TIDMRAI
RNS Number : 1844B
RA International Group PLC
19 September 2018
19 September 2018
RA INTERNATIONAL GROUP PLC
("RA International" or the "Company" and, together with its
subsidiaries, the "Group")
Interim Results for the six months to 30 June 2018
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 2018.
INTERIM HIGHLIGHTS
-- Admission to trading on AIM on 29 June 2018 raising gross
proceeds of GBP18.8m (approximately US$24.7m)
-- Half yearly revenue of US$ 23.9 m and EBITDA(1) of US$ 7.4m
-- During the period, total contracts awarded of approximately
US$ 33m including a 5-year contract with UNICEF providing,
accommodation, catering, cleaning services and offices for their
staff
-- Net cash of US$ 28.0m at 30 June 2018
-- Acquired RA SB Ltd., a provider of remote site services in
Sudan, in line with strategy of further geographical expansion in
Africa
-- Commenced a US$ 5.2m construction and services project in
Oman for the UK MOD. Besides supporting the Company's geographical
diversification efforts, the successful mobilisation of this
contract demonstrates RA International's ability to support UK
Government agencies worldwide
(1) EBITDA is earnings before interest, tax, depreciation and
the deduction of exceptional items detailed within the Condensed
Consolidated Income Statement.
POST PERIOD HIGHLIGHTS
-- Company now debt free with US$ 0.6m of term loans settled in
H1 18 and remaining US$ 1.3m settled by 31 August 2018
-- Contracted revenue backlog of US$ 114m at 31 August 2018 with
US$ 63m of contracts awarded since 1 January 2018
-- The average term of ongoing contracts is 2.2 years or 4.2
years when weighted by contract value
-- Five-year contract of US$ 30m awarded by the United Nations
Support Office in Somalia, in line with the Company's focus on
securing larger and longer-term contracts supporting key
customers
-- Regional project Management Office established and opened in
Nairobi, Kenya, to provide technical project support leading to
future project efficiencies around Africa
Soraya Narfeldt, CEO of RA International, commented:
"The Company is delivering on its strategy of geographical
expansion and securing larger and longer term contracts. We have
seen a significant increase in the bid pipeline since admission to
trading on AIM in June, and we expect this to translate into
contracts in the second half of this year and beyond.
"We are now focussing on larger contracts, and being a publicly
quoted company will enhance our status and competitive position. We
are grateful to the support shown by shareholders since June and
look forward to the next phase of RA International's
development."
Enquiries:
RA International Group PLC Via IFC Advisory
Soraya Narfeldt, Chief Executive Officer
Lars Narfeldt, Chief Operating Officer
Andrew Bolter, Chief Financial Officer
Cenkos Securities PLC (Nominated Adviser and
Broker)
Beth McKiernan +44 (0)131 220
Derrick Lee 6939
IFC Advisory Limited (Financial PR & IR)
Tim Metcalfe
Heather Armstrong +44 (0)20 3934
Florence Chandler 6600
Background to the Company
RA International is a leading provider of services to remote
locations in Africa and the Middle East. It specialises in five
service verticals: construction; integrated facilities management;
operation and maintenance; accommodation; and supply chain
logistics. It has a strong customer base, largely comprising UN
agencies, western governments and global corporations.
The Group provides comprehensive, flexible, mission critical
support to its clients enabling them to focus on the delivery of
their respective businesses and services. RA International's focus
on integrity and values alongside on-going investment in people,
locations and operations has over time created a reliable and
trusted brand within its sector.
CHIEF EXECUTIVE'S REVIEW
Admission to AIM
Admission to AIM was an important step in the Group's
development, enabling us to raise additional capital to support our
strategic objectives of broadening our geographical presence and
undertaking larger, multi-year contracts with both existing and new
customers, and in new sectors such as mining and oil and gas. By
becoming a public company we are able to build on our existing
strong reputation within our market place and provide additional
confidence to customers when we bid for larger contracts.
The funds we raised at the time of Admission in addition to our
existing cash resources, will be utilised to fund the
following:
-- strengthen the Group's balance sheet enabling us to meet
customer demand to bid on larger scale contracts within our core
competencies;
-- promote a client multiplier effect, adding to the Group's
ability to upsell additional services to existing clients.
Opportunities for upselling have been identified across all five
verticals; and
-- enter new territories and sectors through leveraging existing relationships and reputation.
Contracts
The Company reported backlog revenue at 31 August of US$ 114m
compared with US$ 112m at 31 December 2017, with US$ 63m worth of
new contracts awarded this financial year to date. The average term
of ongoing contracts is 2.2 years or 4.2 years when weighted by
contract value.
During the period, we have delivered on our long-term strategy
of providing high quality and reliable service to generate trust
with our customers. We have built on our existing relationship with
the United Nations, resulting in a 5-year contract with UNICEF for
accommodation, offices, catering and cleaning services. Following
this award, the UN High Commissioner for Refugees (UNHCR) renewed
their contract with RA International for similar services in
Mogadishu for a long-term period.
We announced on 16 August 2018, post period end, that the
Company successfully bid and was selected by the United Nations
Support Office and the African Mission in Somalia to deliver a
power infrastructure project worth US$ 30m over 5 years.
The Company continues to actively bid on future contracts with
larger contract values and longer terms. Additionally, we expect to
continue to win follow on work from our key clients based on the
quality and execution of our projects. A prime example of this, was
the contract win for the UK MOD in Oman. This was a customer led
contract win which expanded our geographical footprint. Further
contract awards from the UK MOD and FCO demonstrate a continued
confidence in RA International as a service provider to UK
Government agencies.
The Company's strategy for US Government business development is
to partner with companies for each of the Africa-centric Government
programs and support them in winning work across the continent. In
addition, the Company has partnered with a firm who specialise in
Overseas Building Operations for the US Department of State and is
bidding on multiple projects at present.
Since the Company's Admission to AIM in June it has also bid or
is in the process of bidding for large construction and service
contracts in the mining, oil and gas sector.
While there are a number of factors that influence the timing of
contract awards and the recognition of revenue, we are confident
that a proportion of our significant pipeline will contribute to
our full year results for 2019. We maintain close relationships
with our customers and look forward to providing updates on a
number of contracts during the remainder of the year.
Operations
We have completed a number of key operational projects so far in
2018, including the acquisition of RA SB Ltd. in Sudan which adds
an additional geographic territory to our already strong African
coverage. Through this acquisition we have been able to enter into
a support contract within the mining, oil and gas industry.
During the period, we appointed a Legal Officer and Group
Compliance Manager to work at Group level, and further enhanced our
operating capacity through the hiring of a new Group Supply Chain
Manager and Head of Engineering. We also opened a Project
Management Office in Nairobi, Kenya, on 10 September 2018 to
support ongoing project work in the region. It is anticipated that
the consolidation of technical project support in Kenya will lead
to future efficiencies when executing projects across Africa.
Overall, the Company has reduced its East Africa concentration,
increasing projects in Central African Republic, Oman and Sudan. We
have increased local hires from 62% in 2016 to 67% in 2017 and in
2018 we are very pleased to have 70% of total employees of RA
International being local staff.
The UN is a significant customer for us and to ensure we
continue to meet the agency's high Sustainable Development Goals
(SDG), we have initiated work on developing a new Corporate Social
Responsibility (CSR) strategy. This will be done by formalizing our
sustainability work and pursuing a new structure that will revolve
around the SDG, with the intention of creating lasting long-term
impact for our stakeholders and the environment.
Strategy for growth
There are four core elements to our strategy to enhance our
growth plans:
1. Diversify our customer base;
2. Diversify our geographic reach;
3. Bid for larger, longer-term contracts which we have started
to submit since our Admission in June; and
4. Cross sell our services to new and existing customers.
Market Developments
Overseas Development Aid (ODA) expenditure by international
governments is driven by a number of aims including providing
stability in conflicted regions, promoting democracy, contributing
to counter terrorism and law enforcement efforts, as well as
humanitarian aid to alleviate short term humanitarian crises. ODA
can be delivered bilaterally, directly by individual governments,
or multilaterally, through a multitude of organisations such as UN
agencies, and charitable organisations. RA International typically
undertakes contracts for western governments and international
agencies to help deliver ODA in remote locations, as well as acting
for international companies.
In 2016, UN agencies and USAID spent approximately US$ 4.4
billion and US$ 3.1 billion respectively in the Central African
Republic, the Democratic Republic of Congo, Eritrea, Ethiopia,
Libya, Mali, Somalia, South Sudan and Sudan. These are countries in
which the Group is presently working or can provide its services at
short notice. In the same year the UK, which is the second largest
contributor by monetary value in overseas aid to Africa, spent
approximately GBP2.9 billion in ODA to Africa. In aggregate, over
US$100 billion in planned expenditure has been announced by the US,
UK, United Nations and the mining sector for investment in Africa
in the next three years. RA International believes that a
proportion of this planned expenditure will be directly related to
the services the Company is able to deliver.
The US is the largest contributor by monetary value in overseas
aid to Africa and the majority of the US Government funds spent is
through Indefinite Delivery/Indefinite Quantity (IDIQ) contracts.
IDIQ contracts are awarded, after a pre-qualification round, to a
group of 3 to 5 companies who compete for Task Orders over a 5 to
10 year period. For the most part, only US companies can qualify
for these IDIQ contracts because of security clearance
requirements. Most of these companies that qualify to bid on Task
Orders do not have a large presence in Africa and require a partner
to execute the primary contract scope or provide support services.
This presents a significant opportunity for RA International given
the scope of our service offering, geographical reach, and
experience successfully completing US Government projects.
Current Trading and Outlook
At RA International, we are committed to delivering our projects
to a high standard and on time. Our contract delivery in the first
half of the year has remained excellent. Looking to the future,
both the size and contract length of the bids we are working on has
increased. We are continuing to diversify our customer base and
deliver geographical expansion. The management undertook a huge
challenge in the first half of the year with the Admission to AIM
and we have been delighted with the support we have seen from the
London market. We look forward to the second half of 2018 with
confidence.
Soraya Narfeldt
Chief Executive Officer
19 September 2018
FINANCIAL REVIEW
Overview
Financial performance for the first-half of 2018 is consistent
with our expectations. While the Company does not experience
seasonality, it does frequently execute short term contracts
("STCs") which often have a significant effect on revenue and
profitability in a given quarter or half-year period. As a result,
interim figures are often not directly comparable to those of the
previous year. To provide readers with a more complete
understanding of our financial performance we have chosen to
present the financial results of the interim period (H1 18) and the
two preceding half-year periods (H2 17 and H1 17). It is
anticipated that the Company will have a strong second-half of 2018
and that going forward, as the Company secures higher value,
longer-term contracts, the effect of STCs will diminish.
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2018 2017 2017
US$'000 US$'000 US$'000
Notes Unaudited Unaudited Unaudited
Revenue 23,855 25,919 27,342
Gross profit 9,906 9,426 11,503
Gross margin 41.5% 36.4% 42.1%
EBITDA (1) 7,377 6,335 9,451
EBITDA margin (1) 30.9% 24.4% 34.6%
Normalised EPS (cents) (2) 4.7 3.5 6.3
Net cash (end of period) (3) 27,978 5,602 2,202
(1) EBITDA is earnings before interest, tax, depreciation and
the deduction of exceptional items detailed within the Condensed
Consolidated Income Statement. EBITDA margin is a key performance
measurement monitored by management of the Group.
(2) Normalised earnings per share represents basic earnings per
share excluding exceptional items.
(3) Net cash represents the end of period cash balance less term
loans and notes outstanding.
Revenue
Reported revenue for H1 18 was US$ 23.9m (H2 17: 25.9m, H1 17:
27.3m). This represents a 12.8% decrease when compared with H1 17
and is due to a US$ 5.7m reduction in revenue being reported from
short-term construction and supply contracts. The Company completed
US$ 7.0m of STCs in 2017 with US$ 6.8m of revenue recorded in H1 17
and US$ 0.2m recorded in H2 17. The Company is currently executing
5 STCs with an aggregate value of US$ 8.0m. US$ 1.1m of revenue is
included in the H1 18 results with US$ 6.9m anticipated to be
recognized in H2 18. Of the US$ 63.2m of contracts awarded to the
Company this year, US$ 50.2m relate to contracts with five-year
terms.
Profit Margin
Gross margin in H1 18 was 41.5% (H2 17: 36.4%, H1 17: 42.1%)
which is consistent with the Company's expectations. The variance
in H2 17 was due to the Company executing a construction project
for the UK MOD in Somalia which was substantially completed in the
second half of 2017. Excluding the effect of this contract, H2 17
gross margin would have been 39.0%. The Company feels the
successful completion of this contract was instrumental to the UK
MOD awarding RA International a contract in Oman earlier this
year.
EBITDA margin, excluding costs of the IPO and related charges,
was 30.9% in the period (H2 17: 24.4%, H1 17: 34.6%) which was
consistent with the Company's expectations. The decrease in margin
of 3.7% from H1 17 is primarily due to an additional US$ 0.7m of
other income recognized in H1 17. Excluding other income, EBITDA
margin is 29.1% (H2 17: 24.2%, H1 17: 30.6%). The majority of other
income relates to customer reimbursements of project costs incurred
which have been expensed in prior accounting periods.
Exceptional Items
Exceptional items of US$ 2.9m have been recorded as costs in the
period. These items represent expenses incurred in relation to the
Company's Admission to AIM which, in accordance with international
accounting standards, are to be presented as expenses in the income
statement. Within the interim accounts exceptional items are split
into two categories; advisory fees and other costs associated with
the AIM Admission totalled US$ 1.3m and stock-based compensation
totalled US$ 1.6m. The stock-based compensation charge relates to
the transfer of shares by the majority shareholder of the Company
to certain employees at the AIM Admission date. While the Company
was not a party to this transfer, IFRS mandates that the
transaction be accounted for as a cost on the date of share grant.
The transfer of shares was conditional on the Company's successful
Admission to AIM.
Earnings Per Share
Normalised earnings per share, being earnings before exceptional
items divided by the weighted number of shares outstanding in the
period, was 4.7 cents per share in the period (H2 17: 3.5 cents, H1
17: 6.3 cents).
Basic earnings per share was 2.6 cents (H2 17: 3.5 cents, H1 17:
6.3 cents) and is equal to diluted earnings per share.
Cashflow
Net cash flow from operations was US$ 3.5m in the period (H2 17:
6.2m, H1 17: 6.3m) which represented 51.9% cash conversion, well
below previously reported results (H2 17: 106.2%, H1 17: 70.2%).
The primary factors contributing to the differential were:
1) A build-up in receivable balances from one UN agency. As at
30 June 2018 this specific account receivable balance was US$ 3.9m
(31 December 17: US$ 0.4m). The Company collected US$ 3.0m of this
balance in July 2018.
2) A build-up of inventory relating to the mobilisation of the
UK MOD Oman contract, and the construction of hotel and office
facilities in Somalia to accommodate UNICEF who have signed a
five-year contract with the Company. Additionally, goods-in-transit
balances on route to project sites in the Central African Republic
increased compared with prior periods. Increasing the value of
goods in the supply chain has led to increased operational
efficiency in the current trading period where we have seen a 15%
increase in monthly revenue being generated from the country's
operations when compared with the first six-months of the year.
The Company targets a 100% cash conversion ratio but significant
increases in operational activity, such as mobilising for material
contracts, can lead to short-term divergences.
Balance Sheet
Net of share issuance and AIM Admission costs, the Company
raised US$ 21.4m in IPO proceeds. As a result, net cash increased
to US$ 28.0m at 30 June 2018 (31 December 2017: US$ 5.6m, 30 June
2017: US$ 2.2m). The Company repaid US$ 0.6m of debt in the period
and cleared the remaining balance by 31 August 2018. While the
Company does not anticipate raising debt in the near future, it
does plan to explore the availability and pricing of working
capital facilities in case such a facility is required in 2019 to
finance the working capital needs of certain large pipeline
opportunities.
Liquidity and cash on hand is often assessed by potential
customers during the contract adjudication process. The completion
of the IPO and related fundraising was a milestone for the Company
in that it will now qualify to bid for larger projects and has the
financial capacity to mobilize for multiple large projects
simultaneously. Net assets were US$ 54.1m at 30 June 2018 with the
majority of the total balance sheet being cash and other current
assets.
The Company continues to invest in revenue generating fixed
assets, with the majority of the US$ 1.6m increase in fixed assets
relating to the accommodation facility being built for UNICEF.
Dividend
The Company anticipates declaring an annual dividend when it
reports its earnings for the fiscal year ended 31 December
2018.
Andrew Bolter
Chief Financial Officer
19 September 2018
Condensed Consolidated Income Statement
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2018 2017 2017
USD'000 USD'000 USD'000
Notes Unaudited Unaudited Unaudited
Revenue 23,855 25,919 27,342
Direct costs (13,949) (16,493) (15,839)
---------------- ---------------- ----------------
GROSS PROFIT 9,906 9,426 11,503
Other income 424 54 1,098
Administrative expenses (2,953) (3,145) (3,150)
---------------- ---------------- ----------------
Profit before depreciation, amortisation,
finance costs, and exceptional
items 7,377 6,335 9,451
Depreciation (547) (531) (404)
Amortisation - - (17)
Finance costs (294) (908) (252)
---------------- ---------------- ----------------
Profit for the period before exceptional
items 6,536 4,896 8,778
Exceptional items 3 (2,908) - -
---------------- ---------------- ----------------
PROFIT FOR THE PERIOD 3,628 4,896 8,778
Other comprehensive income for - - -
the period
---------------- ---------------- ----------------
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD 3,628 4,896 8,778
BASIC AND DILUTED EARNINGS PER
SHARE (cents) 4 2.6 3.5 6.3
NORMALISED BASIC AND DILUTED EARNINGS
PER SHARE (cents) 4 4.7 3.5 6.3
The Group has no recognised gains or losses other than those
disclosed in the Consolidated Income Statement.
The notes 1 to 9 form part of the Condensed Financial
Statements.
Condensed Consolidated Statement Of Financial Position
As at As at As at
30 June 31 December 30 June
2018 2017 2017
USD'000 USD'000 USD'000
Notes Unaudited Audited Unaudited
ASSETS
Non-current assets
Property, plant, and equipment 10,769 9,170 8,726
---------------- ---------------- ----------------
Current assets
Inventories 4,013 2,660 3,915
Accounts receivable, deposits,
and other receivables 17,308 13,138 13,380
Bank balances and cash 8 29,271 7,469 5,224
---------------- ---------------- ----------------
50,592 23,267 22,519
---------------- ---------------- ----------------
TOTAL ASSETS 61,361 32,437 31,245
EQUITY AND LIABILITIES
Equity
Share capital 24,300 272 272
Additional contributed capital - 1,809 1,809
Share premium 18,256 - -
Merger reserve (17,803) - -
Retained earnings 29,350 24,269 20,023
---------------- ---------------- ----------------
Total equity 54,103 26,350 22,104
---------------- ---------------- ----------------
Non-current liabilities
Term loans and notes - long-term
portion - 6 1,866
Employees' end of service benefits 308 251 404
---------------- ---------------- ----------------
308 257 2,270
---------------- ---------------- ----------------
Current liabilities
Term loans and notes - short-term
portion 1,293 1,861 1,156
Accounts payable and accruals 5,657 3,969 5,715
---------------- ---------------- ----------------
6,950 5,830 6,871
---------------- ---------------- ----------------
Total liabilities 7,258 6,087 9,141
---------------- ---------------- ----------------
TOTAL EQUITY AND LIABILITIES 61,361 32,437 31,245
Consolidated Statement of Changes In Equity
Additional
Share Contributed Share Merger Retained
Capital Capital Premium Reserve Earnings Total
Notes USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1
January 2017 272 1,809 - - 11,370 13,451
Profit for the
period - - - - 8,778 8,778
Dividends
declared and
paid 5 - - - - (125) (125)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 30 June
2017 272 1,809 - - 20,023 22,104
Profit for the
period - - - - 4,896 4,896
Dividends
declared and
paid 5 - - - - (650) (650)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 31
December 2017 272 1,809 - - 24,269 26,350
Share exchange 2 19,612 (1,809) - (17,803) - -
Profit for the
period - - - - 3,628 3,628
Non-cash
employee
compensation 3 - - - - 1,578 1,578
Issue of share
capital (net
of issue
costs) 2 4,416 - 18,256 - - 22,672
Dividends
declared and
paid 5 - - - - (125) (125)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 30 June
2018 24,300 - 18,256 (17,803) 29,350 54,103
Consolidated statement of Cashflows
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2018 2017 2017
USD'000 USD'000 USD'000
Notes Unaudited Unaudited Unaudited
OPERATING ACTIVITIES
Profit for the period 3,628 4,896 8,778
Non-cash adjustments to reconcile profit to net cash
flows:
Depreciation on property, plant, and equipment 547 531 404
Loss on disposal of property, plant, and equipment 7 28 135
Amortisation of intangible assets - - 17
Finance costs 294 908 252
Provision for employees' end of service benefits 57 49 234
Exceptional items 3 2,908 - -
---------------- ---------------- ----------------
7,441 6,412 9,820
Working capital adjustments:
Inventories (1,337) 1,255 (570)
Accounts receivable, deposits, and other
receivables (3,497) 242 (3,300)
Accounts payable and accruals 941 (1,746) 386
---------------- ---------------- ----------------
Cash flows generated from operations 3,548 6,163 6,336
Employees' end of service benefits paid - (202) (19)
Stock-based compensation and related costs 3 (24) - -
---------------- ---------------- ----------------
Net cash flows from operating activities 3,524 5,961 6,317
---------------- ---------------- ----------------
INVESTING ACTIVITIES
Deposits under lien released during the period - - 201
Deposit of cash margin against guarantees issued - (2,000) -
during the period
Purchase of property, plant, and equipment (2,159) (1,008) (2,398)
Proceeds from disposal of property, plant, and
equipment 74 3 20
Acquisition of subsidiary 6 (565) - -
---------------- ---------------- ----------------
Net cash flows used in investing activities (2,650) (3,005) (2,177)
---------------- ---------------- ----------------
FINANCING ACTIVITIES
Repayment of term loans and notes (573) (1,155) (2,005)
Proceeds from term loans and notes - - 2,432
Finance costs paid (371) (803) (310)
Dividends paid 5 (125) (650) (125)
Share listing costs 3 (935) - -
Issue of share capital (net of issue costs paid) 2 22,859 - -
---------------- ---------------- ----------------
Net cash flows from / (used in) financing activities 20,855 (2,608) (8)
---------------- ---------------- ----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 21,729 348 4,132
Cash and cash equivalents at start of period 5,469 5,224 1,035
Effect of foreign exchange on cash and cash
equivalents 73 (103) 57
---------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS AT OF PERIOD 27,271 5,469 5,224
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
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 engineering and construction, life support services,
operation and maintenance, and procurement and logistics.
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 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. Comparative
information presented in these interim consolidated financial
statements, relate to that of RA, not 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 2018 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 RA for the year ended 31 December 2017 which are
presented in the RAI Admission Document. The unaudited condensed
financial information has been prepared using the same accounting
policies and methods of computation which will be used to prepare
the Annual Report for the year ended 31 December 2018. The
financial statements of the Group are prepared in accordance with
IFRS.
There are no new standards or interpretations mandatory for the
first time for the financial year ending 31 December 2017 that have
a material effect on the half year results.
2. GROUP REORGANISATION
2.1 Share for Share Exchange
On 12 April 2018, RAI acquired 100% ownership of RA through a
share for share exchange transaction (the "Exchange"). The cost of
RA was established and accounted for with reference to IAS 27 which
states that when a parent reorganizes the structure of its group by
establishing a new entity as its parent, and meets specific
criteria, the new parent measures cost at the carrying amount of
its share of the equity items shown in the separate financial
statements of the original parent at the date of the
reorganisation. In the case of the Exchange, RA was the former
parent of the Group and all relevant criteria were met, as a result
the cost of RA was determined to be USD 29,278,000, being the
carrying amount of the equity of RA at the date of the
Exchange.
USD'000
Equity balances of RA at date
of Exchange
Share capital 272
Additional contributed capital 1,809
Retained Earnings 27,700
----------------
Total equity balances of RA at
date of Exchange 29,781
The consideration paid to the shareholders of RA was 139,999,998
ordinary shares of GBP 0.10 each.
The difference between the total equity balances of RA and the
nominal value of shares issued by RAI at the date of the Exchange
is recorded as a merger reserve. Upon consolidation, all
intra-group transactions, balances, income and expense are
eliminated, and the merger reserve is equal to the difference
between the nominal value of the shares issued by RAI and the total
share capital and additional contributed capital of RA at the date
of the Exchange.
2.2 Initial Public Offering
On 29 June 2018, RAI undertook an initial public offering
("IPO") and was admitted to trade on the Alternative Investment
Market ("AIM"), a sub-market of the London Stock Exchange. New
ordinary shares of 33,575,741 were issued on the date of the IPO
bringing the total number of shares outstanding to 173,575,741.
These shares have a par value of GBP 0.10 and were sold by RAI at
GBP 0.56 per share.
During the IPO process, the Group incurred USD 2,059,000 of
expenses which were incremental and directly attributed to the
equity raise. As per IAS 32, these costs are to be accounted for as
a deduction from equity raised and as a result the net proceeds of
the IPO were USD 22,672,000.
USD'000
Reconciliation of IPO proceeds
Proceeds from issue of share capital 24,731
Costs incurred and attributable
to issue of share capital (2,059)
----------------
Net proceeds from issue of share
capital 22,672
At 30 June 2018, USD 187,000 of IPO related costs were included
in Accounts Payable and Accruals, and subsequently settled in July
2018.
3. EXCEPTIONAL ITEMS
USD'000
Share listing costs (1) 1,306
Stock-based compensation and related
costs (2) 1,602
----------------
2,908
(1) Share listing costs represent advisory, legal, and other
costs incurred in connection with the IPO which have not been
accounted for as a deduction from equity raised. At 30 June 2018,
USD 371,000 of share listing costs were included in Accounts
Payable and Accruals, and subsequently settled in July 2018.
(2) On 29 June 2018, the majority shareholder of RAI gifted
2,142,855 personally owned shares of the Company to certain
employees of RA International FZCO as a reward for past employment
service. The fair value of the shares on the grant date was GBP
0.56 per share.
4. 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 identical to basic earnings per
share.
Normalised earnings per share is calculated by dividing the
profit before exceptional items attributable to ordinary
shareholders of the Group by the weighted average number of
ordinary shares outstanding during the period.
As per IFRS 3, where a new parent entity is established by means
of a share for share exchange and its consolidated financial
statements have been presented as a continuation of the existing
group, the number of shares taken as being in issue for both the
current and preceding periods should be the number of shares issued
by the new parent entity. As a result, the historical weighted
average number of shares presented in the comparative EPS
calculation is 139,999,998, being the number of ordinary shares
exchanged for the entire share capital of RA.
6 months 6 months 6 months
ended ended ended
30 June 31 December 30 June
2018 2017 2017
Unaudited Unaudited Unaudited
Profit for the period (USD'000) 3,628 4,896 8,778
Weighted average number of ordinary
shares 140,371,001 139,999,998 139,999,998
---------------- ---------------- ----------------
Basic and diluted earnings per
share (cents) 2.6 3.5 6.3
Profit for the period before exceptional
item (USD'000) 6,536 4,896 8,778
---------------- ---------------- ----------------
Normalised basic and diluted earnings
per share (cents) 4.7 3.5 6.3
5. DIVIDS
During the interim period, a dividend of USD 12,500 per share
(10 shares) totalling USD 125,000 was declared and paid (6 months
ending 30 June 2017: USD 12,500 per share (10 shares) totalling USD
125,000 and 6 months ending 31 December 2017: USD 65,000 per share
(10 shares) totalling USD 650.000).
6. ACQUISITION OF SUBSIDIARY
On 1 January 2018, the Group acquired 100% of the share capital
of RA SB Ltd. and its subsidiary (together "RASB"), from one of its
shareholders, who is also a member of key management. The purchase
consideration of USD 594,000 represents the net book value of RASB
as at 1 January 2018. RA SB Ltd. is registered in Ras Al Khaimah,
UAE and operates in the Republic of Sudan through its subsidiary
which provides remote site services to the mining industry. The
acquisition is consistent with the Group's strategy of operating
across Africa.
The fair values of the identifiable assets and liabilities of
RASB as at the date of acquisition were:
USD'000
ASSETS
Property, plant, and equipment 69
Inventories 16
Accounts receivable, deposits,
and other receivables 688
Bank balances and cash 29
LIABILITIES
Accounts payable and accruals (208)
----------------
NET ASSETS 594
Net cash outflow on acquisition
USD'000
Consideration paid 594
Less:
Bank balances and cash acquired (29)
----------------
565
Acquisition costs of USD 6,000 relating to the acquisition of
RASB are included in Administrative Expenses within the current
accounting period.
For the 6 months ended 30 June 2018, RASB contributed USD
913,000 revenue and USD 239,000 profit before finance costs to the
Group results.
7. 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 Chief Operating Decision Maker
monitors the operating results of the business as a single unit for
the purpose of making decisions about resource allocation and
performance assessment.
Operating segments
Revenue, operating results, assets and liabilities presented in
the Condensed Financial Statements relate to the provision of
services in demanding and remote areas business of the Group.
Geographic segment
The Group is currently predominantly operating in Africa.
8. CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statement of cash
flows consist of the following condensed consolidated statement of
financial position amounts:
As at As at As at
30 June 31 December 30 June
2018 2017 2017
Unaudited Audited Unaudited
Bank balances and cash in hand 29,271 7,469 5,224
Less: restricted cash (2,000) (2,000) -
---------------- ---------------- ----------------
27,271 5,469 5,224
Restricted cash represents cash margin provided to a commercial
bank against issuance of a guarantee to a subsidiary. The value of
cash margin is equal to that of the value of the guarantee.
9. APPROVAL OF INTERIM FINANCIAL STATEMENTS
The condensed interim financial statements were approved by the
board of directors on 17 September 2018.
INDEPENDENT REVIEW REPORT TO RA INTERNATIONAL GROUP PLC (the
"Company")
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 2018, 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 9. 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
International Accounting Standard 34, "Interim Financial
Reporting," as adopted by the European Union.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards ('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 2018 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union.
Ernst & Young LLP
Edinburgh
19 September 2018
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
IR GGUPUBUPRPUR
(END) Dow Jones Newswires
September 19, 2018 02:01 ET (06:01 GMT)
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