Interim Results

RNS Number : 2488B

RA International Group PLC

30 September 2022

 

This announcement contains inside information

RA INTERNATIONAL GROUP PLC

("RA International" or the "Company")

Interim Results for the six months to 30 June 2022

RA International Group plc (AIM: RAI), a specialist provider of complex and integrated remote site services to organisations globally , is pleased to announce its interim results for the six months ended 30 June 2022.

HIGHLIGHTS

·   Revenue of USD 29.2m (H2 21: USD 28.4m, H1 21: USD 26.2m) and underlying EBITDA of USD nil (H2 21: USD 1.6m, H1 21: USD 5.0m), in line with external expectations for the period ended 30 June 2022

·     Positive run rate of new contract wins for the year to date with USD 35m awarded in the year to August 2022 compared with USD 40m for the full 12 months of 2021

·     Order book of USD 95m as at 31 August 2022 (H2 21: USD 100m, H1 21: USD 129m) provides good forward visibility despite the continued low level of tendering of larger, long-term contracts in the humanitarian sector

·   The new contract award with the UK Ministry of Defence, announced separately today, demonstrates good progress in deepening our relationships with western governments. This is a global framework agreement, with a base term of 5 years and a contract value of up to GBP 35m (not included in current order book)

· USD 12.0m debt financing completed in May 2022 supports our liquidity position to fund existing and visible project activity

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2022	2021	2021
		USD'm	USD'm	USD'm
Revenue		29.2	28.4	26.2
Gross profit		3.0	4.4	7.7
Gross profit margin		10.3%	15.4%	29.2%
Underlying EBITDA1		-	1.6	5.0
Underlying EBITDA margin		(0.2%)	5.7%	19.2%
(Loss)/Profit before tax		(3.4)	(33.0)	0.8
(Loss)/Profit before tax margin		(11.7%)	(116.7%)	3.8%
Basic EPS (cents)		(2.0)	(19.3)	0.6
Net (debt)/cash (end of period) 2		(4.3)	(1.5)	3.6

Soraya Narfeldt, CEO of RA International, commented:

"We are making good progress in securing high quality overseas work with the relevant departments of the UK and US Governments, in line with our refreshed strategy. We see this as a significant opportunity given the scale of these addressable markets and believe, over time, RA International will be increasingly well positioned as a differentiated provider of specialist services to government clients, complementing our work with humanitarian organisations and the international development community. Our pipeline activity is healthy and growing within the areas we are targeting, however the timing of contract awards and project starts remains uncertain. We are not immune to the macro and general inflationary environment and this informs our cautious view on our nearer-term financial performance, particularly on margin. We are mitigating these pressures where we can through commercial arrangements and other supply chain initiatives and remain focused on converting our robust pipeline to support the attractive growth opportunity we have ahead."

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

Enquiries:

RA International Group PLC Soraya Narfeldt, Chief Executive Officer Lars Narfeldt, Chief Operating Officer Andrew Bolter, Chief Financial Officer	Via Bamburgh Capital
Canaccord Genuity Limited (Nominated Adviser and Broker) Bobbie Hilliam	[phone]
Bamburgh Capital Limited (Financial PR & Investor Relations) Murdo Montgomery	[phone] [e-mail]

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'S REVIEW

We are making good progress in executing on our priorities

As we outlined to investors in our last results statement in late May 2022, we have a significant opportunity to grow by deepening and strengthening our relationships with the relevant departments of the US and UK Governments. We are doing this from a position of some strength with an established platform as a trusted partner which has seen government sector revenues grow from 6% of our revenue in 2014 to 47% by 2021. We are strengthening our market position as a differentiated and specialist remote site service provider to these clients by aligning our resources more clearly with our business development activities in this sector and through building our track record in delivering projects as a prime contractor. This complements our long-term relationships with humanitarian agencies, and we are excited about the opportunity we have to scale the Company significantly through our differentiated and integrated offering supporting clients across these sectors. We also believe the fragmented market environment plays to our strengths: where international companies' use of local companies leads to project inefficiencies; where our track record and past performance is second to none; and where our one-supplier model gives us a clear cost advantage.

We are pleased with the progress we have made in the period in scaling our relationships with relevant UK and US Government departments. Through RA Federal Services, LLC ("RA Federal") our US subsidiary, we now have the US credentials to deliver full scale capability to the relevant US Federal Government budget holders as a prime contractor. RA Federal is now operational and is delivering contracts on behalf of the US Government as a prime contractor. We will continue to invest in our US capability to spearhead further growth in this significant market.

On the UK side, we have today announced the award of a contract to provide operational support capability to the UK Ministry of Defence as lead contractor. This is a significant award for RA International and will lead to the Company working closely with British military operational headquarters, the Permanent Joint Headquarters (PJHQ), for the next five years, with an option to extend for a further two years. The win is testament to our capability to deliver operational support to the British military across the world; providing our expertise in project management, engineering, supply chain management, logistics and project delivery to support military planning, operations and training. The contract is structured as a global framework agreement, with a contract ceiling of GBP 35 million which will be drawn down as tasks are issued. The contract start date is effective from 1 December 2022 and we will be increasing the size of our UK operations to help facilitate and oversee the delivery of this contract.

In previous updates we have highlighted the opportunity we have to develop valuable partnerships and how this continues to be central to our business development activities. We remain active in delivering projects for a number of large US defence contractors and are in active discussions with other companies which could provide significant global opportunities. At the right time, we also see the opportunity for organic growth to be accelerated by bolt-on M&A further strengthening our position in underserved markets.

Our financial performance is in-line with external expectations and reflects the prevailing environment

As we look to grow in-line with our strategy, we are also focusing on the near-term performance and overall stability of the business. The financial performance we are reporting for the first half is in-line with external expectations. It does also highlight how the operating environment and inflation are putting pressure on gross margin across our Integrated Facilities Management ("IFM") and Construction sectors, as outlined in Andrew's Financial Review.

We have taken steps to strengthen our liquidity position, with our loan note programme refinanced out to late 2024, and are confident we have the financial capacity to bid for and mobilise multiple large projects simultaneously. In addition, we are recovering value on the Mozambique related assets we impaired in FY21 and these results highlight the low level of capex which is required when we are not constructing camp facilities where ownership will be retained by the Group. 

Our order book of USD 95m as at 31 August 2022 provides good forward visibility 

We were awarded new contracts, uplifts, and extensions to existing contracts of USD 35m in the first eight months of 2022.

Contract order book:

		USD'm
Opening order book as at 1 January 2022		100
New contracts, uplifts and extensions		35
Contracted revenue delivered		(40)
		─
Closing order book as at 31 August 2022		95
		═

We have maintained the order book at or around USD 100m at a time when the level of market activity has been subdued. The nature of project tendering in the humanitarian sector is a good example of this. We conservatively estimate there are at least USD 50m of contracts which under normal conditions would be awarded in the next three months, and which we would expect to have a reasonable chance of winning. This said, under current conditions, the timeline of award is very uncertain with the default position remaining contract extensions rather than new awards. If we look back to our contract awards in a pre-Covid environment, in 2019, we announced three humanitarian contracts with a combined value of USD 28m. These are the types of new contracts which have not been awarded over the last two and a half years, constraining our order book momentum. In this context, we see the higher run-rate of contract wins of USD 35m in the year to August 2022 compared with the USD 40m for the full 12 months of 2021 as encouraging.

IFM projects represent 53% of order book, with construction 42% and supply chain 5%. New contract activity has been weighted to construction projects with many expected to be the first phase of much larger contracts.

Overall, we are 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.  Going forward, we see scope for accelerated contract awards through our targeted business development and as and when the humanitarian sector returns to more normal tendering patterns. 

Summary and outlook

We are making good progress in securing high quality overseas work with the relevant departments of the UK and US Governments, in line with our refreshed strategy. We see this as a significant opportunity given the scale of these addressable markets and believe, over time, RA International will be increasingly well positioned as a differentiated provider of specialist services to government clients, complementing our work with humanitarian organisations and the international development community. Our pipeline activity is healthy and growing within the areas we are targeting, however the timing of contract awards and project starts remains uncertain. We are not immune to the macro and general inflationary environment and this informs our cautious view on our nearer-term financial performance, particularly on margin. We are mitigating these pressures where we can through commercial arrangements and other supply chain initiatives and remain focused on converting our robust pipeline to support the attractive growth opportunity we have ahead.

Soraya Narfeldt

Chief Executive Officer 

30 September 2022

FINANCIAL REVIEW

Overview

Revenue of USD 29.2m and underlying EBITDA of USD nil are in line with external expectations and reflect the prevailing market environment where the level and nature of project activity has not yet returned to pre-Covid norms. The impact of this disruption, inflationary pressure and related issues such as material shortages are clearly impacting gross margin rather than revenue, which has been fairly consistent with comparative periods.  Administrative expenses have reduced by USD 0.2m since H2 21, reflecting our efforts to streamline the cost base of the business as we reallocate resources to, and invest in, our growth priorities.

We completed a USD 12.0m debt financing in the first half of the year, with the maturity of existing notes being extended to the fourth quarter of 2024 and additional liquidity raised of USD 3.6m. We are also making progress in recovering value for our assets which were fully impaired and relate to the Palma, Mozambique operations.  In H1 22, USD 1.2m of impairment was reversed resulting from the sale of Palma Project assets.  Besides generating a profit and an impairment recovery this transaction will significantly reduce future storage costs. Overall, the Company remains in a strong position to bid for and execute large projects and significant opportunities remain to increase liquidity through further asset sales.

Cash outflows from operations decreased from prior periods to USD 1.2m in H1 22 (H2 21: USD 1.4m, H1 21: USD 3.4m). Excluding the USD 1.6m in cash outflows relating to the storage of Palma related assets and the prefabricated camp facility, operating cashflows were positive. We continue to actively pursue opportunities to enhance our liquidity position through disposing of these assets and, in turn, reducing the ongoing holding costs to the business.

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2022	2021	2021
		USD'm	USD'm	USD'm
Revenue		29.2	28.4	26.2
Gross profit		3.0	4.4	7.7
Gross profit margin		10.3%	15.4%	29.2%
Underlying EBITDA		-	1.6	5.0
Underlying EBITDA margin		(0.2%)	5.7%	19.2%
(Loss)/Profit before tax		(3.4)	(33.0)	0.8
(Loss)/Profit before tax margin		(11.7%)	(116.7%)	3.8%
Basic EPS (cents)		(2.0)	(19.3)	0.6
Net (debt)/cash (end of period)		(4.3)	(1.5)	3.6

Revenue

Reported revenue for H1 22 of USD 29.2m (H2 21: USD 28.4m, H1 21: USD 26.2m) is relatively consistent with the comparative periods, as increased Supply Chain revenue more than offset lower Construction and IFM contributions.

The majority of our Supply Chain revenue is typically earned from long-term contracts, often three to five years in length, although revenue for this period was bolstered by a USD 2.3m sale of Palma Project assets, as well as USD 2.2m in sales relating to parcels of the prefabricated camp facility held in Turkey. Excluding these asset sales, Supply Chain revenue grew 11.2% period on period, with IAP expanding our mandate to include a third country, which is encouraging and indicative of how the relationship is growing.

Construction revenue of USD 6.4m represents a decrease of USD 1.6m from prior period (H2 21: USD 8.0m, H1 21: USD 6.2m). The decrease from H2 21 is reflective of significant disruption caused to some projects by material shortages and the successful conclusion of a large contract with Cherokee Nation which strengthened H2 21 revenue and profitability. Overall, Construction revenue for the period was in-line with H1 21. We expect Construction revenue to be significantly higher in the second half of the year as we commence new, recently awarded projects.  

IFM revenue of USD 13.3m represents a decrease of USD 2.4m from prior period (H2 21: USD 15.7m, H1 21: USD 15.4m) and resulted from lower income from our hotel facility in Somalia. From November 2022, we expect occupancy to meaningfully improve month on month unless significant travel restrictions are reintroduced.  Overall, IFM revenue continues to be resilient and long-term in nature.

Government revenue continues to increase as a percentage of total revenue, and we expect the majority of revenue in FY22 to come from government clients.

Revenue by service channel:

		6 months	6 months	6 months
		ended	ended	Ended
		30 June	31 December	30 June
		2022	2021	2021
		USD'm	USD'm	USD'm
Integrated facilities management		13.3	15.7	15.4
Construction		6.4	8.0	6.2
Supply chain		9.5	4.6	4.6
		─	─	─
		29.2	28.4	26.2
		═	═	═

Profit Margin

Gross margin in H1 22 was 10.3% (H2 21: 15.4%, H1 21: 29.2%) reflecting weaker profit margins across all service channels and a far higher percentage of total revenue being generated from Supply Chain and Construction activities than in prior periods (H1 22: 55%, H2 21: 44%, H1 21: 41%).  

Challenges highlighted within the 2021 full year results continued in the current period, specifically the fitful nature of construction project execution. While material shortages and inflationary pressure continued to depress margins on legacy construction projects, margin improvements are anticipated in the second half of the year as a number of large contracts are completed and new projects, which were recently priced and awarded, commence. 

As with revenue, low hotel occupancy rates in Somalia negatively impacted IFM margins in H1 22. Some improvement is anticipated in H2 22 as more international organisations expand their presence in the country following the completion of elections earlier this year. Excluding the sale of Palma Project assets at a low margin (after taking into account the recovery of impairment), gross margin generated from Supply Chain activities was relatively resilient during the period. 

Reconciliation of (loss)/profit to Underlying EBITDA:

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2022	2021	2021
		USD'm	USD'm	USD'm
(Loss)/Profit		(3.4)	(33.1)	1.0
Tax expense		-	0.1	(0.2)
		─	─	─
(Loss)/Profit before tax		(3.4)	(33.0)	0.8
Finance costs		1.4	0.8	0.6
Investment income		(0.1)	-	-
		─	─	─
Operating (loss)/profit		(2.1)	(32.3)	1.4
Non-underlying items		(0.4)	31.0	1.2
		─	─	─
Underlying operating (loss)/profit		(2.5)	(1.3)	2.6
Share based payments		0.2	0.2	0.3
Depreciation		2.3	2.7	2.1
		─	─	─
Underlying EBITDA		-	1.6	5.0
		═	═	═

Underlying EBITDA margin in H1 22 was negative 0.2% (H2 21: 5.7%, H1 21: 19.2%) , with the negative variance from prior periods reflecting the weakening in project margins.  Administrative expenses decreased by USD 0.2m from H2 21, reflecting efforts made to streamline the support functions of the Group, ensuring resources are aligned more fully with the Company's focus on government and humanitarian work.

Non-underlying items

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2022	2021	2021
		USD'm	USD'm	USD'm
COVID-19 costs		-	0.3	0.4
Restructuring costs		0.8	-	-
Asset impairment		(1.2)	30.6	0.8
		─	─	─
		(0.4)	31.0	1.2
		═	═	═

Restructuring costs result from the strategic decision to redirect resources and investment towards growing our government and humanitarian client bases, and away from actively selling to commercial customers. The specific costs associated with the restructuring exercise can be broadly classified as relating to staff redundancies and the write-off of past investments which were to be recovered through contracts with commercial customers.

As indicated previously, USD 1.2m of impairment was reversed in H1 22 resulting from the sale of Palma Project assets. In addition to this recovery of value, we have also significantly reduced the total storage costs moving forward. We are in discussions with parties interested in acquiring further parcels of assets which may lead to a further recovery of value and eliminate asset storage costs other than those being paid to safeguard machinery and heavy equipment in Northern Mozambique.

Earnings Per Share

Basic earnings per share was negative 2.0 cents in the current period (H2 21: negative 19.3 cents, H1 21: 0.6 cents) and is equal to diluted earnings per share for the current period.  

Cashflow

Cash of USD 9.2m at 30 June 2022 reflects a modest increase of USD 0.7m from 2021 year end and results from an increase in loan notes issued, offset by finance cost and storage expenses incurred and paid during H1 22.

Cash outflows from operations decreased from prior periods to USD 1.2m in H1 22 (H2 21: USD 1.4, H1 21: USD 3.4m).  Excluding the USD 1.6m in cash outflows relating to the storage of Palma related assets and the prefabricated camp facility, operating cashflows were positive. We have been successful in selling goods which were incurring significant storage costs and we are actively pursuing opportunities to minimize the remaining ongoing charges as well as recover value from the underlying assets.

When we released our full year FY21 results we anticipated FY22 capital expenditure (capex) to be between USD 1.0m and USD 2.0m. During the Period we incurred capex of USD 0.3m (H2 21: USD 0.2m, H1 21: USD 3.3m) ; considering projects commencing in the second half of the year, we now anticipate full year expenditure to be towards the lower end of this range.  

Balance Sheet and Liquidity

Net assets at 30 June 2022 were USD 34.1m (H2 21: USD 37.3m, H1 21: USD 70.2m), decreasing from 2021 year end in line with the net loss generated in the Period.

Breakup of net assets:

		As at	As at	As at
		30 June	31 December	30 June
		2022	2021	2021
		USD'm	USD'm	USD'm
Cash and cash equivalents		9.2	8.5	10.1
Loan notes		(13.5)	(10.0)	(6.5)
		─	─	─
Net (debt)/cash		(4.3)	(1.5)	3.6
Net working capital		16.3	14.7	18.8
Non-current assets		28.7	30.9	54.5
Tangible owned assets		23.8	25.5	48.6
Right-to-use assets		4.9	5.4	5.8
Goodwill		-	-	0.1
Lease liabilities and end of service benefit		(6.5)	(6.8)	(6.8)
		─	─	─
Net assets		34.1	37.3	70.2
		═	═	═

Given the events taking place last year in Palma, Mozambique and the effect on the Company's balance sheet, a focus point for 2022 was improving the Company's liquidity profile. In H1 22 we made significant progress through completing a refinancing and fundraising exercise to synchronise and extend the maturity of the loan notes issued under the Medium-Term Note ("MTN") programme. The USD 12.0m of loan notes issued mature in November 2024 and we have commenced the repayment of the USD 1.5m of loan notes maturing in H2 22. Largely a result of this fundraising exercise, the Company's current ratio increased to 2.9 at 30 June 2022 from 1.6 as at 31 December 2021.

In addition to the MTN programme, during the Period we established a GBP 10m long-term debt facility and in July 2022 we agreed a USD 3.5m working capital facility with one of our primary banks. While we have adequate cash to fund current and planned operations, we felt it diligent to establish additional available sources of capital as we enter the next growth phase of the business.

In addition to fundraising activities we made further progress reducing the level of inventory. This will remain a focus point during this year. At the end of June 2022 inventory had decreased to USD 8.6m (H2 21: USD 9.4m, H1 21: USD 13.3m).

Trade and other receivables increased to USD 17.3m at the end of the current period (H2 21: USD 16.5m, H1 21: USD 14.2m). The USD 0.8m variance was due to a USD 2.9m receivable balance relating to the Palma Project and prefabricated camp asset sales as well as the Company continuing to experience a slow collection cycle with humanitarian customers.

Dividend

The Company has typically not paid a dividend with respect to the first half interim results and no dividend has been declared for the first half of 2022. The Board did not recommend the payment of a final dividend for FY21 in line with its cautious approach to the prevailing environment. The Board's intention is to reinstate the dividend as soon as is practical.

Shares in Issue and Treasury Shares

 

In the First Half, 324,462 ordinary shares were transferred out of treasury in settlement of certain employee share options. As at 30 June 2022, the total number of ordinary shares in issue and admitted to trading on AIM was 173,575,741, comprising 1,459,435 ordinary shares held in treasury and 172,116,306 ordinary shares with voting rights.

 

In July 2022, the remaining 1,459,435 of ordinary shares held in treasury were issued. As a result, ordinary shares with voting rights in issue total 173,575,741.

Andrew Bolter

Chief Financial Officer

30 September 2022

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2022

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2022	2021	2021
	Notes	USD'000	USD'000	USD'000
Revenue		29,188	28,355	26,240
Direct costs		(26,176)	(23,470)	(18,580)
Credit provision		-	(505)	-
		─	─	─
Gross profit		3,012	4,380	7,660
Administrative expenses		(5,514)	(5,677)	(5,042)
		─	─	─
Underlying operating (loss)/profit		(2,502)	(1,297)	2,618
Non-underlying items	4	444	(30,979)	(1,243)
		─	─	─
Operating (loss)/profit		(2,058)	(32,276)	1,375
Investment revenue		56	33	22
Finance costs		(1,419)	(754)	(560)
		─	─	─
(Loss)/Profit before tax		(3,421)	(32,997)	837
Tax expense		-	(84)	164
		─	─	─
(Loss)/Profit and total comprehensive income for the period		(3,421)	(33,081)	1,001
		═	═	═
Basic earnings per share (cents)	5	(2.0)	(19.3)	0.6
Diluted earnings per share (cents)	5	(2.0)	(19.1)	0.6

CONDESED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2022

		As at	As at	As at
		30 June	31 December	30 June
		2022	2021	2021
	Notes	USD'000	USD'000	USD'000
Assets
Non-current assets
Property, plant, and equipment		23,803	25,512	48,555
Right-of-use assets		4,904	5,374	5,810
Goodwill		-	-	138
		─	─	─
		28,707	30,886	54,503
		─	─	─
Current assets
Inventories		8,638	9,397	13,267
Trade and other receivables		17,298	16,522	14,201
Cash and cash equivalents		9,174	8,532	10,102
		─	─	─
		35,110	34,451	37,570
		─	─	─
Total assets		63,817	65,337	92,073
		═	═	═
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)	(1,199)	(1,257)
Share based payment reserve		448	534	383
Retained earnings		9,896	13,223	46,304
		─	─	─
Total equity		34,114	37,309	70,181
		─	─	─
Non-current liabilities
Loan notes		12,000	-	6,471
Lease liabilities		4,825	5,206	5,698
Employees' end of service benefits		817	731	562
		─	─	─
		17,642	5,937	12,731
		─	─	─
Current liabilities
Loan notes		1,502	10,000	-
Lease liabilities		896	834	502
Trade and other payables		8,931	9,835	8,659
Provisions		732	1,422	-
		─	─	─
		12,061	22,091	9,161
		─	─	─
Total liabilities		29,703	28,028	21,892
		─	─	─
Total equity and liabilities		63,817	65,337	92,073
		═	═	═

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2022

						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 2021		24,300	18,254	(17,803)	(1,363)	177	48,509	72,074
Total comprehensive income for the period		-	-	-	-	-	1,001	1,001
Share based payments		-	-	-	-	288	-	288
Dividends declared and authorised	6	-	-	-	-	-	(3,206)	(3,206)
Issuance of treasury shares		-	-	-	106	(82)	-	24
		─	─	─	─	─	─	─
As at 30 June 2021		24,300	18,254	(17,803)	(1,257)	383	46,304	70,181
Total comprehensive income for the period		-	-	-	-	-	(33,081)	(33,081)
Share based payments		-	-	-	-	199	-	199
Issuance of treasury shares		-	-	-	58	(48)	-	10
		─	─	─	─	─	─	─
As at 31 December 2021		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
		═	═	═	═	═	═	═

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2022

			6 months	6 months	6 months
			ended	ended	ended
			30 June	31 December	30 June
			2022	2021	2021
	Notes		USD'000	USD'000	USD'000
Operating activities
Operating (loss)/profit			(2,058)	(32,276)	1,375
Adjustments for non-cash and other items:
Depreciation on property, plant, and equipment			2,271	2,728	2,127
(Profit)/loss on disposal of property, plant, and equipment			(20)	(67)	51
Unrealised differences on translation of foreign balances			(57)	118	15
Provision for employees' end of service benefits			257	225	208
Share based payments			185	199	288
Non-underlying items	4		627	27,218	817
			─	─	─
			1,205	(1,855)	4,881
Working capital adjustments:
Inventories			487	(428)	(4,643)
Accounts receivable, deposits, and other receivables			(1,139)	(2,363)	(1,921)
Accounts payable and accruals			(1,814)	3,244	(1,731)
			─	─	─
Cash flows used in operations			(1,261)	(1,402)	(3,414)
Tax paid			-	(4)	(16)
Employees' end of service benefits paid			(142)	(56)	(163)
			─	─	─
Net cash flows used in operating activities			(1,403)	(1,462)	(3,593)
			─	─	─
Investing activities
Investment revenue received			56	33	22
Purchase of property, plant, and equipment			(250)	(191)	(3,287)
Proceeds from disposal of property, plant, and equipment			187	788	35
			─	─	─
Net cash flows (used in)/from investing activities			(7)	630	(3,230)
			─	─	─
Financing activities
Proceeds from borrowings			3,502	3,529	387
Payment of lease liabilities			(319)	(199)	(543)
Finance costs paid			(1,229)	(754)	(560)
Dividends paid	6		-	(3,206)	-
Proceeds from share options exercised			41	10	24
			─	─	─
Net cash flows from/(used in) financing activities			1,995	(620)	(692)
			─	─	─
Net increase/(decrease) in cash and cash equivalents			585	(1,452)	(7,515)
Cash and cash equivalents as at start of the period			8,532	10,102	17,632
Effect of foreign exchange on cash and cash equivalents			57	(118)	(15)
			─	─	─
Cash and cash equivalents as at end of the period			9,174	8,532	10,102

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANICAL STATEMENTS

For the six months ended 30 June 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 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 2022 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 2021. 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 2021. The same accounting policies and methods of computation will be used to prepare the Annual Report for the year ending 31 December 2022. 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
		2022	2021	2021
		USD'000	USD'000	USD'000
Integrated facilities management		13,257	15,747	15,415
Construction		6,415	8,034	6,187
Supply chain		9,516	4,574	4,638
		─	─	─
		29,188	28,355	26,240
		═	═	═

Revenue by recognition timing:

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2022	2021	2021
		USD'000	USD'000	USD'000
Revenue recognised over time		18,919	22,002	19,318
Revenue recognised at a point in time		10,269	6,353	6,922
		─	─	─
		29,188	28,355	26,240
		═	═	═

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
		2022	2021	2021
		USD'000	USD'000	USD'000
Africa		27,879	26,930	25,427
Other		1,309	1,425	813
		─	─	─
		29,188	28,355	26,240
		═	═	═

Non-current assets by geographic area:

		As at	As at	As at
		30 June	31 December	30 June
		2022	2021	2021
		USD'000	USD'000	USD'000
Africa		26,489	28,448	51,249
Other		2,218	2,438	3,254
		─	─	─
		28,707	30,886	54,503
		═	═	═

Revenue split by customer:

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2022	2021	2021
		%	%	%
Customer A		20	22	29
Customer F		12	11	12
Customer E		11	11	18
Customer I		10	-	-
Customer B		9	10	1
Customer D		8	10	10
Customer H		8	8	-
Other		22	28	30
		─	─	─
		100	100	100
		═	═	═

4  NON-UNDERLYING ITEMS

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2022	2021	2021
		USD'000	USD'000	USD'000
COVID-19 costs		-	339	426
Restructuring costs		760	-	-
Palma Project, Mozambique		(1,204)	30,640	817
		─	─	─
		(444)	30,979	1,243
		═	═	═

Restructuring costs

These expenses result from the strategic decision to redirect resources and investment towards growing our government and humanitarian business as is described in our 2021 annual results.

Palma Project, Mozambique

In H1 22, the Group sold fixed assets and inventory which had previously been fully impaired. As a result, a USD 1,204,000 reversal of impairment 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
		2022	2021	2021
(Loss)/Profit for the period (USD'000)		(3,421)	(33,081)	1,001
Basic weighted average number of ordinary shares		171,813,566	171,744,052	171,576,465
Effect of employee share options		1,077,434	1,447,842	1,560,394
		─	─	─
Diluted weighted average number of shares		172,891,000	173,191,894	173,136,859
Basic earnings per share (cents)		(2.0)	(19.3)	0.6
Diluted earnings per share (cents)		(2.0)	(19.1)	0.6
		═	═	═

6  DIVIDENDS

During the interim period, no dividend was declared and authorised (H2 21: nil, H1 21: 1.35 pence (USD 0.02) per share (171,662,973 shares) totalling GBP 2,317,000 (USD 3,206,000)).

7  APPROVAL OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

The condensed consolidated interim financial statements were approved by the Board of Directors on 30 September 2022.

 

END

 

 

IR SELFWUEESELU