group incurs costs for the asset, incurs borrowing costs and undertakes
activities that are necessary to prepare the asset for its intended use or
sale. Capitalisation ceases when the asset is ready for use or sale. All other
borrowing costs are expensed in the period in which they occur. Borrowing
costs consist of interest and other costs that are incurred in connection with
the borrowing of funds.
Tax
Current income tax assets and liabilities are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and
tax laws used to compute the amount are those that are enacted or
substantively enacted
at the reporting date in the countries where the Group operates and generates
taxable income. Management periodically evaluates positions taken in the tax
returns with respect to situations in which applicable tax regulations are
subject to interpretation and establishes provisions where appropriate.
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. At the end of the useful
life, assets are deemed to have no residual value. Contract specific assets
are depreciated over the lesser of the length of the project, or the useful
life of the asset. The useful life of general property, plant, and equipment
is as follows:
Buildings
Lesser of 5 to 20 years and term of land lease
Machinery, motor vehicles, furniture and equipment 2 to 10 years
Leasehold
improvements
Lesser of 10 years, or term of lease
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 derecognition 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 using 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 CGUs 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 unless the asset is carried at a revalued amount, in which case, the
reversal is treated as a revaluation increase.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. The expense relating to a provision is presented in the statement
of profit or loss.
If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
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.
Subsequent measurement
Financial assets at amortised cost are subsequently measured using the
effective interest method and are subject to impairment. Gains and losses are
recognised in profit or loss when the asset is derecognised, modified, or
impaired.
Other receivables are subsequently measured at amortised cost.
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 twelve months (a twelve-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. When arriving at the ECL we consider historical credit
loss experience including any adjustments for forward-looking factors specific
to the debtors and the economic environment.
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.
Income from financial assets
Investment revenue relates to interest income 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.
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 and loan
notes.
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.
Leases
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease
(i.e. the date the underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liability. The cost of
right-of-use assets includes the amount of lease liabilities recognised and
initial direct costs incurred. Right-of-use assets are depreciated on a
straight line basis over the shorter of the lease term and the estimated
useful lives of the assets.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. In calculating the present value of lease payments, the Group uses its
incremental borrowing rate at the lease commencement date because the interest
rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payment made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, a change
in the lease term or a change in the lease payments.
Short-term leases and leases on low-value assets
The Group applies the short-term lease recognition exemption to its short-term
leases (i.e. those leases that have a lease term of twelve months or less from
the commencement date). It also applies the lease of low-value assets
recognition exemption to leases that are considered to be low value. Lease
payments on short-term leases and leases of low-value assets are recognised as
an expense on a straight line basis over the lease term.
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
employee's 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. The Group accounts for these benefits as a defined
contribution plan under IAS 19.
Treasury shares
Treasury shares are held as a deduction from equity and are held at cost
price.
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 13.
That cost is recognised in employee benefits expense, included in
administrative expenses, 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
Amendments and interpretations that apply for the first time in 2021 do not
have a significant impact on the financial statements of the Group. The Group
has not early adopted any standards, interpretations, or amendments that have
been issued but are not yet effective.
Presentation of Consolidated Statement of Financial Position
Property, plant, and equipment ("PPE") as presented in the prior period on the
face of the balance sheet includes a USD 3,528,000 reclassification to
Right-of-Use Assets ("ROU") as a result of a presentational change where ROU
is now separately disclosed. PPE as at 1 January 2020 would have been USD
26,081,000 on a similar basis. A third balance sheet for the beginning of the
preceding period (1 January 2020) has not been presented on the basis that the
information does not have a material effect on the information already
presented for the Group.
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) Judgements
Use of Alternative Performance Measures
IAS 1 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 refers to these as non-underlying items and
considers items suitable for separate presentation that are outside normal
operations and are material to the results of the Group either by virtue of
size or nature. See note 9 for further details on specific balances which are
classified as non-underlying items.
b) Estimates and assumptions
Percentage of completion
The Group primarily 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 2021,
USD 3,837,000 of accrued revenue had been calculated using the
percentage-of-completion method (2020: USD 1,083,000), of which USD 845,000 is
supported by customer verifications (2020: USD 398,000).
Revisions to profit or loss arising from changes in estimates are accounted
for in the period when the changes occur.
IFRS 16 - interest rate
In some jurisdictions where the Group holds long-term leases, the incremental
borrowing rate is not readily determinable. As a result, the incremental
borrowing rate is estimated with reference to risk adjusted rates in other
jurisdictions where a market rate is determinable, and the Group's cost of
funding.
Provision for asset impairment
In March 2021, insurgents attacked the town of Palma, Mozambique. This led to
Total Energies ("Total") suspending their development works in the region and
declaring force majeure. As a result, the Group's contract to build and
operate a 1,800-person camp was suspended (the Palma Project). At the time of
the attack, RA had purchased substantially all of the assets required to
complete the project and was approximately two weeks from commencing revenue
generating activities.
As a result of this catastrophic event and the lack of evidence of this time
to conclude on the fair value of these assets, the Group has impaired the full
carrying value of assets which are associated with the Palma Project. Further
details of this impairment charge can be found in note 9.
Provision for unavoidable costs
Following the March 2021 attack on Palma, Mozambique the Group began incurring
unavoidable costs relating to the Offsite Assets. It is estimated that these
assets will be fully disposed of by December 2022.
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:
2021 2020
USD'000 USD'000
Integrated facilities management 31,162 31,265
Construction 14,221 19,085
Supply chain services 9,212 14,091
──────── ────────
54,595 64,441
════════ ════════
Revenue by recognition timing:
2021 2020
USD'000 USD'000
Revenue recognised over time 41,320 40,118
Revenue recognised at a point in time 13,275 24,323
──────── ────────
54,595 64,441
════════ ════════
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:
2021 2020
USD'000 USD'000
Africa 52,357 61,161
Other 2,238 3,280
──────── ────────
54,595 64,441
════════ ════════
Non-current assets by geographic area:
2021 2020
USD'000 USD'000
Africa 28,448 47,687
Other 2,438 3,337
──────── ────────
30,886 51,024
════════ ════════
Revenue split by customer:
2021 2020
% %
Customer A 25 24
Customer E 14 10
Customer F 11 10
Customer D 10 9
Customer G 9 9
Customer B 6 7
Customer H 4 -
Customer C 1 4
Other 20 27
──────── ────────
100 100
════════ ════════
8 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 International Commercial Services 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
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 SARL Lebanon 100% Beirut Souks, Souk El Dahab, section no 1144, plot no 1479, Beirut, Lebanon
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 KAMPFUMO, Bairro Sommarchield, Rua. Jose Graverinha, no 198, 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% Building 41, 3B Street, Al Quoz Industrial Area 1, PO Box 115774, Dubai,
United Arab Emirates
RA SB Ltd. UAE 100% RAK International Corporate Centre, Ras Al Khaimah, United Arab Emirates
RA International Global Operations Limited UK 100% 1 Fleet Place, London, EC4M 7WS, United Kingdom
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 Federal Services LLC United States of America 100% 3411 Silverside Road, Tatnall Building #104,
Wilmington, DE 19810
RA-RME LLC United States of America 67% 3411 Silverside Road, Tatnall Building #104,
Wilmington, DE 19810
Berkshire General Insurance Limited United States of America 100% 1 Church Street, 5th Floor, Burlington, Chittenden, Vermont, 05401, United
States of America
(*) RA International in Somalia is not an incorporated legal entity
9 PROFIT FOR THE PERIOD
Loss/profit for the period is stated after charging:
2021 2020
USD'000 USD'000
Staff costs 22,088 19,845
Materials 12,887 17,571
Depreciation 4,855 3,731
════════ ════════
Staff costs relate to wages and salaries plus directly attributable expenses.
Non-underlying items
2021 2020
USD'000 USD'000
Acquisition costs - 175
COVID-19 costs 765 1,433
Restructuring costs - 269
Other share based payments (note 13) - 1,169
Palma Project, Mozambique 31,457 -
──────── ────────
Total non-underlying items 32,222 3,046
════════ ════════
Acquisition costs
Costs incurred by the Group related to corporate acquisitions are expensed as
incurred. Acquisition costs mainly comprise professional fees and travel
costs. The acquisition of new companies is not considered to be part of the
Group's normal operations, and therefore management has chosen to disclose
these costs separately on the basis as that outlined above. Acquisition costs
in 2020 relate to potential corporate acquisitions which were being explored
in the first half of the 2020. These transactions were halted for various
reasons including the incremental level of uncertainty COVID-19 added to
target operating forecasts.
COVID-19 costs
These costs were incurred due to the COVID-19 pandemic and primarily comprise
of incremental staff costs and PPE. These incremental staff costs relate to
staff salaries paid to employees unable to work due to local lockdowns or
international travel restrictions preventing their access to worksites (2021:
USD 374,000; 2020: USD 853,000) and discretionary payments made to employees
working throughout the pandemic (2021: nil; 2020: USD 388,000). All payments
made were non-contracted and at the discretion of executive management.
Incremental project costs associated with PPE consumption and COVID-19 testing
are also included in this balance (2021: USD 391,000; 2020: USD 192,000).
General inefficiencies experienced as a result of COVID-19 have not been
included given the high level of judgement inherent in undertaking this
exercise and as a result, continue to be included within cost of sales.
Restructuring costs
In 2020, the Group closed two offices in the United Arab Emirates and
consolidated all country staff into a larger corporate office ("Head Office").
In addition, the Group relocated staff from other geographical locations to
Head Office. This restructuring exercise was completed in 2020.
Palma Project, Mozambique
In March 2021, insurgents attacked the town of Palma, Mozambique. This led to
Total suspending their development works in the region and declaring force
majeure. As a result, the Group's contract to build and operate a 1800-person
camp was suspended (the Palma Project). At the time of the attack, RA had
purchased substantially all of the assets required to complete the project and
was approximately two weeks from commencing revenue generating activities.
2021 2020
USD'000 USD'000
Provision for asset impairment 23,410 -
Permanent asset impairment 2,145 -
Incremental costs incurred but unpaid 1,058 -
Provision for unavoidable costs 1,422 -
Total of non-cash charges 28,035 -
Incremental costs incurred and paid 3,422 -
31,457 -
As a result of this catastrophic event, the Group has incurred significant
incremental costs and impaired assets which are associated with the Palma
Project.
Provision for asset impairment
As at the date of these accounts, the force majeure is still in place and
development work has not recommenced. While the security situation has
improved, and commercial activity is returning to the Palma area, Total has
recently indicated that while they are committed to restarting works in the
region, they are not undertaking any works at present, and they will
re‑evaluate the situation so as to assess if there are conditions to return.
These conditions include a sustained level of security in the region, and the
return of the local population to normal living conditions.
Following a number of conversations with a wide range of third parties
directly or indirectly involved in returning security to the Cabo Delgado
region, the CODM is hopeful that the conditions for Total's return will be met
and development works will recommence. However, there remains significant
uncertainty as to when the force majeure will be lifted and what RA's role
will be in the recommenced development works. The Group stands well placed to
benefit from the restart of activities in the region given the investment made
in the area, but at this stage, given the variables indicated above, the CODM
cannot reasonably attribute a fair value to these assets.
Given this uncertainty, and in accordance with IAS 36, after a significant
amount of deliberation both as a board and with third‑party advisers, the
CODM has decided to recognise a provision to impair the full value of assets
relating to the Palma Project.
The CODM will undertake regular assessments to establish if there is a basis
for reversal of the impairment provision (recovery). These assessments will be
made at least every six months or when an event transpires which may indicate
a material change in the value of the Palma Project assets.
The Palma Project assets can be divided into three separate groups:
1. Palma Assets
The Palma Assets relate to the land, infrastructure, and other assets located
within the RA Camp facility near the town of Palma, Mozambique. As at the time
these accounts were published, the security situation in Cabo Delgado province
remains volatile and significant security measures must be taken to access the
camp facility. Given the assets are not currently generating a commercial
return, the uncertainty regarding the future commercial returns from these
assets, and the lack of a ready market for the Palma Assets, an impairment
provision has been established equal to their carrying value.
2. Offsite Assets
These consist of equipment and material located within various secure storage
locations in Africa and the Middle East. Although the best use of the Offsite
Assets is on the Palma Project, given the uncertainty as to when Total will
recommence development activities, the CODM believe it to be in the best
interest of stakeholders that the Group dispose of these assets in the short
term so as to cease incurring unavoidable costs.
Given the nature, location and customs status of the Offsite Assets, a limited
market exists for these items. As a result, an impairment provision has been
established for the full carrying value of the assets.
3. Other Assets
These consist of non‑tangible assets such as tax and receivable balances.
The Group has recorded an impairment provision in relation to the full value
of tax assets and other balances that have been deemed unrecoverable as a
result of the March 2021 attack.
The below table provides a breakup of these balances by asset class:
Fixed Assets Other Assets
Inventory Total
USD'000 USD'000 USD'000 USD'000
Palma Assets 15,257 137 - 15,394
Offsite Assets 4,050 3,177 - 7,227
Other Assets - - 789 789
19,307 3,314 789 23,410
Permanent asset impairment
While the Group's camp facility near Palma Mozambique was not directly
attacked, at the time of the attack the Group incurred impairment losses
resulting from the theft or vandalism of its assets. The Group has also
incurred losses when disposing of assets which were originally purchased for
use on the Palma Project. These losses, incurred during 2021, are permanent
and as a result, there is no need to reassess the value of these assets in the
future. Permanent impairment losses relating to the Palma Project totalled USD
2,145,000 as at 31 December 2021. Included in this balance is USD 138,000
relating to the impairment of goodwill.
Incremental costs
As at 31 December 2021, the Group had incurred USD 4,480,000 in incremental
costs directly related to the March 2021 attack on Palma, Mozambique and the
resulting suspension of development activities by Total. These expenses
primarily relate to logistics, storage, and security costs, but also include
costs such as staff evacuation and mental health counselling provided to
staff. At the time of the attack, a significant value of assets were on-route
to Palma and post attack, it was no longer possible to safely offload goods in
the Palma area. As a result, goods had to be stored in their current locations
in Europe, the Middle East, and East Africa, or where possible, shipped to
more economical storage locations. Of these incremental costs USD 3,422,000
were paid for during 2021 and USD 1,058,000 were accrued but unpaid as at 31
December 2021.
Provision for unavoidable costs
The Group has recorded a provision of USD 1,422,000 relating to unavoidable
costs associated with the Offsite Assets. Management anticipates that the
Offsite Assets will be fully disposed of by December 2022.
Auditor Compensation
Amounts paid or payable by the Group in respect of audit and non-audit
services to the Auditor are shown below.
2021 2020
USD'000 USD'000
Fees for the audit of the Company annual accounts 164 138
Fees for the audit of the subsidiary annual accounts 74 72
Additional fee for the prior year audit of the Group annual accounts - 45
─────── ───────
Total audit fees 238 255
═══════ ═══════
Non-audit related services - -
─────── ───────
10 EMPLOYEE EXPENSES
The average number of employees (including directors) employed during the
period was:
2021 2020
Directors 7 7
Executive management 5 6
Staff 1,157 1,645
──────── ────────
1,169 1,658
════════ ════════
The aggregate remuneration of the above employees was:
2021 2020
USD'000 USD'000
Wages and salaries 17,804 18,200
Social security costs 153 95
Share based payments 487 1,299
─────── ───────
18,444 19,594
════════ ════════
The remuneration of the Directors and other key management personnel of the
Group are detailed in note 31.
11 TAX
The tax charge on the profit for the year is as follows:
2021 2020
USD'000 USD'000
Current tax:
UK corporation tax on profit for the year - -
Non-UK corporation tax 80 61
Adjustment for prior years (160) -
─────── ───────
Tax charge for the year (80) 61
═══════ ═══════
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:
2021 2020
USD'000 USD'000
Loss (profit) before tax (32,160) 6,627
─────── ───────
Expected tax charge based on the standard average rate of corporation tax in (6,110) 1,259
the UK of 19% (2020: 19%)
Effects of:
Deferred tax asset not recognised 105 102
Exemptions and foreign tax rate difference 6,085 (1,300)
Adjustment for prior years (160) -
─────── ───────
Tax charge for the year (80) 61
═══════ ═══════
The Group benefits from tax exemptions granted to its customers who are
predominantly governments and large intragovernmental 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.
The main rate of UK corporation tax is 19% and will increase to 25% on 1 April
2023. The expected impact as a result of this change is not considered
material for the Group.
12 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.
2021 2020
Profit for the period (USD'000) (32,080) 6,566
Basic weighted average number of ordinary shares 171,660,947 172,451,137
Effect of employee share options 1,447,842 1,407,232
─────── ───────
Diluted weighted average number of shares 173,108,789 173,858,369
Basic earnings per share (cents) (18.7) 3.8
Diluted earnings per share (cents) (18.5) 3.8
═══════ ═══════
13 SHARE BASED PAYMENT EXPENSE
The Group recognised the following expenses related to equity-settled payment
transactions:
2021 2020
USD'000 USD'000
Performance share plan 16 31
Employee retention share plan 471 99
Other share based payments - 1,169
─────── ───────
487 1,299
═══════ ═══════
Performance Share Plan
On Admission, 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.
Employee Retention Share Plan
In October 2020, the Company introduced an Employee Retention Share Plan
("ERSP") and granted share options to a number of senior employees. Awards
vest annually subject to continuous employment. There are no TSR linked
vesting conditions associated with these options.
At 31 December, the following unexercised share options to acquire ordinary
shares under the PSP and ERSP were outstanding:
Year of Grant Share Plan Vesting Date Exercise Number of Number of
price options options
GBP 2021 2020
2018 PSP 29 June 2022 0.10 2,065,216 2,065,216
2020 ERSP 1 May 2021 0.10 31,280 291,054
ERSP 1 May 2022 0.10 549,869 582,108
ERSP 1 May 2023 0.10 824,800 873,162
2021 ERSP 1 May 2021 0.10 17,212 -
ERSP 1 May 2022 0.10 84,520 -
ERSP 1 May 2023 0.10 151,830 -
ERSP 1 May 2024 0.10 150,292 -
3,875,019 3,811,540
════════ ════════
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
2021 2021 2020 2020
GBP GBP
Outstanding at 1 January 3,811,540 0.10 2,826,085 0.10
Granted during the year 458,348 0.10 1,843,047 0.10
Exercised during the year (243,653) 0.10 - 0.10
Forfeited during the year (151,216) 0.10 (857,592) 0.10
Outstanding at 31 December 3,875,019 0.10 3,811,540 0.10
════════ ════════ ════════ ════════
Options issued under the PSP were valued using the Monte Carlo Simulation
model using the following inputs:
Weighted average share price 56p (USD 0.74)
Expected volatility 10.10%
Risk free rate 1.24%
This method 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 16,000
(2020: USD 31,000) was recognised in administrative expenses for the fiscal
year ended 2021.
Options issued under the ERSP were valued using the Black Scholes model using
the following inputs:
average share Expected volatility Risk free rate
price
2020 49p (USD 0.64) 49.70% 0.00%
2021 49p (USD 0.68) 48.60% 0.00%
The total fair value of the options at the grant date was USD 919,000. A
charge of USD 117,000 (2020: USD 35,000) was recognised in cost of sales and
USD 354,000 (2020: USD 64,000) was recognised in administrative expenses for
the fiscal year ended 2021. The expected volatility input utilised represents
the historic volatility of the share price of the Company since Admission.
Other Share Based Payments
On 19 October 2020, the Company agreed to issue a total of 1,840,449
restricted ordinary shares (the "Restricted Shares") to senior members of
staff, including certain persons discharging managerial responsibilities. The
Restricted Shares are subject to a six-month lock-in from the date of issue,
during which they cannot be sold or transferred. Ordinary shares issued
pursuant to the award of the Restricted Shares were satisfied from the pool of
ordinary shares held in Treasury. The fair value of the shares on the grant
date was GBP 0.49 (USD 0.64) per share. A charge of USD 1,169,000 was
recognised as a non-underlying item given the non-reoccurring nature of this
transaction and since the discretionary awards are not part of the formal
share based payment performance plan of the Company.
Warrants
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.
14 DIVIDENDS
During the period, a dividend of 1.35p (USD 0.02) per share (171,662,973
shares) totalling GBP 2,317,000 (USD 3,206,000) was declared and paid (2020:
1.25p (USD 0.02) per share (173,575,741 shares) totalling GBP 2,170,000 (USD
2,674,000)).
15 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.
2021 2020
USD'000 USD'000
(Loss)/Profit (32,080) 6,566
Tax benefit/(expense) (80) 61
─────── ───────
(Loss)/Profit before tax (32,160) 6,627
Finance costs 1,314 970
Investment income (55) (278)
─────── ───────
Operating (loss)/profit (30,901) 7,319
Non-underlying items 32,222 3,046
─────── ───────
Underlying operating profit 1,321 10,365
Share based payment expense 487 130
Depreciation 4,855 3,731
─────── ───────
Underlying EBITDA 6,663 14,226
═══════ ═══════
Underlying Operating Profit ("UOP")
The Group uses UOP as an alternative measure to Operating Profit to allow
comparison of the profitability of its operations across financial periods.
UOP is calculated as Operating Profit adjusted for costs which are considered
to be unrelated to the Group's underlying trading performance.
Underlying Operating Margin is calculated as UOP divided by revenue.
Underlying EBITDA
Management defines Underlying EBITDA as Operating Profit adjusted for
depreciation, share based payments, and costs which are considered to be
unrelated to the Group's underlying trading performance. Underlying EBITDA
facilitates comparisons of operating performance from period to period and
company to company by eliminating potential differences caused by variations
in capital structures, tax positions, and the age and booked depreciation on
assets.
Underlying EPS
Underlying EPS reflects underlying operating profit after deducting net
finance costs and taxation, divided by the weighted average number of ordinary
shares outstanding during the period. This alternative measure of EPS enables
shareholder return from the underlying business operations to be better
evaluated across periods.
2021 2020
cents cents
Reported EPS, basic (18.7) 3.8
Impact of non-underlying items 18.8 1.8
Underlying EPS, basic 0.1 5.6
═══════ ═══════
Reported EPS, diluted (18.5) 3.8
Impact of non-underlying items 18.6 1.7
Underlying EPS, diluted 0.1 5.5
═══════ ═══════
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. Negative net cash is referred to a net debt position.
16 PROPERTY, PLANT, AND EQUIPMENT
Machinery,
motor
vehicles,
Land and furniture and Leasehold
buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2021 38,973 15,497 1,192 55,662
Additions 2,526 774 178 3,478
Disposals (1,580) (2,156) - (3,736)
──────── ──────── ──────── ────────
At 31 December 2021 39,919 14,115 1,370 55,404
──────── ──────── ──────── ────────
Depreciation:
At 1 January 2021 2,432 5,754 118 8,304
Charge for the year 1,416 2,294 247 3,957
Relating to disposals (125) (1,747) - (1,872)
Provision for impairment 17,715 1,788 - 19,503
──────── ──────── ──────── ────────
At 31 December 2021 21,438 8,089 365 29,892
──────── ──────── ──────── ────────
Net carrying amount:
At 31 December 2021 18,481 6,026 1,005 25,512
════════ ════════ ════════ ════════
Machinery,
motor
vehicles,
Land and furniture and Leasehold
buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2020 16,605 14,892 471 31,968
Additions 22,372 1,206 872 24,450
Disposals (4) (601) (151) (756)
──────── ──────── ──────── ────────
At 31 December 2020 38,973 15,497 1,192 55,662
──────── ──────── ──────── ────────
Depreciation:
At 1 January 2020 1,475 4,290 122
5,887
Charge for the year 961 2,030 65 3,056
Relating to disposals (4) (566) (69) (639)
──────── ──────── ──────── ────────
At 31 December 2020 2,432 5,754 118 8,304
──────── ──────── ──────── ────────
Net carrying amount:
At 31 December 2020 36,541 9,743 1,074 47,358
════════ ════════ ════════ ═══════
During the year, capitalised interest of USD 114,000 was included in Land and
Buildings (2020: USD 136,000), representing 22% of borrowing costs (2020:
100%). From 1 April 2021, upon the suspension of construction activities in
Palma, Mozambique, the Group ceased capitalising interest relating to the
Palma Camp development.
17 RIGHT-OF-USE ASSETS
2021 2020
USD'000 USD'000
Cost:
At 1 January 5,143 3,375
Additions 2,744 1,768
Disposals - -
──────── ────────
At 31 December 7,887 5,143
──────── ────────
Depreciation:
At 1 January 1,615 940
Charge for the year 898 675
Relating to disposals - -
──────── ────────
At 31 December 2,513 1,615
──────── ────────
Net carrying amount:
At 31 December 5,374 3,528
════════ ═══════
Information related to lease liabilities is available in note 25.
The table below indicates the rents resulting from lease contracts which are
not capitalised and are therefore expensed in the year.
2021 2020
USD'000 USD'000
Short-term leases 1,308 1,112
════════ ════════
Short-term leases include amounts paid for vehicles and heavy equipment
rental, as well as short-term property leases.
18 GOODWILL
2021 2020
USD'000 USD'000
As at 1 January 138 138
Acquisitions (138) -
─────── ───────
As at 31 December - 138
═══════ ═══════
19 INVENTORIES
2021 2020
USD'000 USD'000
Materials and consumables 8,123 8,166
Goods-in-transit 1,274 976
─────── ───────
9,397 9,142
═══════ ═══════
A provision of USD 3,314,000 has been recognised in 2021 reflecting the cost
of inventory relating to Palma, Mozambique (2020: nil). See note 9.
20 TRADE AND OTHER RECEIVABLES
2021 2020
USD'000 USD'000
Trade receivables 8,942 7,319
Accrued revenue 5,281 2,410
Deposits 112 116
Prepayments 1,039 1,021
Other receivables 1,148 1,800
─────── ───────
16,522 12,666
═══════ ═══════
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 (2020: 100%).
As at 31 December the transaction price allocated to remaining performance
obligations was USD 100,000,000 (2020: USD 187,000,000). 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 five years.
As at 31 December the ageing of trade receivables was as follows:
2021 2020
USD'000 USD'000
Not past due 5,855 5,184
Overdue by less than 30 days 1,509 938
Overdue by between 30 and 60 days 294 653
Overdue by more than 60 days 1,284 544
─────── ───────
8,942 7,319
═══════ ═══════
Trade receivables are non-interest bearing and generally have payment terms of
30 days. An ECL of USD 505,000 was recorded as at 31 December 2021 (2020:
nil). All other receivables are expected, on the basis of past experience, to
be fully recoverable.
21 CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statement of financial position
comprised of cash at bank of USD 8,532,000 (2020: USD 17,632,000).
22 SHARE CAPITAL
2021 2020
USD'000 USD'000
Authorised, issued and fully paid
173,575,741 shares (2020: 173,575,741 shares) of GBP 0.10 (2020: GBP 0.10) 24,300 24,300
each
═══════ ═══════
23 TREASURY SHARES
2021 2021 2020 2020
Number USD'000 Number USD'000
As at 1 January 2,027,551 1,363 - -
Acquired in the period -- - 3,868,000 2,600
Issued in the period (note 13) (243,653) (164) (1,840,449) (1,237)
─────── ─────── ─────── ───────
As at 31 December 1,783,898 1,199 2,027,551 1,363
═══════ ═══════ ═══════ ═══════
24 LOAN NOTES
The table below summarises the loan notes:
2021 2020
USD'000 USD'000
As at 1 January 6,471 -
Additions 3,529 6,471
─────── ───────
As at 31 December 10,000 6,471
═══════ ═══════
Current 10,000 -
Non-current - 6,471
During the year loan notes were issued to retail investors. These notes carry
an annual fixed interest rate of 7.00% (2020: 7.00%) for GBP denominated notes
and 7.50% (2020: 7.50%) for USD denominated notes. The term of the note
issuance is up to 24 months with principal to be repaid as a bullet payment
upon maturity. Interest is paid on a quarterly basis, semi-annual basis, or at
maturity, at the option of the investor. At 31 December 2020, USD 387,000 was
included in Other Receivables relating to loan notes committed but where cash
was not yet received. This cash was received shortly after year end and is
included in 2021 proceeds from borrowings in the statement of cash flows.
25 LEASE LIABILITIES
Movements in the provision recognised in the consolidated statement of
financial position are as follows:
2021 2020
USD'000 USD'000
As at 1 January 4,038 2,834
Additions 2,744 1,768
Interest 527 533
Payments (1,269) (1,097)
─────── ───────
As at 31 December 6,040 4,038
═══════ ═══════
Current 834 318
Non-current 5,206 3,720
Interest of USD 527,000 (2020: USD 533,000) 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:
2021 2020
USD'000 USD'000
3 months or less 102 92
3 to 12 months 732 226
1 to 5 years 2,125 2,000
Over 5 years 3,081 1,720
─────── ───────
6,040 4,038
═══════ ═══════
The Group had total cash outflows relating to leases of USD 2,577,000 in 2021
(2020: USD 2,209,000). This is the total of short-term lease payments from
note 17 and payments from note 25.
26 EMPLOYEES' END OF SERVICE BENEFITS
Movements in the provision recognised in the consolidated statement of
financial position are as follows:
2021 2020
USD'000 USD'000
As at 1 January 517 391
Provided during the year 433 209
End of service benefits paid (219) (83)
─────── ───────
As at 31 December 731 517
═══════ ═══════
27 TRADE AND OTHER PAYABLES
2021 2020
USD'000 USD'000
Accounts payable 6,478 5,163
Accrued expenses 2,702 1,931
Accrued tax expense 161 182
Customer advances 494 88
─────── ───────
9,835 7,364
═══════ ═══════
All customer advances recorded at 31 December 2020 were subsequently
recognised as revenue in 2021 and all customer advances held at 31 December
2021 were subsequently recognised as revenue in 2022.
28 PROVISIONS
2021 2020
USD'000 USD'000
As at 1 January - -
Provided during the year 1,422 -
─────── ───────
As at 31 December 1,422 -
═══════ ═══════
Following the March 2021 attack on Palma, Mozambique the Group began incurring
unavoidable costs relating to the Offsite Assets. It is estimated that these
assets will be fully disposed of by December 2022.
A USD 1,422,000 provision relating to these costs was recorded in 2021, with
the full charge being reflected in the consolidated statement of comprehensive
income.
29 CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
1 January 31 December
2021 Cash flows New leases Other 2021
USD'000 USD'000 USD'000 USD'000 USD'000
Non-current liabilities
Loan notes 6,471 3,529 - (10,000) -
Lease liabilities 3,720 - 2,184 (698) 5,206
Current liabilities
Loan notes - - - 10,000 10,000
Lease liabilities 318 (1,269) 560 1,225 834
──────── ──────── ──────── ──────── ────────
10,509 2,260 2,744 527 16,040
════════ ════════ ════════ ════════ ════════
1 January 31 December
2020 Cash flows New leases Other 2020
USD'000 USD'000 USD'000 USD'000 USD'000
Non-current liabilities
Loan notes - 6,084 - 387 6,471
Lease liabilities 2,397 - 1,642 (319) 3,720
Current liabilities
Loan notes - - - - -
Lease liabilities 437 (1,097) 126 852 318
──────── ──────── ──────── ──────── ────────
2,834 4,987 1,768 920 10,509
════════ ════════ ════════ ════════ ════════
The 'Other' column includes the effect of reclassification of non-current
portion of leases to current due to the passage of time, the effect of
contracted loan note amounts not yet received, and the effect of accrued
interest not yet paid.
30 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 2021, the Group held foreign cash and cash equivalents of GBP
1,067,000 (USD 1,441,000). Additionally, the Group held GBP denominated loans
of GBP 1,354,000 (USD 1,787,000). UK pound sterling is primarily held by the
Group to settle payment obligations denominated in GBP. As at 31 December
2020, the Group held GBP 2,270,000 (USD 3,099,000) and GBP denominated loans
of GBP 982,000 (USD 1,341,000).
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 63% of
outstanding accounts receivable at 31 December 2021 (2020: 54%).
Receivables split by customer
2021 2020
% %
Customer D 21 16
Customer B 17 14
Customer E 14 15
Customer C 8 3
Customer F 6 12
Customer A 5 7
Other 29 33
─────── ───────
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 intragovernmental
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 and loan notes was as
follows:
As at 31 December 2021
Less than 3 to 12 3 to 12 12 to 24
3 months Months Months Months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Loan notes - - 10,000 - 10,000
Trade payable 6,478 - - - 6,478
──────── ──────── ──────── ──────── ────────
6,478 - 10,000 - 16,478
════════ ════════ ════════ ════════ ════════
As at 31 December 2020
Less than 3 to 12 3 to 12 12 to 24
3 months Months Months Months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Loan notes - - - 6,471 6,471
Trade payable 5,163 - - - 5,163
──────── ──────── ──────── ──────── ────────
5,163 - - 6,471 11,634
════════ ════════ ════════ ════════ ════════
Liabilities falling due within twelve months are recognised as current on the
consolidated statement of financial position. Liabilities falling due after
twelve months are recognised as non-current.
The unutilised bank overdraft facilities at 31 December 2021 amounted to USD
10,000,000 (2020: USD 2,000,000) and carry interest of 1m LIBOR +3.50% per
annum (2020: 1m LIBOR +3.50%).
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 Aa3 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 2021.
Capital comprises share capital, share premium, merger reserve, treasury
shares, share based payment reserve, and retained earnings and is measured at
USD 37,309,000 as at 31 December 2021 (2020: USD 72,074,000).
31 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.
There were no transactions with related parties during the year (2020: nil).
No outstanding balances with related parties are included in the consolidated
statement of financial position at 31 December 2021 (2020: nil).
32 COMPENSATION
Compensation of key management personnel
The remuneration of key management during the year was as follows:
2021 2020
USD'000 USD'000
Short-term benefits 1,874 1,734
Stock based compensation 16 1,200
──────── ────────
1,890 2,934
════════ ════════
The key management personnel comprise of 5 (2020: 6) individuals. Included in
key management personnel are 3 (2020: 3) Directors.
Compensation of directors
The remuneration of directors during the year was as follows:
2021 2020
USD'000 USD'000
Short-term benefits 1,611 1,312
Stock based compensation 9 340
─────── ───────
1,620 1,652
═══════ ═══════
Highest paid director
The remuneration of the highest paid director during the year was as follows:
2021 2020
USD'000 USD'000
Short-term benefits 490 276
Stock based compensation - 340
─────── ───────
490 616
═══════ ═══════
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.
33 STANDARDS ISSUED BUT NOT YET 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.
34 SUBSEQUENT EVENTS
During May 2022, the Group completed a refinancing and fundraising exercise.
The purpose of the exercise was to synchronise and extend the maturity of the
USD 10m of loan notes issued by the Group during 2020 and 2021, which were due
to mature in the second half of 2022.
A total of USD 12.0m in loan notes were issued to retail investors. These
notes carry an annual fixed interest rate of 7.50% for GBP denominated notes
and 8.00% for USD denominated notes.
The term of the note issuance is 30 months with principal to be repaid as a
bullet payment upon maturity in November 2024. Interest is paid on a quarterly
basis.
Of the USD 12.0m notes issued, USD 8.4m relates to a refinancing of notes
outstanding at 31 December 2021 and USD 3.6m relates to new investment.
Notes outstanding at 31 December 2021 which were not refinanced as part of the
May 2022 issuance will be repaid in the second half of 2022 as per the
original maturity date
COMPANY STATEMENT OF FINANCIAL POSITION
2021 2020
Notes USD'000 USD'000
Assets
Non-current assets
Investments 50,047 50,047
─────── ───────
Current assets
Trade and other receivables 4 5,754 8,009
Cash and cash equivalents 113 933
─────── ───────
5,867 8,942
─────── ───────
Total assets 55,914 58,989
═══════ ═══════
Equity and liabilities
Equity
Share capital 5 24,300 24,300
Share premium 18,254 18,254
Merger reserve 9,897 9,897
Treasury shares 6 (1,199) (1,363)
Share based payment reserve 534 177
Retained earnings 3,819 7,578
─────── ───────
Total equity 55,605 58,843
─────── ───────
Current liabilities
Trade and other payables 7 309 146
─────── ───────
Total equity and liabilities 55,914 58,989
═══════ ═══════
As at 31 December 2021
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 loss of USD 553,000
(2020: USD 536,000).
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Share
Based
Share Share Merger Treasury Payment Retained
Capital Premium Reserve Shares Reserve Earnings Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1 January 2020 24,300 18,254 9,897 - 47 10,788 63,286
Total comprehensive income for the period - - - - - (536) (536)
Share based payments - - - - 130 - 130
Dividends declared and paid - - - - - (2,674) (2,674)
Purchase of treasury shares (note 6) - - - (2,600) - - (2,600)
Issuance of treasury shares (note 6) - - - 1,237 - - 1,237
─────── ─────── ─────── ─────── ─────── ─────── ───────
As at 31 December 2020 24,300 18,254 9,897 (1,363) 177 7,578 58,843
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════
Total comprehensive income for the period - - - - - (553) (553)
Share based payments 487 487
Dividends declared and paid - - - - - (3,206) (3,206)
Issuance of treasury shares (note 6) - - - 164 (130) - 34
─────── ─────── ─────── ─────── ─────── ─────── ───────
As at 31 December 2021 24,300 18,254 9,897 (1,199) 534 3,819 55,605
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════
The attached notes 1 to 8 form part of the Financial Statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2021
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" ("FRS 101")
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:
2021 2020
Directors 7 7
════════ ════════
The aggregate remuneration of the above employees was:
2021 2020
USD'000 USD'000
Wages and salaries 469 410
Social security costs 53 46
─────── ───────
522 456
═══════ ═══════
4 TRADE AND OTHER RECEIVABLES
2021 2020
USD'000 USD'000
Prepayments 18 83
Due from subsidiary 5,703 7,878
VAT recoverable 33 48
─────── ───────
5,754 8,009
═══════ ═══════
Amounts due from subsidiary represent amounts due from RA International FZCO,
an immediate subsidiary, and are non-interest bearing and payable on demand.
5 SHARE CAPITAL
2021 2021 2020 2020
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
════════ ════════ ════════ ════════
6 TREASURY SHARES
2021 2021 2020 2020
Number USD'000 Number USD'000
As at 1 January 2,027,501 1,363 - -
Acquired in the period - - 3,868,000 2,600
Issued in the period (243,653) (164) (1,840,499) (1,237)
──────── ──────── ──────── ────────
As at 31 December 1,783,898 1,199 2,027,551 1,363
═══════ ═══════ ═══════ ═══════
7 TRADE AND OTHER PAYABLES
2021 2020
USD'000 USD'000
Trade payables 146 44
Accruals 163 102
─────── ───────
309 146
═══════ ═══════
8 RELATED PARTY TRANSACTIONS
The Directors have taken advantage of the exemption under paragraph 8(j) and
8(k) of FRS 101 and have not disclosed transactions with other wholly owned
Group undertakings. There are no other related party transactions.
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