REG - RA Intnl Group PLC - Final Results
25/05/2023 07:00
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RNS Number : 5958A RA International Group PLC 25 May 2023
RA INTERNATIONAL GROUP PLC
("RA International", "RA", the "Group" or the "Company")
Results for the year ended 31 December 2022
RA International Group plc (AIM: RAI), a specialist provider of complex and
integrated remote site services to organisations globally, announces its
audited full year results in respect of the 12 months ended 31 December 2022.
HIGHLIGHTS
● Revenue of USD 62.9m (2021: USD 54.6m) and underlying EBITDA of USD 0.6m
(2021: USD 6.7m), is in line with market expectations for the financial year.
● Revenue growth of 15% year over year driven by strong increases in
Construction and Supply Chain revenues, more than offsetting the anticipated
and temporary short-term decline in IFM revenue.
● Lower underlying EBITDA margin for FY22 reflective of inflationary pressure
impacting the business since the second half of 2021. This margin pressure is
expected to reduce over time with newly awarded contracts generating improved
margins and other mitigating actions reducing exposure to higher costs.
● Closing year-end order book of USD 83m has been broadly maintained in 2023,
and we are in the process of finalising the value of a major contract award
which would result in a current order book in excess of USD 100m. In addition,
the Company holds high value framework agreements which are currently not
included in the order book.
● Good progress in strengthening our position with Government clients; the
Company is actively securing and delivering contracts for US Government
departments complementing contract momentum with the UK MoD and Foreign,
Commonwealth and Development Office.
● Liquidity strengthened in FY22 with the loan note programme refinanced out to
late 2024. Measures targeting improved liquidity have led to cash increasing
to USD 11.0m at 31 March 2023 from the year-end position of USD 7.5m, with an
equivalent improvement being seen in net debt. Further value recovery from the
disposal of camp assets is expected in the current financial year.
2022 2021
USD'm USD'm
Revenue 62.9 54.6
Gross profit 5.2 12.0
Gross profit margin 8.2% 22.0%
Underlying EBITDA(1) 0.6 6.7
Underlying EBITDA margin 1.0% 12.3%
Loss before tax (13.2) (32.2)
Basic EPS (cents) (7.6) (18.7)
Underlying EPS, basic (cents) (2) (5.2) 0.1
Net debt (end of period) (3) (6.5) (1.5)
Soraya Narfeldt, CEO of RA International, commented:
"Our performance for FY22 was in-line with our cautious expectations for the
year, with profitability significantly impacted by the prevailing input cost
headwinds. The results also reflect successful implementation of our
initiatives to stabilise the business and strengthen liquidity supporting our
position to fund existing and visible project activity. We remain cautious on
the financial performance of the business for the current financial year and
expect the business to remain broadly breakeven at the underlying EBITDA
level. We have strengthened the liquidity position of the Group in the current
financial year and this is highlighted by an improvement in net debt to USD
3.0m at 31 March 2023 from USD 6.5m as at 31 December 2022.
We continue to focus on internal initiatives including cost control,
efficiency and cash discipline to restore profitability alongside growing the
business in-line with our strategic priorities. Our order book of USD 78m as
at end March 2023 gives us good forward visibility, and we are in the process
of finalising the value of a major contract award which would result in a
current order book in excess of USD 100m. New contract awards over recent
years have been weighted to construction projects and we are now seeing more
longer term contracts in the pipeline being converted to order book. Whilst we
remain cautious on the timing of these awards and project starts, we are very
much encouraged by this trend which is important in restoring the levels of
profitability the business has delivered previously."
Notes to summary table of financial results:
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/debt represents cash less overdraft balances, term loans and
notes outstanding.
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
Harry Rees
Bamburgh Capital Limited (Financial PR & Investor Relations) +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 two main client groups:
humanitarian and aid agencies and western government organisations focusing on
overseas projects. It has a strong customer base, largely comprising UN
agencies, UK and US government departments 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
2022 was a testing year for the business. The results for the year are in line
with our expectations, but the year hasn't been without its trials. Whilst
some of these challenges have been external in nature, and some reflect
temporary factors that we expect to see reversed, it is important as a Board
that we learn from these events and strengthen the underlying business where
we have the opportunity to do so.
As a Board, we have looked to use this approach to guide the short-term and
strategic priorities of the business. The main objectives set for the business
are to restore profitability, improve the Company's liquidity position, and to
build a stronger pipeline, in particular by leveraging the significant
opportunity we have with UK and US Government clients.
We have allocated greater resources to target opportunities in the government
space. We have a track record of securing work with these type of customers,
but we are now looking to do this on a more equal footing, for example as a
prime contractor and by securing seats directly on multi-year framework
agreements. We are confident this is the right strategy, but we will only be
successful if we execute on
the opportunity with discipline and focus, identifying and securing contracts
that are in our "sweet spot". This is the time for restoring stability to the
business, focusing on what we do well and on opportunities where we have the
strongest likelihood of success.
The award of new humanitarian contracts, typically multi- year Integrated
Facilities Management ("IFM") contracts at attractive margins, has slowed and
this has impacted our order book.
Whilst we expect the humanitarian side of our business to normalise, the lull
is putting pressure on the near-term financial performance of the business.
This highlights the importance of securing profitable work to mitigate this
pressure and also makes us cautious on the outlook for the business for the
year ahead.
Our commitment to sustainability and to doing business the right way remains
fundamental to our approach. We are ahead of the curve with respect to this,
and will continue to strengthen our leadership credentials in this space.
Despite the near-term financial outlook, we are not going to cut corners or
compromise our standards. It is an important differentiator for our employees
and, over time, it will continue to build as an increasingly important
differentiator for the types of customers we are looking to work with. RA as a
business has made a widespread and significant social impact on disadvantaged
people and communities since the business was founded by Soraya and Lars in
2004. They are pioneers in their approach and do it to drive lasting change.
I was delighted to welcome Paul Jaques to the Board in November 2022. Paul
brings extensive and highly relevant experience across the government space,
including through his distinguished service with the British Army. Together
with the pedigree we have on the Board of RA Federal Services in the US,
Paul's appointment strengthens our capability to build on our existing track
record as a trusted partner with government clients. We look forward to
drawing on our strengthened pool of governmental expertise as we deepen and
broaden these relationships, in line with our refreshed growth strategy.
I would like to pay tribute to RA's people for their contribution to the
business. It is evident on a daily basis how much you care about the business,
the work that you do and the communities that we support. The Board is in a
privileged position to be able to count on your professionalism, integrity,
and tireless commitment, and on behalf of the Board, we thank you for this. I
would also like to extend our thanks to Ian Henderson who retired from the
Board in November 2022, having provided valuable counsel, including through
the Company's IPO in 2018.
The business is undergoing transition as we look to build a stronger
organisation that can realise the ambition we share for RA. We are confident
in our strategy, but we caution that it is likely to take time for this
strategy to feed through to sustained profitability. We recognise shareholders
have been patient and we do not take this for granted. We are working hard to
move the business forward and we appreciate their continued patience as we do
this.
Sangita Shah
Non-Executive Chair
25 May 2023
CHIEF EXECUTIVE OFFICER'S REVIEW
Our performance for FY22 was in-line with expectations for the year.
Overview
The last two years have been hugely challenging for the business with an
unforeseen series of events starting from COVID creating economic contraction
worldwide, followed by the unexpected and devastating insurgency in Mozambique
combined with the unprecedented rise in logistics and materials costs which
was further exasperated by the Ukrainian war and its inflationary impact on
commodity pricing. While shareholder value has been impacted, RA has a strong
leadership position in its principal services, both with government clients
from the UK and in the US, as well as with UN peacekeeping operations around
the world which have been built over the past 20 years. For this reason, the
Board maintains its belief that shareholder value will recover and grow again
in the future.
RA's skills have proved to be transferable from country to country as our
know-how and a track record of successful delivery is relevant and required.
Going forward, in pursuit of the strategy set out later in this report, RA
will focus on growing its business within those areas where it has sustainable
competitive advantage, whilst at the same time reducing costs by simplifying
our organisational design and sharing common services across the Group. All
this will be developed within a pragmatic framework, supported by focused,
timely performance information that highlights unplanned exceptions at an
early stage.
Our financial performance for FY22 is consistent with market expectations,
with revenue of USD 63m and underlying EBITDA of USD 0.6m in line with the key
themes we set out in the interim accounts in September 2022. This reflects a
similar performance in the first and second halves of the year. We remain
cautious on the near-term financial outlook for the business, given the timing
of project awards and starts remains uncertain and ongoing gross margin
pressure.
Despite this caution, our order book gives us good forward visibility and we
have achieved significant milestones in winning long-term work with US and UK
Government departments, a key focus of our growth strategy. We are building
our pipeline, investing in our capability as a differentiated service provider
to government and humanitarian clients and remain focused on restoring
profitability, improving liquidity, and delivering sustained growth as these
efforts bear fruit.
Summary of financial performance
Revenue grew by 15% year over year, with strong increases in Construction and
Supply Chain more than offsetting an anticipated and temporary decline in IFM
revenue. Construction revenue of USD 14.9m represents a particularly strong
second half, with a number of construction contracts commencing in the third
quarter of the year and scheduled to complete in the second quarter of the
current financial year. Supply Chain revenue moderated to USD 4.7m in H2, a
more typical run-rate after a strong first half bolstered by USD 4.5m of sales
relating to camp assets. As expected, IFM revenue picked up in the second half
and overall continues to be resilient and long-term in nature. Construction is
linked to our activity with government clients, as our initial engagement is
often to provide construction related services to these clients. Our Supply
Chain activity has also been increasingly linked to supplying clients in the
Government sector.
Gross profit for the year reflects the fixed price nature of the majority of
contracts we undertake, particularly for the Humanitarian sector. In the past
these have allowed for efficiencies to be realised over the long-term nature
of the contracts but more recently has exposed the business to significant
inflationary pressure. As we work more with government customers, we
anticipate cost plus contracts to be more prevalent.
A key short-term priority remains improving our liquidity and we continue to
make progress in recovering value from the disposal of camp assets, including
in relation to our operations in Palma, Mozambique, which were curtailed due
to the 2021 terrorist insurgency in the region. In FY22, USD 4.5m of cash was
realised from the sale of pre-fabricated camp assets held in inventory. This
transaction will also significantly reduce future storage costs.
Overall, from a balance sheet perspective, the Company remains in a
comfortable position to bid for and execute large projects, and opportunities
remain to increase liquidity through further asset sales.
Contract awards, order book, and building the pipeline
During the year, we were awarded new contracts, uplifts, and extensions to
existing contracts of USD 45m. IFM projects represent 47% of order book, with
Construction 50% and Supply Chain 3%. New contract activity has been weighted
to Construction projects with many anticipated to be the first phase of much
larger contracts. The order book remains weighted to Humanitarian projects,
albeit we expect the share of government activity to continue to increase over
time. New contracts are being negotiated at improved rates which we expect
will improve margins going forward.
In terms of recent contracts secured, we were delighted to be awarded the OSCC
Framework Agreement with the UK MoD, announced in September 2022. The contract
appoints RA as the sole contractor to provide operational support capability
to the MoD as their global "problem solver." The contract has a ceiling of GBP
35m and is for five years with two additional option years. This is excluded
from our order book, until such time as specific task orders are awarded, but
is clearly an important marker that the UK Government recognises our global
capability. We were also delighted to close the year by securing landmark
contract wins with the FCDO and to be awarded our first task orders with
respect to our JV in Diego Garcia.
The award of the Botswana High Commission contract highlights how our
operational capability is valued the FCDO. The strength of our technical
proposal was our key differentiator, and this positions us well for further
awards across the FCDO network.
Task orders were secured for work at the US Navy's base on Diego Garcia for an
aggregate value of USD 8.2m. These contracts were awarded under the USD 249m
framework agreement announced in September 2021, which sees RA International
and our partner ECC compete for individual task orders with four other
awardees. Whilst it has taken some time for the first contracts to be secured,
these orders represent an important milestone for our partnership with ECC.
Additional contracts have been awarded in 2023.
Framework agreements, such as the OSCC and Diego Garcia contracts, are a
mechanism favoured by governments. A major focus of our business development
activity going forward is securing RA's participation in these types of
contract vehicles, which is consistent with building our platform as a prime
contractor and recognised partner competing for large and multi-year
government contracts. It is worth noting that whilst securing these contracts
does not lead to an immediate uplift in our contract order book, they are
important markers of the success of our strategic partnership approach with
government clients and demonstrate the capability and value they see in
working with us.
We are up and running with RA FS, our US subsidiary focused on securing work
with US federal government clients worldwide, delivering contracts as a prime
contractor. This builds on our track record and past performance with the main
overseas federal agencies including the DoD, DoS, OBO, and USAID, which manage
budgets in the billions of Dollars. Key opportunities in our "sweet spot" we
are targeting include winning seats on Indefinite Delivery, Indefinite
Quantity ("IDIQ") contracts, such as with Diego Garcia, winning contracts for
smaller embassy or consulate construction work, and winning a seat on a DoD or
DoS logistics contracts. We are also looking to develop our partnerships with
the likes of small disadvantaged businesses ("SDBs"), to whom the US
Government allocates between 5% and 10% of government spend. The visible
pipeline with US projects is healthy and we are optimistic we will secure
material contracts in the year ahead.
Contract order book:
USD'm
Opening order book 100
New contracts, contract uplifts and extensions 45
Contracted revenue delivered (62)
────────
Closing order book as at 31 December 2022 83
════════
We continue to experience a slowdown in project tendering and awards in the
Humanitarian sector. The timeline of awards is very uncertain with the default
position remaining contract extensions rather than new awards. The challenges
in this sector are short term and we remain committed to supporting
Humanitarian projects. Humanitarian agencies overall do a good job helping
hundreds of millions of people a year and certainly save lives. The job they
do will always be needed and we are confident that our support and unique
deliverables will translate into contract awards over the course of the year.
Sustainability
Our commitment to sustainability and to doing business the right way remains
fundamental to our approach and is an increasingly important competitive
differentiator. We continue to be focused on the social value we can bring to
communities, and champion the employment of local people to provide
opportunities for personal growth and skills development. We were pleased to
see an increase in the percentage of local staff we employ rebuild to 51% from
42% the previous year.
We continued to expand our environmental activities and our efforts are being
recognised as having wider benefits to our customers' own sustainability
goals, which are themselves increasingly being directed by legislation and bid
requirements.
Having refreshed our material topics in 2021, last year we focused on setting
KPIs against which we can begin to measure our progress. Some of these require
new SOPs in order to gather data and to establish baselines against which we
can set targets for the future.
The newly established ESG Committee has added additional oversight to our
sustainability activities and has highlighted the need to bring greater focus
to the mental wellbeing of our staff. Whilst we already do a lot of work in
the area through our employment practices and occupational health and safety
systems, we are looking at ways to enhance our provision in this area.
Summary and Outlook
Our performance for FY22 was in-line with market expectations for the year.
We have been through a very difficult period since 2021, which has had a major
impact on the Group: reducing profitability, diverting management focus, and
adding costs to dispose of assets relating to suspended or cancelled projects.
We have now been able to assess the combined direct and indirect impacts of
Covid and the Palma incident on clients, contract awards and the business as a
whole to guide our short-term and strategic priorities. We are refocusing our
resources on strengthening our value proposition for western Government
clients, and are now in a stronger position to compete and grow our business
across the relevant overseas government budgets. Both the UK and US markets
remain attractive in size and have significant future growth potential. RA has
the capabilities, relationships, and global reputation for delivering complex
projects and to bid for what are very specialised contracts.
We have taken significant steps in 2022 to stabilise the business and
implement organisational change which we believe will drive business growth
and enhance operational resilience.
We continue to focus on internal initiatives including cost control,
efficiency and cash discipline to restore profitability alongside growing the
business in-line with our strategic priorities. We expect to dispose of the
majority of the Palma assets, eliminating storage costs, and reduce operating
costs through business reorganisation. We have also repriced contracts to take
into consideration rising prices. These initiatives should support higher
margins going forward.
We have significantly strengthened the liquidity position of the Group in the
current financial year and this is highlighted by the improvement in net debt
to USD 3.0m as at 31 March 2023 from the USD 6.5m reported as at 31 December
2022. The improvement in our cash position is being driven by the unwinding of
working capital balances and further recovery from the sale of previously
impaired assets.
Our order book of USD 78m as at end March 2023 (which is broadly consistent
with the December 2022 value) gives us good forward visibility. We have made
good progress in the current financial year in securing notable high-quality
contracts with blue-chip clients, albeit these can be in the form of framework
agreements which are not included in the order book until task orders are
issued. In addition, we are in the process of finalising the value of a major
contract award which would result in a current order book in excess of USD
100m. New contract awards over recent years have been weighted to construction
projects and we are now seeing more client confidence in awarding longer term
IFM contracts which is driving our confidence in the outlook for order book
growth. Whilst the timing of these awards and project starts remains difficult
to judge, we are encouraged by this trend.
We remain cautious on the financial performance of the business for the
current financial year and expect the business to remain broadly breakeven at
the underlying EBITDA level. Overall, the business improvement measures
outlined above, the improving confidence of our clients translating to a
stronger run-rate of contract awards and the work we are doing to strengthen
our position with government clients are important drivers in restoring the
levels of profitability the business has delivered previously.
Soraya Narfeldt
Chief Executive Officer
25 May 2023
FINANCIAL REVIEW
Revenue of USD 62.9m for the year ended 31 December 2022 and underlying EBITDA
of USD 0.6m are consistent with the cautious view outlined at the time of our
interim results in September 2022.
Profitability for the year was impacted significantly by inflationary cost
pressure and related issues such as material shortages, impacting gross
margin. Administrative expenses increased by USD 1.0m year over year,
primarily a reflection of the full year cost impact of RA FS.
Stabilising the financial position of the business through increasing
liquidity was a focus for the Group in 2022 and this continues into 2023. We
completed a USD 14.0m debt refinancing in the year, with the notes being
extended to the fourth quarter of 2024. Working capital movements returned to
more normalised patterns in the second half of the year, with significant
receivable balances unwinding in 2023. Additionally, capital expenditure
incurred during the year of USD 0.6m (2021: USD 3.5m) was lower than
expectations communicated mid- year, reflecting the modest ongoing maintenance
requirements of the business. Overall, the current cash headroom and ongoing
access to facilities, supports our liquidity position to fund existing and
visible project activity.
Highlights:
2022 2021
USD'm USD'm
Revenue 62.9 54.6
Gross profit 5.2 12.0
Gross profit margin 8.2% 22.0%
Underlying EBITDA 0.6 6.7
Underlying EBITDA margin 0.9% 12.3%
Loss before tax (13.0) (32.2)
Loss before tax margin (20.7)% (59.0)%
EPS, basic (cents) (7.6) (18.7)
Underlying EPS, basic (cents) (5.2) 0.1
Net debt (end of period) (6.5) (1.5)
Revenue
Reported revenue for 2022 of USD 62.9m (2021: USD 54.6m) represents a USD 8.3m
or 15% year-on-year increase. RA FS generated USD 5.7m in revenue from new
contracts signed during the year and USD 4.5m was generated from the sale of
prefabricated camp assets which had been purchased in 2020 and held in Mersin,
Turkey.
Construction revenue increased by USD 7.1m to USD 21.3m (2021: USD 14.2m) with
the majority of the positive variance relating to USD 4.4m of construction
revenue generated by RA FS. Additionally, as our clients' staff returned to
working at their overseas facilities, we received increased requests for
renovation and expansion works of over USD 2.0m.
IFM revenue decreased by USD 3.8m to USD 27.4m (2021: USD 31.2m) and reflects
the impact of lower occupancy from our hotel facility in Somalia. During the
COVID-19 pandemic, many long-term tenancy contracts came to an end and were
not renewed. While steady growth in occupancy has been seen since the start of
2022, it could take a number of years before levels seen pre-pandemic are
achieved. This said, a recovery in IFM revenue is expected in 2023 resulting
from increased IFM services performed for humanitarian clients, and improving
hotel occupancy.
Revenue from supply chain services was USD 14.2m (2021: USD 9.2m). The USD
5.0m increase year on year is reflective of USD 4.5m earned from the sale of
camp assets which were held in inventory as at the end of 2021.
Revenue by service channel:
2022 2021
USD'm USD'm
Integrated facilities management 27.4 31.2
Construction 21.3 14.2
Supply chain 14.2 9.2
──────── ────────
62.9 54.6
════════ ════════
Profit margin
Gross margin in 2022 was 8.3% (2021: 22.0%) reflecting continued inflationary
pressure which has been affecting the business since the second half of 2021,
impacting our main non-staff cost categories: food and beverage, fuel,
logistics, construction materials, and consumables. While newly awarded
contracts are generating improved margins, the effect of inflation on legacy
projects worsened throughout 2022, further depressing these project margins
and leading to losses generated on some long-term fixed price contracts.
Decreased hotel occupancy also negatively affected gross margin during the
year.
We continue to work with suppliers to reduce the impact of increasing cost of
supplies, and with customers to agree contract uplifts where possible. With
some customers we have been successful in agreeing rate increases during the
contract term, and in other cases we are in the process of agreeing rate
increases on contract renewal.
Reconciliation of loss to underlying EBITDA:
2022 2021
USD'm USD'm
Loss (13.2) (32.1)
Tax expense (credit) 0.2 (0.1)
──────── ────────
Loss before tax (13.0) (32.2)
Finance costs 2.5 1.3
Investment income (0.2) (0.1)
──────── ────────
Operating loss (10.7) (30.9)
Non-underlying items 4.2 32.2
──────── ────────
Underlying operating (loss)/profit (6.5) 1.3
Share based payments 0.5 0.5
Depreciation 6.6 4.9
──────── ────────
Underlying EBITDA 0.6 6.7
════════ ════════
Underlying EBITDA margin was 0.9% in 2022 (2021: 12.3%), reflecting lower
gross margin and a USD 1.0m increase in administrative expenses driven by a
full year of costs relating to RA FS, established during 2021.
During the year, the Company incurred non-underlying costs of USD 4.2m (2021:
USD 32.2m).
Non-underlying items:
2022 2021
USD'm USD'm
COVID-19 costs - 0.8
Restructuring costs 3.5 -
Palma Project, Mozambique 0.7 31.5
──────── ────────
4.2 32.2
════════ ════════
Restructuring costs relate to the strategic decision to redirect resources and
investment towards growing our government and humanitarian business, as
described in our 2021 Annual Report. These costs primarily arose from
recording provisions against certain asset balances deemed unrecoverable as a
result of this strategic shift.
Non-underlying expenses relating to the Palma Project consist of an
incremental USD 1.1m of additional unavoidable costs which are expected to be
incurred while the Group disposes of camp assets currently located in storage.
This balance is offset by the recovery of impairment recognised in 2021.
Recovery was generated both through the sale of assets and insurance proceeds.
Finance costs net of investment revenue increased to USD 2.3m (2021: USD 1.3m)
due to fees relating to the refinancing undertaken during the year and
interest charges. The average loan balance during the year was USD 11.5m
(2021: USD 7.1m). The notes carry an annual fixed interest rate of 7.5% (2021:
7.0%) for GBP denominated notes and 8.0% (2021: 7.5%) for USD denominated
notes with principal to be repaid as a bullet payment upon maturity in
November 2024. Interest is paid on a quarterly basis.
Earnings per share
Basic loss per share was 7.6 cents in the current period (2021: 18.7 cents).
Adjusting for non-underlying items, underlying loss per share was 5.2 cents
(2021: earnings per share 0.1 cents).
Cash flow
Cash decreased by USD 1.1m during the year (2021: USD 9.1m).
Summary cash flows:
2022 2021
USD'm USD'm
Operating Profit (10.7) (30.9)
Asset impairment 3.9 28.0
Depreciation 5.1 4.9
Other non-cash items pre-working capital adjustments 1.9 1.0
──────── ────────
0.2 3.0
Working capital adjustments (1.6) (7.8)
Tax & end of service benefits paid (0.3) (0.2)
──────── ────────
Net cash flows used in operating activities (1.7) (5.1)
Investing activities (excluding Capital Expenditure) 0.6 0.9
Capital Expenditure (0.6) (3.5)
──────── ────────
Net cash flows used in investing activities - (2.6)
Financing activities (excluding borrowings) (3.3) (5.2)
Net proceeds from borrowing 4.0 3.9
──────── ────────
Net cash flows from/(used in) financing activities 0.7 (1.3)
Net change in cash during the period (1.0) (9.1)
Net cash outflows from operations were USD 1.7m (2021: USD 5.1m), primarily a
result of working capital adjustments of USD 1.6m (2021: USD 7.8m). While a
USD 2.1m cash benefit was realised from inventory levels decreasing, this
benefit was more than offset by a decrease in trade payables.
Capex for the period was USD 0.6m (2021: USD 3.5m), lower than our previous
expectations, and reflects the relatively low maintenance spend requirements
of the business. Management plans to continue to exercise restraint in
undertaking any significant capital expenditure not directly related to, and
recoverable from, new contracts. During the year a nearly equivalent value of
cash was raised through the sale of fixed assets, a trend which has continued
into 2023.
Balance sheet and liquidity
Net assets at 31 December 2022 were USD 24.9 (2021: USD 37.3m).
Breakdown of net assets:
2022 2021
USD'm USD'm
Cash and cash equivalents 7.5 8.5
Loan notes (14.0) (10.0)
──────── ────────
Net cash (6.5) (1.5)
Net working capital 13.5 13.8
Non-current assets 24.0 30.9
Tangible owned assets 19.6 25.5
Right-to-use assets 4.4 5.4
Goodwill - -
Lease liabilities and end of service benefit (6.1) (5.9)
──────── ────────
Net assets 24.9 37.3
════════ ════════
During the year the Group raised USD 14.0m of debt under a new Medium-Term
Note ("MTN") programme. The fundraising was undertaken in two tranches with
USD 12.0m raised in the first half, and USD 2.0m raised in the second half of
2022. This debt was raised to refinance previously issued notes, and maintain
adequate liquidity so as to comfortably bid for and execute certain large
projects in the pipeline. The notes mature in November 2024.
We saw progress during the year in reducing our inventory and trade
receivables balances which has continued into 2023. As at 31 December 2022, we
continue to hold a provision against inventory originally purchased for the
Palma Project. Whilst there has been discussions ongoing, the assets are yet
to be disposed of.
Dividend
The Board is not recommending the payment of a final dividend in connection
with the year ended 2022, however it is the Board's intention to reinstate the
dividend as soon as is practicable, taking into consideration the financial
strength of RA and confidence in its future performance.
Andrew Bolter
Chief Financial Officer
25 May 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
2022 2021
USD'000 USD'000
Notes
Revenue 7 62,917 54,595
Cost of sales 9 (57,717) (42,050)
Credit provision 20 - (505)
Gross profit 5,200 12,040
Administrative 9 (11,695) (10,719)
expenses
Underlying operating (loss)/profit (6,495) 1,321
Non-underlying 9 (4,217) (32,222)
items
Operating loss (10,712) (30,901)
Investment revenue 206 55
Finance costs (2,491) (1,314)
Loss before tax (12,997) (32,160)
Tax 11 (169) 80
(expense)/credit
Loss and total comprehensive income for the year (13,166) (32,080)
Basic earnings per share (cents) 12 (7.6) (18.7)
Diluted earnings per share (cents) 12 (7.6) (18.5)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Notes 2022 2021
USD'000 USD'000
Assets
Non-current assets
Property, plant, and equipment 16 19,590 25,512
Right-of-use 17 4,421 5,374
assets
Goodwill 18 - -
24,011 30,886
Current assets
Inventories 19 5,154 9,397
Trade and other 20 16,389 16,522
receivables
Cash and cash 21 7,514 8,532
equivalents
29,057 34,451
Total assets 53,068 65,337
Equity and liabilities
Equity
Share 22 24,300 24,300
capital
Share premium 18,254 18,254
Merger reserve (17,803) (17,803)
Treasury 23 - (1,199)
shares
Share based payment reserve 574 534
Retained earnings (457) 13,223
Total equity 24,868 37,309
Non-current liabilities
Loan 24 14,000 -
notes
Lease 25 4,556 5,206
liabilities
Employees' end of service 26 928 731
benefits
19,484 5,937
Current liabilities
Loan 24 - 10,000
notes
Lease 25 650 834
liabilities
Trade and other 27 6,974 9,835
payables
Provisions 28 1,092 1,422
8,716 22,091
Total liabilities 28,200 28,028
Total equity and liabilities 53,068 65,337
CONSOLIDATED STATEMENT IN CHANGES IN EQUITY
For the year ended 31 December 2022
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 2021 24,300 18,254 (17,803) (1,363) 177 48,509 72,074
Total comprehensive income for the period - - - - - (32,080) (32,080)
Share based payments (note 13) - - - - 487 - 487
Dividends declared and paid (note 14) - - - - - (3,206) (3,206)
Issuance of treasury shares (note 23) - - - 164 (130) - 34
As at 31 December 2021 24,300 18,254 (17,803) (1,199) 534 13,223 37,309
Total comprehensive - - - - - (13,166) (13,166)
income for the period
Share based payments - - - - 311 - 311
(note 13)
Non-cash employee - - - 981 - (608) 373
compensation (note 13)
Lapsed share options - - - - (94) 94 -
(note 13)
Issuance of treasury - - - 218 (177) - 41
shares (note 23)
As at 31 December 2022 24,300 18,254 (17,803) - 574 (457) 24,868
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Notes 2022 2021
USD'000 USD'000
Operating activities
Operating (loss)/profit (10,712) (30,901)
Adjustments for non-cash and other items:
Depreciation on property, plant, and 6,566 4,855
equipment
16, 17
Profit on disposal of property, plant, and (3) (16)
equipment
16
Unrealised differences on translation of foreign balances (35) 133
Provision for employees' end of service 526 433
benefits
26
Share based 489 487
payments
13
Non-underlying items - Palma Project, 3,334 28,035
Mozambique
9
165 3,026
Working capital adjustments:
Inventories 2,067 (5,071)
Trade and other receivables (257) (4,284)
Trade and other payables (3,362) 1,513
Cash flows (used in)/generated from operations (1,387) (4,816)
Tax paid 11 - (20)
Employees' end of service benefits paid 26 (329) (219)
Net cash flows used in operating activities (1,716) (5,055)
Investing activities
Investment revenue received 206 55
Purchase of property, plant, and equipment 16 (618) (3,478)
Proceeds from disposal of property, plant, and equipment 16 359 823
Net cash flows used in investing activities (53) (2,600)
Financing activities
Repayment of borrowings 24 (11,500) -
Proceeds from borrowings 24 15,500 3,916
Repayment of lease liabilities 25 (834) (742)
Finance costs paid (2,491) (1,314)
Dividends paid 14 - (3,206)
Proceeds from share options exercised 41 34
Net cash flows generated from/(used in) financing activities 716 (1,312)
Net decrease in cash and cash equivalents (1,053) (8,967)
Cash and cash equivalents as at start of the period 21 8,532 17,632
Effect of foreign exchange on cash and cash equivalents 35 (133)
Cash and cash equivalents as at end of the period 21 7,514 8,532
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2022
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 2022 or 2021 but is derived
from those accounts. Statutory accounts for the year ended 31 December 2021
have been delivered to the Registrar of companies and those for 2022 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 2024 (the going concern period) and
utilising scenario analysis to test the adequacy of the Group's liquidity. As
consistent with prior year, 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 downside scenarios were
prepared which reflect the primary uncertainties facing the business. One
assumes that the Group is unable to sell any unutilised assets and continues
to incur the related storage costs until 30 September 2023. Another scenario
forecasts a 25% decrease in the probability of the award of new contracts, a
10% reduction in gross margin earned from these contracts, and that the Group
is unable to sell any unutilised assets and continues to incur the related
storage costs until 30 September 2023. Under the most pessimistic downside
scenario, Group revenue is approximately 96% of that reported in 2022 and
underlying EBITDA margin is negative 1.8%.
Under all scenarios, the Group has concluded that it has sufficient cash
reserves to fund trading, capital investment, and interest repayments
associated with loan notes during the going concern period. If for any reason
further liquidity is required during the going concern period, the Group could
decline new project awards, or alter its cost base. These are considered
controllable mitigating options that management could implement and would lead
to an increase in liquidity.
A further Reverse Stress Test was also undertaken to determine what trading
conditions would lead to the Group exhausting its available cash reserves
during the going concern period. It was determined that under a scenario
whereby the Group is awarded no future contracts, and solely generates revenue
from work that is currently contracted, the Group would not exhaust its
available liquidity until October 2024 (which falls outside of the going
concern period). This trading scenario is considered remote given the value of
the current pipeline.
During the year, the Group completed a refinancing and fundraising exercise.
The purpose of the exercise was to synchronise and extend the maturity of the
USD 10.0m of loan notes issued by the Group during 2020 and 2021, which were
due to mature in the second half of 2022. The original USD 10.0m of loan notes
were replaced with USD 14.0m in new loan notes which mature in November of
2024. The Group also has access to a GBP 10.0m long-term debt facility which
is not expected to be utilised under any scenarios modelled. The amount that
can be drawn from this facility at any given time is dependant on the value of
the Company's market capitalisation and other non financial covenants.
Under all scenarios reviewed by the Board the Group continues to have
sufficient cash reserves to operate throughout the going concern period. Any
scenario whereby trading performance is worse than those modelled is
considered to be remote given the level of committed contracted work in place.
Additionally, controllable mitigations exist, as are noted above, which could
be utilised to increase liquidity. On this basis, the Board is 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 2022.
3 BASIS OF CONSOLIDATION
The financial statements comprise the financial statements of the Company and
its subsidiaries as at 31 December 2022. 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.
Current versus non-current classification
The Group presents assets and liabilities in the statement of financial
position based on current/non-current classification. An asset is current when
it is:
· Expected to be realised or intended to be sold or consumed in the
normal operating cycle,
· Held primarily for the purpose of trading,
· Expected to be realised within twelve months after the reporting
period, or
· Cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period.
All other assets are classified as non-current. A liability is current when:
· It is expected to be settled in the normal operating cycle,
· It is held primarily for the purpose of trading,
· It is due to be settled within twelve months after the reporting
period, or
· There is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current.
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. Dependant 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 and 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 de-recognition of the asset (calculated as the difference between
the net disposal proceeds and carrying amount of the asset) is included in the
profit or loss in the year the asset is derecognised.
Assets' residual values, useful lives, and methods of depreciation are
reviewed at each financial year end, and adjusted prospectively, if
appropriate.
Goodwill
Goodwill is stated as cost less accumulated impairment losses. Cost is
calculated as the total consideration transferred less net assets acquired.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs
include those expenses incurred in bringing each product to its present
location and condition. Cost is calculated 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
employees' final salary and length of service, subject to the completion of a
minimum service period. The expected costs of these benefits are accrued over
the period of employment. 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 2022 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.
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
IAS1 requires material items to be disclosed separately in a way that enables
users to assess the quality of a company's profitability. In practice, these
are commonly referred to as "exceptional" items, but this is not a concept
defined by IFRS and therefore there is a level of judgement involved in
arriving at an Alternative Performance Measure ("APM") which excludes such
exceptional items. The Group 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.
The accuracy of percentage-of-completion estimates has a material impact on
the amount of revenue and related profit recognised. As at 31 December 2022,
USD 2,031,000 of accrued revenue had been calculated using the percentage-of-
completion method (2021: USD 3,837,000).
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 to conclude on
the fair value of these assets at 31 December 2021, the Group 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 was expected that these
assets were to be fully disposed of by December 2022, however it is now
expected that this will extend to September 2023. Given the limited market for
these assets the exact timing of disposal is considered uncertain.
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:
2022 2021
USD'000 USD'000
Integrated facilities management 27,411 31,162
Construction 21,276 14,221
Supply chain services 14,230 9,212
──────── ────────
62,917 54,595
════════ ════════
Revenue by recognition timing:
2022 2021
USD'000 USD'000
Revenue recognised over time 48,160 41,320
Revenue recognised at a point in time 14,757 13,275
──────── ────────
62,917 54,595
════════ ════════
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:
2022 2021
USD'000 USD'000
Africa 61,012 52,357
Other 1,905 2,238
──────── ────────
62,917 54,595
════════ ════════
Non-current assets by geographic area:
2022 2021
USD'000 USD'000
Africa 22,223 28,448
Other 1,788 2,438
──────── ────────
24,011 30,886
════════ ════════
Revenue split by customer:
2022 2021
% %
Customer A 19 25
Customer F 12 11
Customer E 10 14
Customer B 10 6
Customer D 9 10
Customer H 8 4
Customer I 7 -
Other 25 30
──────── ────────
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 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
Al Mutaheda Al-Alamia Ltd. Libya 100% Suq El Jumah- Tripoli Libya
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
RA Facilities Services 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 International Poland Poland 100% UL. MŁYŃSKA, numer 16, lokal 8 PIĘTRO, kod poczt. 61-730, poczta POZNAŃ
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 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
RA Federal Services LLC United States of America 100% 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
* During the year, Royal Food Solutions S.A was renamed as RA Facilities
Services S.A
** RA International in Somalia is not an incorporated legal entity.
RA International Global Operations Limited, registered number 12672019 is
exempt from the requirements of Company Act 2006 relating to the audit of
individual accounts by virtue of section 479A
9 LOSS FOR THE PERIOD
Loss for the period is stated after charging:
2022 2021
USD'000 USD'000
Staff costs 24,382 22,088
Materials 24,079 12,887
Depreciation of property, plant, and equipment 5,110 4,855
Impairment of property, plant, and equipment 1,456 -
════════ ════════
Staff costs relate to wages and salaries plus directly attributable expenses.
Non-underlying items
2022 2021
USD'000 USD'000
COVID-19 costs - 765
Restructuring costs 3,502 -
Palma Project, Mozambique 715 31,457
──────── ────────
Total non-underlying items 4,217 32,222
════════ ════════
COVID-19 costs
These costs were incurred due to the COVID-19 pandemic and primarily comprise
of incremental staff costs and PPE. 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 (2022:
USD nil; 2021: USD 374,000). 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 (2022:
USD nil; 2021: USD 391,000). 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.
In 2022, the Company chose not to classify COVID-19 costs as a non-underlying
item, instead treating these expenses as consistent with costs arising from
other incidences of disease and illness.
Restructuring costs
In 2022, the CODM made a decision to significantly alter Group Strategy,
choosing to focus corporate efforts and resources towards growing revenue from
western government customers. This was a fundamental and significant change
that has a material effect on the nature and focus of the entity's operations
and led to a number of initiatives which resulted in costs being incurred to
restructure the organisation.
These expenses include USD 3,139,000 relating to a provision recorded against
assets purchased and held for projects which were to be executed for
Commercial customers and that are no longer deemed recoverable. Additionally,
USD 363,000 relates to staff restructuring costs.
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.
As a result of this catastrophic event, in the prior year the Group incurred
significant incremental costs and impaired assets which are associated with
the Palma Project.
2022 2021
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 1,092 1,422
1,092 28,035
Incremental costs incurred and paid 237 3,422
1,329 31,457
Reversal of asset impairment (614) -
715 31,457
Provision for asset impairment
As at the date of the prior year accounts, the force majeure was still in
place and development work has not recommenced. While the security situation
had improved, and commercial activity was returning to the Palma area, Total
had 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, it was determined that there remained significant uncertainty as to
when the force majeure will be lifted and what RA's role will be in the
recommenced development works.
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
decided to recognise a provision to impair the full value of assets relating
to the Palma Project in the prior year. The provision for impairment is still
held as at the date of these accounts [given that the force majeure has not
been lifted].
The CODM will continue to 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 Other
Assets Inventory Assets 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. There was no permanent asset
impairment relating to the Palma Project in the year ended 31 December 2022.
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.
In 2022, storage and other related incremental costs increased significantly
due to inflation. As a result, additional costs of USD 237,000 were incurred
during the year.
Provision for unavoidable costs
In the prior year, the Group recorded a provision of USD 1,422,000 relating to
unavoidable costs associated with the Offsite Assets. The provision was
utilised in full during the year and an additional USD 1,092,000 has been
recognised as a provision in 2022 which is expected to be utilised in 2023.
Reversal of asset impairment
During the year, a number of Palma Project assets were disposed of, generating
proceeds of USD 114,000. These assets had been fully impaired in 2021 and as a
result, the disposal resulted in a recovery of USD 114,000 which has been
recorded in the current year. In addition, property insurance proceeds of USD
500,000 were confirmed as being payable to the Company from its insurers. This
amount relates to a claim filed by the Company in 2021 relating to the theft
and vandalism of its assets in Palma, Mozambique. These assets were indicated
as being permanently impaired in 2021.
The Group reassessed the recoverable amount of all impaired assets and deemed
there was no further reversals necessary.
Auditor Compensation
Amounts paid or payable by the Group in respect of audit and non-audit
services to the Auditor are shown below.
2022 2021
USD'000 USD'000
Fees for the audit of the Company annual accounts 188 164
Fees for the audit of the subsidiary annual accounts 75 74
Additional fee for the prior year audit of the Group annual accounts 25 -
─────── ───────
Total audit fees 288 238
═══════ ═══════
Non-audit related services - -
─────── ───────
10 EMPLOYEE EXPENSES
The average number of employees (including directors) employed during the
period was:
2022 2021
Directors 7 7
Executive management 5 5
Staff 1,356 1,157
──────── ────────
1,368 1,169
════════ ════════
The aggregate remuneration of the above employees was:
2022 2021
USD'000 USD'000
Wages and salaries 19,820 17,804
Social security costs 148 153
Share based payments 684 487
─────── ───────
20,652 18,444
════════ ════════
The remuneration of the Directors and other key management personnel of the
Group are detailed in note 32.
11 TAX
The tax charge on the profit for the year is as follows:
2022 2021
USD'000 USD'000
Current tax:
UK corporation tax on profit for the year - -
Non-UK corporation tax 169 80
Adjustment for prior years - (160)
─────── ───────
Tax charge for the year 169 (80)
═══════ ═══════
Factors affecting the tax expense/(credit)
The tax assessed for the year varies from the standard rate of corporation tax
in the UK. The difference is explained below:
2022 2021
USD'000 USD'000
Loss before tax (12,997) (32,160)
─────── ───────
Expected tax charge based on the standard average rate of corporation tax in (2,469) (6,110)
the UK of 19% (2021: 19%)
Effects of:
Deferred tax asset not recognised 115 105
Exemptions and foreign tax rate difference 2,523 6,085
Adjustment for prior years - (160)
─────── ───────
Tax expense/(credit) for the year 169 (80)
═══════ ═══════
The Group benefits from tax exemptions granted to its customers who are
predominantly governments and large intragovernmental organisations. The CODM
is not aware of any factors 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.
The Group has USD 3,463,000 of unused tax losses, available indefinitely, for
which no deferred tax asset has been recognised.
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.
2022 2021
Loss for the period (USD'000) (13,166) (32,080)
Basic weighted average number of ordinary shares 172,601,934 171,660,947
Effect of employee share options 728,394 1,447,842
─────── ───────
Diluted weighted average number of shares 173,330,328 173,108,789
Basic earnings per share (cents) (7.6) (18.7)
Diluted earnings per share (cents) (7.6) (18.5)
═══════ ═══════
13 SHARE BASED PAYMENT EXPENSE
The Group recognised the following expenses related to equity-settled payment
transactions:
2022 2021
USD'000 USD'000
Performance share plan - 16
Employee retention share plan 311 471
Other share based payments 178 -
Other share based payments - non-underlying 195 -
─────── ───────
684 487
═══════ ═══════
Performance Share Plan
On Admission, the Company introduced a Performance Share Plan ("PSP") whereby
options may be granted to eligible employees. Awards vested after a
performance period of 4 years subject to continuous employment and the
achievement of a hurdle total shareholder return ("TSR") as at the end of the
performance period. The TSR was not achieved, resulting in the shares lapsing
in the 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 2022 2021
2018 PSP 29 June 2022 0.10 - 2,065,216
2020 ERSP 1 May 2021 0.10 - 31,280
ERSP 1 May 2022 0.10 229,710 549,869
ERSP 1 May 2023 0.10 671,510 824,800
2021 ERSP 1 May 2021 0.10 17,212 17,212
ERSP 1 May 2022 0.10 47,776 84,520
ERSP 1 May 2023 0.10 107,243 151,830
ERSP 1 May 2024 0.10 83,413 150,292
2022 ERSP 1 Dec 2022 0.22 741,457 -
ERSP 1 Dec 2023 0.22 741,457 -
ERSP 1 Dec 2024 0.22 741,457 -
ERSP 1 May 2023 0.10 130,920 -
ERSP 1 May 2024 0.10 261,840 -
ERSP 1 May 2025 0.10 392,760 -
4,166,755 3,875,019
════════ ════════
The weighted average remaining contractual life for the shares options
outstanding as at 31 December 2022 is 0.9 years (2021: 1 year).
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
2022 2022 2021 2021
GBP GBP
Outstanding at 1 January 3,875,019 0.10 3,811,540 0.10
Granted during the year 3,009,891 0.18 458,348 0.10
Exercised during the year (324,463) 0.10 (243,653) 0.10
Forfeited during the year (328,476) 0.10 (151,216) 0.10
Lapsed during the year (2,065,216) 0.10 - 0.10
Outstanding at 31 December 4,166,755 0.16 3,875,019 0.10
════════ ════════ ════════ ════════
Options issued under the PSP were valued using the Monte Carlo Simulation
model using the following inputs:
Weighted average Expected Risk
share price volatility free rate
2018 56p (USD 0.74) 10.10% 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 nil (2021:
USD 16,000) was recognised in administrative expenses for the fiscal year
ended 2022.
Options issued under the ERSP were valued using the Black Scholes model using
the following inputs:
Weighted average Expected volatility Risk free rate
Share price
2020 49p (USD 0.64) 49.70% 0.00%
2021 49p (USD 0.68) 48.60% 0.00%
2022 22p (USD 0.28) 46.80% 1.69%
The total fair value of the options at the grant date was USD 1,100,000. A
charge of USD 66,000 (2021: USD 117,000) was recognised in cost of sales and
USD 245,000 (2021: USD 369,000) was recognised in administrative expenses for
the fiscal year ended 2022. The expected volatility input utilised represents
the historic volatility of the share price of the Company since Admission.
Other Share Based Payments
On 26 July 2022, the Company agreed to issue a total of 1,459,435 Ordinary
Shares to senior members of staff, including certain persons discharging
managerial responsibilities. Ordinary Shares issued pursuant to the award were
satisfied from the pool of Ordinary Shares held in Treasury. The fair value of
the shares on the grant date was GBP 0.21 (USD 0.25) per share. A total charge
of USD 373,000 was recognised, with USD 178,000 recognised as an
administrative expense and USD 195,000 recognised as a non-underlying
restructuring cost given the non-reoccurring nature of the transaction.
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 USD nil (2021: USD nil).
14 DIVIDENDS
During the period, no dividend was declared and paid (2021: 1.35 pence (USD
0.02) per share (171,662,973 shares) totalling GBP 2,317,000 (USD 3,206,000)).
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.
2022 2021
USD'000 USD'000
Loss (13,166) (32,080)
Tax expense/(credit) 169 (80)
─────── ───────
Loss before tax (12,997) (32,160)
Finance costs 2,491 1,314
Investment income (206) (55)
─────── ───────
Operating loss (10,712) (30,901)
Non-underlying items 4,217 32,222
─────── ───────
Underlying operating (loss)/profit (6,495) 1,321
Share based payment expense 489 487
Depreciation 5,110 4,855
Impairment 1,456 -
─────── ───────
Underlying EBITDA 560 6,663
═══════ ═══════
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.
2022 2021
cents cents
Reported EPS, basic (7.6) (18.7)
Impact of non-underlying items 2.4 18.8
Underlying EPS, basic (5.2) 0.1
═══════ ═══════
Reported EPS, diluted (7.6) (18.5)
Impact of non-underlying items 2.4 18.6
Underlying EPS, diluted (5.2) 0.1
═══════ ═══════
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 2022 39,919 14,115 1,370 55,404
Additions 194 424 - 618
Disposals (788) (856) - (1,644)
──────── ──────── ──────── ────────
At 31 December 2022 39,325 13,683 1,370 54,378
──────── ──────── ──────── ────────
Depreciation:
At 1 January 2022 21,438 8,089 365 29,892
Charge for the year 2,040 1,893 237 4,170
Relating to disposals (226) (491) - (717)
Provision for impairment 528 915 - 1,443
──────── ──────── ──────── ────────
At 31 December 2022 23,780 10,406 602 34,788
──────── ──────── ──────── ────────
Net carrying amount:
At 31 December 2022 15,545 3,277 768 19,590
════════ ════════ ════════ ════════
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
════════ ════════ ════════ ═══════
During the year, capitalised interest of USD nil was included in Land and
Buildings (2021: USD 114,000), representing 0% of borrowing costs (2021: 22%).
From 1 April 2021, upon the suspension of construction activities in Palma,
Mozambique, the Group ceased capitalising interest relating to the Palma Camp
development.
A provision for impairment of USD 1,443,000 was recorded during 2022 (2021:
nil). This balance resulted from the value of certain assets, located in one
location, being deemed unrecoverable as at 31 December 2022. In determining
this provision, the CODM reviewed both the likelihood of recovery through
continued use, and the recoverable value through sale.
17 RIGHT-OF-USE ASSETS
2022 2021
USD'000 USD'000
Cost:
At 1 January 7,887 5,143
Additions - 2,744
At 31 December 7,887 7,887
──────── ────────
Depreciation:
At 1 January 2,513 1,615
Charge for the year 940 898
Provision for impairment 13 -
──────── ────────
At 31 December 3,466 2,513
──────── ────────
Net carrying amount:
At 31 December 4,421 5,374
════════ ═══════
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.
2022 2021
USD'000 USD'000
Short-term leases 715 1,308
════════ ════════
Short-term leases include amounts paid for vehicles and heavy equipment
rental, as well as short-term property leases.
18 GOODWILL
2022 2021
USD'000 USD'000
As at 1 January - 138
Acquisitions - (138)
─────── ───────
As at 31 December - -
═══════ ═══════
19 INVENTORIES
2022 2021
USD'000 USD'000
Materials and consumables 4,442 8,123
Goods-in-transit 712 1,274
─────── ───────
5,154 9,397
═══════ ═══════
A provision of USD 3,139,000 was recognised during the year relating to the
write-off of assets purchased and held for projects which were to be executed
for Commercial customers and that are no longer deemed recoverable (2021: USD
nil).
20 TRADE AND OTHER RECEIVABLES
2022 2021
USD'000 USD'000
Trade receivables 10,697 8,942
Accrued revenue 3,765 5,281
Deposits 112 112
Prepayments 514 1,039
Other receivables 1,301 1,148
─────── ───────
16,389 16,522
═══════ ═══════
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 (2021: 100%).
As at 31 December the transaction price allocated to remaining performance
obligations was USD 83,000,000
(2021: USD 100,000,000). 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:
2022 2021
USD'000 USD'000
Not past due 5,609 5,855
Overdue by less than 30 days 3,705 1,509
Overdue by between 30 and 60 days 831 294
Overdue by more than 60 days 552 1,284
─────── ───────
10,697 8,942
═══════ ═══════
Trade receivables are non-interest bearing and generally have payment terms of
30 days. An ECL of USD nil was recorded as at 31 December 2022 (2021: USD
505,000). 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 7,514,000 (2021: USD 8,532,000).
22 SHARE CAPITAL
2022 2021
USD'000 USD'000
Authorised, issued and fully paid
173,575,741 shares (2021: 173,575,741 shares) of GBP 0.10 (2021: GBP 0.10) 24,300 24,300
each
═══════ ═══════
23 TREASURY SHARES
2022 2022 2021 2021
Number USD'000 Number USD'000
As at 1 January 1,783,898 1,199 2,027,551 1,363
Issued in the period (note 13) -(1,783,898) (1,199) (243,653) (164)
─────── ─────── ─────── ───────
As at 31 December - - 1,783,898 1,199
═══════ ═══════ ═══════ ═══════
24 LOAN NOTES
The table below summarises the loan notes:
2022 2021
USD'000 USD'000
As at 1 January 10,000 6,471
Additions 15,500 3,529
Repayments (11,500) -
─────── ───────
As at 31 December 14,000 10,000
═══════ ═══════
Current - 10,000
Non-current 14,000 -
During the year, the Group completed a refinancing and fundraising exercise.
The purpose of the exercise was to synchronise and extend the maturity of the
USD 10,000,000 of loan notes issued by the Group during 2020 and 2021, which
were due to mature in the second half of 2022. The original USD 10,000,000 of
loan notes were replaced with USD 14,000,000 in new loan notes issued to
retail investors. These notes carry an annual fixed interest rate of 7.50%
(2021: 7.00%) for GBP denominated notes and 8.00% (2021:7.50%) for USD
denominated notes. The term of the note issuance is up to 30 months with
principal to be repaid as a bullet payment upon maturity in November 2024.
Interest is paid on a quarterly basis.
25 LEASE LIABILITIES
Movements in the provision recognised in the consolidated statement of
financial position are as follows:
2022 2021
USD'000 USD'000
As at 1 January 6,040 4,038
Additions - 2,744
Interest 476 527
Payments (1,310) (1,269)
─────── ───────
As at 31 December 5,206 6,040
═══════ ═══════
Current 650 834
Non-current 4,556 5,206
Interest of USD 476,000 (2021: USD 527,000) 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:
2022 2021
USD'000 USD'000
3 months or less 124 102
3 to 12 months 526 732
1 to 5 years 1,746 2,125
Over 5 years 2,810 3,081
─────── ───────
5,206 6,040
═══════ ═══════
The Group had total cash outflows relating to leases of USD 2,025,000 in 2022
(2021: USD 2,577,000). 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:
2022 2021
USD'000 USD'000
As at 1 January 731 517
Provided during the year 526 433
End of service benefits paid (329) (219)
─────── ───────
As at 31 December 928 731
═══════ ═══════
27 TRADE AND OTHER PAYABLES
2022 2021
USD'000 USD'000
Trade payables 3,744 6,478
Accrued expenses 2,309 2,702
Accrued tax expense 388 161
Customer advances 533 494
─────── ───────
6,974 9,835
═══════ ═══════
All customer advances recorded at 31 December 2021 were subsequently
recognised as revenue in 2022 and all customer advances held at 31 December
2022 were subsequently recognised as revenue in 2023.
28 PROVISIONS
2022 2021
USD'000 USD'000
As at 1 January 1,422 -
Provided during the year 1,092 1,422
Utilised during the year (1,422) -
─────── ───────
As at 31 December 1,092 1,422
═══════ ═══════
Following the March 2021 attack on Palma, Mozambique the Group began incurring
unavoidable costs relating to the Offsite Assets. All assets are expected to
be disposed of in 2023.
A USD 1,092,000 (2021: USD 1,422,000) provision relating to these costs was
recorded in 2022, 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
2022 Cash flows New leases Other 2022
USD'000 USD'000 USD'000 USD'000 USD'000
Non-current liabilities
Loan notes - 14,000 - - 14,000
Lease liabilities 5,206 - - (650) 4,556
Current liabilities
Loan notes 10,000 (10,000) - - -
Lease liabilities 834 (1,310) - 1,126 650
──────── ──────── ──────── ──────── ────────
16,040 2,690 - 476 19,206
════════ ════════ ════════ ════════ ════════
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
════════ ════════ ════════ ════════ ════════
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 2022, the Group held foreign cash and cash equivalents of GBP
364,000 (USD 440,000). Additionally, the Group held GBP denominated loans of
GBP 1,970,000 (USD 2,382,000). UK pound sterling is primarily held by the
Group to settle payment obligations denominated in GBP. As at 31 December
2021, the Group held GBP 1,067,000 (USD 1,441,000) and GBP denominated loans
of GBP 1,354,000 (USD 1,787,000).
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 financial institutions 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 61% of outstanding trade receivables at 31 December 2022
(2021: 63%).
Receivables split by customer
2022 2021
% %
Customer B 22 17
Customer A 19 5
Customer D 14 21
Customer H 11 -
Customer C 7 8
Customer I 7 4
Customer E - 14
Customer F - 6
Other 20 25
─────── ───────
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 2022
Less than 3 to 12 6 to 12 12 to 24
3 months Months Months Months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Loan notes - - - 14,000 14,000
Trade payable 3,744 - - - 3,744
──────── ──────── ──────── ──────── ────────
3,744 - - 14,000 17,744
════════ ════════ ════════ ════════ ════════
As at 31 December 2021
Less than 3 to 12 6 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
════════ ════════ ════════ ════════ ════════
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 2022 amounted to USD
10,000,000 (2021: USD 10,000,000) and carry interest of 1m Term SOFR +3.50%
per annum (2021: 1m LIBOR +3.50%). The facilities require a 100% cash margin
guarantee to be paid upfront.
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 2022.
Capital comprises share capital, share premium, merger reserve, treasury
shares, share based payment reserve and retained earnings and is measured at
USD 24,868,000 as at 31 December 2022 (2021: USD 37,309,000).
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 (2021: USD
nil). No outstanding balances with related parties are included in the
consolidated statement of financial position at 31 December 2022 (2021: USD
nil).
32 COMPENSATION
Compensation of key management personnel
The remuneration of key management during the year was as follows:
2022 2021
USD'000 USD'000
Short-term benefits 1,379 1,874
Stock based compensation 373 16
──────── ────────
1,752 1,890
════════ ════════
The key management personnel comprise of 3 (2021: 5) individuals. Included in
key management personnel are 3 (2021: 3) Directors.
Compensation of directors
The remuneration of directors during the year was as follows:
2022 2021
USD'000 USD'000
Short-term benefits 1,574 1,611
Stock based compensation 178 9
─────── ───────
1,752 1,620
═══════ ═══════
Highest paid director
The remuneration of the highest paid director during the year was as follows:
2022 2021
USD'000 USD'000
Short-term benefits 393 490
Stock based compensation 178 -
─────── ───────
571 490
═══════ ═══════
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.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
2022 2021
Notes USD'000 USD'000
Assets
Non-current assets
Investments 4 28,606 50,047
Loan to subsidiary 5 1,000 -
─────── ───────
29,606 50,047
Current assets
Trade and other receivables 6 5,984 5,754
Cash and cash equivalents 157 113
─────── ───────
6,141 5,867
─────── ───────
Total assets 35,747 55,914
═══════ ═══════
Equity and liabilities
Equity
Share capital 7 24,300 24,300
Share premium 18,254 18,254
Merger reserve - 9,897
Treasury shares 8 - (1,199)
Share based payment reserve 574 534
Retained earnings (8,680) 3,819
─────── ───────
Total equity 34,448 55,605
Non-current liabilities
Loan from subsidiary 9 1,000 -
Current liabilities
Trade and other payables 10 299 309
Total liabilities 1,299 309
─────── ───────
Total equity and liabilities 35,747 55,914
═══════ ═══════
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 22,396,351
(2021: USD 553,000).
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
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 2021 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 8) - - - 164 (130) - 34
─────── ─────── ─────── ─────── ─────── ─────── ───────
As at 31 December 2021 24,300 18,254 9,897 (1,199) 534 3,819 55,605
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════
Total comprehensive income for the period - - - - - (22,396) (22,396)
Share based payments 311 - 311
Issuance of treasury shares (note 8) - - - 218 (177) - 41
Lapsed share options (94) - (94)
Non-cash employee compensation 981 981
Transfer of reserve (9,897) 9,897
─────── ─────── ─────── ─────── ─────── ─────── ───────
As at 31 December 2022 24,300 18,254 - - 574 (8,680) 34,448
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════
The attached notes 1 to 12 form part of the Financial Statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2022
1 BASIS OF PREPARATION
The financial statements have been prepared in accordance with United Kingdom
Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and the Companies Act
2006), including
Financial Reporting Standard 101 "Reduced Disclosure Framework" ("FRS101")
under the historical cost
basis and have been presented in USD, being the functional currency of the
Company.
The Company has applied a number of exemptions available under FRS 101.
Specifically, the requirement(s) of:
(a) paragraphs 91-99 of IFRS 13 "Fair Value Measurement";
(b) paragraph 38 of IAS 1 "Presentation of Financial Statements" to present
comparative information in respect of paragraph 79(a)(iv) of IAS 1;
(c) paragraphs 10(d), 10(f), and 134-136 of IAS 1 "Presentation of Financial
Statements";
(d) IAS 7 "Statement of Cash Flows";
(e) paragraphs 30 and 31 of IAS 8 "Accounting Policies, Changes in
Accounting Estimates and Errors";
(f) paragraph 17 of 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.
Merger Reserve
A merger reserve is a non-distributable reserve often arising from a share for
share exchange transaction, such as that undertaken by the Company in 2018.
The merger reserve is held at carrying value and may be transferred to
distributable reserves upon the disposal, write-down, depreciation,
amortisation, or diminution in value or impairment of the related asset.
3 EMPLOYEE EXPENSES
The average number of employees employed during the period was:
2022 2021
Directors 7 7
════════ ════════
The aggregate remuneration of the above employees was:
2022 2021
USD'000 USD'000
Wages and salaries 447 469
Social security costs 53 53
─────── ───────
500 522
═══════ ═══════
4 INVESTMENTS
2022 2021
USD'000 USD'000
As at 1 January 50,047 50,047
Additions 350 -
Diminution in value (21,791) -
─────── ───────
As at 31 December 28,606 50,047
═══════ ═══════
During the year, the Company established a provision of USD 21,791,000
relating to diminution in value of the investment as at 31 December 2022. The
impairment has been calculated with reference to the company's market
capitalisation at the yearend date, adjusted to reflect cost of disposal in
order to determine the recoverable amount of the investments on a fair value
less cost to sell basis. No adjustment has been made to reflect control
premium however a 10 percent increase/decrease in the share price would result
in a $2.8 million decrease/increase to the impairment provision.
Additionally, the Company invested USD 350,000 in RA Federal Services LLC, a
100% owned subsidiary.
5 LOAN TO SUBSIDIARY
2022 2021
USD'000 USD'000
As at 1 January - -
Additions 1,000 -
─────── ───────
As at 31 December 1,000 -
═══════ ═══════
During the year, the Company advanced a loan of USD 1,000,000 to a subsidiary.
This note carries an annual fixed interest rate of 9.56%. 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 to be received on an annual basis.
6 TRADE AND OTHER RECEIVABLES
2022 2021
USD'000 USD'000
Prepayments 67 18
Due from subsidiary 5,879 5,703
VAT recoverable 38 33
─────── ───────
5,984 5,754
═══════ ═══════
Amounts due from subsidiary represent amounts due from RA International FZCO,
an immediate subsidiary, and are non-interest bearing and payable on demand.
7 SHARE CAPITAL
2022 2022 2021 2021
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
════════ ════════ ════════ ════════
8 TREASURY SHARES
2022 2022 2021 2021
Number USD'000 Number USD'000
As at 1 January 2,027,501 1,363 2,027,551 1,363
Issued in the period (2,027,501) (1,363) (243,653) (164)
──────── ──────── ──────── ────────
As at 31 December - - 1,783,898 1,199
═══════ ═══════ ═══════ ═══════
9 LOAN FROM SUBSIDIARY
2022 2021
USD'000 USD'000
As at 1 January - -
Additions 1,000 -
─────── ───────
As at 31 December 1,000 -
═══════ ═══════
During the year, the Company subscribed to a loan from a subsidiary for USD
1,000,000. This note carries an annual fixed interest rate 9.56%. 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 an annual basis.
10 TRADE AND OTHER PAYABLES
2022 2021
USD'000 USD'000
Trade payables 176 146
Accruals 123 163
─────── ───────
299 309
═══════ ═══════
11 RELATED PARTY TRANSACTIONS
The Directors have taken advantage of the exemption under paragraph 8(j) and
8(k) of FRS101 and have not disclosed transactions with other wholly owned
Group undertakings. There are no other related party transactions.
12 SUBSEQUENT EVENTS
In May 2023, the Board of Directors agreed to commence the process to convert
the USD 18,254,000 balance of share premium to distributable reserves. This
conversion is subject to requisite shareholder and statutory approvals being
granted. If these approvals are received, it is anticipated this process will
be completed by 31 December 2023.
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