Interim Results for the 6 months ended 30 June 21

RNS Number : 9071K

RA International Group PLC

07 September 2021

 

This announcement contains inside information

RA INTERNATIONAL GROUP PLC

("RA International" or the "Company")

Interim Results for the six months to 30 June 2021

RA International Group plc (AIM: RAI), a specialist provider of complex and integrated remote site services to Humanitarian, Governmental and Commercial organisations globally, is pleased to announce its interim results in respect of the six months ended 30 June 2021.

HIGHLIGHTS

●	Revenue of USD 26.2m (H2 20: USD 29.1m, H1 20: USD 35.4m) and underlying EBITDA of USD 5.0m (H2 20: USD 6.2m, H1 20: USD 8.1m), in line with expectations for the first half of 2021.
●	IFM revenue of USD 15.4m (H2 20: USD 15.3m, H1 20: USD 15.9m) highlights the continued resilience of this service channel as supply chain and construction activity remained impacted by COVID-19 in the first half of the year.
●	Given the ongoing uncertainty in Cabo Delgado province, Mozambique, we have excluded the USD 60.5m contract to provide IFM services in this region and reset the order book to USD 129m as at 30 June 2021.
●	The revised order book of USD 129m as at 30 June 2021 reflects new contracts, contract uplifts and extensions of USD 29m in the period, highlighting very encouraging new contract momentum; we expect awards with a higher aggregate value in the second half of the year.
●	Significant contract awards within the first half of the year include a USD 21.5m contract with USAID and two UN construction contracts in Central Africa, with a combined value of USD 5.8m.
●	Subsequent to the end of the Period we commenced a construction contract with Cherokee Nation Mechanical, LLC for works in East Africa with a value of USD 4.2m. We have also made significant progress in finalizing the two contracts announced in March to provide construction related support services for the U.S. Department of State in the Middle East and in East Asia. Both contracts are expected to be significant in value.
●	In addition to the above, during the period we agreed commercial terms with Danakali Limited for the construction of a 1,200 person camp facility and to provide IFM services.
●	Cash as at 30 June 2021 of USD 10.1m, reflecting a USD 7.5m decrease from December 2020 year-end, primarily attributable to working capital movements which are expected to begin to reverse in the second half of the year.

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
		USD'm	USD'm	USD'm
Revenue		26.2	29.1	35.4
Gross profit		7.7	8.5	10.3
Gross profit margin		29.2%	29.2%	29.1%
Underlying EBITDA1		5.0	6.2	8.1
Underlying EBITDA margin		19.2%	21.2%	22.8%
Profit before tax		0.8	1.6	5.1
Profit before tax margin		3.2%	5.4%	14.3%
Basic EPS (cents)		0.6	0.9	2.9
Net cash (end of period)2		3.6	11.2	20.3

Soraya Narfeldt, CEO of RA International, commented:

"Our financial performance for the first half of the year, with revenue and profitability in line with market expectations, is a resilient performance given COVID-19 uncertainty has remained across our markets. We are cautiously optimistic and starting to see encouraging signs that the business environment is improving; depending on timing, this could boost our second half performance, but in any event should bridge to a stronger 2022.

What is less apparent in the numbers we are reporting today is the progress we are making in building a stronger business year on year.  This becomes clear when you consider the significant projects we are winning including Danakali, Cherokee Nation, and USAID. We also have visibility on future contract wins which we see as highly likely we will secure. By the end of this financial year, based on current contract pipeline, we could more than offset the reduction in our order book which we have made in light of the ongoing situation in Mozambique. To not only replace a contract of this scale but to deliver growth would be a real barometer of the success of our strategy, our business development activity across all our customer segments and our reputation as a trusted partner for global, blue-chip organisations. We look forward to updating investors on our progress throughout the second half of the year."

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 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 Alex Aylen Georgina McCooke	[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 three main client groups: humanitarian and aid agencies, governments and commercial customers, predominantly in the oil and gas and mining sectors. It has a strong customer base, largely comprising UN agencies, western governments and global corporations.

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

CHIEF EXECUTIVE'S REVIEW

Overview

I am pleased to update the Company's shareholders on our performance for the six months ended 30 June 2021 (the "Period" or "First Half"). The main themes for the First Half have been consistent with the views and outlook we detailed in our full year results update at the end of March. In March, we highlighted our confidence in the level and nature of our business development activity, which is aligned with our customer led growth strategy. The contracts we have secured in the First Half, including the landmark contracts with Cherokee Nation Mechanical, LLC ("Cherokee") and the United States Agency for International Development ("USAID") highlight an increase in business momentum. We are growing our customer base and winning larger, more valuable long-term contracts, expanding into new geographies and demonstrating the value of our relationship-based approach and "one supplier" model. 

We are greatly encouraged by this momentum, which will drive long-term business growth, however we remain cautious in the near-term as COVID-19 continues to be a constraint on new business activity and as a result of the unfolding situation in Mozambique. Despite these challenges, we have delivered a stable performance for the First Half, and, as we look ahead, are cautiously optimistic the impact of COVID-19 is receding, and new business activity is picking up.

We delivered a resilient performance in the First Half, in-line with expectations 

We highlighted in March the continued impact of the pandemic as a health crisis and that of government enforced restrictions and lock-down provisions which remained in place across the world. Whilst we were encouraged by the level of bid activity we were seeing and our ability to continue to win high quality contracts, delays in both awarding and commencing new contracts remained a material factor. This uncertainty informed our approach of adopting a cautious view on our financial performance in the near-term, including for the first half of 2021. The financial performance we are reporting today, with revenue of USD 26.2m and underlying EBITDA of USD 5.0m, is in line with expectations and we see these results as a credible performance as we continue to work in an operating environment where COVID-19 remains a significant factor. As we think about the near-term outlook, we are encouraged both by the continued resilience of our IFM service channel and by the awards of new construction contracts; an important indicator that activity levels are starting to return to more normal levels. We expect to see heightened levels of project starts by existing and new customers and, depending on timing, this could lead to a materially stronger performance in the second half of the year but, in any event, should bridge to a stronger performance in 2022.

We are responding to the evolving situation in Mozambique

Clearly the situation in Mozambique has been a key area of focus for us since the tragic events unfolded in Cabo Delgado province in March 2021. It is not appropriate to provide commentary on this from a people perspective in this report, but it is important we provide shareholders with an update from a commercial perspective. Given the continued uncertainty in the region, which has seen Total suspend activity in the area, we have excluded the USD 60.5m contract from our order book and have reset the order book at USD 129m as at 30 June 2021. We highlighted in March that we expected the situation in Mozambique to have a USD 10.0m impact on revenue in 2021; this remains our expectation. Looking further ahead, in spite of the ongoing instability in the region, we remain confident that by virtue of the considerable multinational commercial investment and the significance to both Mozambique and the international community, the project will come into fruition and we remain well positioned to provide the originally planned services as and when they are required.

We continue to drive long-term value by executing on our customer-led growth strategy

As we have grown over the years, we have relentlessly and successfully focused on the diversification of our business in terms of geography, customer concentration, and service channel. Our customers rely on us and trust us to deliver in the most challenging of circumstances and our track record of delivering large and complex projects, often through our "one-supplier" model, and supporting our customers and their changing requirements is central to our ethos of growing with our customers.  We believe our relationship driven approach continues to set us apart and will drive sustainable growth through further expansion into our very significant addressable markets.

During the Period we announced contracts which highlight the strategy in action. In March 2021, we announced our appointment as teaming partner on two contracts with Cherokee, providing construction related services for the U.S. Department of State in the Middle East and East Asia. These significant contracts build on our initial work with Cherokee in East Africa and highlight how by partnering with large US corporations of Cherokee's standing, we can deliver large and complex projects for the US government and extend our footprint to new geographies. We look forward to further collaboration with Cherokee on new projects and growing this very successful partnership.

We highlighted in our March results the high level of business development activity we are involved in, with new bid activity on contracts ranging from USD 10m to USD 50m being particularly notable. We also highlighted our discussions with large US corporations and governmental institutions as a primary area of focus for our business development activity. The Cherokee contracts referenced above demonstrate the effectiveness of this approach as does our contract with USAID, which we announced in June 2021. This contract sees us working directly with USAID to provide comprehensive life support and maintenance services in one of their compounds in East Africa. The contract is for an initial two-year base period, with the option for two one-year extensions, with a contract value in aggregate of USD 21.5m. Our reputation for delivering integrated services to international standards was instrumental in securing this contract.

We continue to make good progress on our business development activity with respect to the commercial sector, another primary area of focus for us. We announced in June 2021 that we had agreed commercial terms with Danakali. This will be a major milestone contract for RA in that it is a globally significant project and highlights the value of our integrated approach, constructing and providing ongoing IFM support for a 1,200 person camp for the Colluli Mining Share Company ("CMSC") development in Eritrea, East Africa.  We were appointed as preferred contractor in 2020 and have worked closely with Danakali and its partners as they have developed their plans, with the updated scope of work and contract terms highlighting the value of this relationship driven approach. We look forward to providing shareholders with further information on the key commercial terms when all approvals have been obtained, which include the CMSC board.  

Overall, we have demonstrated our ability to win large contracts across our humanitarian, governmental and commercial customer base and the work we have been doing to build relationships with customers across these categories supports a healthy pipeline with a number of similar sized opportunities which are in various stages of adjudication.

Contracts

We were awarded new contracts, uplifts, and extensions to existing contracts of USD 29m in the First Half and expect awards with a higher aggregate value in the second half of 2021.

Contract order book:

		USD'm
Opening order book		187
New contracts, contract uplifts and extensions		29
Removal of Mozambique contract		(61)
Contracted revenue delivered		(26)
		─
Closing order book as at 30 June 2021		129
		═

At 30 June 2021, 57% of the order book composition was comprised of high value IFM work. The scale of our order book, combined with the contracts at advanced stage negotiation and proven resilience of IFM revenue, provides confidence to continue to make long-term investment decisions, even in these dynamic times.

Current Trading and Outlook 

Our financial performance for the first half of the year, with revenue and profitability in line with market expectations, is a resilient performance given COVID-19 uncertainty has remained across our markets. We are cautiously optimistic and starting to see encouraging signs that the business environment is improving - depending on timing, this could boost our second half performance, but in any event should bridge to a stronger 2022.

What is less apparent in the numbers we are reporting today is the progress we are making in building a stronger business year on year.  This becomes clear when you consider the significant projects we are winning - including Danakali, Cherokee Nation, and USAID. We also have visibility on future contract wins which we see as highly likely we'll secure. By the end of this financial year, based on current contract pipeline, we could more than offset the reduction in our order book which we have made in light of the ongoing situation in Mozambique. To not only replace a contract of this scale but to deliver growth would be a real barometer of the success of our strategy, our business development activity across all our customer segments and our reputation as a trusted partner for global, blue-chip organisations. We look forward to updating investors on our progress throughout the second half of the year.

Soraya Narfeldt

Chief Executive Officer 

07 September 2021

FINANCIAL REVIEW

Overview

Revenue of USD 26.2m and underlying EBITDA of USD 5.0m highlight our financial performance for the Period, in line with external expectations. We see this as a resilient performance, with the stability of our IFM service channel remaining a key feature of our business.  While Construction and Supply Chain revenue continues to be impacted by COVID-19, we are seeing encouraging signs that the business environment is improving. The most promising is that we have commenced works on all newly awarded construction contracts. Gross margin for the Period was stable at 29.2% (H2 20 29.2%, H1 20 29.1%) with improvements expected once the operating environment normalises. Cash generation for the Period was lower than comparative periods reflecting an adverse USD 8.3m movement in working capital. This primarily resulted from an increase in inventory balances caused by the suspension of works in Mozambique in March. These movements are seen as temporary and are expected to begin to reverse in the next six months as inventory is reallocated to new and ongoing projects. 

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
		USD'm	USD'm	USD'm
Revenue		26.2	29.1	35.4
Gross profit		7.7	8.5	10.3
Gross profit margin		29.2%	29.2%	29.1%
Underlying EBITDA		5.0	6.2	8.1
Underlying EBITDA margin		19.2%	21.2%	22.8%
Profit before tax		0.8	1.6	5.1
Profit before tax margin		3.2%	5.4%	14.3%
Basic EPS (cents)		0.6	0.9	2.9
Net cash (end of period)		3.6	11.2	20.3

Revenue

Reported revenue for H1 21 was USD 26.2m (H2 20: USD 29.1m, H1 20: USD 35.4m). The decrease from prior period comparators reflects lower revenues from our Construction and Supply Chain channels whilst IFM revenue remained stable. We are encouraged by a recent uptick in construction contracts being awarded, which although relatively small in terms of contract value, are an important indicator of returning to a more normal operating environment, which if it persists, should lead to significant growth in Construction revenue in the short term.

The weighting of revenue by customer type remained stable. At 52%, Commercial and Government work represents approximately half of our revenue (H2 20: 53%, H1 20: 51%). Our strategic goal is to diversify our customer base and revenue streams over time. 

Revenue by service channel:

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
		USD'm	USD'm	USD'm
Integrated facilities management		15.4	15.3	15.9
Construction		6.2	8.4	10.7
Supply chain		4.6	5.3	8.8
		─	─	─
		26.2	29.1	35.4
		═	═	═

Profit Margin

Gross margin in H1 21 was 29.2% (H2 20: 29.2%, H1 20: 29.1%), reflecting stable profit margins compared with prior period comparators. The stability in gross margins reflects an increase in the percentage of IFM revenue, offset by the addition of certain new contracts which have lower margin in the initial phase of deployment but are expected to increase over time, and also lower occupancy in our hotel facility in Somalia. Gross margin is not expected to return to pre-COVID levels until such time as more normal levels of customer activity resume and operational inefficiencies caused by COVID-19 ease.

Reconciliation of profit to Underlying EBITDA:

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
		USD'm	USD'm	USD'm
Profit		1.0	1.5	5.0
Tax expense		(0.2)	-	-
		─	─	─
Profit before tax		0.8	1.6	5.1
Finance costs		0.6	0.5	0.5
Investment income		-	(0.1)	(0.1)
		─	─	─
Operating profit		1.4	1.9	5.4
Non-underlying items		1.2	2.2	0.8
		─	─	─
Underlying operating profit		2.6	4.2	6.2
Share based payments		0.3	0.1	-
Depreciation		2.1	1.9	1.8
		─	─	─
Underlying EBITDA		5.0	6.2	8.1
		═	═	═

Underlying EBITDA margin in H1 21 was 19.2% (H2 20: 21.2%, H1 20: 22.8%) reflecting the variance in revenue and an increase in administrative expenses. Administrative expenses increased modestly in the Period to USD 5.0m from USD 4.3m in the prior period, resulting from investment in our project management and support functions to underpin anticipated future growth of the business. Excluding this investment, underling EBITDA margin would have been comparable to the prior period.

During the Period, the Company incurred non-underlying costs of USD 1.2m (H2 20: USD 2.2m, H1 20: USD 0.8m). This balance includes an impairment charge of USD 0.8m relating to assets that were damaged as a result of the hostile activity in Mozambique.  We are actively working with our insurance providers to identify the value of a possible recovery and taking all practical steps to safeguard assets still in the Palma area, including relocating assets from the region.

Non-underlying items

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
		USD'm	USD'm	USD'm
Acquisition costs		-	0.2	-
COVID-19 costs		0.4	0.6	0.8
Restructuring costs		-	0.3	-
Other share based payments		-	1.2	-
Asset impairment		0.8	-	-
		─	─	─
		1.2	2.2	0.8
		═	═	═

Earnings Per Share

Basic earnings per share was 0.6 cents in the current period (H2 20: 0.9 cents, H1 20: 2.9 cents) and is equal to diluted earnings per share.  

Cashflow

Net cash outflows from operating activities of USD 3.6m in the Period reflects a marked decrease from the comparators with net inflows of USD 12.0m and USD 9.1m respectively. The decrease is primarily attributable to temporary working capital movements which impacted cash negatively by USD 8.3m. This compares with a USD 7.1m working capital cash benefit in H2 20. The negative working capital movements for the Period primarily relate to the addition of USD 4.0m of inventory which was in transit to Mozambique at the time of the attack and increased accounts receivable and decreased accounts payable balances. The inventory relating to Mozambique is being reallocated to new and existing projects which is expected to result in working capital beginning to reverse in the next six months.

Capital expenditure ("capex") for the period of USD 3.3m primarily relates to investment in Mozambique. As previously highlighted, overall capex for the current financial year is expected to be markedly lower than prior years (2020: USD 24.5m, 2019: USD 12.4m), with 2020 in particular reflecting significant investment in our Mozambique project. Given our current portfolio of projects we anticipate 2021 capex to be approximately USD 5-7m.

Balance Sheet and Liquidity

Cash as at 30 June 2021 of USD 10.1m reflects a USD 7.5m decrease from year-end. The decrease in cash is attributable to the working capital movements outlined above, which are expected to begin to reverse in the next six months.

Net assets at 30 June 2021 were USD 70.2m (H2 20: USD 72.1m, H1 20: USD 71.8m), with fixed assets comprising the majority of the total balance sheet following significant capital expenditure in 2020.

Breakup of net assets:

		As at	As at	As at
		30 June	31 December	30 June
		2021	2020	2020
		USD'm	USD'm	USD'm
Cash and cash equivalents		10.1	17.6	20.3
Loan notes		(6.5)	(6.5)	-
		─	─	─
Net cash		3.6	11.2	20.3
Net working capital		18.8	14.4	18.5
Non-current assets		54.5	51.0	36.3
Tangible owned assets		48.6	47.4	33.7
Right-to-use assets		5.8	3.5	2.4
Goodwill		0.1	0.1	0.1
Lease liabilities and end of service benefit		(6.8)	(4.6)	(3.2)
		─	─	─
Net assets		70.2	72.1	71.8
		═	═	═

Within non-current assets is USD 16.7m of buildings, infrastructure, and equipment in Palma, Mozambique. We are currently working to relocate high value items to ensure their continued security and upkeep. A full review of the value of these assets is planned for the second half of 2021.

Dividend

A dividend of 1.35p per share totalling USD 3.2m was declared and authorised during H1 21 (H2 20: nil, H1 20: USD 2.7m) and was subsequently paid on 8 July 2021.

The Board's intention continues to be to adopt a progressive dividend policy and to increase the dividend in future years while retaining sufficient working capital to meet the needs of the business and to fund continued growth. The Board believes the continued growth in our customer base and the pursuit of a one-supplier model will provide a basis for continued earnings growth in the future

Shares in Issue and Treasury Shares

In the First Half, 157,493 ordinary shares were transferred out of treasury in settlement of certain employee share options. As at 30 June 2021, the total number of ordinary shares in issue and admitted to trading on AIM was 173,575,741, comprising 1,870,058 ordinary shares held in treasury and 171,705,683 ordinary shares with voting rights.

Andrew Bolter

Chief Financial Officer

07 September 2021

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2021

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
	Notes	USD'000	USD'000	USD'000
Revenue		26,240	29,076	35,365
Direct costs		(18,580)	(20,577)	(25,070)
		─	─	─
Gross profit		7,660	8,499	10,295
Administrative expenses		(5,042)	(4,338)	(4,091)
		─	─	─
Underlying operating profit		2,618	4,161	6,204
Non-underlying items	4	(1,243)	(2,249)	(797)
		─	─	─
Operating profit		1,375	1,912	5,407
Investment revenue		22	139	139
Finance costs		(560)	(491)	(479)
		─	─	─
Profit before tax		837	1,560	5,067
Tax expense		164	(20)	(41)
		─	─	─
Profit and total comprehensive income for the period		1,001	1,540	5,026
		═	═	═
Basic and diluted earnings per share (cents)	5	0.6	0.9	2.9

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2021

		30 June	31 December	30 June
		2021	2020	2020
	Notes	USD'000	USD'000	USD'000
Assets
Non-current assets
Property, plant, and equipment		54,365	50,886	36,114
Goodwill		138	138	138
		─	─	─
		54,503	51,024	36,252
		─	─	─
Current assets
Inventories		13,267	9,142	8,971
Trade and other receivables		14,201	12,666	19,078
Cash and cash equivalents		10,102	17,632	20,266
		─	─	─
		37,570	39,440	48,315
		─	─	─
Total assets		92,073	90,464	84,567
		═	═	═
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		(1,257)	(1,363)	(51)
Share based payment reserve		383	177	62
Retained earnings		46,304	48,509	47,037
		─	─	─
Total equity		70,181	72,074	71,799
		─	─	─
Non-current liabilities
Loan notes		6,471	6,471	-
Lease liabilities		5,698	3,720	2,579
Employees' end of service benefits		562	517	477
		─	─	─
		12,731	10,708	3,056
		─	─	─
Current liabilities
Lease liabilities		502	318	163
Trade and other payables		8,659	7,364	9,549
		─	─	─
		9,161	7,682	9,712
		─	─	─
Total liabilities		21,892	18,390	12,768
		─	─	─
Total equity and liabilities		92,073	90,464	84,567
		═	═	═

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2021

						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 2020		24,300	18,254	(17,803)	-	47	44,685	69,483
Total comprehensive income for the period		-	-	-	-	-	5,026	5,026
Share based payments		-	-	-	-	15	-	15
Dividends declared and authorised	6	-	-	-	-	-	(2,674)	(2,674)
Purchase of treasury shares		-	-	-	(51)	-	-	(51)
		─	─	─	─	─	─	─
As at 30 June 2020		24,300	18,254	(17,803)	(51)	62	47,037	71,799
Total comprehensive income for the period		-	-	-	-	-	1,540	1,540
Share based payments		-	-	-	-	115	-	115
Purchase of treasury shares		-	-	-	(2,549)	-	-	(2,549)
Issuance of treasury shares		-	-	-	1,237	-	(68)	1,169
		─	─	─	─	─	─	─
As at 31 December 2020		24,300	18,254	(17,803)	(1,363)	177	48,509	72,074
Total comprehensive 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
		═	═	═	═	═	═	═

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2021

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
	Notes	USD'000	USD'000	USD'000
Operating activities
Operating profit		1,375	1,912	5,407
Adjustments for non-cash and other items:
Depreciation on property, plant, and equipment		2,127	1,885	1,846
Loss on disposal of property, plant, and equipment		51	83	10
Unrealised differences on translation of foreign balances		15	(330)	335
Provision for employees' end of service benefits		208	110	99
Share based payments		288	1,284	15
Non-underlying items - asset impairment	4	817	-	-
		─	─	─
		4,881	4,944	7,712
Working capital adjustments:
Inventories		(4,643)	(171)	(2,793)
Accounts receivable, deposits, and other receivables		(1,921)	6,798	5,442
Accounts payable and accruals		(1,731)	508	(1,124)
		─	─	─
Cash flows generated from operations		(3,414)	12,079	9,237
Tax paid		(16)	(38)	(79)
Employees' end of service benefits paid		(163)	(70)	(13)
		─	─	─
Net cash flows from operating activities		(3,593)	11,971	9,145
		─	─	─
Investing activities
Investment revenue received		22	139	139
Purchase of property, plant, and equipment		(3,287)	(15,270)	(9,180)
Proceeds from disposal of property, plant, and equipment		35	20	4
		─	─	─
Net cash flows used in investing activities		(3,230)	(15,111)	(9,037)
		─	─	─
Financing activities
Proceeds from borrowings		387	6,084	-
Payment of lease liabilities		(543)	(194)	(370)
Finance costs paid		(560)	(491)	(479)
Dividends paid	6	-	(2,674)	-
Purchase of treasury shares		-	(2,549)	(51)
Proceeds from share options exercised		24	-	-
		─	─	─
Net cash flows used in financing activities		(692)	176	(900)
		─	─	─
Net decrease in cash and cash equivalents		(7,515)	(2,964)	(792)
Cash and cash equivalents as at start of the period		17,632	20,266	21,393
Effect of foreign exchange on cash and cash equivalents		(15)	330	(335)
		─	─	─
Cash and cash equivalents as at end of the period		10,102	17,632	20,266
		═	═	═

The attached notes 1 to 7 form part of the Condensed Consolidated Interim Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2021

1  CORPORATE INFORMATION

The principal activity of RA International Group plc ("RAI" or the "Company") and its subsidiaries (together the "Group") is providing services in demanding and remote areas. These services include construction, integrated facilities management, and supply chain services. RAI was incorporated on 13 March 2018 as a public company in England and Wales under registration number 11252957. The address of its registered office is One Fleet Place, London, EC4M 7WS.

2  BASIS OF PREPARATION

The 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 2021 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 2020. 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 2020. The same accounting policies and methods of computation will be used to prepare the Annual Report for the year ended 31 December 2021. 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
		2021	2020	2020
		USD'000	USD'000	USD'000
Integrated facilities management		15,415	15,349	15,916
Construction		6,187	8,420	10,665
Supply chain		4,638	5,307	8,784
		─	─	─
		26,240	29,076	35,365
		═	═	═

Revenue by recognition timing:

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
		USD'000	USD'000	USD'000
Revenue recognised over time		19,318	19,940	20,178
Revenue recognised at a point in time		6,922	9,136	15,187
		─	─	─
		26,240	29,076	35,365
		═	═	═

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
		2021	2020	2020
		USD'000	USD'000	USD'000
Africa		25,427	28,741	32,420
Other		813	335	2,945
		─	─	─
		26,240	29,076	35,365
		═	═	═

Non-current assets by geographic area:

		As at	As at	As at
		30 June	31 December	30 June
		2021	2020	2020
		USD'000	USD'000	USD'000
Africa		51,249	47,687	35,003
Other		3,254	3,337	1,249
		─	─	─
		54,503	51,024	36,252
		═	═	═

Revenue split by customer:

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
		%	%	%
Customer A		29	24	24
Customer E		18	16	6
Customer F		12	14	7
Customer D		10	12	7
Customer G		10	9	9
Customer I		3	3	2
Customer H		2	5	5
Customer B		1	5	9
Customer C		-	1	6
Other		15	11	25
		─	─	─
		100	100	100
		═	═	═

4  NON-UNDERLYING ITEMS

		6 months	6 months	6 months
		ended	ended	ended
		30 June	31 December	30 June
		2021	2020	2020
		USD'000	USD'000	USD'000
Acquisition costs		-	175	-
COVID-19 costs		426	636	797
Restructuring costs		-	269	-
Other share based payments		-	1,169	-
Asset impairment		817	-	-
		─	─	─
		1,243	2,249	797
		═	═	═

Asset impairment

These costs relate to the write off of inventory and fixed assets stolen or damaged beyond repair following the widescale attack in Palma District, Mozambique in March 2021.

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
		2021	2020	2020
Profit for the period (USD'000)		1,001	1,540	5,026
Basic weighted average number of ordinary shares		171,576,465	171,347,432	173,566,950
Effect of employee share options		1,560,394	1,407,232	-
		─	─	─
Diluted weighted average number of shares		173,136,859	172,754,664	173,566,950
Basic earnings per share (cents)		0.6	0.9	2.9
Diluted earnings per share (cents)		0.6	0.9	2.9
		═	═	═

6  DIVIDENDS

During the interim period, a dividend of 1.35 pence (USD 0.02) per share (171,662,973 shares) totalling GBP 2,317,000 (USD 3,206,000) was declared and authorised (H2 20: nil, H1 20: 1.25 pence (USD 0.02) per share (173,575,741 shares) totalling GBP 2,170,000 (USD 2,674,000)). The dividend declared and authorised during the interim period was paid to ordinary shareholders on 8 July 2021.

7  APPROVAL OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

The condensed consolidated interim financial statements were approved by the Board of Directors on 6 September 2021.

 

END

 

 

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