TIDMRAI
RNS Number : 6295L
RA International Group PLC
07 September 2023
07 September 2023
RA INTERNATIONAL GROUP PLC
("RA International", "RA" or the "Company")
Interim Results for the six months to 30 June 2023
RA International Group plc (AIM: RAI), a specialist provider of
complex and integrated remote site services to organisations
globally, is pleased to announce its unaudited interim results for
the six months ended 30 June 2023.
HIGHLIGHTS
-- Revenue of USD 30.4m (H2 22: USD 33.7m, H1 22: USD 29.2m) and
underlying EBITDA of USD 0.3m (H2 22: USD 0.6m, H1 22: USD nil), in
line with market expectations for the interim period ended 30 June
2023.
-- New contracts, together with uplifts and extensions to
existing contracts, totalling USD 18m including two contracts with
western Governments clients, highlighting our position as a
trusted, global partner offering a comprehensive, flexible, and
mission critical support.
-- Order book of USD 71m at 30 June 2023 (H2 22: USD 83m, H1 22:
USD 96m), excluding framework agreements, provides good forward
visibility with a number of large tenders in progress with western
Governments despite the continued low level of tendering of larger,
long-term contracts in the Humanitarian sector.
-- Progress made in recovering value from the cancelled Palma
Project, with USD 0.6m net income and cash inflow in H1 23 and
further recovery from impaired assets expected to be realised in H2
23.
-- Cash of USD 12.2m on 30 June 2023 increased by USD 4.7m from
the prior period (H2 22: USD 7.5m, H1 22: USD 9.2m), resulting from
USD 6.1m of net cash inflows from operations, offset by USD 1.4m of
cash outflows from financing activities.
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'm USD'm USD'm
Revenue 30.4 33.7 29.2
Gross profit 3.6 2.2 3.0
Gross profit margin 11.8% 6.5% 10.3%
Underlying EBITDA(1) 0.3 0.6 _
Underlying EBITDA margin 1.0% 1.8% (0.2%)
Loss before tax (2.5) (9.6) (3.4)
Loss before tax margin (8.2%) (28.4%) (11.7%)
Basic EPS (cents) (1.4) (5.6) (2.0)
Net debt (end of period) (2) (1.8) (6.5) (4.3)
Soraya Narfeldt, CEO of RA International, commented:
"RA is emerging from two and a half very difficult years. Our
focus for FY23 has been to stabilise the financial position and
trading performance of the Group. This has seen a marked
improvement through cost control, cash collections, unwinding of
impaired assets, as well as new and renegotiated contracts
addressing inflationary pressures.
Against this backdrop, we remain cautious on our financial
performance for the current financial year and continue to expect
the business to remain broadly breakeven at the underlying EBITDA
level. We will continue to focus on restoring profitability,
strengthening our liquidity position, and building our
pipeline.
We have a number of tenders in place with Government and
Humanitarian clients, including the expected imminent announcement
of a framework agreement for HM Government's Conflict, Stability
and Security Fund ("CSSF"). While we have no control of the timing
or value of future contracts, we can reasonably expect an
improvement in contract award run-rate. In the meantime, we are
seeing an increase in contract extensions and, in some cases,
working with clients on a short-term basis whilst we finalise
negotiations on longer-term contracts, establishing a solid
foundation for future growth."
Notes to summary table of financial results:
(1) Underlying EBITDA is calculated by adding depreciation,
non-underlying items, and share based payment expense to operating
profit.
(2) Net debt represents cash less overdraft balances, term loans
and notes outstanding.
Enquiries:
RA International Group plc Via Strand Hanson
Soraya Narfeldt, Chief Executive Officer
Lars Narfeldt, Chief Operating Officer
Dave Marshall, Interim Chief Financial Officer
Strand Hanson Limited (Nominated & Financial
Adviser and Broker) +44 (0) 20 7409
Ritchie Balmer / James Spinney / David Asquith 3494
Background to the Company
RA International is a leading provider of services to remote
locations. The Company offers its services through three channels:
construction, integrated facilities management and supply chain,
and services two main client groups: humanitarian and development
agencies and western Government organisations focusing on overseas
projects. It has a strong customer base, largely comprising UN
agencies, UK and US Government departments and global
corporations.
The Company provides comprehensive, flexible, mission critical
support to its clients enabling them to focus on the delivery of
their respective businesses and services. Focusing on integrity and
values alongside making on-going investment in its people,
locations and operations has over time created a reliable and
trusted brand within its sector.
CHIEF EXECUTIVE OFFICER'S REVIEW
We are making good progress in executing on our priorities
As outlined in our last results in May 2023 we are focused on
strengthening the underlying business, focusing on short-term and
strategic priorities. Our main objectives are to restore
profitability, improve the Company's liquidity position, and to
build a stronger pipeline, by leveraging the significant
opportunities we have with UK and US Government clients. We are
making good progress across all areas.
Financial review - improved trading performance and stabilising
financial position
Revenue of USD 30.4m was broadly in line with prior periods (H2
22: USD 33.7m, H1 22: USD 29.2m).
Supply Chain revenue included USD 2.9m relating to a contract
for the sale of prefabricated camp facility units held in Turkey.
Excluding this transaction, Supply Chain revenue showed modest
growth of 6.4% from H2 22. The decrease in Construction revenue is
reflective of the successful conclusion of substantial contracts
with the UN and Cherokee Nation. IFM revenue grew 11.7% from the
prior period due to increased occupancy at our Somalia facility,
with revenue expected to grow further in H2.
Revenue by service channel:
6 months 6 months 6 months
ended ended Ended
30 June 31 December 30 June
2023 2022 2022
USD'm USD'm USD'm
Integrated facilities management 15.8 14.2 13.3
Construction 6.7 14.9 6.4
Supply chain 7.9 4.7 9.5
---------------- ---------------- ----------------
30.4 33.7 29.2
Gross margin in H1 23 was 11.8% (H2 22: 6.5%, H1 22: 10.3%)
showing an increase period on period as a result of a number of
long-term, fixed price contracts being completed in prior periods.
These contracts were priced before the recent global inflationary
impact. Whilst the effects of inflation are still being felt by the
Group, recently priced and awarded contracts are showing improved
margins, and the Group has been successful in negotiating increases
on a number of long-term contracts to offset the impact of the
current economic climate.
In our efforts to restore profitability, strict cost controls
are being maintained with administrative costs of USD 5.7m
decreasing from the prior period (H2 22: USD 6.2m, H1 22: USD
5.5m). We expect further savings to be realised in H2 23.
Underlying EBITDA was USD 0.3m (H2 22: USD 0.6m, H1 22: nil).
The loss before tax for the period reduced to USD 2.5m (H2 22: loss
USD 9.6m, H1 22: loss USD 3.4m).
Cash of USD 12.2m at 30 June 2023 shows an increase of USD 4.7m
from the prior period (H2 22: USD 7.5m, H1 22: USD 9.2m), resulting
from USD 6.1m of net cash inflow from operations (H2 22: USD 0.9m,
H1 22: outflow USD 2.5m), offset by USD 1.4m of cash outflows from
financing activities. Cash inflows from operations include USD 5.2m
from working capital, demonstrating strong collections and
unwinding of balances during the first half of the year, as well as
a settlement with the Palma Project client which saw a net income
and cash inflow of USD 0.6m.
Net assets at 30 June 2023 were USD 22.5m (H2 22: USD 24.9m, H1
22: USD 34.1m), decreasing from 2022-year end in line with the net
loss generated in the period.
Basic loss per share was 1.4 cents in the current period (H2 22:
Loss 5.6 cents, H1 22: Loss 2.0 cents) and is equal to diluted
earnings per share for the current period.
Contract awards, order book and building our pipeline with
western Governments
Our position with US and UK Governments goes from strength to
strength, with two contracts awarded during the period: a GBP 3.3m
contract with the UK's Foreign, Commonwealth and Development Office
to provide construction services relating to the refurbishment of
the British High Commission in Botswana and three task orders to
work at the US Navy's base on Diego Garcia with an aggregate value
of USD 8.2 million.
These wins highlight our position as a trusted, global primary
contractor to western Government clients, alongside the strength of
our offering combining comprehensive, flexible, mission critical
support. Revenues from western Governments now accounts for over
50% of the business.
The order book of USD 71m at 30 June 2023, provides good forward
visibility (H2 22: USD 83m, H1 22: USD 96m). Although this is lower
than reported at the start of the year, we are not overly concerned
given the number of tenders for large long-term contracts we are
pursuing, the considerable progress we are making with western
Government opportunities, and that it excludes framework
agreements.
USD'm
Opening order book as at 1 January
2023 83
New contracts, uplifts, and extensions 18
Contracted revenue delivered in
H1 23 (30)
----------------
Closing order book at 30 June
2023 71
Post period-end events
In our efforts to pursue opportunities to recover value from
Mozambique-related impaired assets, we have finalised agreements
for the sale of two pockets of assets for a total of USD 5.0m with
the cargo due to be shipped in Q4 2023; the proceeds will be
realised in H2 23. These transactions reduce the storage cost
burden going forward, with the beneficial effect of releasing
resources to focus on other opportunities.
Strengthening our relationship with the UK Government, we
recently announced a significant strategic contract with the
Foreign, Commonwealth and Development Office ("FCDO") to deliver
ambitions to tackle conflict and instability through the Conflict,
Stability and Security Fund ("CSSF"). The contract is a two-year
global framework agreement relating to Lot 3 of the CSSF fund,
which has a total budget of GBP 375m, with an option to extend for
a further two twelve-month periods with an additional budget of GBP
187m per annum allocated by the FCDO. Scoring the highest out of 27
awardees we look forward to participating in task orders and future
work.
Whilst we cannot predict the value or nature of contracts to RA
over the framework agreement period, specific elements of Lot 3
relevant to RA relate to the provision and delivery of operational
and technical equipment to organisations in hostile environments in
a human rights compliant manner. This includes providing advice on
administrative, logistics and human resource reform to improve
working practices. The contract builds our relationships with the
UK MOD and FCDO further, following our success with the MOD OSCC
last year and FCDO this year.
Summary and outlook
We remain committed to building a high-quality and de-risked
pipeline through developing our relationships with western
Government and Humanitarian clients, either as prime contractor or
through a partnership approach where it makes more commercial
sense. We have a number of tenders in our pipeline and have made
considerable in-roads with US Government agencies in H2 already,
which allow us to bid for the long-term contracts for which we are
known in the Humanitarian sector. Although we cannot be certain of
the number, value or timing of contract awards, we believe our
differentiated and integrated offering is both competitive and
attractive.
In the meantime, we are benefiting from contract extensions and
uplifts, as well as increased occupancy in our permanent
facilities. In some cases, we are providing rolling services to
clients while long-term contract negotiations continue. The
short-term nature of these contracts means the USD 71m order book
is not reflective of our current operations.
In addition, we are currently in advanced discussions with
parties interested in acquiring further parcels of assets which
will lead to a further recovery of value, and which will conclude
the sale of all impaired assets held in storage relating to the
Palma Project. The sale of these assets will further improve our
financial position and release our staff to pursue new business
opportunities.
As stated in May 2023, we remain cautious on our financial
performance for the current financial year and expect the business
to remain broadly breakeven at the underlying EBITDA levels. We
maintain our expectation that we will see a stronger run-rate of
contact awards and continue to strengthen our relationships with
target clients that will support our return to profitability.
Soraya Narfeldt
Chief Executive Officer
06 September 2023
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
Notes USD'000 USD'000 USD'000
Revenue 30,357 33,729 29,188
Direct costs (26,778) (31,541) (26,176)
---------------- ---------------- ----------------
Gross profit 3,579 2,188 3,012
Administrative expenses (5,714) (6,181) (5,514)
---------------- ---------------- ----------------
Underlying operating loss (2,135) (3,993) (2,502)
Non-underlying items 4 607 (4,661) 444
---------------- ---------------- ----------------
Operating loss (1,528) (8,654) (2,058)
Investment revenue 106 150 56
Finance costs (1,021) (1,072) (1,419)
---------------- ---------------- ----------------
Loss before tax (2,443) (9,576) (3,421)
Tax expense (7) (169) _
---------------- ---------------- ----------------
Loss and total comprehensive income
for the period (2,450) (9,745) (3,421)
Basic earnings per share (cents) 5 (1.4) (5.6) (2.0)
Diluted earnings per share
(cents) 5 (1.4) (5.6) (2.0)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
As at As at As at
30 June 31 December 30 June
2023 2022 2022
Notes USD'000 USD'000 USD'000
Assets
Non-current assets
Property, plant, and equipment 17,810 19,590 23,803
Right-of-use assets 3,953 4,421 4,904
---------------- ---------------- ----------------
21,763 24,011 28,707
---------------- ---------------- ----------------
Current assets
Inventories 3,331 5,154 8,638
Trade and other receivables 12,306 16,389 17,298
Cash and cash equivalents 12,206 7,514 9,174
---------------- ---------------- ----------------
27,843 29,057 35,110
---------------- ---------------- ----------------
Total assets 49,606 53,068 63,817
Equity and liabilities
Equity
Share capital 24,300 24,300 24,300
Share premium 18,254 18,254 18,254
Merger reserve (17,803) (17,803) (17,803)
Treasury shares _ _ (981)
Share based payment reserve 648 574 448
Retained earnings (2,907) (457) 9,896
---------------- ---------------- ----------------
Total equity 22,492 24,868 34,114
---------------- ---------------- ----------------
Non-current liabilities
Loan notes 14,000 14,000 12,000
Lease liabilities 4,278 4,556 4,825
Employees' end of service
benefits 1,089 928 817
---------------- ---------------- ----------------
19,367 19,484 17,642
---------------- ---------------- ----------------
Current liabilities
Loan notes _ _ 1,502
Lease liabilities 547 650 896
Trade and other payables 6,693 6,974 8,931
Provisions 507 1,092 732
---------------- ---------------- ----------------
7,747 8,716 12,061
---------------- ---------------- ----------------
Total liabilities 27,114 28,200 29,703
---------------- ---------------- ----------------
Total equity and liabilities 49,606 53,068 63,817
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Share
Based
Share Share Merger Treasury Payment Retained
Capital Premium Reserve Shares Reserve Earnings Total
Notes USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1 January 2022 24,300 18,254 (17,803) (1,199) 534 13,223 37,309
Total comprehensive
income for
the period _ _ _ _ _ (3,421) (3,421)
Share based payments _ _ _ _ 185 _ 185
Lapsed share options _ _ _ _ (94) 94 _
Issuance of treasury
shares _ _ _ 218 (177) _ 41
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 30 June 2022 24,300 18,254 (17,803) (981) 448 9,896 34,114
Total comprehensive
income for
the period _ _ _ _ _ (9,745) (9,745)
Share based payments _ _ _ _ 126 _ 126
Non-cash employee
compensation _ _ _ 981 _ (608) 373
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 31 December 2022 24,300 18,254 (17,803) _ 574 (457) 24,868
Total comprehensive
income for
the period _ _ _ _ _ (2,450) (2,450)
Share based payments _ _ _ _ 74 _ 74
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 30 June 2023 24,300 18,254 (17,803) _ 648 (2,907) 22,492
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
Notes USD'000 USD'000 USD'000
Operating activities
Operating loss (1,528) (8,654) (2,058)
Adjustments for non-cash and other items:
Depreciation on property, plant, and equipment 2,312 4,295 2,271
Loss/(profit) on disposal of property, plant, and equipment 34 17 (20)
Unrealised differences on translation of foreign balances (22) 22 (57)
Provision for employees' end of service benefits 273 269 257
Share based payments 74 304 185
Non-underlying items 4 _ 2,707 627
---------------- ---------------- ----------------
1,143 (1,040) 1,205
Working capital adjustments:
Inventories 1,824 1,580 487
Accounts receivable, deposits, and other
receivables 4,084 882 (1,139)
Accounts payable and accruals (745) (1,548) (1,814)
---------------- ---------------- ----------------
Cash flows from/(used in) operations 6,306 (126) (1,261)
Tax paid (129) _ _
Employees' end of service benefits paid (112) (187) (142)
---------------- ---------------- ----------------
Net cash flows from/(used in) operating activities 6,065 (313) (1,403)
---------------- ---------------- ----------------
Investing activities
Investment revenue received 106 150 56
Purchase of property, plant, and equipment (265) (368) (250)
Proceeds from disposal of property, plant, and equipment 166 172 187
---------------- ---------------- ----------------
Net cash flows from/(used in) investing activities 7 (46) (7)
---------------- ---------------- ----------------
Financing activities
Repayment of borrowings _ (11,500) _
Proceeds from borrowings _ 11,998 3,502
Payment of lease liabilities (381) (515) (319)
Finance costs paid (1,021) (1,262) (1,229)
Proceeds from share options exercised _ _ 41
---------------- ---------------- ----------------
Net cash flows (used in)/from financing activities (1,402) (1,279) 1,995
---------------- ---------------- ----------------
Net increase/(decrease) in cash and cash equivalents 4,670 (1,638) 585
Cash and cash equivalents as at start of the period 7,514 9,174 8,532
Effect of foreign exchange on cash and cash equivalents 22 (22) 57
---------------- ---------------- ----------------
Cash and cash equivalents as at end of the period 12,206 7,514 9,174
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2023
1 CORPORATE INFORMATION
The principal activity of RA International Group plc ("RAI" or
the "Company") and its subsidiaries (together the "Group") is
providing services in demanding and remote areas. These services
include construction, integrated facilities management, and supply
chain services. RAI was incorporated on 13 March 2018 as a public
company in England and Wales under registration number 11252957.
The address of its registered office is One Fleet Place, London,
EC4M 7WS.
2 BASIS OF PREPARATION
The financial information set out in these condensed
consolidated interim financial statements does not constitute the
Group's statutory accounts within the meaning of section 434 of the
Companies Act 2006.
The unaudited condensed consolidated interim financial
statements for the six months ended 30 June 2023 have been prepared
in accordance with IAS 34, 'Interim Financial Reporting'. They do
not include all the information required for full annual financial
statements and should be read in conjunction with the consolidated
financial statements of RAI for the year ended 31 December 2022.
The unaudited financial information has been prepared using the
same accounting policies and methods of computation as the Annual
Report for the year ended 31 December 2022. The same accounting
policies and methods of computation will be used to prepare the
Annual Report for the year ending 31 December 2023. The financial
statements of the Group are prepared in accordance with IFRS.
3 SEGMENT INFORMATION
For management purposes, the Group is organised into one segment
based on its products and services, which is the provision of
services in demanding and remote areas. Accordingly, the Group only
has one reportable segment. The Group's Chief Operating Decision
Maker ("CODM") monitors the operating results of the business as a
single unit for the purpose of making decisions about resource
allocation and assessing performance. The CODM is considered to be
the Board of Directors.
Operating segments
Revenue, operating results, assets, and liabilities presented in
the financial statements relate to the provision of services in
demanding and remote areas.
Revenue by service channel:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Integrated facilities management 15,817 14,154 13,257
Construction 6,637 14,861 6,415
Supply chain 7,903 4,714 9,516
---------------- ---------------- ----------------
30,357 33,729 29,188
Revenue by recognition timing:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Revenue recognised over time 21,989 29,241 18,919
Revenue recognised at a point
in time 8,368 4,488 10,269
---------------- ---------------- ----------------
30,357 33,729 29,188
Geographic segment
The Group primarily operates in Africa and the CODM considers
Africa and Other to be the only geographic segments of the Group.
The below geography split is based on the location of project
implementation.
Revenue by geographic area of project implementation:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Africa 26,835 33,133 27,879
Other 3,522 596 1,309
---------------- ---------------- ----------------
30,357 33,729 29,188
Non-current assets by geographic area:
As at As at As at
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Africa 20,103 22,223 26,489
Other 1,660 1,788 2,218
---------------- ---------------- ----------------
21,763 24,011 28,707
Revenue split by customer:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
% % %
Customer A 21 17 20
Customer F 13 12 12
Customer I 10 13 10
Customer J 10 _ _
Customer H 10 7 8
Customer D 9 9 8
Customer K 5 2 _
Customer E _ 9 11
Customer B _ 11 9
Other 22 20 22
---------------- ---------------- ----------------
100 100 100
4 NON-UNDERLYING ITEMS
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
USD'000 USD'000 USD'000
Restructuring costs _ 2,742 760
Palma Project, Mozambique (607) 1,919 (1,204)
---------------- ---------------- ----------------
(607) 4,661 (444)
Palma Project, Mozambique
In H1 23, the Group reached a settlement for lost revenue due to
delayed occupation of the completed elements of the camp in Palma,
Mozambique before the attack in March 2021. As a result, a USD
607,000 net income has been recorded in the period.
5 EARNINGS PER SHARE
The Group presents basic earnings per share ("EPS") data for its
ordinary shares. Basic EPS is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the period
plus the weighted average number of ordinary shares that would be
issued on conversion of all the dilutive potential ordinary shares
into ordinary shares.
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2023 2022 2022
Loss for the period (USD'000) (2,450) (9,745) (3,421)
Basic weighted average number
of ordinary shares 173,575,741 173,377,448 171,813,566
Effect of employee share options 312,545 728,394 1,077,434
---------------- ---------------- ----------------
Diluted weighted average number
of shares 173,888,286 174,105,842 172,891,000
Basic earnings per share (cents) (1.4) (5.6) (2.0)
Diluted earnings per share (cents) (1.4) (5.6) (2.0)
6 APPROVAL OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The condensed consolidated interim financial statements were
approved by the Board of Directors on 06 September 2023.
_ Ends _
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