TIDMRAI
RNS Number : 7351L
RA International Group PLC
10 September 2019
10 September 2019
RA INTERNATIONAL GROUP PLC
("RA International" or the "Company" and, together with its
subsidiaries, the "Group")
Interim results for the six months period ended 30 June 2019
RA International Group plc (AIM: RAI), a leading provider of
services to remote locations in Africa and the Middle East, is
pleased to announce its interim results in respect of the six
months ended 30 June 2019.
6 months 6 months
ended ended
30 June 30 June
2019 2018
USD'000 USD'000
Revenue 23,044 26,112
Underlying profit (1) 2,546 7,654
Profit 2,623 4,819
Normalised EPS (cents) (2) 1.5 5.5
Basic EPS (cents) 1.5 3.4
Net Cash (end of period) (3) 25,830 27,978
INTERIM HIGHLIGHTS
-- Contracted revenue backlog of USD 166m at 30 June 2019, up
39.5% from USD 119m at 31 December 2018
-- USD 65.8m of contracts awarded during the period including:
-- Master service agreement with IAP for global supply
chain services. The first task order issued is for
up to USD 8.5m over five years;
-- Significant contract with Facilities Development
Corporation to provide construction services in
connection with the refurbishment and upgrade of
the U.S. Embassy in Denmark;
-- USD 9.8m contract to provide vehicle and equipment
fleet operation and first line maintenance services
in up to 10 locations in East Africa for a large
humanitarian organisation;
-- USD 9.0m contract with a western government to provide
construction and facilities management services
over the next three years in East Africa;
-- USD 10.7m construction contract with a large humanitarian
client to provide accommodation facilities for peacekeeping
troops in a Central African country; and a
-- USD 7.8m contract with a large humanitarian organisation
to supply and install modified shipping containers
as accommodation and offices in an East African
country.
-- Operating cash flow of USD 3.9m (H1 18: USD 3.8m) driven by
a period of strong receivable collections
-- Underlying Operating Profit of USD 3.3m (H1 18: USD 8.3m)
and Operating Profit of USD 2.7m (H1 18: USD 8.2m)
-- In support of its Mozambique entrance strategy, acquired a
shareholding in Royal Food Solutions S.A and a large plot
of land in the North of the country
POST PERIOD HIGHLIGHTS
-- Encouraging start to H2 19 with monthly activity levels increasing
in line with expectations and profit margins returning to historical
levels
-- Revenue anticipated to be recognised in H2 19 from the Group's
USD 166m revenue backlog should lead to the Group meeting turnover
expectations in 2019 while profitability is projected to be broadly
in line with expectations
Soraya Narfeldt, CEO of RA International, commented:
We are pleased and encouraged by the value of contracts awarded
to the Group in H1 19 and whilst the delay in being awarded a
particular contract has impacted on first half financials, the
Company is set for a strong second half of the year. All contracts
expected to significantly contribute to H2 19 revenue have now
commenced and we continue to bid for large, long-term contracts in
line with our strategic plan.
Notes to summary table of financial results:
(1)Underlying profit represents profit before non-reoccurring
exceptional items and unrealised FX charges.
(2)Normalised earning per share represents basic earnings
per share excluding exceptional items and unrealised FX charges.
(3)Net cash represents the end of period cash balance less
term loans and notes outstanding.
Enquiries:
RA International Group PLC Via Hudson Sandler
Soraya Narfeldt, Chief Executive Officer
Lars Narfeldt, Chief Operating Officer
Andrew Bolter, Chief Financial Officer
Cenkos Securities PLC (Nominated Adviser
and Broker)
Derrick Lee
Peter Lynch +44 (0)131 220 6939
Hudson Sandler LLP (Financial PR & IR) +44 (0)207 796 4133
Daniel de Belder rainternational@hudsonsandler.com
Nelly Akpaka
Background of the Company
RA International is a leading provider of services to remote
locations in Africa and the Middle East. The Company offers its
services through three channels: construction, integrated
facilities management and supply chain, and services three main
client groups: humanitarian and aid agencies, governments and
commercial customers, predominantly in the oil and gas and mining
sectors. It has a strong customer base, largely comprising UN
agencies, western governments and global corporations.
The Company provides comprehensive, flexible, mission critical
support to its clients enabling them to focus on the delivery of
their respective businesses and services. Focusing on integrity and
values alongside making on-going investment in its people,
locations and operations has over time created a reliable and
trusted brand within its sector.
CHIEF EXECUTIVE'S REVIEW
Overview
I am pleased to update the Company's shareholders on our
performance for the six months ending 30 June 2019 (the "Period" or
"First Half"). In line with our strategic objectives, we have
continued to grow our customer base, diversify geographically,
target longer-term contracts and cross-sell to new and existing
customers. Our strategy is beginning to bear fruit as evidenced by
our growing contracted revenue backlog which was USD 166m at 30
June 2019, increasing 39.5% since 31 December 2018.
Group revenue during the First Half was USD 23.0m (H2 18: USD
28.7m, H1 18: USD 26.1m) and underlying profit was USD 2.5m (H2 18:
USD 5.5m, H1 18: USD 7.7m).
The level of revenue and underlying profit partly reflects
certain delays the Group experienced in converting large bids into
contract awards. These delays were however resolved by the end of
the Period and the Group was awarded contracts with an aggregate
value of USD 65.8m during H1 19. Revenue recognition for most
contracts awarded in H1 19 will only begin in the second half of
the year and consequently the Company is confident of a
significantly stronger H2 19 and delivering on 2019 market
expectations.
During the First Half we placed significant focus on
diversifying our customer base and bidding on larger, longer-term
contracts. We achieved notable success in both being invited to
tender for larger contracts and being awarded several projects from
new customers with whom we are already bidding on other contracts.
We see growing our customer base and winning longer-term contracts
as the primary drivers of sustainable long-term business
growth.
Contracts
As stated in our 2018 Annual Report, our strengthened balance
sheet has enabled us to bid for larger contracts which if awarded
to the Group would be transformational in nature. Being a quoted
company has also enhanced our profile and brought us a number of
new opportunities, particularly with western governments. One
example is a new contract whereby we will be undertaking
construction works at the US embassy in Denmark. We primarily bid
on this contract to provide us with the track record and experience
required to undertake similar contracts in Africa; and less than 2
months following this contract win we were awarded a similar
contract in South Sudan where we have now materially increased our
footprint. We are optimistic that we will win additional work in
South Sudan allowing us to maintain a significant footprint in the
country for years to come.
During the First Half, the Group was awarded a large number of
significant contracts. These include a USD 9.8m long-term contract
with the United Nations to provide vehicle and equipment fleet
operation and first line maintenance services in East Africa and a
government contract with a value of up to USD 9.0m for construction
and facilities management services. This government contract was
originally expected to be signed in H2 18.
We have continued to see an increase in the number of hybrid
projects whereby two or more of the Group's services have been
delivered on behalf of our clients. Hybrid projects typically
involve the construction and operation of infrastructure, however
one recent contract awarded to the Group is for the supply and
installation of modified shipping containers. This contract, for
USD 7.8m, is primarily a supply chain contract and would not have
been awarded to the Group had we not had the relevant construction
experience and capability to install these facilities.
Besides significant new contract wins, as a result of our
excellent service and the trust our clients have in our delivery
capability, we have increased the value of a number of our existing
contracts. In some instances, we are extending our geographical
reach and scope of work to accommodate our clients' needs.
Operations
Our geographical presence continues to expand; the Company
currently has operations in 9 countries, primarily in remote
locations in Africa. During the Period we significantly expanded
our operations in Mozambique. In addition to acquiring a parcel of
land in Northern Mozambique to build a large camp facility, we also
acquired a shareholding in Royal Food Solutions S.A, a family-owned
provider of integrated facilities management services.
In H1 19 the Group continued to add resources to its Nairobi
based Project Management Office ("PMO"), both through new hires and
relocating staff from our Dubai head office and various operating
areas to the PMO. We believe that by centralising our project
execution function we can enhance our clients' experience through
simplifying communication channels and clarifying project
management responsibility. Additionally, as we continue to expand
our geographic footprint, we anticipate incremental efficiencies to
be realised given that the PMO will control resource allocation
across all project locations.
Current Trading and Outlook
The start of the second half of the year has been encouraging
with monthly activity levels increasing in line with expectations
and profit margins returning to historical levels. Revenue
anticipated to be recognised in H2 19 from the Group's USD 166m
revenue backlog should lead to the Group meeting turnover
expectations in 2019 while profitability is projected to be broadly
in line with expectations. All contracts which are expected to
contribute to H2 19 revenue have now commenced and the Board does
not anticipate any changes or delays to these projects.
We are very pleased by the Group's current level of trading
activity and expect this momentum to carry on into next year. Our
team continues to do an exceptional job and it is validating that
recent investments made in enhancing our operational capacity have
proved warranted given the increasing number, size, and complexity
of projects we are undertaking.
Soraya Narfeldt
Chief Executive Officer
10 September 2019
FINANCIAL REVIEW
Overview
During the first few months of 2019 the Group experienced delays
in converting certain large bids into contract awards; however, by
the end of the Period the Group had been awarded contracts with an
aggregate value of USD 65.8m. As the majority of these contracts
were awarded in the last two months of H1 19 and, in most cases,
the recognition of revenue will begin in the third quarter of the
year, the profit contribution from these contracts in the Period
was insignificant.
Some recently awarded contracts, including a USD 7.8m supply
contract awarded to the Group on 30 June 2019, are short term
contracts ("STCs") which are expected to be fully or substantially
completed in H2 19. Revenue from STCs totalled USD 0.8m in H1 19
and it is anticipated this figure will be USD 12.4m in H2 19. While
we had previously anticipated that the impact of STCs would
decrease as the Group's contract portfolio transitioned to larger,
longer-term contracts, this is unlikely to occur in the short-term
as the Group is seeing increased demand for supply chain services
for which project revenue is often recognised over a period of 1 to
3 months.
6 months 6 months 6 months
ended Ended ended
30 June 31 December 30 June
2019 2018 2018
USD'000 USD'000 USD'000
Unaudited Unaudited Unaudited
Notes Restated Restated
(1) (1)
Revenue 23,044 28,693 26,112
Gross profit 7,140 9,731 11,217
Gross margin 31.0% 33.9% 43.0%
Underlying profit (2) 2,546 5,471 7,654
Underlying profit margin 11.0% 19.1% 29.3%
Profit 2,623 5,008 4,819
Profit margin 11.4% 17.5% 18.5%
Basic EPS (cents) 1.5 2.9 3.4
Normalised EPS (cents) (3) 1.5 3.2 5.5
Net cash (end of period) (4) 25,830 27,804 27,978
(1) Balances have been restated to reflect the impact of IFRS
16. See note 5 for details.
(2) Underlying profit is calculated by deducting exceptional
items and unrealised differences on translation of foreign balances
from profit.
(3) Normalised earnings per share is calculated by dividing
underlying profit by the weighted average number of ordinary shares
outstanding during the period.
(4) Net cash represents the end of period cash balance less
loans and notes outstanding.
Revenue
Reported revenue for H1 19 was USD 23.0m (H2 18: USD 28.7m, H1
18: USD 26.1m). This represents an 11.9% decrease when compared
with H1 18 and is primarily due to a short-term decrease in revenue
from one operating location which resulted from an extended period
of negotiation on a significant contract. This contract has now
been awarded to the Company and it is anticipated that it will
contribute over USD 6.0m in revenue during H2 19.
The Company's revenue backlog at 30 June 2019 stood at USD 166
million. Taking into account the forecast revenue contribution from
STCs in H2 19, the turnover expected to be delivered from this
backlog in the current year is already sufficient to meet the
Company's revenue expectations for 2019. As noted previously, all
contracts which are expected to contribute to H2 19 revenues have
now commenced and the Board does not anticipate any changes or
delays to these projects.
Profit Margin
Gross margin in H1 19 was 31.0% (H2 18: 33.9%, H1 18: 43.0%).
Excluding the impact of the operating location experiencing
decreased turnover as a result of an extended period of negotiation
on a significant contract, gross margin was 38.1% which is in line
with the Group's expectations.
Due to the dynamic nature of the contract award process and the
Group's commitment to ensure it could execute the project works to
the timeframe required by its customer, the Group maintained a
fairly stable labour presence in country during H1 19 despite
monthly revenue from operations decreasing by approximately 50%
when compared with 2018. These staff were allocated to internal
projects which were significantly accelerated during the
Period.
Maintaining staff levels was a strategic decision which is
believed by the Group to have directly led to a significant project
award. It is anticipated that gross margin generated in H2 19 from
this operation will be consistent with historical levels.
Underlying operating profit margin in H1 19 was 14.4% (H2 18:
21.9%, H1 18: 31.6%). The decrease in gross margin was the primary
driver for this variance although administrative expenses increased
by USD 0.8m from H1 18. The increase in administrative expenses is
largely a result of the Group adding a number of senior management
around the time of Admission to AIM on 29 June 2018 and also a
result of significant investment being made in connection with
staff training and process restructuring so as to ensure the
structure is in place to bid, win and manage the larger and more
complex projects for which the Group is bidding and
undertaking.
Finance costs of USD 0.3m were reported in the Period (H2 18:
USD 0.3m, H1 18: USD 0.6m). USD 0.2m relates to interest charges on
lease liabilities which have been recorded in accordance with IFRS
16.
Earnings Per Share
Normalised earnings per share, being underlying profit divided
by the weighted number of shares outstanding in the period, was 1.5
cents per share in the period (H2 18: 3.2 cents, H1 18: 5.5 cents).
Basic earnings per share was 1.5 cents (H2 18: 2.9 cents, H1 18:
3.4 cents) and is equal to diluted earnings per share.
Cashflow
Net cash flow from operations was USD 3.9m in the Period (H2 18:
USD 7.6m, H1 18: USD 3.8m) which represented 143.6% cash
conversion; slightly higher than recent results (H2 18: 139.4%, H1
18: 45.7%). The strong cash conversion ratio was driven by a period
of strong collections of accounts receivable balances. Accounts
receivable balances at 30 June 2019 totalled USD 5.8m (H2 18: USD
10.0m, H1 18: USD 9.7m), of which 69.8% is not yet due (H2 18:
59.2%, H1 18: 39.6%). This was partially offset by the build-up of
inventory relating to a number of significant construction and
supply projects ongoing over the Period end or due to commence in
H2 19, including a project with AECOM for the construction of an
asphalt runway and several contracts with the United Nations.
Balance Sheet
Property, plant and equipment increased by USD 4.2m during H1
19. The Group continued to construct and lease accommodation and
office facilities in East Africa to humanitarian organisations and
purchased land in Northern Mozambique. Additionally, the Group
expanded its heavy equipment fleet to service ongoing or soon to
commence construction projects.
Goodwill of USD 0.1m was recognised in the Period and relates to
the purchase of Royal Food Solutions S.A.
Dividend
A dividend of 1p per share totalling USD 2.2m was declared and
authorised during H1 19 (H2 18: nil, H1 18: USD 0.1m) and was
subsequently paid on 3 July 2019. The Company anticipates declaring
an annual dividend when it reports its earnings for the fiscal year
ended 31 December 2019.
Andrew Bolter
Chief Financial Officer
10 September 2019
[1] Cash conversion is calculated as cashflow generated from
operations divided by operating profit.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2019
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2019 2018 2018
USD'000 USD'000 USD'000
Notes Unaudited Unaudited Unaudited
Restated* Restated*
Revenue 23,044 28,693 26,112
Direct costs (15,904) (18,962) (14,895)
---------------- ---------------- ----------------
Gross profit 7,140 9,731 11,217
Administrative expenses (3,812) (3,438) (2,978)
---------------- ---------------- ----------------
Underlying operating profit 3,328 6,293 8,239
Acquisition costs (36) (76) (6)
Holding company expenses (569) (505) -
---------------- ---------------- ----------------
Operating profit 2,723 5,712 8,233
Investment revenue 169 33 1
Finance costs (346) (274) (580)
---------------- ---------------- ----------------
Underlying profit 2,546 5,471 7,654
Unrealised differences on translation
of foreign balances 77 (437) 73
Exceptional items - (26) (2,908)
---------------- ---------------- ----------------
Profit and total comprehensive
income for the period 2,623 5,008 4,819
Basic and diluted earnings per
share (cents) 2 1.5 2.9 3.4
Normalised basic and diluted earnings
per share (cents) 2 1.5 3.2 5.5
*Balances have been restated to reflect the impact of IFRS 16.
See note 5 for details.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
As at As at As at
30 June 31 December 30 June
2019 2018 2018
USD'000 USD'000 USD'000
Notes Unaudited Audited Unaudited
Restated* Restated*
Assets
Non-current assets
Property, plant, and equipment 6 22,855 18,624 12,774
Goodwill 138 - -
---------------- ---------------- ----------------
22,993 18,624 12,774
---------------- ---------------- ----------------
Current assets
Inventories 5,837 4,263 4,013
Trade and other receivables 13,458 15,962 17,308
Cash and cash equivalents 7 25,830 27,804 29,271
---------------- ---------------- ----------------
45,125 48,029 50,592
---------------- ---------------- ----------------
Total assets 68,118 66,653 63,366
Equity and liabilities
Equity
Share capital 24,300 24,300 24,300
Share premium 18,254 18,254 18,256
Merger reserve (17,803) (17,803) (17,803)
Share based payment reserve 32 16 -
Retained earnings 34,434 34,013 29,005
---------------- ---------------- ----------------
Total equity 59,217 58,780 53,758
---------------- ---------------- ----------------
Non-current liabilities
Lease liabilities 2,469 2,532 2,284
Employees' end of service benefits 328 350 308
---------------- ---------------- ----------------
2,797 2,882 2,592
---------------- ---------------- ----------------
Current liabilities
Term loans and notes - short-term
portion - - 1,293
Lease liabilities 122 111 66
Trade and other payables 5,982 4,880 5,657
---------------- ---------------- ----------------
6,104 4,991 7,016
---------------- ---------------- ----------------
Total liabilities 8,901 7,873 9,608
---------------- ---------------- ----------------
Total equity and liabilities 68,118 66,653 63,366
*Balances have been restated to reflect the impact of IFRS 16.
See note 5 for details.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2019
Additional Share Based
Share Contributed Share Merger Payment Retained
Capital Capital Premium Reserve Reserve Earnings Total
Notes USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1
January 2018
restated* 272 1,809 - - - 22,733 24,814
Total
comprehensive
income
for the
period
restated* - - - - - 4,819 4,819
Share exchange 19,612 (1,809) - (17,803) - - -
Issue of share
capital 4,416 - 18,256 - - - 22,672
Non-cash
employee
compensation - - - - - 1,578 1,578
Dividends
declared and
paid 3 - - - - - (125) (125)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 30 June
2018
restated* 24,300 - 18,256 (17,803) - 29,005 53,758
Total
comprehensive
income
for the
period - - - - - 5,008 5,008
Issue of share
capital - - (2) - - - (2)
Share based
payments - - - - 16 - 16
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 31
December 2018
restated* 24,300 - 18,254 (17,803) 16 34,013 58,780
Total
comprehensive
income
for the
period - - - - - 2,623 2,623
Share based
payments - - - - 16 - 16
Dividends
declared and
authorised 3 - - - - - (2,202) (2,202)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 30 June
2019 24,300 - 18,254 (17,803) 32 34,434 59,217
*Balances have been restated to reflect the impact of IFRS 16.
See note 5 for details.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2019
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2019 2018 2018
USD'000 USD'000 USD'000
Notes Unaudited Unaudited Unaudited
Restated Restated
Operating activities
Profit for the period 2,623 5,008 4,819
Adjustments for non-cash and other items:
Depreciation on property, plant, and equipment 1,124 876 634
Loss on disposal of property, plant, and equipment 38 113 7
Investment revenue (169) (33) (1)
Finance costs 346 274 580
Unrealised differences on translation of foreign
balances (77) 437 (73)
Provision for employees' end of service benefits 68 59 57
Share based payments 16 16 -
Exceptional items - 26 2,908
---------------- ---------------- ----------------
3,969 6,776 8,931
Working capital adjustments:
Inventories (1,266) (250) (1,337)
Accounts receivable, deposits, and other
receivables 2,757 1,339 (3,966)
Accounts payable and accruals (1,459) (219) 161
---------------- ---------------- ----------------
Cash flows generated from operations 4,001 7,646 3,789
Employees' end of service benefits paid (90) (17) -
Stock-based compensation and related costs - - (24)
---------------- ---------------- ----------------
Net cash flows from operating activities 3,911 7,629 3,765
---------------- ---------------- ----------------
Investing activities
Release of cash margin against guarantees issued - 2,000 -
Purchase of property, plant, and equipment (5,700) (6,524) (2,159)
Proceeds from disposal of property, plant, and
equipment 73 23 74
Acquisition of subsidiary (net of cash acquired) (106) - (565)
---------------- ---------------- ----------------
Net cash flows used in investing activities (5,733) (4,501) (2,650)
---------------- ---------------- ----------------
Financing activities
Repayment of term loans and notes - (1,263) (573)
Payment of lease liabilities (52) (75) (29)
Investment revenue received 169 33 1
Finance costs paid (346) (269) (584)
Dividends paid 3 - - (125)
Share listing costs - (397) (935)
Issue of share capital (net of issue costs paid) - (187) 22,859
---------------- ---------------- ----------------
Net cash flows (used in) / from financing activities (229) (2,158) 20,614
---------------- ---------------- ----------------
Net (decrease) / increase in cash and cash
equivalents (2,051) 970 21,729
Cash and cash equivalents as at start of the period 27,804 27,271 5,469
Effect of foreign exchange on cash and cash
equivalents 77 (437) 73
---------------- ---------------- ----------------
Cash and cash equivalents as at end of the period 25,830 27,804 27,271
1 BASIS OF PREPARATION
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. The
Company acquired, by way of share for share exchange (the
"Exchange") the entire issued share capital of RA International
FZCO and its subsidiaries ("RA") on 12 April 2018. The Group
reorganisation is treated as a common control transaction, for
which there is no specific accounting guidance under International
Financial Reporting Standards ("IFRS"). Consequently, the
integration of the Company has been accounted for using merger
accounting principles. The policy, which does not conflict with
IFRS, reflects the economic substance of the transaction.
The adoption of merger accounting presents the Company as if it
had always been the parent of the Group. As the Company was not
incorporated until 13 March 2018, the condensed interim
consolidated financial statements of the Group represent a
continuation of consolidated financial statements of RA
International FZCO, the former parent of the Group. The financial
information set out in these interim condensed consolidated
financial statements does not constitute the Group's statutory
financial statements within the meaning of section 434 of the
Companies Act 2006.
The unaudited condensed interim financial statements for the six
months ended 30 June 2019 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 2018. The
unaudited condensed financial information has been prepared using
the same accounting policies and methods of computation as the
Annual Report for the year ended 31 December 2018, except for the
adoption of IFRS 16 (see note 5). The same accounting policies and
methods of computation will be used to prepare the Annual Report
for the year ended 31 December 2019. The financial statements of
the Group are prepared in accordance with IFRS.
2 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.
Normalised earnings per share is calculated by dividing
underlying profit by the weighted average number of ordinary shares
outstanding during the period.
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2019 2018 2018
Unaudited Unaudited Unaudited
Restated Restated
Profit for the period (USD'000) 2,623 5,008 4,819
Basic weighted average number
of ordinary shares 173,575,741 173,575,741 140,371,001
Effect of warrants - - -
Effect of employee share options - - -
---------------- ---------------- ----------------
Diluted weighted average number
of shares 173,575,741 173,575,741 140,371,001
Basic earnings per share (cents) 1.5 2.9 3.4
Diluted earnings per share (cents) 1.5 2.9 3.4
Underlying Profit (USD'000) 2,546 5,471 7,654
Normalised basic earnings per
share (cents) 1.5 3.2 5.5
Normalised diluted earnings per
share (cents) 1.5 3.2 5.5
3 DIVIDS
During the interim period, a dividend of 1 pence (USD 0.01) per
share (173,575,741 shares) totalling GBP 1,736,000 (USD 2,202,000)
was declared and authorised (H2 18: USD nil, H1 18: USD 12,500 per
share (10 shares) totalling USD 125.000). The dividend declared and
authorised during the interim period was paid to ordinary
shareholders on 3 July 2019.
4 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
2019 2018 2018
USD'000 USD'000 USD'000
Unaudited Unaudited Unaudited
Restated Restated
Construction 8,041 16,942 12,537
Integrated facilities management 13,292 10,674 12,471
Supply chain services 1,711 1,077 1,104
---------------- ---------------- ----------------
23,044 28,693 26,112
The Group allocates a contract to a specific service channel
based on the nature of the primary deliverable to the customer. The
Group does not allocate revenue to multiple service channels from a
contract. If the Group were to allocate revenue to multiple service
channels from its contracts, a significant value of construction
revenue would be reclassified to the other service channels;
additionally, a significant value of integrated facilities
management revenue would be reclassified to supply chain
services.
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
2019 2018 2018
USD'000 USD'000 USD'000
Unaudited Unaudited Unaudited
Restated Restated
Africa 22,998 22,982 25,021
Other 46 5,711 1,091
---------------- ---------------- ----------------
23,044 28,693 26,112
Non-current assets by geographic area:
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2019 2018 2018
USD'000 USD'000 USD'000
Unaudited Unaudited Unaudited
Restated Restated
Africa 21,985 16,607 11,934
Other 1,008 2,017 840
---------------- ---------------- ----------------
22,993 18,624 12,774
5 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New and amended standards and interpretations
The Group applied IFRS 15 Revenue from Contracts with Customers
for the first time in 2018 and IFRS 16 Leases for the first time in
2019, using a fully retrospective approach. The effect of the
changes resulting from the adoption of these new accounting
standards has been reflected in the figures for H1 18 and H2 18 in
the Statement of Comprehensive Income, Statement of Financial
Position, Statement of Changes in Equity and Statement of
Cashflows.
The Group has not early adopted any standards, interpretations
or amendments that have been issued but are not yet effective.
IFRS 16 Leases
IFRS 16 was issued in January 2016 and replaces IAS 17 Leases,
IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15
Operating Leases-Incentives and SIC-27 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease. IFRS 16 sets out
the principles for the recognition, measurement, presentation, and
disclosure of leases and requires lessees to account for all leases
under a single on-balance sheet model similar to accounting for
finance leases under IAS 17. The standard includes two recognition
exemptions for lessees - leases of 'low-value' assets and
short-term leases. At the commencement date of a lease, lessees
recognise a liability relating to future lease payments (i.e., the
lease liability) and an asset representing the right to use the
underlying leased asset during the lease term (i.e., the
right-of-use asset). Lessees are required to separately recognise
the interest expense on the lease liability and the depreciation
expense on the right-of-use asset.
Lessees are also required to remeasure the lease liability upon
the occurrence of certain events such as a change in lease term or
in future lease payments resulting from a change in an index or
reference rate used to determine those payments. The lessee will
generally recognise the amount of the remeasurement of the lease
liability as an adjustment
to the right-of-use asset.
(a) Recognition of leases
Before the adoption of IFRS 16, lease costs were recognised as
expenses in the period of asset use. The Group has chosen to adopt
the fully retrospective approach and as such has restated prior
period results as if IFRS 16 had always been in place.
As a result, 2018 opening retained earnings decreased by USD
287,000 to reflect the impact of IFRS 16 in periods previous to 1
January 2018. A right-of-use asset of USD 2,092,000 was also
recognised together with associated aggregate lease liabilities of
USD 2,379,000 as at 1 January 2018.
H1 18 reported direct costs have decreased by USD 155,000, with
finance costs increasing by USD 213,000. H2 18 direct costs
decreased by USD 156,000, administrative expenses increased by USD
9,000 and finance costs increased by USD 234,000.
Property, plant and equipment has increased by USD 2,005,000 in
H1 18 and USD 2,229,000 in H2 18, with lease liabilities increasing
by USD 2,350,000 and USD 2,643,000 respectively.
On the Statement of Cashflows, net cash flows from operating
activities increased by USD 242,000 in H1 18 and USD 278,000 in H2
18, with net cash flows from financing activities decreasing by USD
242,000 and USD 278,000 respectively.
The Group has chosen to take advantage of the exemptions for
leases of 'low-value' assets and short-term leases. Rental expense
relating to these leases will continue to be fully recognised in
direct costs and administrative expenses.
6 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 2019 restated* 12,419 10,515 451 23,385
Additions 1,981 3,700 19 5,700
Acquired on business combination - 31 - 31
Disposals (241) (594) - (835)
---------------- ---------------- ---------------- ----------------
At 30 June 2019 14,159 13,652 470 28,281
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 January 2019 restated* 1,473 3,233 55 4,761
Charge for the period 383 708 33 1,124
Relating to disposals (19) (440) - (459)
---------------- ---------------- ---------------- ----------------
At 30 June 2019 1,837 3,501 88 5,426
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 30 June 2019 12,322 10,151 382 22,855
Machinery,
motor
vehicles,
Land and furniture Leasehold
and
buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 July 2018 restated* 9,628 6,902 148 16,678
Additions restated* 2,904 3,655 303 6,862
Disposals (113) (42) - (155)
---------------- ---------------- ---------------- ----------------
At 31 December 2018 restated* 12,419 10,515 451 23,385
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 July 2018 restated* 1,177 2,695 32 3,904
Charge for the periodrestated* 298 555 23 876
Relating to disposals (2) (17) - (19)
---------------- ---------------- ---------------- ----------------
At 31 December 2018 restated* 1,473 3,233 55 4,761
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 31 December 2018 restated* 10,946 7,282 396 18,624
Machinery,
motor
vehicles,
Land and furniture Leasehold
and
buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2018 restated* 8,488 6,010 126 14,624
Additions 1,123 1,013 22 2,158
Acquired on business combination 17 52 - 69
Disposals - (173) - (173)
---------------- ---------------- ---------------- ----------------
At 30 June 2018 restated* 9,628 6,902 148 16,678
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 January 2018 restated* 945 2,391 26 3,362
Charge for the period restated* 232 396 6 634
Relating to disposals - (92) - (92)
---------------- ---------------- ---------------- ----------------
At 30 June 2018 restated* 1,177 2,695 32 3,904
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 30 June 2018 restated* 8,451 4,207 116 12,774
*Balances have been restated to reflect the impact of IFRS 16.
See note 5 for details.
Included in the carrying amount of land and buildings at 30 June
2019 are right-of-use assets of USD 2,110,000 (H2 18: USD
2,229,000, H1 18: USD 2,005,000) on which depreciation was charged
of USD 119,000 (H2 18: USD 113,000, H1 18: USD 87,000).
7 CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statement of
financial position comprised of cash at bank of USD 25,830,000 (H2
18: USD 27,804,000, H1 18: USD 29,271,000). Of the total balance of
cash and cash equivalents, USD 3,193,000 (H2 18: USD 1,719,000, H1
18: USD 2,000,000) represents restricted cash.
The balance of restricted cash held by the Group at 30 June 2019
and 31 December 2018 relates to cash held in Group bank accounts
which cannot be withdrawn on demand. The balance of restricted cash
held by the Group at 30 June 2018 relates to cash margin provided
to a commercial bank against the issuance of a guarantee to a
subsidiary. Due to the respective terms, restricted cash is
considered to be liquid.
8 APPROVAL OF INTERIM FINANCIAL STATEMENTS
The condensed interim financial statements were approved by the
board of directors on 09 September 2019.
INDEPENT REVIEW REPORT TO RA INTERNATIONAL GROUP PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2019 which comprises the Interim Condensed
Consolidated Statement of Financial Position, the Interim Condensed
Consolidated Income Statement, the Interim Condensed Consolidated
Statement of Comprehensive Income, the Interim Condensed
Consolidated Statement of Changes in Equity, the Interim Condensed
Consolidated Statement of Cash Flows and related notes 1 to 8. We
have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2019 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Edinburgh
11 September 2019
Notes:
1. The maintenance and integrity of the RA International Group
PLC website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the financial statements
since they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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