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RNS Number : 6295L RA International Group PLC 07 September 2023
07 September 2023
RA INTERNATIONAL GROUP PLC
("RA International", "RA" or the "Company")
Interim Results for the six months to 30 June 2023
RA International Group plc (AIM: RAI), a specialist provider of complex and
integrated remote site services to organisations globally, is pleased to
announce its unaudited interim results for the six months ended 30 June 2023.
HIGHLIGHTS
· Revenue of USD 30.4m (H2 22: USD 33.7m, H1 22: USD 29.2m) and
underlying EBITDA of USD 0.3m (H2 22: USD 0.6m, H1 22: USD nil), in line with
market expectations for the interim period ended 30 June 2023.
· New contracts, together with uplifts and extensions to existing
contracts, totalling USD 18m including two contracts with western Governments
clients, highlighting our position as a trusted, global partner offering a
comprehensive, flexible, and mission critical support.
· Order book of USD 71m at 30 June 2023 (H2 22: USD 83m, H1 22: USD
96m), excluding framework agreements, provides good forward visibility with a
number of large tenders in progress with western Governments despite the
continued low level of tendering of larger, long-term contracts in the
Humanitarian sector.
· Progress made in recovering value from the cancelled Palma Project,
with USD 0.6m net income and cash inflow in H1 23 and further recovery from
impaired assets expected to be realised in H2 23.
· Cash of USD 12.2m on 30 June 2023 increased by USD 4.7m from the
prior period (H2 22: USD 7.5m, H1 22: USD 9.2m), resulting from USD 6.1m of
net cash inflows from operations, offset by USD 1.4m of cash outflows from
financing activities.
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'm USD'm USD'm
Revenue 30.4 33.7 29.2
Gross profit 3.6 2.2 3.0
Gross profit margin 11.8% 6.5% 10.3%
Underlying EBITDA(1) 0.3 0.6 ―
Underlying EBITDA margin 1.0% 1.8% (0.2%)
Loss before tax (2.5) (9.6) (3.4)
Loss before tax margin (8.2%) (28.4%) (11.7%)
Basic EPS (cents) (1.4) (5.6) (2.0)
Net debt (end of period) (2) (1.8) (6.5) (4.3)
Soraya Narfeldt, CEO of RA International, commented:
"RA is emerging from two and a half very difficult years. Our focus for FY23
has been to stabilise the financial position and trading performance of the
Group. This has seen a marked improvement through cost control, cash
collections, unwinding of impaired assets, as well as new and renegotiated
contracts addressing inflationary pressures.
Against this backdrop, we remain cautious on our financial performance for the
current financial year and continue to expect the business to remain broadly
breakeven at the underlying EBITDA level. We will continue to focus on
restoring profitability, strengthening our liquidity position, and building
our pipeline.
We have a number of tenders in place with Government and Humanitarian clients,
including the expected imminent announcement of a framework agreement for HM
Government's Conflict, Stability and Security Fund ("CSSF"). While we have no
control of the timing or value of future contracts, we can reasonably expect
an improvement in contract award run-rate. In the meantime, we are seeing an
increase in contract extensions and, in some cases, working with clients on a
short-term basis whilst we finalise negotiations on longer-term contracts,
establishing a solid foundation for future growth."
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)Net debt represents cash less overdraft balances, term loans and notes
outstanding.
Enquiries:
RA International Group plc Via Strand Hanson
Soraya Narfeldt, Chief Executive Officer
Lars Narfeldt, Chief Operating Officer
Dave Marshall, Interim Chief Financial Officer
Strand Hanson Limited (Nominated & Financial Adviser and Broker) +44 (0) 20 7409 3494 (tel:02074093494)
Ritchie Balmer / James Spinney / David Asquith
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 development 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.
CHIEF EXECUTIVE OFFICER'S REVIEW
We are making good progress in executing on our priorities
As outlined in our last results in May 2023 we are focused on strengthening
the underlying business, focusing on short-term and strategic priorities. Our
main objectives are to restore profitability, improve the Company's liquidity
position, and to build a stronger pipeline, by leveraging the significant
opportunities we have with UK and US Government clients. We are making good
progress across all areas.
Financial review - improved trading performance and stabilising financial
position
Revenue of USD 30.4m was broadly in line with prior periods (H2 22: USD 33.7m,
H1 22: USD 29.2m).
Supply Chain revenue included USD 2.9m relating to a contract for the sale of
prefabricated camp facility units held in Turkey. Excluding this transaction,
Supply Chain revenue showed modest growth of 6.4% from H2 22. The decrease in
Construction revenue is reflective of the successful conclusion of substantial
contracts with the UN and Cherokee Nation. IFM revenue grew 11.7% from the
prior period due to increased occupancy at our Somalia facility, with revenue
expected to grow further in H2.
Revenue by service channel:
6 months 6 months 6 months
ended ended Ended
30 June 31 December 30 June
2023 2022 2022
USD'm USD'm USD'm
Integrated facilities management 15.8 14.2 13.3
Construction 6.7 14.9 6.4
Supply chain 7.9 4.7 9.5
──────── ──────── ────────
30.4 33.7 29.2
════════ ════════ ════════
Gross margin in H1 23 was 11.8% (H2 22: 6.5%, H1 22: 10.3%) showing an
increase period on period as a result of a number of long-term, fixed price
contracts being completed in prior periods. These contracts were priced before
the recent global inflationary impact. Whilst the effects of inflation are
still being felt by the Group, recently priced and awarded contracts are
showing improved margins, and the Group has been successful in negotiating
increases on a number of long-term contracts to offset the impact of the
current economic climate.
In our efforts to restore profitability, strict cost controls are being
maintained with administrative costs of USD 5.7m decreasing from the prior
period (H2 22: USD 6.2m, H1 22: USD 5.5m). We expect further savings to be
realised in H2 23.
Underlying EBITDA was USD 0.3m (H2 22: USD 0.6m, H1 22: nil). The loss before
tax for the period reduced to USD 2.5m (H2 22: loss USD 9.6m, H1 22: loss USD
3.4m).
Cash of USD 12.2m at 30 June 2023 shows an increase of USD 4.7m from the prior
period (H2 22: USD 7.5m, H1 22: USD 9.2m), resulting from USD 6.1m of net cash
inflow from operations (H2 22: USD 0.9m, H1 22: outflow USD 2.5m), offset by
USD 1.4m of cash outflows from financing activities. Cash inflows from
operations include USD 5.2m from working capital, demonstrating strong
collections and unwinding of balances during the first half of the year, as
well as a settlement with the Palma Project client which saw a net income and
cash inflow of USD 0.6m.
Net assets at 30 June 2023 were USD 22.5m (H2 22: USD 24.9m, H1 22: USD
34.1m), decreasing from 2022-year end in line with the net loss generated in
the period.
Basic loss per share was 1.4 cents in the current period (H2 22: Loss 5.6
cents, H1 22: Loss 2.0 cents) and is equal to diluted earnings per share for
the current period.
Contract awards, order book and building our pipeline with western Governments
Our position with US and UK Governments goes from strength to strength, with
two contracts awarded during the period: a GBP 3.3m contract with the UK's
Foreign, Commonwealth and Development Office to provide construction services
relating to the refurbishment of the British High Commission in Botswana and
three task orders to work at the US Navy's base on Diego Garcia with an
aggregate value of USD 8.2 million.
These wins highlight our position as a trusted, global primary contractor to
western Government clients, alongside the strength of our offering combining
comprehensive, flexible, mission critical support. Revenues from western
Governments now accounts for over 50% of the business.
The order book of USD 71m at 30 June 2023, provides good forward visibility
(H2 22: USD 83m, H1 22: USD 96m). Although this is lower than reported at the
start of the year, we are not overly concerned given the number of tenders for
large long-term contracts we are pursuing, the considerable progress we are
making with western Government opportunities, and that it excludes framework
agreements.
USD'm
Opening order book as at 1 January 2023 83
New contracts, uplifts, and extensions 18
Contracted revenue delivered in H1 23 (30)
────────
Closing order book at 30 June 2023 71
════════
Post period-end events
In our efforts to pursue opportunities to recover value from
Mozambique-related impaired assets, we have finalised agreements for the sale
of two pockets of assets for a total of USD 5.0m with the cargo due to be
shipped in Q4 2023; the proceeds will be realised in H2 23. These transactions
reduce the storage cost burden going forward, with the beneficial effect of
releasing resources to focus on other opportunities.
Strengthening our relationship with the UK Government, we recently announced a
significant strategic contract with the Foreign, Commonwealth and Development
Office ("FCDO") to deliver ambitions to tackle conflict and instability
through the Conflict, Stability and Security Fund ("CSSF"). The contract is a
two-year global framework agreement relating to Lot 3 of the CSSF fund, which
has a total budget of GBP 375m, with an option to extend for a further two
twelve-month periods with an additional budget of GBP 187m per annum allocated
by the FCDO. Scoring the highest out of 27 awardees we look forward to
participating in task orders and future work.
Whilst we cannot predict the value or nature of contracts to RA over the
framework agreement period, specific elements of Lot 3 relevant to RA relate
to the provision and delivery of operational and technical equipment to
organisations in hostile environments in a human rights compliant manner. This
includes providing advice on administrative, logistics and human resource
reform to improve working practices. The contract builds our relationships
with the UK MOD and FCDO further, following our success with the MOD OSCC last
year and FCDO this year.
Summary and outlook
We remain committed to building a high-quality and de-risked pipeline through
developing our relationships with western Government and Humanitarian clients,
either as prime contractor or through a partnership approach where it makes
more commercial sense. We have a number of tenders in our pipeline and have
made considerable in-roads with US Government agencies in H2 already, which
allow us to bid for the long-term contracts for which we are known in the
Humanitarian sector. Although we cannot be certain of the number, value or
timing of contract awards, we believe our differentiated and integrated
offering is both competitive and attractive.
In the meantime, we are benefiting from contract extensions and uplifts, as
well as increased occupancy in our permanent facilities. In some cases, we are
providing rolling services to clients while long-term contract negotiations
continue. The short-term nature of these contracts means the USD 71m order
book is not reflective of our current operations.
In addition, we are currently in advanced discussions with parties interested
in acquiring further parcels of assets which will lead to a further recovery
of value, and which will conclude the sale of all impaired assets held in
storage relating to the Palma Project. The sale of these assets will further
improve our financial position and release our staff to pursue new business
opportunities.
As stated in May 2023, we remain cautious on our financial performance for the
current financial year and expect the business to remain broadly breakeven at
the underlying EBITDA levels. We maintain our expectation that we will see a
stronger run-rate of contact awards and continue to strengthen our
relationships with target clients that will support our return to
profitability.
Soraya Narfeldt
Chief Executive Officer
06 September 2023
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
Notes USD'000 USD'000 USD'000
Revenue 30,357 33,729 29,188
Direct costs (26,778) (31,541) (26,176)
──────── ──────── ────────
Gross profit 3,579 2,188 3,012
Administrative expenses (5,714) (6,181) (5,514)
──────── ──────── ────────
Underlying operating loss (2,135) (3,993) (2,502)
Non-underlying items 4 607 (4,661) 444
──────── ──────── ────────
Operating loss (1,528) (8,654) (2,058)
Investment revenue 106 150 56
Finance costs (1,021) (1,072) (1,419)
──────── ──────── ────────
Loss before tax (2,443) (9,576) (3,421)
Tax expense (7) (169) ―
──────── ──────── ────────
Loss and total comprehensive income for the period (2,450) (9,745) (3,421)
════════ ════════ ════════
Basic earnings per share (cents) 5 (1.4) (5.6) (2.0)
Diluted earnings per share (cents) 5 (1.4) (5.6) (2.0)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
As at As at As at
30 June 31 December 30 June
2023 2022 2022
Notes USD'000 USD'000 USD'000
Assets
Non-current assets
Property, plant, and equipment 17,810 19,590 23,803
Right-of-use assets 3,953 4,421 4,904
──────── ──────── ────────
21,763 24,011 28,707
──────── ──────── ────────
Current assets
Inventories 3,331 5,154 8,638
Trade and other receivables 12,306 16,389 17,298
Cash and cash equivalents 12,206 7,514 9,174
──────── ──────── ────────
27,843 29,057 35,110
──────── ──────── ────────
Total assets 49,606 53,068 63,817
════════ ════════ ════════
Equity and liabilities
Equity
Share capital 24,300 24,300 24,300
Share premium 18,254 18,254 18,254
Merger reserve (17,803) (17,803) (17,803)
Treasury shares ― ― (981)
Share based payment reserve 648 574 448
Retained earnings (2,907) (457) 9,896
──────── ──────── ────────
Total equity 22,492 24,868 34,114
──────── ──────── ────────
Non-current liabilities
Loan notes 14,000 14,000 12,000
Lease liabilities 4,278 4,556 4,825
Employees' end of service benefits 1,089 928 817
──────── ──────── ────────
19,367 19,484 17,642
──────── ──────── ────────
Current liabilities
Loan notes ― ― 1,502
Lease liabilities 547 650 896
Trade and other payables 6,693 6,974 8,931
Provisions 507 1,092 732
──────── ──────── ────────
7,747 8,716 12,061
──────── ──────── ────────
Total liabilities 27,114 28,200 29,703
──────── ──────── ────────
Total equity and liabilities 49,606 53,068 63,817
════════ ════════ ════════
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Share Based
Share Share Merger Treasury Payment Retained
Capital Premium Reserve Shares Reserve Earnings Total
Notes USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1 January 2022 24,300 18,254 (17,803) (1,199) 534 13,223 37,309
Total comprehensive income for the period ― ― ― ― ― (3,421) (3,421)
Share based payments ― ― ― ― 185 ― 185
Lapsed share options ― ― ― ― (94) 94 ―
Issuance of treasury shares ― ― ― 218 (177) ― 41
──────── ──────── ──────── ──────── ──────── ──────── ────────
As at 30 June 2022 24,300 18,254 (17,803) (981) 448 9,896 34,114
Total comprehensive income for the period ― ― ― ― ― (9,745) (9,745)
Share based payments ― ― ― ― 126 ― 126
Non-cash employee compensation ― ― ― 981 ― (608) 373
──────── ──────── ──────── ──────── ──────── ──────── ────────
As at 31 December 2022 24,300 18,254 (17,803) ― 574 (457) 24,868
Total comprehensive income for the period ― ― ― ― ― (2,450) (2,450)
Share based payments ― ― ― ― 74 ― 74
──────── ──────── ──────── ──────── ──────── ──────── ────────
As at 30 June 2023 24,300 18,254 (17,803) ― 648 (2,907) 22,492
════════ ════════ ════════ ════════ ════════ ════════ ════════
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
Notes USD'000 USD'000 USD'000
Operating activities
Operating loss (1,528) (8,654) (2,058)
Adjustments for non-cash and other items:
Depreciation on property, plant, and equipment 2,312 4,295 2,271
Loss/(profit) on disposal of property, plant, and equipment 34 17 (20)
Unrealised differences on translation of foreign balances (22) 22 (57)
Provision for employees' end of service benefits 273 269 257
Share based payments 74 304 185
Non-underlying items 4 ― 2,707 627
──────── ──────── ────────
1,143 (1,040) 1,205
Working capital adjustments:
Inventories 1,824 1,580 487
Accounts receivable, deposits, and other receivables 4,084 882 (1,139)
Accounts payable and accruals (745) (1,548) (1,814)
──────── ──────── ────────
Cash flows from/(used in) operations 6,306 (126) (1,261)
Tax paid (129) ― ―
Employees' end of service benefits paid (112) (187) (142)
──────── ──────── ────────
Net cash flows from/(used in) operating activities 6,065 (313) (1,403)
──────── ──────── ────────
Investing activities
Investment revenue received 106 150 56
Purchase of property, plant, and equipment (265) (368) (250)
Proceeds from disposal of property, plant, and equipment 166 172 187
──────── ──────── ────────
Net cash flows from/(used in) investing activities 7 (46) (7)
──────── ──────── ────────
Financing activities
Repayment of borrowings ― (11,500) ―
Proceeds from borrowings ― 11,998 3,502
Payment of lease liabilities (381) (515) (319)
Finance costs paid (1,021) (1,262) (1,229)
Proceeds from share options exercised ― ― 41
──────── ──────── ────────
Net cash flows (used in)/from financing activities (1,402) (1,279) 1,995
──────── ──────── ────────
Net increase/(decrease) in cash and cash equivalents 4,670 (1,638) 585
Cash and cash equivalents as at start of the period 7,514 9,174 8,532
Effect of foreign exchange on cash and cash equivalents 22 (22) 57
──────── ──────── ────────
Cash and cash equivalents as at end of the period 12,206 7,514 9,174
════════ ════════ ════════
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2023
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 financial information set out in these condensed consolidated interim
financial statements does not constitute the Group's statutory accounts within
the meaning of section 434 of the Companies Act 2006.
The unaudited condensed consolidated interim financial statements for the six
months ended 30 June 2023 have been prepared in accordance with IAS 34,
'Interim Financial Reporting'. They do not include all the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of RAI for the year
ended 31 December 2022. The unaudited financial information has been prepared
using the same accounting policies and methods of computation as the Annual
Report for the year ended 31 December 2022. The same accounting policies and
methods of computation will be used to prepare the Annual Report for the year
ending 31 December 2023. The financial statements of the Group are prepared in
accordance with IFRS.
3 SEGMENT 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:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Integrated facilities management 15,817 14,154 13,257
Construction 6,637 14,861 6,415
Supply chain 7,903 4,714 9,516
──────── ──────── ────────
30,357 33,729 29,188
════════ ════════ ════════
Revenue by recognition timing:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Revenue recognised over time 21,989 29,241 18,919
Revenue recognised at a point in time 8,368 4,488 10,269
──────── ──────── ────────
30,357 33,729 29,188
════════ ════════ ════════
Geographic segment
The Group primarily operates in Africa and the CODM considers Africa and Other
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:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Africa 26,835 33,133 27,879
Other 3,522 596 1,309
──────── ──────── ────────
30,357 33,729 29,188
════════ ════════ ════════
Non-current assets by geographic area:
As at As at As at
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Africa 20,103 22,223 26,489
Other 1,660 1,788 2,218
──────── ──────── ────────
21,763 24,011 28,707
════════ ════════ ════════
Revenue split by customer:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
% % %
Customer A 21 17 20
Customer F 13 12 12
Customer I 10 13 10
Customer J 10 ― ―
Customer H 10 7 8
Customer D 9 9 8
Customer K 5 2 ―
Customer E ― 9 11
Customer B ― 11 9
Other 22 20 22
──────── ──────── ────────
100 100 100
════════ ════════ ════════
4 NON-UNDERLYING ITEMS
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Restructuring costs ― 2,742 760
Palma Project, Mozambique (607) 1,919 (1,204)
──────── ──────── ────────
(607) 4,661 (444)
════════ ════════ ════════
Palma Project, Mozambique
In H1 23, the Group reached a settlement for lost revenue due to delayed
occupation of the completed elements of the camp in Palma, Mozambique before
the attack in March 2021. As a result, a USD 607,000 net income has been
recorded in the period.
5 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.
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
Loss for the period (USD'000) (2,450) (9,745) (3,421)
Basic weighted average number of ordinary shares 173,575,741 173,377,448 171,813,566
Effect of employee share options 312,545 728,394 1,077,434
──────── ──────── ────────
Diluted weighted average number of shares 173,888,286 174,105,842 172,891,000
Basic earnings per share (cents) (1.4) (5.6) (2.0)
Diluted earnings per share (cents) (1.4) (5.6) (2.0)
════════ ════════ ════════
6 APPROVAL OF CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
The condensed consolidated interim financial statements were approved by the
Board of Directors on 06 September 2023.
― Ends ―
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