TIDMRAI
RNS Number : 5958A
RA International Group PLC
25 May 2023
RA INTERNATIONAL GROUP PLC
("RA International", "RA", the "Group" or the "Company")
Results for the year ended 31 December 2022
RA International Group plc (AIM: RAI), a specialist provider of
complex and integrated remote site services to organisations
globally, announces its audited full year results in respect of the
12 months ended 31 December 2022.
HIGHLIGHTS
-- Revenue of USD 62.9m (2021: USD 54.6m) and underlying EBITDA
of USD 0.6m (2021: USD 6.7m), is in line with market expectations
for the financial year.
-- Revenue growth of 15% year over year driven by strong increases
in Construction and Supply Chain revenues, more than offsetting
the anticipated and temporary short-term decline in IFM
revenue.
-- Lower underlying EBITDA margin for FY22 reflective of inflationary
pressure impacting the business since the second half of
2021. This margin pressure is expected to reduce over time
with newly awarded contracts generating improved margins
and other mitigating actions reducing exposure to higher
costs.
-- Closing year-end order book of USD 83m has been broadly
maintained in 2023, and we are in the process of finalising
the value of a major contract award which would result in
a current order book in excess of USD 100m. In addition,
the Company holds high value framework agreements which
are currently not included in the order book.
-- Good progress in strengthening our position with Government
clients; the Company is actively securing and delivering
contracts for US Government departments complementing contract
momentum with the UK MoD and Foreign, Commonwealth and Development
Office.
-- Liquidity strengthened in FY22 with the loan note programme
refinanced out to late 2024. Measures targeting improved
liquidity have led to cash increasing to USD 11.0m at 31
March 2023 from the year-end position of USD 7.5m, with
an equivalent improvement being seen in net debt. Further
value recovery from the disposal of camp assets is expected
in the current financial year.
2022 2021
USD'm USD'm
Revenue 62.9 54.6
Gross profit 5.2 12.0
Gross profit margin 8.2% 22.0%
Underlying EBITDA (1) 0.6 6.7
Underlying EBITDA margin 1.0% 12.3%
Loss before tax (13.2) (32.2)
Basic EPS (cents) (7.6) (18.7)
Underlying EPS, basic (cents) (2) (5.2) 0.1
Net debt (end of period) (3) (6.5) (1.5)
Soraya Narfeldt, CEO of RA International, commented:
"Our performance for FY22 was in-line with our cautious
expectations for the year, with profitability significantly
impacted by the prevailing input cost headwinds. The results also
reflect successful implementation of our initiatives to stabilise
the business and strengthen liquidity supporting our position to
fund existing and visible project activity. We remain cautious on
the financial performance of the business for the current financial
year and expect the business to remain broadly breakeven at the
underlying EBITDA level. We have strengthened the liquidity
position of the Group in the current financial year and this is
highlighted by an improvement in net debt to USD 3.0m at 31 March
2023 from USD 6.5m as at 31 December 2022.
We continue to focus on internal initiatives including cost
control, efficiency and cash discipline to restore profitability
alongside growing the business in-line with our strategic
priorities. Our order book of USD 78m as at end March 2023 gives us
good forward visibility, and we are in the process of finalising
the value of a major contract award which would result in a current
order book in excess of USD 100m. New contract awards over recent
years have been weighted to construction projects and we are now
seeing more longer term contracts in the pipeline being converted
to order book. Whilst we remain cautious on the timing of these
awards and project starts, we are very much encouraged by this
trend which is important in restoring the levels of profitability
the business has delivered previously."
Notes to summary table of financial results:
(1) Underlying EBITDA is calculated by adding depreciation, non-underlying
items, and share based payment expense to operating profit.
(2) Underlying EPS reflects underlying operating profit after deducting
net finance costs and taxation, divided by the weighted average number
of ordinary shares outstanding during the period.
(3) Net cash/debt represents cash less overdraft balances, term
loans and notes outstanding.
Enquiries:
RA International Group PLC Via Bamburgh Capital
Soraya Narfeldt, Chief Executive Officer
Lars Narfeldt, Chief Operating Officer
Andrew Bolter, Chief Financial Officer
Canaccord Genuity Limited (Nominated Adviser
and Broker)
Bobbie Hilliam +44 (0) 207 523
Harry Rees 8000
Bamburgh Capital Limited (Financial PR & +44 (0) 131 376
Investor Relations) 0901
Murdo Montgomery investors@raints.com
Background to the Company
RA International is a leading provider of services to remote
locations. The Company offers its services through three channels:
construction, integrated facilities management and supply chain,
and services two main client groups: humanitarian and aid agencies
and western government organisations focusing on overseas projects.
It has a strong customer base, largely comprising UN agencies, UK
and US government departments and global corporations.
The Company provides comprehensive, flexible, mission critical
support to its clients enabling them to focus on the delivery of
their respective businesses and services. Focusing on integrity and
values alongside making on-going investment in its people,
locations and operations has over time created a reliable and
trusted brand within its sector.
CHAIR'S STATEMENT
2022 was a testing year for the business. The results for the
year are in line with our expectations, but the year hasn't been
without its trials. Whilst some of these challenges have been
external in nature, and some reflect temporary factors that we
expect to see reversed, it is important as a Board that we learn
from these events and strengthen the underlying business where we
have the opportunity to do so.
As a Board, we have looked to use this approach to guide the
short-term and strategic priorities of the business. The main
objectives set for the business are to restore profitability,
improve the Company's liquidity position, and to build a stronger
pipeline, in particular by leveraging the significant opportunity
we have with UK and US Government clients.
We have allocated greater resources to target opportunities in
the government space. We have a track record of securing work with
these type of customers, but we are now looking to do this on a
more equal footing, for example as a prime contractor and by
securing seats directly on multi-year framework agreements. We are
confident this is the right strategy, but we will only be
successful if we execute on
the opportunity with discipline and focus, identifying and
securing contracts that are in our "sweet spot". This is the time
for restoring stability to the business, focusing on what we do
well and on opportunities where we have the strongest likelihood of
success.
The award of new humanitarian contracts, typically multi- year
Integrated Facilities Management ("IFM") contracts at attractive
margins, has slowed and this has impacted our order book.
Whilst we expect the humanitarian side of our business to
normalise, the lull is putting pressure on the near-term financial
performance of the business. This highlights the importance of
securing profitable work to mitigate this pressure and also makes
us cautious on the outlook for the business for the year ahead.
Our commitment to sustainability and to doing business the right
way remains fundamental to our approach. We are ahead of the curve
with respect to this, and will continue to strengthen our
leadership credentials in this space. Despite the near-term
financial outlook, we are not going to cut corners or compromise
our standards. It is an important differentiator for our employees
and, over time, it will continue to build as an increasingly
important differentiator for the types of customers we are looking
to work with. RA as a business has made a widespread and
significant social impact on disadvantaged people and communities
since the business was founded by Soraya and Lars in 2004. They are
pioneers in their approach and do it to drive lasting change.
I was delighted to welcome Paul Jaques to the Board in November
2022. Paul brings extensive and highly relevant experience across
the government space, including through his distinguished service
with the British Army. Together with the pedigree we have on the
Board of RA Federal Services in the US, Paul's appointment
strengthens our capability to build on our existing track record as
a trusted partner with government clients. We look forward to
drawing on our strengthened pool of governmental expertise as we
deepen and broaden these relationships, in line with our refreshed
growth strategy.
I would like to pay tribute to RA's people for their
contribution to the business. It is evident on a daily basis how
much you care about the business, the work that you do and the
communities that we support. The Board is in a privileged position
to be able to count on your professionalism, integrity, and
tireless commitment, and on behalf of the Board, we thank you for
this. I would also like to extend our thanks to Ian Henderson who
retired from the Board in November 2022, having provided valuable
counsel, including through the Company's IPO in 2018.
The business is undergoing transition as we look to build a
stronger organisation that can realise the ambition we share for
RA. We are confident in our strategy, but we caution that it is
likely to take time for this strategy to feed through to sustained
profitability. We recognise shareholders have been patient and we
do not take this for granted. We are working hard to move the
business forward and we appreciate their continued patience as we
do this.
Sangita Shah
Non-Executive Chair
25 May 2023
CHIEF EXECUTIVE OFFICER'S REVIEW
Our performance for FY22 was in-line with expectations for the
year.
Overview
The last two years have been hugely challenging for the business
with an unforeseen series of events starting from COVID creating
economic contraction worldwide, followed by the unexpected and
devastating insurgency in Mozambique combined with the
unprecedented rise in logistics and materials costs which was
further exasperated by the Ukrainian war and its inflationary
impact on commodity pricing. While shareholder value has been
impacted, RA has a strong leadership position in its principal
services, both with government clients from the UK and in the US,
as well as with UN peacekeeping operations around the world which
have been built over the past 20 years. For this reason, the Board
maintains its belief that shareholder value will recover and grow
again in the future.
RA's skills have proved to be transferable from country to
country as our know-how and a track record of successful delivery
is relevant and required. Going forward, in pursuit of the strategy
set out later in this report, RA will focus on growing its business
within those areas where it has sustainable competitive advantage,
whilst at the same time reducing costs by simplifying our
organisational design and sharing common services across the Group.
All this will be developed within a pragmatic framework, supported
by focused, timely performance information that highlights
unplanned exceptions at an early stage.
Our financial performance for FY22 is consistent with market
expectations, with revenue of USD 63m and underlying EBITDA of USD
0.6m in line with the key themes we set out in the interim accounts
in September 2022. This reflects a similar performance in the first
and second halves of the year. We remain cautious on the near-term
financial outlook for the business, given the timing of project
awards and starts remains uncertain and ongoing gross margin
pressure.
Despite this caution, our order book gives us good forward
visibility and we have achieved significant milestones in winning
long-term work with US and UK Government departments, a key focus
of our growth strategy. We are building our pipeline, investing in
our capability as a differentiated service provider to government
and humanitarian clients and remain focused on restoring
profitability, improving liquidity, and delivering sustained growth
as these efforts bear fruit.
Summary of financial performance
Revenue grew by 15% year over year, with strong increases in
Construction and Supply Chain more than offsetting an anticipated
and temporary decline in IFM revenue. Construction revenue of USD
14.9m represents a particularly strong second half, with a number
of construction contracts commencing in the third quarter of the
year and scheduled to complete in the second quarter of the current
financial year. Supply Chain revenue moderated to USD 4.7m in H2, a
more typical run-rate after a strong first half bolstered by USD
4.5m of sales relating to camp assets. As expected, IFM revenue
picked up in the second half and overall continues to be resilient
and long-term in nature. Construction is linked to our activity
with government clients, as our initial engagement is often to
provide construction related services to these clients. Our Supply
Chain activity has also been increasingly linked to supplying
clients in the Government sector.
Gross profit for the year reflects the fixed price nature of the
majority of contracts we undertake, particularly for the
Humanitarian sector. In the past these have allowed for
efficiencies to be realised over the long-term nature of the
contracts but more recently has exposed the business to significant
inflationary pressure. As we work more with government customers,
we anticipate cost plus contracts to be more prevalent.
A key short-term priority remains improving our liquidity and we
continue to make progress in recovering value from the disposal of
camp assets, including in relation to our operations in Palma,
Mozambique, which were curtailed due to the 2021 terrorist
insurgency in the region. In FY22, USD 4.5m of cash was realised
from the sale of pre-fabricated camp assets held in inventory. This
transaction will also significantly reduce future storage
costs.
Overall, from a balance sheet perspective, the Company remains
in a comfortable position to bid for and execute large projects,
and opportunities remain to increase liquidity through further
asset sales.
Contract awards, order book, and building the pipeline
During the year, we were awarded new contracts, uplifts, and
extensions to existing contracts of USD 45m. IFM projects represent
47% of order book, with Construction 50% and Supply Chain 3%. New
contract activity has been weighted to Construction projects with
many anticipated to be the first phase of much larger contracts.
The order book remains weighted to Humanitarian projects, albeit we
expect the share of government activity to continue to increase
over time. New contracts are being negotiated at improved rates
which we expect will improve margins going forward.
In terms of recent contracts secured, we were delighted to be
awarded the OSCC Framework Agreement with the UK MoD, announced in
September 2022. The contract appoints RA as the sole contractor to
provide operational support capability to the MoD as their global
"problem solver." The contract has a ceiling of GBP 35m and is for
five years with two additional option years. This is excluded from
our order book, until such time as specific task orders are
awarded, but is clearly an important marker that the UK Government
recognises our global capability. We were also delighted to close
the year by securing landmark contract wins with the FCDO and to be
awarded our first task orders with respect to our JV in Diego
Garcia.
The award of the Botswana High Commission contract highlights
how our operational capability is valued the FCDO. The strength of
our technical proposal was our key differentiator, and this
positions us well for further awards across the FCDO network.
Task orders were secured for work at the US Navy's base on Diego
Garcia for an aggregate value of USD 8.2m. These contracts were
awarded under the USD 249m framework agreement announced in
September 2021, which sees RA International and our partner ECC
compete for individual task orders with four other awardees. Whilst
it has taken some time for the first contracts to be secured, these
orders represent an important milestone for our partnership with
ECC. Additional contracts have been awarded in 2023.
Framework agreements, such as the OSCC and Diego Garcia
contracts, are a mechanism favoured by governments. A major focus
of our business development activity going forward is securing RA's
participation in these types of contract vehicles, which is
consistent with building our platform as a prime contractor and
recognised partner competing for large and multi-year government
contracts. It is worth noting that whilst securing these contracts
does not lead to an immediate uplift in our contract order book,
they are important markers of the success of our strategic
partnership approach with government clients and demonstrate the
capability and value they see in working with us.
We are up and running with RA FS, our US subsidiary focused on
securing work with US federal government clients worldwide,
delivering contracts as a prime contractor. This builds on our
track record and past performance with the main overseas federal
agencies including the DoD, DoS, OBO, and USAID, which manage
budgets in the billions of Dollars. Key opportunities in our "sweet
spot" we are targeting include winning seats on Indefinite
Delivery, Indefinite Quantity ("IDIQ") contracts, such as with
Diego Garcia, winning contracts for smaller embassy or consulate
construction work, and winning a seat on a DoD or DoS logistics
contracts. We are also looking to develop our partnerships with the
likes of small disadvantaged businesses ("SDBs"), to whom the US
Government allocates between 5% and 10% of government spend. The
visible pipeline with US projects is healthy and we are optimistic
we will secure material contracts in the year ahead.
Contract order book:
USD'm
Opening order book 100
New contracts, contract uplifts
and extensions 45
Contracted revenue delivered (62)
----------------
Closing order book as at 31 December
2022 83
We continue to experience a slowdown in project tendering and
awards in the Humanitarian sector. The timeline of awards is very
uncertain with the default position remaining contract extensions
rather than new awards. The challenges in this sector are short
term and we remain committed to supporting Humanitarian projects.
Humanitarian agencies overall do a good job helping hundreds of
millions of people a year and certainly save lives. The job they do
will always be needed and we are confident that our support and
unique deliverables will translate into contract awards over the
course of the year.
Sustainability
Our commitment to sustainability and to doing business the right
way remains fundamental to our approach and is an increasingly
important competitive differentiator. We continue to be focused on
the social value we can bring to communities, and champion the
employment of local people to provide opportunities for personal
growth and skills development. We were pleased to see an increase
in the percentage of local staff we employ rebuild to 51% from 42%
the previous year.
We continued to expand our environmental activities and our
efforts are being recognised as having wider benefits to our
customers' own sustainability goals, which are themselves
increasingly being directed by legislation and bid
requirements.
Having refreshed our material topics in 2021, last year we
focused on setting KPIs against which we can begin to measure our
progress. Some of these require new SOPs in order to gather data
and to establish baselines against which we can set targets for the
future.
The newly established ESG Committee has added additional
oversight to our sustainability activities and has highlighted the
need to bring greater focus to the mental wellbeing of our staff.
Whilst we already do a lot of work in the area through our
employment practices and occupational health and safety systems, we
are looking at ways to enhance our provision in this area.
Summary and Outlook
Our performance for FY22 was in-line with market expectations
for the year.
We have been through a very difficult period since 2021, which
has had a major impact on the Group: reducing profitability,
diverting management focus, and adding costs to dispose of assets
relating to suspended or cancelled projects. We have now been able
to assess the combined direct and indirect impacts of Covid and the
Palma incident on clients, contract awards and the business as a
whole to guide our short-term and strategic priorities. We are
refocusing our resources on strengthening our value proposition for
western Government clients, and are now in a stronger position to
compete and grow our business across the relevant overseas
government budgets. Both the UK and US markets remain attractive in
size and have significant future growth potential. RA has the
capabilities, relationships, and global reputation for delivering
complex projects and to bid for what are very specialised
contracts.
We have taken significant steps in 2022 to stabilise the
business and implement organisational change which we believe will
drive business growth and enhance operational resilience.
We continue to focus on internal initiatives including cost
control, efficiency and cash discipline to restore profitability
alongside growing the business in-line with our strategic
priorities. We expect to dispose of the majority of the Palma
assets, eliminating storage costs, and reduce operating costs
through business reorganisation. We have also repriced contracts to
take into consideration rising prices. These initiatives should
support higher margins going forward.
We have significantly strengthened the liquidity position of the
Group in the current financial year and this is highlighted by the
improvement in net debt to USD 3.0m as at 31 March 2023 from the
USD 6.5m reported as at 31 December 2022. The improvement in our
cash position is being driven by the unwinding of working capital
balances and further recovery from the sale of previously impaired
assets.
Our order book of USD 78m as at end March 2023 (which is broadly
consistent with the December 2022 value) gives us good forward
visibility. We have made good progress in the current financial
year in securing notable high-quality contracts with blue-chip
clients, albeit these can be in the form of framework agreements
which are not included in the order book until task orders are
issued. In addition, we are in the process of finalising the value
of a major contract award which would result in a current order
book in excess of USD 100m. New contract awards over recent years
have been weighted to construction projects and we are now seeing
more client confidence in awarding longer term IFM contracts which
is driving our confidence in the outlook for order book growth.
Whilst the timing of these awards and project starts remains
difficult to judge, we are encouraged by this trend.
We remain cautious on the financial performance of the business
for the current financial year and expect the business to remain
broadly breakeven at the underlying EBITDA level. Overall, the
business improvement measures outlined above, the improving
confidence of our clients translating to a stronger run-rate of
contract awards and the work we are doing to strengthen our
position with government clients are important drivers in restoring
the levels of profitability the business has delivered
previously.
Soraya Narfeldt
Chief Executive Officer
25 May 2023
FINANCIAL REVIEW
Revenue of USD 62.9m for the year ended 31 December 2022 and
underlying EBITDA of USD 0.6m are consistent with the cautious view
outlined at the time of our interim results in September 2022.
Profitability for the year was impacted significantly by
inflationary cost pressure and related issues such as material
shortages, impacting gross margin. Administrative expenses
increased by USD 1.0m year over year, primarily a reflection of the
full year cost impact of RA FS.
Stabilising the financial position of the business through
increasing liquidity was a focus for the Group in 2022 and this
continues into 2023. We completed a USD 14.0m debt refinancing in
the year, with the notes being extended to the fourth quarter of
2024. Working capital movements returned to more normalised
patterns in the second half of the year, with significant
receivable balances unwinding in 2023. Additionally, capital
expenditure incurred during the year of USD 0.6m (2021: USD 3.5m)
was lower than expectations communicated mid- year, reflecting the
modest ongoing maintenance requirements of the business. Overall,
the current cash headroom and ongoing access to facilities,
supports our liquidity position to fund existing and visible
project activity.
Highlights:
2022 2021
USD'm USD'm
Revenue 62.9 54.6
Gross profit 5.2 12.0
Gross profit margin 8.2% 22.0%
Underlying EBITDA 0.6 6.7
Underlying EBITDA margin 0.9% 12.3%
Loss before tax (13.0) (32.2)
Loss before tax margin (20.7)% (59.0)%
EPS, basic (cents) (7.6) (18.7)
Underlying EPS, basic (cents) (5.2) 0.1
Net debt (end of period) (6.5) (1.5)
Revenue
Reported revenue for 2022 of USD 62.9m (2021: USD 54.6m)
represents a USD 8.3m or 15% year-on-year increase. RA FS generated
USD 5.7m in revenue from new contracts signed during the year and
USD 4.5m was generated from the sale of prefabricated camp assets
which had been purchased in 2020 and held in Mersin, Turkey.
Construction revenue increased by USD 7.1m to USD 21.3m (2021:
USD 14.2m) with the majority of the positive variance relating to
USD 4.4m of construction revenue generated by RA FS. Additionally,
as our clients' staff returned to working at their overseas
facilities, we received increased requests for renovation and
expansion works of over USD 2.0m.
IFM revenue decreased by USD 3.8m to USD 27.4m (2021: USD 31.2m)
and reflects the impact of lower occupancy from our hotel facility
in Somalia. During the COVID-19 pandemic, many long-term tenancy
contracts came to an end and were not renewed. While steady growth
in occupancy has been seen since the start of 2022, it could take a
number of years before levels seen pre-pandemic are achieved. This
said, a recovery in IFM revenue is expected in 2023 resulting from
increased IFM services performed for humanitarian clients, and
improving hotel occupancy.
Revenue from supply chain services was USD 14.2m (2021: USD
9.2m). The USD 5.0m increase year on year is reflective of USD 4.5m
earned from the sale of camp assets which were held in inventory as
at the end of 2021.
Revenue by service channel:
2022 2021
USD'm USD'm
Integrated facilities management 27.4 31.2
Construction 21.3 14.2
Supply chain 14.2 9.2
---------------- ----------------
62.9 54.6
Profit margin
Gross margin in 2022 was 8.3% (2021: 22.0%) reflecting continued
inflationary pressure which has been affecting the business since
the second half of 2021, impacting our main non-staff cost
categories: food and beverage, fuel, logistics, construction
materials, and consumables. While newly awarded contracts are
generating improved margins, the effect of inflation on legacy
projects worsened throughout 2022, further depressing these project
margins and leading to losses generated on some long-term fixed
price contracts. Decreased hotel occupancy also negatively affected
gross margin during the year.
We continue to work with suppliers to reduce the impact of
increasing cost of supplies, and with customers to agree contract
uplifts where possible. With some customers we have been successful
in agreeing rate increases during the contract term, and in other
cases we are in the process of agreeing rate increases on contract
renewal.
Reconciliation of loss to underlying EBITDA:
2022 2021
USD'm USD'm
Loss (13.2) (32.1)
Tax expense (credit) 0.2 (0.1)
---------------- ----------------
Loss before tax (13.0) (32.2)
Finance costs 2.5 1.3
Investment income (0.2) (0.1)
---------------- ----------------
Operating loss (10.7) (30.9)
Non-underlying items 4.2 32.2
---------------- ----------------
Underlying operating (loss)/profit (6.5) 1.3
Share based payments 0.5 0.5
Depreciation 6.6 4.9
---------------- ----------------
Underlying EBITDA 0.6 6.7
Underlying EBITDA margin was 0.9% in 2022 (2021: 12.3%),
reflecting lower gross margin and a USD 1.0m increase in
administrative expenses driven by a full year of costs relating to
RA FS, established during 2021.
During the year, the Company incurred non-underlying costs of
USD 4.2m (2021: USD 32.2m).
Non-underlying items:
2022 2021
USD'm USD'm
COVID-19 costs - 0.8
Restructuring costs 3.5 -
Palma Project, Mozambique 0.7 31.5
---------------- ----------------
4.2 32.2
Restructuring costs relate to the strategic decision to redirect
resources and investment towards growing our government and
humanitarian business, as described in our 2021 Annual Report.
These costs primarily arose from recording provisions against
certain asset balances deemed unrecoverable as a result of this
strategic shift.
Non-underlying expenses relating to the Palma Project consist of
an incremental USD 1.1m of additional unavoidable costs which are
expected to be incurred while the Group disposes of camp assets
currently located in storage. This balance is offset by the
recovery of impairment recognised in 2021. Recovery was generated
both through the sale of assets and insurance proceeds.
Finance costs net of investment revenue increased to USD 2.3m
(2021: USD 1.3m) due to fees relating to the refinancing undertaken
during the year and interest charges. The average loan balance
during the year was USD 11.5m (2021: USD 7.1m). The notes carry an
annual fixed interest rate of 7.5% (2021: 7.0%) for GBP denominated
notes and 8.0% (2021: 7.5%) for USD denominated notes with
principal to be repaid as a bullet payment upon maturity in
November 2024. Interest is paid on a quarterly basis.
Earnings per share
Basic loss per share was 7.6 cents in the current period (2021:
18.7 cents). Adjusting for non-underlying items, underlying loss
per share was 5.2 cents (2021: earnings per share 0.1 cents).
Cash flow
Cash decreased by USD 1.1m during the year (2021: USD 9.1m).
Summary cash flows:
2022 2021
USD'm USD'm
Operating Profit (10.7) (30.9)
Asset impairment 3.9 28.0
Depreciation 5.1 4.9
Other non-cash items pre-working
capital adjustments 1.9 1.0
---------------- ----------------
0.2 3.0
Working capital adjustments (1.6) (7.8)
Tax & end of service benefits paid (0.3) (0.2)
---------------- ----------------
Net cash flows used in operating
activities (1.7) (5.1)
Investing activities (excluding
Capital Expenditure) 0.6 0.9
Capital Expenditure (0.6) (3.5)
---------------- ----------------
Net cash flows used in investing
activities - (2.6)
Financing activities (excluding
borrowings) (3.3) (5.2)
Net proceeds from borrowing 4.0 3.9
---------------- ----------------
Net cash flows from/(used in) financing
activities 0.7 (1.3)
Net change in cash during the period (1.0) (9.1)
Net cash outflows from operations were USD 1.7m (2021: USD
5.1m), primarily a result of working capital adjustments of USD
1.6m (2021: USD 7.8m). While a USD 2.1m cash benefit was realised
from inventory levels decreasing, this benefit was more than offset
by a decrease in trade payables.
Capex for the period was USD 0.6m (2021: USD 3.5m), lower than
our previous expectations, and reflects the relatively low
maintenance spend requirements of the business. Management plans to
continue to exercise restraint in undertaking any significant
capital expenditure not directly related to, and recoverable from,
new contracts. During the year a nearly equivalent value of cash
was raised through the sale of fixed assets, a trend which has
continued into 2023.
Balance sheet and liquidity
Net assets at 31 December 2022 were USD 24.9 (2021: USD
37.3m).
Breakdown of net assets:
2022 2021
USD'm USD'm
Cash and cash equivalents 7.5 8.5
Loan notes (14.0) (10.0)
---------------- ----------------
Net cash (6.5) (1.5)
Net working capital 13.5 13.8
Non-current assets 24.0 30.9
Tangible owned assets 19.6 25.5
Right-to-use assets 4.4 5.4
Goodwill - -
Lease liabilities and end
of service benefit (6.1) (5.9)
---------------- ----------------
Net assets 24.9 37.3
During the year the Group raised USD 14.0m of debt under a new
Medium-Term Note ("MTN") programme. The fundraising was undertaken
in two tranches with USD 12.0m raised in the first half, and USD
2.0m raised in the second half of 2022. This debt was raised to
refinance previously issued notes, and maintain adequate liquidity
so as to comfortably bid for and execute certain large projects in
the pipeline. The notes mature in November 2024.
We saw progress during the year in reducing our inventory and
trade receivables balances which has continued into 2023. As at 31
December 2022, we continue to hold a provision against inventory
originally purchased for the Palma Project. Whilst there has been
discussions ongoing, the assets are yet to be disposed of.
Dividend
The Board is not recommending the payment of a final dividend in
connection with the year ended 2022, however it is the Board's
intention to reinstate the dividend as soon as is practicable,
taking into consideration the financial strength of RA and
confidence in its future performance.
Andrew Bolter
Chief Financial Officer
25 May 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
2022 2021
Notes USD'000 USD'000
Revenue 7 62,917 54,595
Cost of sales 9 (57,717) (42,050)
Credit provision 20 - (505)
--------- --------
Gross profit 5,200 12,040
Administrative expenses 9 (11,695) (10,719)
--------- --------
Underlying operating (loss)/profit (6,495) 1,321
Non-underlying items 9 (4,217) (32,222)
--------- --------
Operating loss (10,712) (30,901)
Investment revenue 206 55
Finance costs (2,491) (1,314)
--------- --------
Loss before tax (12,997) (32,160)
Tax (expense)/credit 11 (169) 80
Loss and total comprehensive income for the
year (13,166) (32,080)
========
Basic earnings per share (cents) 12 (7.6) (18.7)
Diluted earnings per share (cents) 12 (7.6) (18.5)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Notes 2022 2021
USD'000 USD'000
-------- --------
Assets
Non-current assets
Property, plant, and equipment 16 19,590 25,512
Right-of-use assets 17 4,421 5,374
Goodwill 18 - -
-------- --------
24,011 30,886
Current assets
Inventories 19 5,154 9,397
Trade and other receivables 20 16,389 16,522
Cash and cash equivalents 21 7,514 8,532
-------- --------
29,057 34,451
-------- --------
Total assets 53,068 65,337
-------- --------
Equity and liabilities
Equity
Share capital 22 24,300 24,300
Share premium 18,254 18,254
Merger reserve (17,803) (17,803)
Treasury shares 23 - (1,199)
Share based payment reserve 574 534
Retained earnings (457) 13,223
-------- --------
Total equity 24,868 37,309
-------- --------
Non-current liabilities
Loan notes 24 14,000 -
Lease liabilities 25 4,556 5,206
Employees' end of service
benefits 26 928 731
-------- --------
19,484 5,937
-------- --------
Current liabilities
Loan notes 24 - 10,000
Lease liabilities 25 650 834
Trade and other payables 27 6,974 9,835
Provisions 28 1,092 1,422
-------- --------
8,716 22,091
-------- --------
Total liabilities 28,200 28,028
-------- --------
Total equity and liabilities 53,068 65,337
======== ========
CONSOLIDATED STATEMENT IN CHANGES IN EQUITY
For the year ended 31 December 2022
Share
based
Share Share Merger Treasury payment Retained
capital premium reserve shares reserve earnings Total
----------------
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
---------------- --------------- -------------- ------------- ------------- ------------------ ------------- ---------
As at 1 January
2021 24,300 18,254 (17,803) (1,363) 177 48,509 72,074
Total
comprehensive
income for the
period - - - - - (32,080) (32,080)
Share based
payments
(note 13) - - - - 487 - 487
Dividends
declared
and paid (note
14) - - - - - (3,206) (3,206)
Issuance of
treasury
shares (note
23) - - - 164 (130) - 34
---------------- --------------- -------------- ------------- ------------- ------------------ ------------- ---------
As at 31
December
2021 24,300 18,254 (17,803) (1,199) 534 13,223 37,309
Total
comprehensive - - - - - (13,166) (13,166)
income for the
period
Share based
payments - - - - 311 - 311
(note 13)
Non-cash
employee - - - 981 - (608) 373
compensation
(note
13)
Lapsed share
options - - - - (94) 94 -
(note 13)
Issuance of
treasury - - - 218 (177) - 41
shares (note
23)
---------------- --------------- -------------- ------------- ------------------ ------------- ------------- -----------
As at 31
December
2022 24,300 18,254 (17,803) - 574 (457) 24,868
================ =============== ============== ============= ================== ============= ============= ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Notes 2022 2021
USD'000 USD'000
--------------------------------------------------------- ------------------ ------------------
Operating activities
Operating (loss)/profit (10,712) (30,901)
Adjustments for non-cash and other items:
Depreciation on property, plant, and equipment
16, 17 6,566 4,855
Profit on disposal of property, plant, and equipment
16 (3) (16)
Unrealised differences on translation of foreign
balances (35) 133
Provision for employees' end of service benefits
26 526 433
Share based payments 13 489 487
Non-underlying items - Palma Project, Mozambique
9 3,334 28,035
--------------------------------------------------------- ------------------ ------------------
165 3,026
--------------------------------------------------------- ------------------ ------------------
Working capital adjustments:
Inventories 2,067 (5,071)
Trade and other receivables (257) (4,284)
Trade and other payables (3,362) 1,513
--------------------------------------------------------- ------------------ ------------------
Cash flows (used in)/ generated from
operations (1,387) (4,816)
Tax paid 11 - (20)
Employees' end of service benefits paid 26 (329) (219)
----------------------------------------------------- ------------------ ------------------
Net cash flows used in operating activities (1,716) (5,055)
--------------------------------------------------------- ------------------ ------------------
Investing activities
Investment revenue received 206 55
Purchase of property, plant, and equipment 16 (618) (3,478)
Proceeds from disposal of property,
plant, and equipment 16 359 823
----------------------------------------------------- ------------------ ------------------
Net cash flows used in investing activities (53) (2,600)
--------------------------------------------------------- ------------------ ------------------
Financing activities
Repayment of borrowings 24 (11,500) -
Proceeds from borrowings 24 15,500 3,916
Repayment of lease liabilities 25 (834) (742)
Finance costs paid (2,491) (1,314)
Dividends paid 14 - (3,206)
Proceeds from share options exercised 41 34
----------------------------------------------------- ------------------ ------------------
Net cash flows generated from/(used in) financing
activities 716 (1,312)
--------------------------------------------------------- ------------------ ------------------
Net decrease in cash and cash equivalents (1,053) (8,967)
Cash and cash equivalents as at start
of the period 21 8,532 17,632
Effect of foreign exchange on cash and
cash equivalents 35 (133)
----------------------------------------------------- ------------------ ------------------
Cash and cash equivalents as at end
of the period 21 7,514 8,532
===================================================== ================== ==================
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2022
1 CORPORATE INFORMATION
The principal activity of RA International Group plc ("RAI" or
the "Company") and its subsidiaries (together the "Group") is
providing services in demanding and remote areas. These services
include construction, integrated facilities management, and supply
chain services.
RAI was incorporated on 13 March 2018 as a public company in
England and Wales under registration number 11252957. The address
of its registered office is One Fleet Place, London, EC4M 7WS.
2 BASIS OF PREPARATION
The consolidated financial statements have been prepared in
accordance with UK adopted international accounting standards. They
have been prepared under the historical cost basis and have been
presented in United States Dollars ("USD"). All values are rounded
to the nearest thousand (USD'000), except where otherwise
indicated.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2022
or 2021 but is derived from those accounts. Statutory accounts for
the year ended 31 December 2021 have been delivered to the
Registrar of companies and those for 2022 will be delivered in due
course. The auditor has reported on both sets of accounts; its
reports were unqualified, did not contain an emphasis of matter
reference and did not contain statements under section 498 (2) or
(3) of the Companies Act 2006.
Going concern
In assessing the basis of preparation of the financial
statements the Board has undertaken a rigorous assessment of going
concern, considering financial forecasts covering a period to 30
June 2024 (the going concern period) and utilising scenario
analysis to test the adequacy of the Group's liquidity. As
consistent with prior year, the primary uncertainties facing the
business at present are related to the timing and success of
contract awards, as well as the time frame and value at which
unutilised fixed assets and inventory can be used or sold.
In addition to a Base Case scenario, additional downside
scenarios were prepared which reflect the primary uncertainties
facing the business. One assumes that the Group is unable to sell
any unutilised assets and continues to incur the related storage
costs until 30 September 2023. Another scenario forecasts a 25%
decrease in the probability of the award of new contracts, a 10%
reduction in gross margin earned from these contracts, and that the
Group is unable to sell any unutilised assets and continues to
incur the related storage costs until 30 September 2023. Under the
most pessimistic downside scenario, Group revenue is approximately
96% of that reported in 2022 and underlying EBITDA margin is
negative 1.8%.
Under all scenarios, the Group has concluded that it has
sufficient cash reserves to fund trading, capital investment, and
interest repayments associated with loan notes during the going
concern period. If for any reason further liquidity is required
during the going concern period, the Group could decline new
project awards, or alter its cost base. These are considered
controllable mitigating options that management could implement and
would lead to an increase in liquidity.
A further Reverse Stress Test was also undertaken to determine
what trading conditions would lead to the Group exhausting its
available cash reserves during the going concern period. It was
determined that under a scenario whereby the Group is awarded no
future contracts, and solely generates revenue from work that is
currently contracted, the Group would not exhaust its available
liquidity until October 2024 (which falls outside of the going
concern period). This trading scenario is considered remote given
the value of the current pipeline.
During the year, the Group completed a refinancing and
fundraising exercise. The purpose of the exercise was to
synchronise and extend the maturity of the USD 10.0m of loan notes
issued by the Group during 2020 and 2021, which were due to mature
in the second half of 2022. The original USD 10.0m of loan notes
were replaced with USD 14.0m in new loan notes which mature in
November of 2024. The Group also has access to a GBP 10.0m
long-term debt facility which is not expected to be utilised under
any scenarios modelled. The amount that can be drawn from this
facility at any given time is dependant on the value of the
Company's market capitalisation and other non financial
covenants.
Under all scenarios reviewed by the Board the Group continues to
have sufficient cash reserves to operate throughout the going
concern period. Any scenario whereby trading performance is worse
than those modelled is considered to be remote given the level of
committed contracted work in place. Additionally, controllable
mitigations exist, as are noted above, which could be utilised to
increase liquidity. On this basis, the Board is satisfied that it
is appropriate to adopt the going concern basis of accounting in
preparing the financial statements.
Climate change
In preparing the financial statements, the management has
considered the impact of the physical and transition risks of
climate change and identified this as an emerging risk but have
concluded that it does not have a material impact on the
recognition and measurement of the assets and liabilities in these
financial statements as at 31 December 2022.
3 BASIS OF CONSOLIDATION
The financial statements comprise the financial statements of
the Company and its subsidiaries as at 31 December 2022. Control is
achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, the
Group has:
-- Power over the investee (i.e., existing rights that give it
the current ability to direct the relevant activities of the
investee),
-- Exposure, or rights, to variable returns from its involvement with the investee, and
-- The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting
rights results in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement with the other vote holders of the investee,
-- Rights arising from other contractual arrangements, and
-- The Group's voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Company loses control over the
subsidiary. Assets, liabilities, income, and expenses of a
subsidiary acquired or disposed of during the year are included in
the financial statements from the date the Group gains control
until the date the Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements
of a subsidiary to bring their accounting policies into line with
the Group's accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary, without a
change of control, is accounted for as an equity transaction.
If the Company loses control over a subsidiary, it derecognises
the related assets (including goodwill), liabilities,
non-controlling interest, and other components of equity while any
resultant gain or loss is recognised in the profit or loss. Any
investment retained is recognised at fair value.
Business combinations
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, which is measured at the fair value
on the acquisition date. The net identifiable assets acquired, and
liabilities assumed are recorded at their respective fair values on
the acquisition date. Acquisition-related costs are expensed as
incurred and included in acquisition costs.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition
date.
Current versus non-current classification
The Group presents assets and liabilities in the statement of
financial position based on current/non-current classification. An
asset is current when it is:
-- Expected to be realised or intended to be sold or consumed in the normal operating cycle,
-- Held primarily for the purpose of trading,
-- Expected to be realised within twelve months after the reporting period, or
-- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting period.
All other assets are classified as non-current. A liability is
current when:
-- It is expected to be settled in the normal operating cycle,
-- It is held primarily for the purpose of trading,
-- It is due to be settled within twelve months after the reporting period, or
-- There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period.
The Group classifies all other liabilities as non-current.
4 SIGNIFICANT ACCOUNTING POLICIES
Revenue recognition
Revenue from contracts with customers is recognised when control
of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Group expects
to be entitled in exchange for those goods or services. The Group
has concluded that it is acting as a principal in all its revenue
arrangements.
Sale of goods (supply chain)
Revenue from the sale of goods and the related logistics
services is recognised when control of ownership of the goods have
passed to the buyer, usually on delivery of the goods.
Construction
Typically, revenue from construction contracts is recognised at
a point in time when performance obligations have been met.
Generally, this is the same time at which client acceptance has
been received. Dependant on the nature of the contracts, in some
cases revenue is recognised over time using the percentage of
completion method on the basis that the performance does not create
an asset with an alternative use and the Group has an enforceable
right to payment for performance completed to date. Contract
revenue corresponds to the initial amount of revenue agreed in the
contract and any variations in contract work, claims and incentive
payments are recognised only to the extent that it is highly
probable that they will result in revenue, and they are capable of
being reliably measured.
Services (integrated facilities management)
Revenue from providing services is recognised over time,
applying the time elapsed method for accommodation and similar
services to measure progress towards complete satisfaction of the
service, as the customers simultaneously receive and consume the
benefits provided by the Group.
Cost of sales
Cost of sales represent costs directly incurred or related to
the revenue generating activities of the Group, including staff
costs, materials and depreciation.
Contract balances
Trade receivables
A receivable represents the Group's right to an amount of
consideration that is unconditional, meaning only the passage of
time is required before payment of the consideration is due.
Accrued revenue
Accrued revenue represents the right to consideration in
exchange for goods or services transferred to a customer in
connection with fulfilling contractual performance obligations. If
the Group performs by transferring goods or services to a customer
before invoicing, accrued revenue is recognised in an amount equal
to the earned consideration that is conditional on invoicing. Once
an invoice has been accepted by the customer accrued revenue is
reclassified as a trade receivable.
Customer advances
If a customer pays consideration before the Group transfers
goods or services to the customer, a customer advance is recognised
when the payment is received by the Group. Customer advances are
recognised as revenue when the Group meets its obligations to the
customer.
Borrowing costs
Borrowing costs directly attributable to the construction of an
asset are capitalised as part of the cost of the asset.
Capitalisation commences when the Group incurs costs for the asset,
incurs borrowing costs and undertakes activities that are necessary
to prepare the asset for its intended use or sale. Capitalisation
ceases when the asset is ready for use or sale. All other borrowing
costs are expensed in the period in which they occur. Borrowing
costs consist of interest and other costs that are incurred in
connection with the borrowing of funds.
Tax
Current income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted at the
reporting date in the countries where the Group operates and
generates taxable income. Management periodically evaluates
positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Property, plant, and equipment
Property, plant, and equipment are stated at cost less
accumulated depreciation and any impairment in value. Capital
work-in-progress is not depreciated until the asset is ready for
use. Depreciation is calculated on a straight-line basis over the
estimated useful lives. At the end of the useful life, assets are
deemed to have no residual value. Contract specific assets are
depreciated over the lesser of the length of the project, or the
useful life of the asset. The useful life of general property,
plant and equipment is as follows:
Buildings Lesser of 5 to 20 years and term
of land lease
Machinery, motor vehicles, furniture 2 to 10 years
and equipment
Leasehold improvements Lesser of 10 years and term of
lease
The carrying values of property, plant, and equipment are
reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable. If any
such indication exists and where the carrying values exceed the
estimated recoverable amount, the assets are written down, with the
write down recorded in profit or loss to their recoverable amount,
being the greater of their fair value less costs to sell and their
value in use.
Expenditure incurred to replace a component of an item of
property, plant, and equipment that is accounted for separately is
capitalised and the carrying amount of the component that is
replaced is written off. Other subsequent expenditure is
capitalised only when it increases future economic benefits of the
related item of property, plant, and equipment. All other
expenditure is recognised in profit or loss as the expense is
incurred.
An item of property, plant, and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and
carrying amount of the asset) is included in the profit or loss in
the year the asset is derecognised.
Assets' residual values, useful lives, and methods of
depreciation are reviewed at each financial year end, and adjusted
prospectively, if appropriate.
Goodwill
Goodwill is stated as cost less accumulated impairment losses.
Cost is calculated as the total consideration transferred less net
assets acquired.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs include those expenses incurred in bringing each
product to its present location and condition. Cost is calculated
using the weighted average method. Net realisable value is based on
estimated selling price less any further costs expected to be
incurred in disposal.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and balances
with banks, which are readily convertible to known amounts of cash
and have a maturity of three months or less from the date of
acquisition. This definition is also used for the consolidated cash
flow statement.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the
Group estimates the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or cash-generating
unit's ("CGU") fair value less costs to sell and its value in use.
An asset's recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. In determining fair value less costs to sell, an
appropriate valuation model is used maximising the use of
observable inputs. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded entities or
other available fair value indicators.
The Group bases its impairment calculation on detailed budgets
and forecasts which are prepared separately for each of the Group's
CGUs to which the individual assets are allocated. These budgets
and forecasts generally cover a period of five years. For longer
periods, a long-term growth rate is calculated and applied to
project future cash flows after the fifth year.
Impairment losses relating to continuing operations are
recognised in those expense categories consistent with the function
of the impaired asset.
An assessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists,
the Group estimates the asset's or CGU's recoverable amount. A
previously recognised impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset's
recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the profit or loss unless the asset is
carried at a revalued amount, in which case, the reversal is
treated as a revaluation increase.
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. The expense
relating to a provision is presented in the statement of profit or
loss.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
Financial instruments
i) Financial assets
Initial recognition and measurement
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them.
With the exception of trade receivables that do not contain a
significant financing component or for which the Group has applied
the practical expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient are
measured at the transaction price determined under IFRS 15.
Subsequent measurement
Financial assets at amortised cost are subsequently measured
using the effective interest method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is
derecognised, modified, or impaired.
Other receivables are subsequently measured at amortised
cost.
Derecognition of financial assets
A financial asset (or, where applicable a part of a financial
asset or part of a group of similar financial assets) is
derecognised when the rights to receive cash flows from the asset
has expired.
Impairment of financial assets
The Group recognises an allowance for expected credit losses
("ECLs") for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all
the cash flows that the Group expects to receive, discounted at an
approximation of the original effective interest rate. The expected
cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual
terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that
result from default events that are possible within the next
twelve-months (a twelve-month ECL). For those credit exposures for
which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a
simplified approach in calculating ECLs. Therefore, the Group does
not track changes in credit risk, but instead recognises a loss
allowance based on lifetime ECLs at each reporting date. When
arriving at the ECL we consider historical credit loss experience
including any adjustments for forward-looking factors specific to
the debtors and the economic environment.
A financial asset is deemed to be in default when internal or
external information indicates that the Group is unlikely to
receive the outstanding contractual amounts in full before taking
into account any credit enhancements held by the Group. A financial
asset is written off when there is no reasonable expectation of
recovering the contractual cash flows.
Income from financial assets
Investment revenue relates to interest income accrued on a time
basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially recognised at fair value and
subsequently classified at fair value through profit or loss, loans
and borrowings, or payables. Loans and borrowings and payables are
recognised net of directly attributable transaction costs.
The Group's financial liabilities include trade and other
payables and loan notes.
Subsequent measurement
The measurement of financial liabilities depends on their
classification as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as held at fair
value through profit or loss.
Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in IFRS 9 are
satisfied. The Group has not designated any financial liability as
at fair value through profit or loss.
Financial liabilities are classified as held for trading if they
are incurred for the purpose of repurchasing in the near term. This
category also includes derivative financial instruments entered
into by the Group that are not designated as hedging instruments in
hedge relationships as defined by IFRS 9. Separated embedded
derivatives are also classified as held for trading unless they are
designated as effective hedging instruments.
Loans and payables
This is the category most relevant to the Group. After initial
recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the EIR method. Gains and losses
are recognised in profit or loss when the liabilities are
derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under
the liability is discharged, cancelled or expires.
Where an existing financial liability is replaced by another
from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in the
profit or loss.
Leases
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liability. The cost of right-of-use
assets includes the amount of lease liabilities recognised and
initial direct costs incurred. Right-of-use assets are depreciated
on a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. In calculating the present value of
lease payments, the Group uses its incremental borrowing rate at
the lease commencement date because the interest rate implicit in
the lease is not readily determinable. After the commencement date,
the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payment made. In
addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term or a change in
the lease payments.
Short-term leases and leases on low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases (i.e. those leases that have a lease term of
twelve months or less from the commencement date). It also applies
the lease of low-value assets recognition exemption to leases that
are considered to be low value. Lease payments on short-term leases
and leases of low-value assets are recognised as an expense on a
straight-line basis over the lease term.
Employees' end of service benefits
The Group provides end of service benefits to its employees in
accordance with local labour laws. The entitlement to these
benefits is based upon the employees' final salary and length of
service, subject to the completion of a minimum service period. The
expected costs of these benefits are accrued over the period of
employment. The Group accounts for these benefits as a defined
contribution plan under IAS 19.
Treasury shares
Treasury shares are held as a deduction from equity and are held
at cost price.
Share based payments
Employees (including senior executives) of the Group receive
remuneration in the form of share-based payments, whereby employees
render services as consideration for equity instruments
(equity-settled transactions).
The cost of equity-settled transactions is determined by the
fair value at the date when the grant is made using an appropriate
valuation model, further details of which are provided in note
13.
That cost is recognised in employee benefits expense, included
in administrative expenses, together with a corresponding increase
in equity (share based payment reserve), over the period in which
the service and, where applicable, the performance conditions are
fulfilled (the vesting period). The cumulative expense recognised
for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has
expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The expense or credit in the
statement of profit or loss for a period represents the movement in
cumulative expense recognised as at the beginning and end of that
period.
Service and non-market performance conditions are not taken into
account when determining the grant date fair value of awards, but
the likelihood of the conditions being met is assessed as part of
the Group's best estimate of the number of equity instruments that
will ultimately vest. Market performance conditions are reflected
within the grant date fair value. Any other conditions attached to
an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to an immediate
expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest
because non-market performance and/or service conditions have not
been met. Where awards include a market or non-vesting condition,
the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all
other performance and/ or service conditions are satisfied.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted earnings
per share.
Contingencies
Contingent liabilities are not recognised in the financial
statements, they are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. A contingent
asset is not recognised in the financial statements but disclosed
when an inflow of economic benefits is probable.
Foreign currencies
The Group's financial statements are presented in USD, which is
the functional currency of all Group companies. Items included in
the financial statements of each entity are measured using that
functional currency.
Transactions in foreign currencies are initially recorded at the
functional currency rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
are retranslated at the functional currency spot rate of exchange
prevailing at the reporting date. All differences are taken to
profit or loss.
Non-monetary items that are measured at historical cost in a
foreign currency are translated using the exchange rates as at the
dates of the initial transactions. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Foreign currency share capital (including any related share
premium or additional paid-in capital) is translated using the
exchange rates as at the dates of the initial transaction. The
value is not remeasured.
5 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New and amended standards and interpretations
Amendments and interpretations that apply for the first time in
2022 do not have a significant impact on the financial statements
of the Group. The Group has not early adopted any standards,
interpretations or amendments that have been issued but are not yet
effective.
6 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that may affect the
reported amount of assets and liabilities, revenue, expenses,
disclosure of contingent liabilities, and the resultant provisions
and fair values. Such estimates are necessarily based on
assumptions about several factors and actual results may differ
from reported amounts.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods
affected.
a) Judgements
Use of Alternative Performance Measures
IAS1 requires material items to be disclosed separately in a way
that enables users to assess the quality of a company's
profitability. In practice, these are commonly referred to as
"exceptional" items, but this is not a concept defined by IFRS and
therefore there is a level of judgement involved in arriving at an
Alternative Performance Measure ("APM") which excludes such
exceptional items. The Group refers to these as non-underlying
items and considers items suitable for separate presentation that
are outside normal operations and are material to the results of
the Group either by virtue of size or nature. See note 9 for
further details on specific balances which are classified as
non-underlying items.
b) Estimates and assumptions
Percentage of completion
The Group primarily uses the output percentage-of-completion
method when accounting for contract revenue on its long-term
construction contracts. Use of the percentage-of-completion method
requires the Group to estimate the progress of contracts based on
surveys of work performed. The Group has determined this basis of
revenue recognition is the best available measure on such
contracts.
The accuracy of percentage-of-completion estimates has a
material impact on the amount of revenue and related profit
recognised. As at 31 December 2022, USD 2,031,000 of accrued
revenue had been calculated using the percentage-of- completion
method (2021: USD 3,837,000).
Revisions to profit or loss arising from changes in estimates
are accounted for in the period when the changes occur.
IFRS 16 - interest rate
In some jurisdictions where the Group holds long-term leases,
the incremental borrowing rate is not readily determinable. As a
result, the incremental borrowing rate is estimated with reference
to risk adjusted rates in other jurisdictions where a market rate
is determinable, and the Group's cost of funding.
Provision for asset impairment
In March 2021, insurgents attacked the town of Palma,
Mozambique. This led to Total Energies ("Total") suspending their
development works in the region and declaring force majeure. As a
result, the Group's contract to build and operate a 1,800-person
camp was suspended (the Palma Project). At the time of the attack,
RA had purchased substantially all of the assets required to
complete the project and was approximately two weeks from
commencing revenue generating activities.
As a result of this catastrophic event and the lack of evidence
to conclude on the fair value of these assets at 31 December 2021,
the Group impaired the full carrying value of assets which are
associated with the Palma Project. Further details of this
impairment charge can be found in note 9.
Provision for unavoidable costs
Following the March 2021 attack on Palma, Mozambique the Group
began incurring unavoidable costs relating to the Offsite Assets.
It was expected that these assets were to be fully disposed of by
December 2022, however it is now expected that this will extend to
September 2023. Given the limited market for these assets the exact
timing of disposal is considered uncertain.
7 SEGMENTAL INFORMATION
For management purposes, the Group is organised into one segment
based on its products and services, which is the provision of
services in demanding and remote areas. Accordingly, the Group only
has one reportable segment. The Group's Chief Operating Decision
Maker ("CODM") monitors the operating results of the business as a
single unit for the purpose of making decisions about resource
allocation and assessing performance. The CODM is considered to be
the Board of Directors.
Operating segments
Revenue, operating results, assets, and liabilities presented in
the financial statements relate to the provision of services in
demanding and remote areas.
Revenue by service channel:
2022 2021
USD'000 USD'000
Integrated facilities management 27,411 31,162
Construction 21,276 14,221
Supply chain services 14,230 9,212
---------------- ----------------
62,917 54,595
Revenue by recognition timing:
2022 2021
USD'000 USD'000
Revenue recognised over time 48,160 41,320
Revenue recognised at a point in
time 14,757 13,275
---------------- ----------------
62,917 54,595
Geographic segment
The Group primarily operates in Africa and as such the CODM
considers Africa and Other locations to be the only geographic
segments of the Group. The below geography split is based on the
location of project implementation.
Revenue by geographic area of project implementation:
2022 2021
USD'000 USD'000
Africa 61,012 52,357
Other 1,905 2,238
---------------- ----------------
62,917 54,595
Non-current assets by geographic area:
2022 2021
USD'000 USD'000
Africa 22,223 28,448
Other 1,788 2,438
---------------- ----------------
24,011 30,886
Revenue split by customer:
2022 2021
% %
Customer A 19 25
Customer F 12 11
Customer E 10 14
Customer B 10 6
Customer D 9 10
Customer H 8 4
Customer I 7 -
Other 25 30
---------------- ----------------
100 100
8 GROUP INFORMATION
The Company operates through its subsidiaries, listed below,
which are legally or beneficially, directly or indirectly owned and
controlled by the Company.
The extent of the Company's beneficial ownership and the
principal activities of the subsidiaries are as follows:
Name of the Country Beneficial Registered address
entity of incorporation ownership
RA Africa Holdings British Virgin 100% 3rd floor, J&C Building, PO
Limited Islands Box 362, Road Town, Torola
Virgin Islands (British) VG110
RA International British Virgin 100% 3th floor, J&C Building, PO
Commercial Services Islands Box 362, Road Town, Torola
Limited Virgin Islands (British) VG110
RASB Holdings British Virgin 100% 3th floor, J&C Building, PO
Limited Islands Box 362, Road Town, Torola
Virgin Islands (British) VG110
RA International Cameroon 100% 537 Rue Njo-Njo, Bonaprisi,
Limited PO Box 1245, Douala, Cameroon
RA International Central African 100% Avenue des Martyrs, Bangui,
RCA Republic Central African Republic
RA International Chad 100% N'djamena, Chad
Chad
RA International Democratic 100% Kinshasa, Sis No106, Boulvevard
DRC SARL Republic Du 30 Juin, Dans La Commune
of Congo De La Gombe EN RD, Congo
RA International Guyana 100% 210 New Market Street, Geoegetown,
Guyana Inc. Guyana
Raints Kenya Kenya 100% 770 Faith Ave, Runda Estate,
Limited Nairobi City (North), Nairobi,
Kenya
RA International Lebanon 100% Beirut Souks, Souk El Dahab,
SARL section no 1144, plot no 1479,
Beirut, Lebanon
Al Mutaheda Al-Alamia Libya 100% Suq El Jumah- Tripoli Libya
Ltd.
RA International Malawi 100% Hanover House, Hanover Avenue,
Limited Independence Drive, Blantyre,
Malawi
Raints Mali Mali 100% Bamako-Niarela Immeuble Sodies
Appartement C/7, Mali
RA International Mozambique 100% Distrito KAMPFUMO, Bairro Sommarchield,
Limitada Rua. Jose Graverinha, no 198,
R/C, Maputo, Mozambique
RA Facilities Mozambique 100% Distrito Urbano 1, Bairro Central,
Services S.A* Rua do Sol, 23 Maputo, Mozambique
RA International Niger 100% Niamey, Quartier Cite Piudriere,
Niger Avenue du Damergou, CI-48, Niger
RA International Poland 100% UL. M Y SKA, numer 16, lokal
Poland 8 PI TRO, kod poczt. 61-730,
poczta POZNA
RA Contracting Qatar 100% 63 Aniza, Doustor St. 905, Salam
and Facility International, Qatar
Management LLC
RA International** Somalia 100% Mogadishu, Somalia
RA International South Sudan 100% Plot no. 705, Block 3-K South,
FZCO , Airport Road, Hai Matar South
Sudan
Reconstruction Sudan 100% 115 First Quarter Graif west-Khartoum,
and Assistance Kharthoum, Republic of Sudan
Company Ltd
RA International Tanzania 100% 369 Toure Drive, Oysterbay,
Limited PO Box 62, Dar Es Salaam, Tanzania
RA International UAE 100% Office Number S101221O39, Jebel
FZCO Ali Free Zone, Dubai, United
Arab Emirates
RA International UAE 100% Building 41, 3B Street, Al Quoz
General Trading Industrial Area 1, PO Box 115774,
LLC Dubai, United Arab Emirates
RA International UK 100% 1 Fleet Place, London, EC4M
Global Operations 7WS, United Kingdom
Limited
RA International Uganda 100% 4th Floor, Acacia Mall, Plot
Limited 14-18, Cooper Road, Kololo,
Kampala, Uganda
RA Federal Services United States 100% 3411 Silverside Road, Tatnall
LLC of America Building #104,
Wilmington, DE 19810
Berkshire General United States 100% 1 Church Street, 5th Floor,
Insurance Limited of America Burlington, Chittenden, Vermont,
05401, United States of America
* During the year, Royal Food Solutions S.A was renamed as RA
Facilities Services S.A
** RA International in Somalia is not an incorporated legal
entity.
RA International Global Operations Limited, registered number
12672019 is exempt from the requirements of Company Act 2006
relating to the audit of individual accounts by virtue of section
479A
9 LOSS FOR THE PERIOD
Loss for the period is stated after charging:
2022 2021
USD'000 USD'000
Staff costs 24,382 22,088
Materials 24,079 12,887
Depreciation of property, plant,
and equipment 5,110 4,855
Impairment of property, plant, 1,456 -
and equipment
Staff costs relate to wages and salaries plus directly
attributable expenses.
Non-underlying items
2022 2021
USD'000 USD'000
COVID-19 costs - 765
Restructuring costs 3,502 -
Palma Project, Mozambique 715 31,457
---------------- ----------------
Total non-underlying items 4,217 32,222
COVID-19 costs
These costs were incurred due to the COVID-19 pandemic and
primarily comprise of incremental staff costs and PPE. Incremental
staff costs relate to staff salaries paid to employees unable to
work due to local lockdowns or international travel restrictions
preventing their access to worksites (2022: USD nil; 2021: USD
374,000). All payments made were non-contracted and at the
discretion of executive management. Incremental project costs
associated with PPE consumption and COVID-19 testing are also
included in this balance (2022: USD nil; 2021: USD 391,000).
General inefficiencies experienced as a result of COVID-19 have not
been included given the high level of judgement inherent in
undertaking this exercise and as a result, continue to be included
within cost of sales.
In 2022, the Company chose not to classify COVID-19 costs as a
non-underlying item, instead treating these expenses as consistent
with costs arising from other incidences of disease and
illness.
Restructuring costs
In 2022, the CODM made a decision to significantly alter Group
Strategy, choosing to focus corporate efforts and resources towards
growing revenue from western government customers. This was a
fundamental and significant change that has a material effect on
the nature and focus of the entity's operations and led to a number
of initiatives which resulted in costs being incurred to
restructure the organisation.
These expenses include USD 3,139,000 relating to a provision
recorded against assets purchased and held for projects which were
to be executed for Commercial customers and that are no longer
deemed recoverable. Additionally, USD 363,000 relates to staff
restructuring costs.
Palma Project, Mozambique
In March 2021, insurgents attacked the town of Palma,
Mozambique. This led to Total suspending their development works in
the region and declaring force majeure. As a result, the Group's
contract to build and operate a 1800-person camp was suspended (the
"Palma Project"). At the time of the attack, RA had purchased
substantially all of the assets required to complete the project
and was approximately two weeks from commencing revenue generating
activities.
As a result of this catastrophic event, in the prior year the
Group incurred significant incremental costs and impaired assets
which are associated with the Palma Project.
2022 2021
USD'000 USD'000
-------------------------------------- -------- --------
Provision for asset impairment - 23,410
Permanent asset impairment - 2,145
Incremental costs incurred but unpaid - 1,058
Provision for unavoidable costs 1,092 1,422
-------------------------------------- -------- --------
1,092 28,035
Incremental costs incurred and paid 237 3,422
-------------------------------------- -------- --------
1,329 31,457
-------------------------------------- -------- --------
Reversal of asset impairment (614) -
-------------------------------------- -------- --------
715 31,457
-------------------------------------- -------- --------
Provision for asset impairment
As at the date of the prior year accounts, the force majeure was
still in place and development work has not recommenced. While the
security situation had improved, and commercial activity was
returning to the Palma area, Total had recently indicated that
while they are committed to restarting works in the region, they
are not undertaking any works at present, and they will re-evaluate
the situation so as to assess if there are conditions to return.
These conditions include a sustained level of security in the
region, and the return of the local population to normal living
conditions.
Following a number of conversations with a wide range of third
parties directly or indirectly involved in returning security to
the Cabo Delgado region, it was determined that there remained
significant uncertainty as to when the force majeure will be lifted
and what RA's role will be in the recommenced development
works.
Given this uncertainty, and in accordance with IAS 36, after a
significant amount of deliberation both as a board and with
third-party advisers, the CODM decided to recognise a provision to
impair the full value of assets relating to the Palma Project in
the prior year. The provision for impairment is still held as at
the date of these accounts [given that the force majeure has not
been lifted].
The CODM will continue to undertake regular assessments to
establish if there is a basis for reversal of the impairment
provision (recovery). These assessments will be made at least every
six months or when an event transpires which may indicate a
material change in the value of the Palma Project assets.
The Palma Project assets can be divided into three separate
groups:
1. Palma Assets
The Palma Assets relate to the land, infrastructure, and other
assets located within the RA Camp facility near the town of Palma,
Mozambique. As at the time these accounts were published, the
security situation in Cabo Delgado province remains volatile and
significant security measures must be taken to access the camp
facility. Given the assets are not currently generating a
commercial return, the uncertainty regarding the future commercial
returns from these assets, and the lack of a ready market for the
Palma Assets, an impairment provision has been established equal to
their carrying value.
2. Offsite Assets
These consist of equipment and material located within various
secure storage locations in Africa and the Middle East. Although
the best use of the Offsite Assets is on the Palma Project, given
the uncertainty as to when Total will recommence development
activities, the CODM believe it to be in the best interest of
stakeholders that the Group dispose of these assets in the short
term so as to cease incurring unavoidable costs.
Given the nature, location and customs status of the Offsite
Assets, a limited market exists for these items. As a result, an
impairment provision has been established for the full carrying
value of the assets.
3. Other Assets
These consist of non-tangible assets such as tax and receivable
balances. The Group has recorded an impairment provision in
relation to the full value of tax assets and other balances that
have been deemed unrecoverable as a result of the March 2021
attack.
The below table provides a breakup of these balances by asset
class:
Fixed Other
Assets Inventory Assets Total
USD'000 USD'000 USD'000 USD'000
---------------- ------- ----------- ------- -------
Palma Assets 15,257 137 - 15,394
Offsite Assets 4,050 3,177 - 7,227
Other Assets - - 789 789
---------------- ------- ----------- ------- -------
19,307 3,314 789 23,410
---------------- ------- ----------- ------- -------
Permanent asset impairment
While the Group's camp facility near Palma Mozambique was not
directly attacked, at the time of the attack the Group incurred
impairment losses resulting from the theft or vandalism of its
assets. The Group has also incurred losses when disposing of assets
which were originally purchased for use on the Palma Project. These
losses, incurred during 2021, are permanent and as a result, there
is no need to reassess the value of these assets in the future.
Permanent impairment losses relating to the Palma Project totalled
USD 2,145,000 as at 31 December 2021. Included in this balance is
USD 138,000 relating to the impairment of goodwill. There was no
permanent asset impairment relating to the Palma Project in the
year ended 31 December 2022.
Incremental costs
As at 31 December 2021, the Group had incurred USD 4,480,000 in
incremental costs directly related to the March 2021 attack on
Palma, Mozambique and the resulting suspension of development
activities by Total. These expenses primarily relate to logistics,
storage, and security costs, but also include costs such as staff
evacuation and mental health counselling provided to staff. At the
time of the attack, a significant value of assets were on-route to
Palma and post attack, it was no longer possible to safely offload
goods in the Palma area. As a result, goods had to be stored in
their current locations in Europe, the Middle East, and East
Africa, or where possible, shipped to more economical storage
locations. Of these incremental costs USD 3,422,000 were paid for
during 2021 and USD 1,058,000 were accrued but unpaid as at 31
December 2021.
In 2022, storage and other related incremental costs increased
significantly due to inflation. As a result, additional costs of
USD 237,000 were incurred during the year.
Provision for unavoidable costs
In the prior year, the Group recorded a provision of USD
1,422,000 relating to unavoidable costs associated with the Offsite
Assets. The provision was utilised in full during the year and an
additional USD 1,092,000 has been recognised as a provision in 2022
which is expected to be utilised in 2023.
Reversal of asset impairment
During the year, a number of Palma Project assets were disposed
of, generating proceeds of USD 114,000. These assets had been fully
impaired in 2021 and as a result, the disposal resulted in a
recovery of USD 114,000 which has been recorded in the current
year. In addition, property insurance proceeds of USD 500,000 were
confirmed as being payable to the Company from its insurers. This
amount relates to a claim filed by the Company in 2021 relating to
the theft and vandalism of its assets in Palma, Mozambique. These
assets were indicated as being permanently impaired in 2021.
The Group reassessed the recoverable amount of all impaired
assets and deemed there was no further reversals necessary.
Auditor Compensation
Amounts paid or payable by the Group in respect of audit and
non-audit services to the Auditor are shown below.
2022 2021
USD'000 USD'000
Fees for the audit of the Company
annual accounts 188 164
Fees for the audit of the subsidiary
annual accounts 75 74
Additional fee for the prior year 25 -
audit of the Group annual accounts
-------------- --------------
Total audit fees 288 238
Non-audit related services - -
-------------- --------------
10 EMPLOYEE EXPENSES
The average number of employees (including directors) employed
during the period was:
2022 2021
Directors 7 7
Executive management 5 5
Staff 1,356 1,157
---------------- ----------------
1,368 1,169
The aggregate remuneration of the above employees was:
2022 2021
USD'000 USD'000
Wages and salaries 19,820 17,804
Social security costs 148 153
Share based payments 684 487
-------------- --------------
20,652 18,444
The remuneration of the Directors and other key management
personnel of the Group are detailed in note 32.
11 TAX
The tax charge on the profit for the year is as follows:
2022 2021
USD'000 USD'000
Current tax:
UK corporation tax on profit for - -
the year
Non-UK corporation tax 169 80
Adjustment for prior years - (160)
-------------- --------------
Tax charge for the year 169 (80)
Factors affecting the tax expense/(credit)
The tax assessed for the year varies from the standard rate of
corporation tax in the UK. The difference is explained below:
2022 2021
USD'000 USD'000
Loss before tax (12,997) (32,160)
-------------- --------------
Expected tax charge based on the
standard average rate of corporation
tax in the UK of 19% (2021: 19%) (2,469) (6,110)
Effects of:
Deferred tax asset not recognised 115 105
Exemptions and foreign tax rate
difference 2,523 6,085
Adjustment for prior years - (160)
-------------- --------------
Tax expense/(credit) for the year 169 (80)
The Group benefits from tax exemptions granted to its customers
who are predominantly governments and large intragovernmental
organisations. The CODM is not aware of any factors that tax
exemptions granted will no longer be available to the Group.
The main rate of UK corporation tax is 19% and will increase to
25% on 1 April 2023. The expected impact as a result of this change
is not considered material for the Group.
The Group has USD 3,463,000 of unused tax losses, available
indefinitely, for which no deferred tax asset has been
recognised.
12 EARNINGS PER SHARE
The Group presents basic earnings per share ("EPS") data for its
ordinary shares. Basic EPS is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the period
plus the weighted average number of ordinary shares that would be
issued on conversion of all the dilutive potential ordinary shares
into ordinary shares.
2022 2021
Loss for the period (USD'000) (13,166) (32,080)
Basic weighted average number of
ordinary shares 172,601,934 171,660,947
Effect of employee share options 728,394 1,447,842
-------------- --------------
Diluted weighted average number
of shares 173,330,328 173,108,789
Basic earnings per share (cents) (7.6) (18.7)
Diluted earnings per share (cents) (7.6) (18.5)
13 SHARE BASED PAYMENT EXPENSE
The Group recognised the following expenses related to
equity-settled payment transactions:
2022 2021
USD'000 USD'000
Performance share plan - 16
Employee retention share plan 311 471
Other share based payments 178 -
Other share based payments - non-underlying 195 -
-------------- --------------
684 487
Performance Share Plan
On Admission, the Company introduced a Performance Share Plan
("PSP") whereby options may be granted to eligible employees.
Awards vested after a performance period of 4 years subject to
continuous employment and the achievement of a hurdle total
shareholder return ("TSR") as at the end of the performance period.
The TSR was not achieved, resulting in the shares lapsing in the
period.
Employee Retention Share Plan
In October 2020, the Company introduced an Employee Retention
Share Plan ("ERSP") and granted share options to a number of senior
employees. Awards vest annually subject to continuous employment.
There are no TSR linked vesting conditions associated with these
options.
At 31 December, the following unexercised share options to
acquire ordinary shares under the PSP and ERSP were
outstanding:
Year of Grant Share Vesting Exercise Number Number
Plan Date of of
price options options
GBP 2022 2021
29 June
2018 PSP 2022 0.10 - 2,065,216
2020 ERSP 1 May 2021 0.10 - 31,280
ERSP 1 May 2022 0.10 229,710 549,869
ERSP 1 May 2023 0.10 671,510 824,800
------- ---------------------------- --------- ---------- ----------
2021 ERSP 1 May 2021 0.10 17,212 17,212
ERSP 1 May 2022 0.10 47,776 84,520
ERSP 1 May 2023 0.10 107,243 151,830
ERSP 1 May 2024 0.10 83,413 150,292
------- ---------------------------- --------- ---------- ----------
2022 ERSP 1 Dec 2022 0.22 741,457 -
ERSP 1 Dec 2023 0.22 741,457 -
ERSP 1 Dec 2024 0.22 741,457 -
ERSP 1 May 2023 0.10 130,920 -
ERSP 1 May 2024 0.10 261,840 -
ERSP 1 May 2025 0.10 392,760 -
4,166,755 3,875,019
The weighted average remaining contractual life for the shares
options outstanding as at 31 December 2022 is 0.9 years (2021: 1
year).
Weighted Weighted
average average
Number exercise Number exercise
of of
options price options price
2022 2022 2021 2021
GBP GBP
Outstanding at 1 January 3,875,019 0.10 3,811,540 0.10
Granted during the year 3,009,891 0.18 458,348 0.10
Exercised during the year (324,463) 0.10 (243,653) 0.10
Forfeited during the year (328,476) 0.10 (151,216) 0.10
Lapsed during the year (2,065,216) 0.10 - 0.10
------------ --------- ---------- ---------
Outstanding at 31 December 4,166,755 0.16 3,875,019 0.10
Options issued under the PSP were valued using the Monte Carlo
Simulation model using the following inputs:
Weighted average Expected Risk
------
share price volatility free
rate
------ ----------------------------------- ---------- ------
2018 56p (USD 0.74) 10.10% 1.24%
------ ----------------------------------- ---------- ------
This method is considered to be the most appropriate for valuing
options granted under schemes where there are changes in
performance conditions by which the options are measured, such as
for TSR based awards. The fair value of the options at the grant
date was USD 96,000 and a charge of USD nil (2021: USD 16,000) was
recognised in administrative expenses for the fiscal year ended
2022.
Options issued under the ERSP were valued using the Black
Scholes model using the following inputs:
Weighted average Expected Risk
Share price volatility free
rate
----- ----------------- ----------- -----
2020 49p (USD 0.64) 49.70% 0.00%
----- ----------------- ----------- -----
2021 49p (USD 0.68) 48.60% 0.00%
----- ----------------- ----------- -----
2022 22p (USD 0.28) 46.80% 1.69%
----- ----------------- ----------- -----
The total fair value of the options at the grant date was USD
1,100,000. A charge of USD 66,000 (2021: USD 117,000) was
recognised in cost of sales and USD 245,000 (2021: USD 369,000) was
recognised in administrative expenses for the fiscal year ended
2022. The expected volatility input utilised represents the
historic volatility of the share price of the Company since
Admission.
Other Share Based Payments
On 26 July 2022, the Company agreed to issue a total of
1,459,435 Ordinary Shares to senior members of staff, including
certain persons discharging managerial responsibilities. Ordinary
Shares issued pursuant to the award were satisfied from the pool of
Ordinary Shares held in Treasury. The fair value of the shares on
the grant date was GBP 0.21 (USD 0.25) per share. A total charge of
USD 373,000 was recognised, with USD 178,000 recognised as an
administrative expense and USD 195,000 recognised as a
non-underlying restructuring cost given the non-reoccurring nature
of the transaction.
Warrants
On Admission, in exchange for brokerage services provided to the
Company during its IPO, the Company issued a warrant instrument
granting its primary broker the right to subscribe for 671,514
ordinary shares of the Company. The warrants are exercisable for
five years from the date of Admission at a subscription price of
GBP 0.728 (USD 0.923) per ordinary share. They are
non-transferrable and are subject to typical anti-dilution rights
to adjust on a proportional basis for share consolidations, share
splits and stock dividends. The Company used the Black-Scholes
model to value the warrants at the grant date. The fair value of
the warrants is USD nil (2021: USD nil).
14 DIVIDS
During the period, no dividend was declared and paid (2021: 1.35
pence (USD 0.02) per share (171,662,973 shares) totalling GBP
2,317,000 (USD 3,206,000)).
15 ALTERNATIVE PERFORMANCE MEASURES
APMs used by the Group are defined below along with a
reconciliation from each APM to its IFRS equivalent, and an
explanation of the purpose and usefulness of each APM. APMs are
non-IFRS measures.
In general, APMs are presented externally to meet investors'
requirements for further clarity and transparency of the Group's
financial performance. APMs are also used internally by management
to evaluate business performance and for budgeting and forecasting
purposes.
2022 2021
USD'000 USD'000
Loss (13,166) (32,080)
Tax expense/(credit) 169 (80)
-------------- --------------
Loss before tax (12,997) (32,160)
Finance costs 2,491 1,314
Investment income (206) (55)
-------------- --------------
Operating loss (10,712) (30,901)
Non-underlying items 4,217 32,222
-------------- --------------
Underlying operating (loss)/profit (6,495) 1,321
Share based payment expense 489 487
Depreciation 5,110 4,855
Impairment 1,456 -
-------------- --------------
Underlying EBITDA 560 6,663
Underlying Operating Profit ("UOP")
The Group uses UOP as an alternative measure to Operating Profit
to allow comparison of the profitability of its operations across
financial periods. UOP is calculated as Operating Profit adjusted
for costs which are considered to be unrelated to the Group's
underlying trading performance.
Underlying Operating Margin is calculated as UOP divided by
revenue.
Underlying EBITDA
Management defines Underlying EBITDA as Operating Profit
adjusted for depreciation, share based payments, and costs which
are considered to be unrelated to the Group's underlying trading
performance. Underlying EBITDA facilitates comparisons of operating
performance from period to period and company to company by
eliminating potential differences caused by variations in capital
structures, tax positions, and the age and booked depreciation on
assets.
Underlying EPS
Underlying EPS reflects underlying operating profit after
deducting net finance costs and taxation, divided by the weighted
average number of ordinary shares outstanding during the period.
This alternative measure of EPS enables shareholder return from the
underlying business operations to be better evaluated across
periods.
2022 2021
cents cents
Reported EPS, basic (7.6) (18.7)
Impact of non-underlying items 2.4 18.8
Underlying EPS, basic (5.2) 0.1
Reported EPS, diluted (7.6) (18.5)
Impact of non-underlying items 2.4 18.6
Underlying EPS, diluted (5.2) 0.1
Net Cash
Net cash represents cash less overdraft balances, term loans,
and notes outstanding. This is a commonly used metric, helpful to
stakeholders when analysing the business. Negative net cash is
referred to a net debt position.
16 PROPERTY, PLANT, AND EQUIPMENT
Machinery,
motor
vehicles,
Land and furniture Leasehold
and
buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2022 39,919 14,115 1,370 55,404
Additions 194 424 - 618
Disposals (788) (856) - (1,644)
---------------- ---------------- ---------------- ----------------
At 31 December
2022 39,325 13,683 1,370 54,378
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 January 2022 21,438 8,089 365 29,892
Charge for the
year 2,040 1,893 237 4,170
Relating to disposals (226) (491) - (717)
Provision for
impairment 528 915 - 1,443
---------------- ---------------- ---------------- ----------------
At 31 December
2022 23,780 10,406 602 34,788
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 31 December
2022 15,545 3,277 768 19,590
Machinery,
motor
vehicles,
Land and furniture Leasehold
and
buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2021 38,973 15,497 1,192 55,662
Additions 2,526 774 178 3,478
Disposals (1,580) (2,156) - (3,736)
---------------- ---------------- ---------------- ----------------
At 31 December
2021 39,919 14,115 1,370 55,404
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 January 2021 2,432 5,754 118 8,304
Charge for the
year 1,416 2,294 247 3,957
Relating to disposals (125) (1,747) - (1,872)
Provision for impairment 17,715 1,788 - 19,503
---------------- ---------------- ---------------- ----------------
At 31 December
2021 21,438 8,089 365 29,892
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 31 December
2021 18,481 6,026 1,005 25,512
During the year, capitalised interest of USD nil was included in
Land and Buildings (2021: USD 114,000), representing 0% of
borrowing costs (2021: 22%). From 1 April 2021, upon the suspension
of construction activities in Palma, Mozambique, the Group ceased
capitalising interest relating to the Palma Camp development.
A provision for impairment of USD 1,443,000 was recorded during
2022 (2021: nil). This balance resulted from the value of certain
assets, located in one location, being deemed unrecoverable as at
31 December 2022. In determining this provision, the CODM reviewed
both the likelihood of recovery through continued use, and the
recoverable value through sale.
17 RIGHT-OF-USE ASSETS
2022 2021
USD'000 USD'000
Cost:
At 1 January 7,887 5,143
Additions - 2,744
At 31 December 7,887 7,887
---------------- ----------------
Depreciation:
At 1 January 2,513 1,615
Charge for the
year 940 898
Provision for impairment 13 -
---------------- ----------------
At 31 December 3,466 2,513
---------------- ----------------
Net carrying amount:
At 31 December 4,421 5,374
Information related to lease liabilities is available in note
25.
The table below indicates the rents resulting from lease
contracts which are not capitalised and are therefore expensed in
the year.
2022 2021
USD'000 USD'000
Short-term leases 715 1,308
Short-term leases include amounts paid for vehicles and heavy
equipment rental, as well as short-term property leases.
18 GOODWILL
2022 2021
USD'000 USD'000
As at 1 January - 138
Acquisitions - (138)
-------------- --------------
As at 31 December - -
19 INVENTORIES
2022 2021
USD'000 USD'000
Materials and consumables 4,442 8,123
Goods-in-transit 712 1,274
-------------- --------------
5,154 9,397
A provision of USD 3,139,000 was recognised during the year
relating to the write-off of assets purchased and held for projects
which were to be executed for Commercial customers and that are no
longer deemed recoverable (2021: USD nil).
20 TRADE AND OTHER RECEIVABLES
2022 2021
USD'000 USD'000
Trade receivables 10,697 8,942
Accrued revenue 3,765 5,281
Deposits 112 112
Prepayments 514 1,039
Other receivables 1,301 1,148
-------------- --------------
16,389 16,522
Invoices are generally raised on a monthly basis, upon
completion, or part completion of performance obligations as agreed
with the customer on a contract by contract basis.
During the year 100% of accrued revenue was subsequently billed
and transferred to trade receivables from the opening unbilled
balance in the period (2021: 100%).
As at 31 December the transaction price allocated to remaining
performance obligations was USD 83,000,000
(2021: USD 100,000,000). This represents revenue expected to be
recognised in subsequent periods arising on existing contractual
arrangements. The Group has not taken the practical expedient in
IFRS 15.121 not to disclose information about performance
obligations that have original expected durations of one year or
less and therefore no consideration from contracts with customers
is excluded from these amounts. All revenue is expected to be
recognised within the next five years.
As at 31 December the ageing of trade receivables was as
follows:
2022 2021
USD'000 USD'000
Not past due 5,609 5,855
Overdue by less than 30 days 3,705 1,509
Overdue by between 30 and 60 days 831 294
Overdue by more than 60 days 552 1,284
-------------- --------------
10,697 8,942
Trade receivables are non-interest bearing and generally have
payment terms of 30 days. An ECL of USD nil was recorded as at 31
December 2022 (2021: USD 505,000). All other receivables are
expected, on the basis of past experience, to be fully
recoverable.
21 CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statement of
financial position comprised of cash at bank of USD 7,514,000
(2021: USD 8,532,000).
22 SHARE CAPITAL
2022 2021
USD'000 USD'000
Authorised, issued and fully paid
173,575,741 shares (2021: 173,575,741
shares) of GBP 0.10 (2021: GBP
0.10) each 24,300 24,300
23 TREASURY SHARES
2022 2022 2021 2021
Number USD'000 Number USD'000
As at 1 January 1,783,898 1,199 2,027,551 1,363
Issued in the period (note
13) -(1,783,898) (1,199) (243,653) (164)
-------------- -------------- -------------- --------------
As at 31 December - - 1,783,898 1,199
24 LOAN NOTES
The table below summarises the loan notes:
2022 2021
USD'000 USD'000
As at 1 January 10,000 6,471
Additions 15,500 3,529
Repayments (11,500) -
-------------- --------------
As at 31 December 14,000 10,000
Current - 10,000
Non-current 14,000 -
During the year, the Group completed a refinancing and
fundraising exercise. The purpose of the exercise was to
synchronise and extend the maturity of the USD 10,000,000 of loan
notes issued by the Group during 2020 and 2021, which were due to
mature in the second half of 2022. The original USD 10,000,000 of
loan notes were replaced with USD 14,000,000 in new loan notes
issued to retail investors. These notes carry an annual fixed
interest rate of 7.50% (2021: 7.00%) for GBP denominated notes and
8.00% (2021:7.50%) for USD denominated notes. The term of the note
issuance is up to 30 months with principal to be repaid as a bullet
payment upon maturity in November 2024. Interest is paid on a
quarterly basis.
25 LEASE LIABILITIES
Movements in the provision recognised in the consolidated
statement of financial position are as follows:
2022 2021
USD'000 USD'000
As at 1 January 6,040 4,038
Additions - 2,744
Interest 476 527
Payments (1,310) (1,269)
-------------- --------------
As at 31 December 5,206 6,040
Current 650 834
Non-current 4,556 5,206
Interest of USD 476 ,000 ( 2021 : USD 527 ,000) relating to the
above lease liabilities has been included in Finance Costs for the
year.
As at 31 December the maturity profile of lease liabilities was
as follows:
2022 2021
USD'000 USD'000
3 months or less 124 102
3 to 12 months 526 732
1 to 5 years 1,746 2,125
Over 5 years 2,810 3,081
-------------- --------------
5,206 6,040
The Group had total cash outflows relating to leases of USD 2,
025 ,000 in 2022 ( 2021: USD 2, 577 ,000). This is the total of
short-term lease payments from note 17 and payments from note
25.
26 EMPLOYEES' OF SERVICE BENEFITS
Movements in the provision recognised in the consolidated
statement of financial position are as follows:
2022 2021
USD'000 USD'000
As at 1 January 731 517
Provided during the year 526 433
End of service benefits paid (329) (219)
-------------- --------------
As at 31 December 928 731
27 TRADE AND OTHER PAYABLES
2022 2021
USD'000 USD'000
Trade payables 3,744 6,478
Accrued expenses 2,309 2,702
Accrued tax expense 388 161
Customer advances 533 494
-------------- --------------
6,974 9,835
All customer advances recorded at 31 December 2021 were
subsequently recognised as revenue in 2022 and all customer
advances held at 31 December 2022 were subsequently recognised as
revenue in 2023.
28 PROVISIONS
2022 2021
USD'000 USD'000
As at 1 January 1,422 -
Provided during the year 1,092 1,422
Utilised during the year (1,422) -
-------------- --------------
As at 31 December 1,092 1,422
Following the March 2021 attack on Palma, Mozambique the Group
began incurring unavoidable costs relating to the Offsite Assets.
All assets are expected to be disposed of in 2023.
A USD 1,092,000 (2021: USD 1,422,000) provision relating to
these costs was recorded in 2022, with the full charge being
reflected in the consolidated statement of comprehensive
income.
29 CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
1 January 31 December
2022 Cash flows New leases Other 2022
USD'000 USD'000 USD'000 USD'000 USD'000
Non-current
liabilities
Loan notes - 14,000 - - 14,000
Lease liabilities 5,206 - - (650) 4,556
Current liabilities
Loan notes 10,000 (10,000) - - -
Lease liabilities 834 (1,310) - 1,126 650
---------------- ---------------- ---------------- ---------------- ----------------
16,040 2,690 - 476 19,206
1 January 31 December
2021 Cash flows New leases Other 2021
USD'000 USD'000 USD'000 USD'000 USD'000
Non-current
liabilities
Loan notes 6,471 3,529 - (10,000) -
Lease liabilities 3,720 - 2,184 (698) 5,206
Current liabilities
Loan notes - - - 10,000 10,000
Lease liabilities 318 (1,269) 560 1,225 834
---------------- ---------------- ---------------- ---------------- ----------------
10,509 2,260 2,744 527 16,040
The 'Other' column includes the effect of reclassification of
non-current portion of leases to current due to the passage of
time, the effect of contracted loan note amounts not yet received,
and the effect of accrued interest not yet paid.
30 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group was not exposed to any
significant interest rate risk on its interest-bearing
liabilities.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group's exposure to the risk
of changes in foreign exchange rates relates primarily to the
Group's operating activities when revenue or expenses are
denominated in a different currency from the Group's functional
currency, as well as cash and cash equivalents held in foreign
currency accounts.
At 31 December 2022, the Group held foreign cash and cash
equivalents of GBP 364,000 (USD 440,000). Additionally, the Group
held GBP denominated loans of GBP 1,970,000 (USD 2,382,000). UK
pound sterling is primarily held by the Group to settle payment
obligations denominated in GBP. As at 31 December 2021, the Group
held GBP 1,067,000 (USD 1,441,000) and GBP denominated loans of GBP
1,354,000 (USD 1,787,000).
The Group's exposure to foreign currency variances for all other
currencies is not material.
Credit risk
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. The Group is exposed to credit risk on its
bank balances and receivables.
The Group seeks to limit its credit risk with respect to banks
by only dealing with reputable financial institutions as determined
by the CODM and with respect to customers by only dealing with
creditworthy customers and continuously monitoring outstanding
receivables. The Company's 5 largest customers account for 61% of
outstanding trade receivables at 31 December 2022 (2021: 63%).
Receivables split by customer
2022 2021
% %
Customer B 22 17
Customer A 19 5
Customer D 14 21
Customer H 11 -
Customer C 7 8
Customer I 7 4
Customer E - 14
Customer F - 6
Other 20 25
-------------- --------------
100 100
No material credit risk is deemed to exist due to the nature of
the Group's customers, who are predominantly governments and large
intragovernmental organisations.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group limits
its liquidity risk by ensuring bank facilities are available.
The Group's terms of sale generally require amounts to be paid
within 30 days of the date of sale. Trade payables are settled
depending on the supplier credit terms, which are generally 30 days
from the date of delivery of goods or services.
As at 31 December the maturity profile of trade payables and
loan notes was as follows:
As at 31 December
2022
Less than 3 to 12 6 to 12 12 to 24
3 months Months Months Months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Loan notes - - - 14,000 14,000
Trade payable 3,744 - - - 3,744
---------------- ---------------- ---------------- ---------------- ----------------
3,744 - - 14,000 17,744
As at 31 December
2021
Less than 3 to 12 6 to 12 12 to 24
3 months Months Months Months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Loan notes - - 10,000 - 10,000
Trade payable 6,478 - - - 6,478
---------------- ---------------- ---------------- ---------------- ----------------
6,478 - 10,000 - 16,478
Liabilities falling due within twelve months are recognised as
current on the consolidated statement of financial position.
Liabilities falling due after twelve months are recognised as
non-current.
The unutilised bank overdraft facilities at 31 December 2022
amounted to USD 10,000,000 (2021: USD 10,000,000) and carry
interest of 1m Term SOFR +3.50% per annum (2021: 1m LIBOR +3.50%).
The facilities require a 100% cash margin guarantee to be paid
upfront.
The Group manages its liquidity risk by maintaining significant
cash reserves.
The Group's cash and cash equivalents balance is substantially
all held in institutions holding a Moody's long-term deposit rating
of Aa3 or above.
Capital management
The primary objective of the Group's capital management is to
ensure that it maintains a healthy capital ratio in order to
support its business and maximise shareholder value. The Group
manages its capital structure and makes adjustments to it in light
of changes in business conditions.
No changes were made in the objectives, policies or processes
during the year ended 31 December 2022.
Capital comprises share capital, share premium, merger reserve,
treasury shares, share based payment reserve and retained earnings
and is measured at USD 24,868,000 as at 31 December 2022 (2021: USD
37,309,000).
31 RELATED PARTY DISCLOSURES
Relat ed parties represent shareholders, directors and key
management personnel of the Group, and entities controlled, jointly
controlled, or significantly influenced by such parties. Pricing
policies and terms of these transactions are approved by the
Group's management.
There were no transactions with related parties during the year
(2021: USD nil). No outstanding balances with related parties are
included in the consolidated statement of financial position at 31
December 2022 (2021: USD nil).
32 COMPENSATION
Compensation of key management personnel
The remuneration of key management during the year was as
follows:
2022 2021
USD'000 USD'000
Short-term benefits 1,379 1,874
Stock based compensation 373 16
---------------- ----------------
1,752 1,890
The key management personnel comprise of 3 (2021: 5)
individuals. Included in key management personnel are 3 (2021: 3)
Directors.
Compensation of directors
The remuneration of directors during the year was as
follows:
2022 2021
USD'000 USD'000
Short-term benefits 1,574 1,611
Stock based compensation 178 9
-------------- --------------
1,752 1,620
Highest paid director
The remuneration of the highest paid director during the year
was as follows:
2022 2021
USD'000 USD'000
Short-term benefits 393 490
Stock based compensation 178 -
-------------- --------------
571 490
The amount disclosed in the tables is the amount recognised as
an expense during the reporting year related to key management
personnel and directors of the Group.
33 STANDARDS ISSUED BUT NOT YET EFFECTIVE
No other standards and interpretations that are issued, but not
yet effective, up to the date of issuance of the Group's financial
statements are expected to have a material impact on the Group.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
2022 2021
Notes USD'000 USD'000
Assets
Non-current assets
Investments 4 28,606 50,047
Loan to subsidiary 5 1,000 -
-------------- --------------
29,606 50,047
Current assets
Trade and other receivables 6 5,984 5,754
Cash and cash equivalents 157 113
-------------- --------------
6,141 5,867
-------------- --------------
Total assets 35,747 55,914
Equity and liabilities
Equity
Share capital 7 24,300 24,300
Share premium 18,254 18,254
Merger reserve - 9,897
Treasury shares 8 - (1,199)
Share based payment reserve 574 534
Retained earnings (8,680) 3,819
-------------- --------------
Total equity 34,448 55,605
Non-current liabilities
Loan from subsidiary 9 1,000 -
Current liabilities
Trade and other payables 10 299 309
Total liabilities 1,299 309
-------------- --------------
Total equity and liabilities 35,747 55,914
The Company has taken the exemption conferred by section 408 of
the Companies Act 2006 not to publish the profit and loss of the
parent company within these accounts. The result for the Company
for the year was a loss of USD 22,396,351 (2021: USD 553,000).
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Share
Based
Share Share Merger Treasury Payment Retained
Capital Premium Reserve Shares Reserve Earnings Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1
January
2021 24,300 18,254 9,897 (1,363) 177 7,578 58,843
Total
comprehensive
income for
the
period - - - - - (553) (553)
Share based
payments - - - - 487 - 487
Dividends
declared
and paid - - - - - (3,206) (3,206)
Issuance of
treasury
shares
(note 8) - - - 164 (130) - 34
-------------- -------------- -------------- -------------- -------------- -------------- --------------
As at 31
December
2021 24,300 18,254 9,897 (1,199) 534 3,819 55,605
Total
comprehensive
income for
the
period - - - - - (22,396) (22,396)
Share based
payments 311 - 311
Issuance of
treasury
shares
(note 8) - - - 218 (177) - 41
Lapsed share
options (94) - (94)
Non-cash
employee
compensation 981 981
Transfer of
reserve (9,897) 9,897
-------------- -------------- -------------- -------------- -------------- -------------- --------------
As at 31
December
2022 24,300 18,254 - - 574 (8,680) 34,448
The attached notes 1 to 12 form part of the Financial
Statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2022
1 BASIS OF PREPARATION
The financial statements have been prepared in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and the
Companies Act 2006), including
Financial Reporting Standard 101 "Reduced Disclosure Framework"
("FRS101") under the historical cost
basis and have been presented in USD, being the functional
currency of the Company.
The Company has applied a number of exemptions available under
FRS 101. Specifically, the requirement(s) of:
(a) paragraphs 91-99 of IFRS 13 "Fair Value Measurement";
(b) paragraph 38 of IAS 1 "Presentation of Financial Statements"
to present comparative information in respect of paragraph
79(a)(iv) of IAS 1;
(c) paragraphs 10(d), 10(f), and 134-136 of IAS 1 "Presentation
of Financial Statements";
(d) IAS 7 "Statement of Cash Flows";
(e) paragraphs 30 and 31 of IAS 8 "Accounting Policies, Changes
in Accounting Estimates and Errors";
(f) paragraph 17 of IAS 24 "Related Party Disclosures" to
disclose related party transactions entered into between two or
more members of a group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member; and
(g) paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36
"Impairment of Assets".
2 SIGNIFICANT ACCOUNTING POLICIES
Except noted below, all accounting policies applied to the
Company are consistent with that of the Group.
Investments
Investments held by the company are stated at cost less
provision for diminution in value.
Merger Reserve
A merger reserve is a non-distributable reserve often arising
from a share for share exchange transaction, such as that
undertaken by the Company in 2018. The merger reserve is held at
carrying value and may be transferred to distributable reserves
upon the disposal, write-down, depreciation, amortisation, or
diminution in value or impairment of the related asset.
3 EMPLOYEE EXPENSES
The average number of employees employed during the period
was:
2022 2021
Directors 7 7
The aggregate remuneration of the above employees was:
2022 2021
USD'000 USD'000
Wages and salaries 447 469
Social security costs 53 53
-------------- --------------
500 522
4 INVESTMENTS
2022 2021
USD'000 USD'000
As at 1 January 50,047 50,047
Additions 350 -
Diminution in value (21,791) -
-------------- --------------
As at 31 December 28,606 50,047
During the year, the Company established a provision of USD
21,791,000 relating to diminution in value of the investment as at
31 December 2022. The impairment has been calculated with reference
to the company's market capitalisation at the yearend date,
adjusted to reflect cost of disposal in order to determine the
recoverable amount of the investments on a fair value less cost to
sell basis. No adjustment has been made to reflect control premium
however a 10 percent increase/decrease in the share price would
result in a $2.8 million decrease/increase to the impairment
provision.
Additionally, the Company invested USD 350,000 in RA Federal
Services LLC, a 100% owned subsidiary.
5 LOAN TO SUBSIDIARY
2022 2021
USD'000 USD'000
As at 1 January - -
Additions 1,000 -
-------------- --------------
As at 31 December 1,000 -
During the year, the Company advanced a loan of USD 1,000,000 to
a subsidiary. This note carries an annual fixed interest rate of
9.56%. The term of the note issuance is 30 months with principal to
be repaid as a bullet payment upon maturity in November 2024.
Interest is to be received on an annual basis.
6 TRADE AND OTHER RECEIVABLES
2022 2021
USD'000 USD'000
Prepayments 67 18
Due from subsidiary 5,879 5,703
VAT recoverable 38 33
-------------- --------------
5,984 5,754
Amounts due from subsidiary represent amounts due from RA
International FZCO, an immediate subsidiary, and are non-interest
bearing and payable on demand.
7 SHARE CAPITAL
2022 2022 2021 2021
Number USD'000 Number USD'000
Authorised, issued, and fully
paid:
Ordinary shares of GBP 0.10
each 173,575,741 24,300 173,575,741 24,300
8 TREASURY SHARES
2022 2022 2021 2021
Number USD'000 Number USD'000
As at 1 January 2,027,501 1,363 2,027,551 1,363
Issued in the period (2,027,501) (1,363) (243,653) (164)
---------------- ---------------- ---------------- ----------------
As at 31 December - - 1,783,898 1,199
9 LOAN FROM SUBSIDIARY
2022 2021
USD'000 USD'000
As at 1 January - -
Additions 1,000 -
-------------- --------------
As at 31 December 1,000 -
During the year, the Company subscribed to a loan from a
subsidiary for USD 1,000,000. This note carries an annual fixed
interest rate 9.56%. The term of the note issuance is 30 months
with principal to be repaid as a bullet payment upon maturity in
November 2024. Interest is paid on an annual basis.
10 TRADE AND OTHER PAYABLES
2022 2021
USD'000 USD'000
Trade payables 176 146
Accruals 123 163
-------------- --------------
299 309
11 RELATED PARTY TRANSACTIONS
The Directors have taken advantage of the exemption under
paragraph 8(j) and 8(k) of FRS101 and have not disclosed
transactions with other wholly owned Group undertakings. There are
no other related party transactions.
12 SUBSEQUENT EVENTS
In May 2023, the Board of Directors agreed to commence the
process to convert the USD 18,254,000 balance of share premium to
distributable reserves. This conversion is subject to requisite
shareholder and statutory approvals being granted. If these
approvals are received, it is anticipated this process will be
completed by 31 December 2023.
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END
FR UVURROSUVURR
(END) Dow Jones Newswires
May 25, 2023 02:00 ET (06:00 GMT)
Ra (LSE:RAI)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Ra (LSE:RAI)
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