TIDMRAI
RNS Number : 8987M
RA International Group PLC
26 May 2022
RA INTERNATIONAL GROUP PLC
("RA International", "RA", the "Group" or the "Company")
Results for the year ended 31 December 2021
RA International Group plc (AIM: RAI) a specialist provider of
complex and integrated remote site services to Humanitarian,
Governmental and Commercial organisations globally, announces its
full year results for the year ended 31 December 2021.
HIGHLIGHTS
-- Revenue of USD 54.6m (2020: USD 64.4m) and underlying EBITDA
of USD 6.7m (2020: USD 14.2m), in-line with the guidance provided
in our pre-close trading statement.
-- Statutory loss before tax of USD 32.2m including USD 31.5m in
non-underlying charges relating to our Mozambique project of which
USD 5.9m relates to cash costs and USD 23.4m is a provision to
impair the carrying value of assets. We are pursuing opportunities
to dispose of USD 7.2m of project related assets located in storage
and remain confident that development works will restart in
Mozambique, although timing is difficult to predict
-- Resilience of IFM services continues to be a feature, with
revenue for the year of USD 31.2m (2020: USD 31.3m); IFM represents
56% of contract order book value
-- 2021 year-end order book of USD 100m, with USD 40m of new
contracts, contract uplifts and extensions awarded during the year
and adjusted for the removal of the USD 60m Mozambique contract
-- Government and humanitarian clients represented 95% of 2021
revenue (2020: 92%), with government an increasing proportion of
the mix (47% of 2021 revenue). These are stable, high-value clients
that support our strategy to diversify geographically through
customer-led growth
-- In 2021 we established a US subsidiary, RA Federal Services,
to target further growth with relevant US federal government
departments, which we see as a significant growth opportunity
-- Maturity of the USD 10m MTN debt programme has recently been
extended to 2024 and additional working capital facilities are
available as required to support implementing material new project
awards
-- Reflecting the Board's cautious view on the operating
environment in the near-term, the Board is not recommending a
dividend for the FY21 financial year
2021 2020
USD'm USD'm
Revenue 54.6 64.4
Underlying EBITDA(1) 6.7 14.2
Underlying EBITDA margin 12.3% 22.0%
(Loss)/Profit before tax (32.2) 6.6
EPS, basic (cents) (18.7) 3.8
Underlying EPS, basic (cents)
(2) 0.1 5.6
Dividend per share Nil 1.35
Net (debt)/cash (end of period)
(3) (1.5) 11.2
Commenting on the 2021 results and outlook, Soraya Narfeldt, CEO
of RA International, said:
"We responded with agility and resilience to the major external
challenges we faced in 2021 and delivered on significant projects
for our clients, building our reputation as a trusted partner.
Looking ahead, it remains difficult to forecast with real authority
how the current year will play out but we are continuing to
stabilise the business post the pandemic and its effects, and see
the scope for a return to accelerated contract awards as and when a
more normalised operating environment returns. In the meantime, we
take great confidence in the strength of our offering, which is
differentiated by our technical capability, proven ability to
innovate and continue to perform under extraordinarily challenging
circumstances, and by our attractive pricing, particularly where we
self-perform.
As we execute on our plans, our main priorities for this year
are to grow the pipeline, particularly with US federal Government
departments, build balance sheet liquidity, and drive value from
recent investment in our business, systems and processes. We thank
shareholders for their patience over what has been a challenging
period and we look forward to realising the value from supporting
our customers as they emerge from the residual challenges of the
last two years. "
Online Investor Presentation
RA International management will host an online investor
presentation and Q&A session at 11am BST on Monday, 30 May
2022.
Anyone wishing to participate should register with PI World
at:
https://bit.ly/RAI_FY21_results_webinar
A replay will be available subsequently on the Company
website.
Notes to Highlights:
(1) Underlying EBITDA is calculated by adding depreciation,
non-underlying items and share based payment expense to operating
profit.
(2) Underlying EPS reflects underlying operating profit after
deducting net finance costs and taxation, divided by the weighted
average number of ordinary shares outstanding during the
period.
(3) Net cash represents cash less overdraft balances, term loans
and notes outstanding. A negative net cash balance is referred to
as net debt.
Enquiries:
RA International Group PLC Via Bamburgh Capital
Soraya Narfeldt, Chief Executive Officer
Lars Narfeldt, Chief Operating Officer
Andrew Bolter, Chief Financial Officer
Canaccord Genuity Limited (Nominated Adviser
and Broker)
Bobbie Hilliam +44 (0) 207 523
Alex Aylen 8000
Bamburgh Capital Limited (Investor Relations +44 (0) 131 376
& Media) 0901
Murdo Montgomery investors@raints.com
Background to the Company
RA International is a leading provider of services to remote
locations. The Company offers its services through three channels:
construction, integrated facilities management and supply chain,
and services 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.
CHAIR'S STATEMENT
2021 was a year where the employees of our Company had to
respond to two major external challenges as they dealt with the
effects of COVID-19 and the tragic events in Mozambique. On behalf
of the Board, I would like to acknowledge the difficulties our
people have experienced and to thank them for their sense of
purpose, community, and commitment in dealing with these
challenges.
It is clear that for our customers the effects of COVID-19 have
been particularly pronounced. This has caused further delays to
mobilising project activity across our business, stalling the
momentum that was building in the third quarter of last year. We
remain confident that we will re-establish this momentum but we are
cautious on timings.
Against this backdrop, the Group still delivered USD 54.6m of
revenue and underlying EBITDA of USD 6.7m. The loss before tax of
USD 32.2m recorded for the year highlights impairment charges we
have recorded in relation to our operations in Northern Mozambique,
where there remains significant uncertainty. As we outline in this
report, we are working hard to recover value from these assets.
The market opportunity remains attractive for RA and, as a
Board, we have assessed how we align our strengths and resources
with these market opportunities to best drive sustainable
profitable growth. We came to market in 2018 looking to expand our
customer base more broadly beyond our established humanitarian
client base.
We have made great strides in developing the government side of
our business, and Soraya provides the substance of this in her
review. We believe our work with western Governments, particularly
US and UK overseas departments, is likely to be a core part of our
success going forward. As such, we are looking to reallocate
greater investment to this side of the business, particularly in
the US through developing RA Federal Services ("RAFS") - our US
subsidiary. As we do this, we will still look to undertake projects
with Commercial customers and build on our extensive relationships
with the UN and other humanitarian organisations.
At the right time, we also see the opportunity for this organic
investment to be complemented by bolt-on M&A strengthening our
past performance in attractive undeserved markets.
In line with the Board's cautious approach to the prevailing
environment, with suppressed levels of activity in terms of
contract awards and project starts continuing to be a feature in
2022, the Board is not recommending the payment of a final
dividend. The Board's intention is to reinstate the dividend as
soon as is practicable, taking into consideration the financial
strength of RA and its confidence in its future performance. More
generally on cash and the balance sheet, the Board remains
confident in our position to fund existing project activity, to
mobilise on new projects, and to bid successfully for tenders.
Environmental, social, governance, and corporate culture
A great deal of work was done behind the scenes in 2021 to set
the future direction for RA's sustainability activities and ensure
progress continues to be made with regards to our environmental and
social activities. This included a rigorous refresh of our
materiality - looking at our own priorities and the expectations of
our stakeholders and selecting areas of investment where we feel we
can do more and have a greater impact. Through this we identified
eight key focus areas where we will set specific targets and
appoint dedicated managers to drive improvements.
In parallel, the Group reviewed and affirmed its purpose,
mission, and values, providing a strong foundation for our
corporate culture, the types of projects we want to take on, and
the organisations we want to work with and for. We now include key
sustainability indicators relating to shared values, social,
environmental and governance alignment, and country related risks
within our project selection process.
The Group also refreshed its system for identifying, monitoring,
and managing risk, and established a Group Risk Assessment
Committee ("GRAC") to support the EMT in managing the principal
risks that are most likely to have the largest negative impact on
the business.
More detail on RA's approach to doing business the right way is
set out in our 2021 Sustainability Report.
A final note
The Board remains focused on delivering value for shareholders
and believes the refreshed strategic focus outlined above supports
this through targeting a high-quality customer base and
international diversification supporting significant contract
visibility, sustained earnings growth, and strong free cash
generation.
On behalf of the Board, I would like to commend the leadership
team and all our staff for their ability to respond to the
challenges of the last two years. Adaptability and finding
solutions in difficult
situations is embedded in RA's culture, and this was proven many
times over in 2021.
Sangita Shah
Non-Executive Chair
26 May 2022
CHIEF EXECUTIVE OFFICER'S REVIEW
As we work through the residual challenges of the last two
years, we should not lose sight of the strengths of the business.
As we outlined in our pre-close trading statement, the second half
of the year saw unprecedented operating constraints, causing
inefficiencies and exceptional delays in executing projects, in
tender issues, awards, and in project mobilisations. This impacted
our profitability for the second half of 2021 and stalled our order
book momentum.
Whilst we are not reporting the financial performance we would
want to for this period, it is primarily a function of the broader
environment and events which are out of our control. Revenue of USD
54.6m and underlying EBITDA of USD 6.7m are markedly lower than the
prior year and reflect the full-year impact of the pandemic and the
events in Mozambique. The Group reported a loss before tax of USD
32.2m, which included a USD 31.5m non-underlying expense relating
to Mozambique. Investors will be aware that this area was subject
to an insurgency attack in March 2021 and, as at the time of these
results, the local situation had not yet stabilised sufficiently to
see sizable commercial activity restarting. We are working hard to
realise value from our investments made relating to this project,
which will support our cash position.
To give further context to these headlines, 2021 was very
disruptive from an operational perspective. Clearly, our customers'
spending over the last two years has been focused on mitigating the
impact of COVID-19 and less on project development. As a result,
government and humanitarian agencies have suffered from staff
shortages which impacted requests for proposals, bids, and project
execution. In September 2021 we believed that these challenges were
abating, however this view was superseded by a return to
government-imposed lockdowns and restrictions which led to further
delays and uncertainty.
Despite these ongoing challenges, we exited 2021 with an order
book backlog of USD 100m, reflecting USD 40m of new contract
awards, uplifts, and extensions, offset by the force majeure
declaration relating to the Palma Project and the subsequent
removal of that contract from the order book.
Contract order book:
USD'm
Opening order book 187
New contracts, contract uplifts
and extensions 40
Contracts suspended, cancelled etc.
(includes Mozambique) (72)
Contracted revenue delivered (55)
----------------
Closing order book as at 31 December
2021 100
Our pipeline activity remains very solid but given the extended
delays we continue to experience and the current run-rate of new
business awards and project starts, we are adopting a very
conservative position in terms of forecasting the extent to which
new project activity lands in the current financial year. We are
confident that as and when a more normal operating environment
returns, we will re-establish significant order book growth but the
timelines for this are beyond our control, meriting the cautious
approach.
The fundamental strengths of the business remain. We are
delivering on some 20 high-value IFM projects which represent 56%
of the order book and provide long-term visibility typically at
above Group average profit margins. We are delivering on multiple
construction projects, with many expected to be the first phase of
much larger contracts. This is augmented by our supply chain
activities which represent around 10% of order book, and again
include projects of significant value.
In terms of an update on our operational involvement in the Cabo
Delgado province in Mozambique, we continue to believe that given
the considerable multi-national commercial investment and the
significance to both Mozambique and the international community,
the project will come to fruition - although timing is difficult to
predict. Given the prevailing uncertainty, the Board has taken the
prudent approach of impairing the assets and associated costs
related to the project. Whilst we have taken this impairment
charge, we are working hard to realise value from these assets
which would bolster our cash resources. We remain well-positioned
to provide the originally planned services as and when they are
required.
Clearly Group profitability and cash have been impacted by the
prevailing environment but as Andrew details in his review, we have
taken the requisite steps to strengthen our liquidity position and
have sufficient resources to fulfil our project deployments and bid
for the types of projects we want.
Our refreshed strategy plays to our strengths across significant
market opportunities
We continue to drive long-term value by executing on our
customer-led growth strategy underpinned by a core principle of
doing business the right way. Our focus on sustainability is a key
differentiator for us as our customers become increasingly aware of
the benefits of incorporating environmental and social
considerations into their projects.
While our commercial projects remain in the pipeline, and we
will continue to bid for new contracts which meet our risk adjusted
return profile, we have reflected on our strong track record and
competitive advantage in supporting blue-chip customers in the
humanitarian and government sectors relative to the emerging
opportunity we have in the commercial sector.
We are particularly encouraged about the success and
opportunities we have with western Governments, and where we are
building a specialist capability with respect to supporting US
Government ("USG") activity overseas. In 2021, this was evidenced
by key contracts signed with the US Navy, USAID, and Cherokee
Nation Mechanical.
In addition, we are looking to prioritise work with UK
Government departments including the Ministry of Defence, the
Foreign, Commonwealth & Development Office, as well as other
international government agencies.
The table below highlights this trajectory with a marked
increase in Government revenues, particularly since 2020.
2014 2015 2016 2017 2018 2019 2020 2021
----- ----- ----- ----- ----- ----- ----- -----
Humanitarian 87% 81% 85% 74% 62% 55% 48% 48%
Government 6% 8% 9% 21% 31% 32% 44% 47%
Commercial 7% 11% 6% 4% 8% 12% 8% 5%
It is worth breaking this down further to illustrate the success
we have established with US federal Government overseas budgets.
This has been a strategic focus of the business over the last four
to five years, has been a significant driver of our financial
performance over the last couple of years, and is expected to
contribute an increased proportion of Group revenue going
forward.
Over the last two financial years, US Government related
revenues have contributed approximately one-third of Group
revenues. This figure was 25% in 2019 and below 10% prior to that.
This growth reflects a targeted approach to business development,
particularly with the US Department of Defense and the US
Department of State, including USAID and the Bureau of Overseas
Building Operations ("OBO") projects. These departments have
contributed materially to the marked growth in Government revenues
since 2020, including the following landmark projects:
- USD 5.7m contract to provide Training and Life Support
Services in Central African Republic for the US Department of
Defense,
- USD 15.1m Embassy Upgrade Project in East Africa for the US
Department of State, and
- USD 21.5m contract to provide comprehensive life support and
maintenance services at a joint USAID/ Embassy compound.
This success has been based on establishing partnerships with US
companies to bid for and deliver US Government work, across a
number of different contract frameworks:
- Indefinite Delivery/Indefinite Quantity ("IDIQ") Contract
Vehicles, of which our seat on the USD 249m IDIQ for design and
construction services supporting the island of Diego Garcia is a
good example,
- Single Contracts, where we deliver life support and
construction contracts for Embassies and are presently executing
projects on three continents,
- Sole Source Teaming Agreements, where we have a successful
partnership with Cherokee Nation Mechanical, and
- Broader partnerships and JVs, including with IAP, who awarded
us a USD 24.1m contract to procure and deliver food to multiple
locations across Africa.
In 2021, we established a wholly owned US based subsidiary,
RAFS, to bid directly on USG projects and accelerate growth in this
area. RAFS has an independent Board of Directors and we have
reallocated resources and personnel from our support hubs in Dubai
and Kenya to the US business. Overall, we are investing USD 1.5m to
USD 2.0m through 2023 in building our US capability through RAFS as
we look to build on our USG momentum.
Strategically, RAFS allows us to be more competitive in our
tenders and complements our existing relationships with
organisations such as Cherokee Nation Mechanical and Sincerus where
a partnership arrangement makes sense. Establishing RAFS has
already broadened discussions and the scope of opportunities
available to us given the clear advantages our proposition
offers:
- track record to self-perform large scale USG contracts across
the range of our services including through our "one-supplier"
model,
- our offering is particularly competitive where we self-
perform as we combine technical capability through past performance
and a clear cost advantage,
- we operate in markets which are underserved by existing
providers, and/or where US organisations look to partner with local
sub-contractors that do not have the capability to deliver to
requisite international standards, and
- our ability to offer additional value through our industry
leading ESG credentials, the breadth and depth of
- our experience, including our humanitarian work, our
reputation as acknowledged specialists in our field.
Overall, we expect government clients to become an increasingly
important part of our business, providing high-quality earnings,
decreasing the risk profile of our clients, and diversifying
geographically through customer-led growth.
We continue to explore broader opportunities that play to our
core strengths. For example, we are in discussions with DFIs such
as the Development Finance Corporation, with a view to establish
relationships as a project manager for DFI funded works. RA adds
value through its social and environmental impact and strong
governance. DFIs fund large infrastructure projects across Africa
and Asia which fall within operational geographies. We are also
exploring ECA funded projects. UKEF, the export credit agency of
the British Government, has more than tripled its investment in
Africa to GBP2.3b.
Current trading and outlook
We responded with agility and resilience to the major external
challenges we faced in 2021 and delivered on significant projects
for our clients, building our reputation as a trusted partner.
Looking ahead, it remains difficult to forecast with real authority
how the current year will play out but we are continuing to
stabilise the business post the pandemic and its effects, and see
the scope for a return to accelerated contract awards as and when a
more normalised operating environment returns. In the meantime, we
take great confidence in the strength of our offering, which is
differentiated by our technical capability, proven ability to
innovate and continue to perform under extraordinarily challenging
circumstances, and by our attractive pricing, particularly where we
self-perform.
As we execute on our plans, our main priorities for this year
are to grow the pipeline, particularly with US federal Government
departments, build balance sheet liquidity, and drive value from
recent investment in our business, systems and processes. We thank
shareholders for their patience over what has been a challenging
period and we look forward to realising the value from supporting
our customers as they emerge from the residual challenges of the
last two years.
Soraya Narfeldt
Chief Executive Officer
26 May 2022
FINANCIAL REVIEW
Revenue of USD 54.6m and underlying EBITDA of USD 6.7m summarise
our financial performance for the year. Results are in line with
the guidance we provided in a trading update on 16 February 2022
and reflect a challenging operating environment and the result of
events taking place in Cabo Delgado, Mozambique which, in addition
to having a material impact on our revenue and profitability in
2021, has significantly altered the makeup of our balance
sheet.
We have addressed these challenges and the impact of the Palma
Project both strategically, as Soraya has touched upon, but also
from a financial standpoint. In 2022 we completed a USD 12.0m debt
raise through the issuance of loan notes maturing in November 2024.
As part of this exercise, USD 8.4m of the USD 10.0m of notes
outstanding at 31 December 2021, maturing in the second half of
2022, were cancelled. Additionally, we have put in place a
long-term working capital facility to support the business, if
required, in implementing material new project awards.
In September 2021 we highlighted the significant increase in
inventory caused by the suspension of the Palma Project and the
corresponding impact on cash. The unwinding of this balance
continues to progress (decrease of USD 0.6m since the end of H1 21)
and we expect this to accelerate in 2022.
Overall, despite the external difficulties faced by the business
during 2021, the Company remains in a strong position to bid for
and execute large projects and significant opportunities remain to
increase liquidity in 2022.
Highlights:
2021 2020
USD'm USD'm
Revenue 54.6 64.4
Gross profit 12.0 18.8
Gross profit margin 22.0% 29.2%
Underlying EBITDA 6.7 14.2
Underlying EBITDA margin 12.3% 22.0%
(Loss)/Profit before tax (32.2) 6.6
(Loss)/Profit before tax
margin (59.0%) 10.3%
EPS, basic (cents) (18.7) 3.8
Underlying EPS, basic (cents) 0.1 5.6
Net cash (end of period) (1.5) 11.2
Revenue
Reported revenue for 2021 of USD 54.6m (2020: USD 64.4m)
represents a USD 9.8m or 15% decrease year on year. This both
contrasts the momentum the Company had entering 2020 with the
challenging operating situation that has continued to develop since
the onset of COVID-19 and highlights the financial impact of the
events in Mozambique.
As was communicated to the market shortly after the event in
March, this project was anticipated to generate USD 10.0m of
revenue in 2021.
In September 2021 we advised that we were encouraged by a recent
uptick in construction contracts being awarded, which although
relatively small in terms of contract value were seen as an
important indicator of returning to a more normal operating
environment. This led to construction revenue increasing by 23% in
the second half of 2021, albeit full year construction revenue
decreased by 26% when compared with 2020.
IFM revenue continues to be resilient and broadly constant from
period-to-period. Lower income from our hotel facility in Somalia
was offset by revenue from new contracts awarded during the year.
Consistent with prior year, approximately 75% of supply chain
revenue was earned from long-term contracts, often three to five
years in length.
Consistent with prior year, approximately 75% of supply chain
revenue was earned from long-term contracts, often three to five
years in length.
H2 2021 H1 2021 H2 2020 H1 2020
USD'm USD'm USD'm USD'm
Integrated facilities management 15.8 15.4 15.3 15.9
Construction 8.0 6.2 8.4 10.7
Supply chain 4.6 4.6 5.3 8.8
---------------- ---------------- ---------------- ----------------
28.4 26.2 29.1 35.4
Profit margin
Gross margin in 2021 was 22.0% (2020: 29.2%), with a significant
variance between H1 2021 and H2 2021 (29.2% and 15.5%
respectively). Gross profit decreased by USD 6.8m when compared
with 2020 and is reflective of:
2021
USD'm
Decrease in revenue 2.4
Increased direct cost depreciation 0.9
Credit provision 0.5
Decrease in project margins - Construction 0.6
Decrease in project margins - IFM 2.2
Decrease in project margins - Supply
Chain 0.2
--------------
Total 6.8
Decreased margins from construction activities resulted from a
number of near nil margin contracts being executed in H2 2021 which
relate to the initial phase of what may become much larger
projects. General inefficiencies were also encountered given the
fitful nature of project execution during the period.
Approximately half of the decrease attributed to IFM services
relates to lower occupancy in our Somalia hotel facility, with the
remainder being the effect of general inefficiencies and
inflationary pressures.
In H2 2021 inflationary pressure was primarily seen on food and
beverage imports and logistics costs, however in some locations we
are seeing significant wage inflation as well. We have recently
been successful in agreeing price increases on some IFM contracts,
however, we anticipate continued margin pressure in 2022. We
continue to work with our long-term suppliers, and plan to leverage
our existing inventory holdings to mitigate inflationary effects
where possible.
Reconciliation of (loss)/profit to underlying EBITDA:
2021 2020
USD'm USD'm
(Loss)/Profit (32.1) 6.6
Tax expense (benefit) (0.1) 0.1
---------------- ----------------
(Loss)/Profit before tax (32.2) 6.6
Finance costs 1.3 1.0
Investment income (0.1) (0.3)
---------------- ----------------
Operating (loss)/profit (30.9) 7.3
Non-underlying items 32.2 3.0
---------------- ----------------
Underlying operating profit 1.3 10.4
Share based payments 0.5 0.1
Depreciation 4.9 3.7
---------------- ----------------
Underlying EBITDA 6.7 14.2
Underlying EBITDA margin was 12.3% in 2021 (2020: 22.0%),
reflecting lower gross margin and a USD 2.3m increase in
administrative expenses driven by centralisation efforts enacted in
2020 and investment made in establishing RAFS during 2021. Outside
of a planned investment in RAFS of between USD 1.5m to USD 2.0m, we
anticipate the strategic shift to de-emphasise commercial projects
will lead to administrative cost savings in 2022.
During the year, the Company incurred non-underlying costs of
USD 32.2m (2020: USD 3.0m).
Non-underlying items:
2021 2020
USD'm USD'm
COVID-19 costs 0.8 1.4
Other share based payments - 1.2
Restructuring costs - 0.3
Acquisition costs - 0.2
Palma Project, Mozambique 31.5 -
---------------- ----------------
32.2 3.0
COVID-19 costs of USD 0.8m are almost entirely incremental staff
costs and PPE relating to the pandemic. Further detail on these
costs can be found in note 9 of the consolidated financial
statements.
Non-underlying costs related to the Palma Project can broadly be
classified into two categories, the impairment of assets related to
the project, and incremental costs
incurred by the Company as a direct result of the attack and
subsequent project suspension.
Asset impairment
The full carrying value of Palma Project assets, totalling USD
25.6m has been impaired, however it is important to note that of
this balance, we consider only USD 2.1m to be a realised loss while
the remainder, USD 23.4m, has been impaired through the
establishment of a provision. These assets will be assessed to
establish if there is a basis for reversal of the impairment
provision at each reporting date or when an event transpires which
may indicate a material change in the value of these assets.
Of the USD 23.4m in assets where a provision has been
established, USD 7.2m relates to equipment and material located
within various secure storage locations in Africa and the Middle
East ("Offsite Assets"). These assets were either on-route to Palma
at the time of the March attack and diverted to or held at safe
storage facilities, or assets which we were able to relocate from
our Mozambique camp during the second half of 2021. Given the
uncertainty as to when development activities will recommence in
Northern Mozambique and the cost of storage, we believe it to be in
the best interest of stakeholders that the Group sell these assets
in the short term, both so as to recover maximum value and cease
incurring storage costs. These assets may also be utilised in new
projects during 2022.
The USD 2.1m that is considered permanently impaired is
primarily made up of assets which have been damaged, stolen, or
otherwise deemed unusable in the future. We have lodged an
insurance claim relating to a significant portion of this balance
and are currently in discussions with our insurers.
Incremental costs
In 2021, the Group incurred USD 4.5m in incremental costs
directly related to the Mozambique attack and resulting contract
suspension. These costs are primarily made up of logistics and
storage charges relating to the Offsite Assets referenced above,
but also include evacuation costs and mental health counselling
provided to staff post incident.
The Group has also recorded a provision of USD 1.4m for
unavoidable costs associated with the Offsite Assets. This
provision will be reassessed as at the date of our 2022 interim
reporting or as the Offsite Assets are disposed.
As with those assets identified as permanently impaired, we have
lodged an insurance claim relating to a significant portion of
incremental costs and are currently in discussions with our
insurers.
Further details of these balances and the process we followed
when assessing the level of impairment to be recorded can be found
in note 9.
A breakup of the USD 31.5m non-underlying expense related to
Mozambique is below:
2021 2020
USD'm USD'm
Provision for asset impairment 23.4 -
Permanent asset impairment 2.1 -
Incremental costs incurred 1.1 -
but unpaid
Provision for unavoidable 1.4 -
costs
---------------- ----------------
28.0 -
Incremental costs incurred 3.4 -
and paid
---------------- ----------------
Total 31.5 -
Finance Costs net of Investment Revenue increased to USD 1.3m
(2020: USD 0.7m) as the Company incurred a full year of interest
expense related to loan notes issued in 2020 and 2021 and realised
USD 0.2m less in foreign exchange gains. The average loan balance
outstanding in 2021 was USD 7.1m compared with USD 2.1m in
2020.
Earnings per share
Basic loss per share was 18.7 cents in the current period (2020:
3.8 cents). Adjusting for non-underlying items, underlying earnings
per share was 0.1 cents (2020: 5.6 cents).
Cash flow
Our cash balance decreased by USD 9.1m during the year (2020:
decrease of USD 3.8m), primarily resulting from asset purchases and
costs incurred relating to Mozambique.
Summary cash flows:
2021 2020
USD'm USD'm
Operating Profit (30.9) 7.3
Asset impairment 28.0 -
Depreciation 4.9 3.7
Other items pre-working capital
adjustments 1.0 1.7
---------------- ----------------
3.0 12.7
Working capital adjustments (7.8) 8.7
Tax & end of service benefits paid (0.2) (0.2)
---------------- ----------------
Net cash flows from operating activities (5.1) 21.1
Investing activities (excluding
Capital Expenditure) 0.9 0.3
Capital Expenditure (3.5) (24.5)
---------------- ----------------
Net cash flows used in investing
activities (2.6) (24.1)
Financing activities (excluding
borrowings) (5.2) (6.8)
Proceeds from borrowing 3.9 6.1
---------------- ----------------
Net cash flows used in financing
activities (1.3) (0.7)
Net change in cash during the period (9.1) (3.8)
Cash outflows from operations were USD 4.8m in the year (2020:
inflows of USD 21.3m) reflecting lower profitability and a variance
of USD 16.5m in working capital adjustments (negative USD 7.8m in
2021 and positive USD 8.7m in 2020).
At the end of 2021, USD 3.4m of the USD 9.4m carrying value of
inventory related to prefabricated camp assets purchased in 2020
and partially used in the Palma Project. The Company will utilise
these assets on certain projects if they commence in 2022 but is
also pursuing a sale which may lead to a significant cash benefit
being realised. USD 3.2m of inventory which has been provided for,
relates to Offsite Assets, which if sold, may also lead to a
significant cash uplift.
2021 2020
USD'm USD'm
Gross inventory 12.7 9.1
Provision for asset impairment (3.3) -
---------------- ----------------
Carrying value of inventory 9.4 9.1
Prefabricated camp assets (3.4) (2.1)
---------------- ----------------
Normalised inventory balance 6.0 7.0
Trade receivables and accrued revenue increased by USD 4.5m as
at the end of 2021 when compared with prior period. This variance
is primarily due to timing with regards to invoicing and collection
but does reflect a USD 2.1m build-up of accrued revenue relating to
one UN construction project. The full balance has been invoiced in
2022.
We entered 2021 anticipating capital expenditure of between USD
7.0m and USD 10.0m, with the majority of spend relating to
finalising the construction of our camp facility near Palma,
Mozambique. Instead, as a result of the attack and contract
suspension, capital expenditure for 2021 totalled USD 3.5m. Our
underlying business is not particularly capital intensive; unless
linked to a significant new project award, we anticipate 2022
capital expenditure to be between USD 1.0m and USD 2.0m.
Balance sheet and liquidity
Net assets at 31 December 2021 were USD 37.3m (2020: USD 72.1m).
Our balance sheet has been reshaped by the events in Mozambique and
related impairment charge and whilst we cannot impact the timing of
recommencement of oil and gas development activities which may
trigger a recovery of asset impairment, with considerable work
already undertaken we are confident that significant opportunities
exist to improve our liquidity profile in the short term. These
primarily relate to the sale of the Offsite Assets and USD 3.4m
prefabricated camp.
Breakdown of net assets:
2021 2020
USD'm USD'm
Cash and cash equivalents 8.5 17.6
Loan notes (10.0) (6.5)
---------------- ----------------
Net cash (1.5) 11.2
Net working capital 13.8 14.4
Non-current assets 30.9 51.0
Tangible owned assets 25.5 47.3
Right-to-use assets 5.4 3.5
Goodwill - 0.1
Lease liabilities and end
of service benefit (5.9) (4.5)
---------------- ----------------
Net assets 37.3 72.1
During the second half of 2021, we raised USD 3.5m of debt under
the Medium-Term Note ("MTN") programme launched in 2020. This debt
was raised to ensure the Company maintained adequate available cash
to execute certain large projects in the pipeline. In May 2022, we
completed a refinancing and fundraising exercise to synchronise and
extend the maturity of the loan notes issued under the MTN
programme.
USD 12.0m of loan notes were issued, of which USD 8.4m relates
to a refinancing of notes outstanding at 31 December 2021 and USD
3.6m relates to new investment. Notes issued in 2022 mature in
November 2024.
Notes outstanding at 31 December 2021 which were not refinanced
will be repaid in the second half of 2022 as per the original
maturity date. Further details of the MTN programme and refinancing
can be found in note 24 and 34 of the consolidated financial
statements.
In addition to refinancing the MTNs, we have also established a
GBP 10m long-term debt facility. This facility, while not expected
to be utilised, provide us with increased "available cash".
Liquidity and available cash are often assessed by potential
customers during the contract adjudication process. Given the above
actions taken and possible cash benefits from the sale of fixed
assets and inventory we remain satisfied, despite the financial
impacts of Mozambique, that both our cash position and liquidity
profile as a whole are sufficient so that we can continue to bid
for larger projects and have the financial capacity to mobilise
multiple large projects simultaneously.
Dividend
The Board is not recommending the payment of a final dividend in
line with its cautious approach to the prevailing environment. The
Board's intention is to reinstate the dividend as soon as is
practicable, taking into consideration the financial strength of RA
and its confidence in its future performance.
Andrew Bolter
Chief Financial Officer
26 May 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
2021 2020
Notes USD'000 USD'000
Revenue 7 54,595 64,441
Cost of sales 9 (42,050) (45,647)
Credit provision 20 (505) -
-------- --------
Gross profit 12,040 18,794
Administrative expenses 9 (10,719) (8,429)
-------- --------
Underlying operating profit 1,321 10,365
Non-underlying items 9 (32,222) (3,046)
-------- --------
Operating (loss)/profit (30,901) 7,319
Investment revenue 55 278
Finance costs (1,314) (970)
-------- --------
(Loss)/Profit before tax (32,160) 6,627
Tax benefit/(expense) 11 80 (61)
(Loss)/Profit and total comprehensive income
for the year (32,080) 6,566
========
Basic earnings per share (cents) 12 (18.7) 3.8
Diluted earnings per share (cents) 12 (18.5) 3.8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Notes 2021 2020
USD'000 USD'000
------------------ ------------------
Assets
Non-current assets
Property, plant, and equipment 16
Right-of-use assets 17 25,512 47,358
Goodwill 18 5,374 3,528
- 138
------------------ ------------------
30,886 51,024
Current assets
Inventories 19 9,397 9,142
Trade and other receivables 20 16,522 12,666
Cash and cash equivalents 21 8,532 17,632
------------------ ------------------
34,451 39,440
------------------ ------------------
Total assets 65,337 90,464
------------------ ------------------
Equity and liabilities
Equity
Share capital 22 24,300 24,300
Share premium 18,254 18,254
Merger reserve (17,803) (17,803)
Treasury shares 23 (1,199) (1,363)
Share based payment reserve 534 177
Retained earnings 13,223 48,509
------------------ ------------------
Total equity 37,309 72,074
------------------ ------------------
Non-current liabilities
Loan notes 24 - 6,471
Lease liabilities 25 5,206 3,720
Employees' end of service benefits 26 731 517
------------------ ------------------
5,937 10,708
------------------ ------------------
Current liabilities
Loan notes 24 10,000 -
Lease liabilities 25 834 318
Trade and other payables 27 9,835 7,364
Provisions 28 1,422 -
------------------ ------------------
22,091 7,682
------------------ ------------------
Total liabilities 28,028 18,390
------------------ ------------------
Total equity and liabilities 65,337 90,464
================== ==================
CONSOLIDATED STATEMENT IN CHANGES IN EQUITY
For the year ended 31 December 2021
Share
based
Share Share Merger Treasury payment Retained
capital premium reserve shares reserve earnings Total
---------------
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
--------------- --------------- -------------- ------------- ------------- ------------- ------------- ---------
As at 1
January
2020 24,300 18,254 (17,803) - 47 44,685 69,483
Total
comprehensive
income for
the
period - - - - - 6,566 6,566
Share based
payments
(note 13) - - - - 130 - 130
Dividends
declared
and paid
(note
14) - - - - - (2,674) (2,674)
Purchase of
treasury
shares (note
23) - - - (2,600) - - (2,600)
Issuance of
treasury
shares (note
23) - - - 1,237 - (68) 1,169
--------------- --------------- -------------- ------------- ------------- ------------- ------------- ---------
As at 31
December
2020 24,300 18,254 (17,803) (1,363) 177 48,509 72,074
Total
comprehensive - - - - - (32,080) (32,080)
income for the
period
Share based
payments - - - - 487 - 487
(note 13)
Dividends
declared
and - - - - - (3,206) (3,206)
paid (note 14)
Issuance of
treasury - - - 164 (130) - 34
shares (note
23)
--------------- --------------- -------------- ------------- ------------- ------------- ------------- -----------
As at 31
December
2021 24,300 18,254 (17,803) (1,199) 534 13,223 37,309
=============== =============== ============== ============= ============= ============= ============= ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Notes 2021 2020
USD'000 USD'000
----------------------------------------------------- ------------------ ------------------
Operating activities
Operating (loss)/profit (30,901) 7,319
Adjustments for non-cash and other items:
Depreciation on property, plant, and equipment
16, 17 4,855 3,731
(Profit)/Loss on disposal of property, plant,
and equipment 16 (16) 93
Unrealised differences on translation of foreign
balances 133 5
Provision for employees' end of service benefits
26 433 209
Share based payments 13 487 1,299
Non-underlying items - Palma Project, Mozambique
9 28,035 -
----------------------------------------------------- ------------------ ------------------
3,026 12,656
----------------------------------------------------- ------------------ ------------------
Working capital adjustments:
Inventories (5,071) (2,964)
Trade and other receivables (4,284) 12,240
Trade and other payables 1,513 (616)
----------------------------------------------------- ------------------ ------------------
Cash flows (used in)/ generated from
operations (4,816) 21,316
Tax paid 11 (20) (117)
Employees' end of service benefits paid 26 (219) (83)
------------------------------------------------- ------------------ ------------------
Net cash flows (used in)/from operating activities (5,055) 21,116
----------------------------------------------------- ------------------ ------------------
Investing activities
Investment revenue received 55 278
Purchase of property, plant, and equipment 16 (3,478) (24,450)
Proceeds from disposal of property,
plant, and equipment 16 823 24
------------------------------------------------- ------------------ ------------------
Net cash flows used in investing activities (2,600) (24,148)
----------------------------------------------------- ------------------ ------------------
Financing activities
Proceeds from borrowings 24 3,916 6,084
Repayment of lease liabilities 25 (742) (564)
Finance costs paid (1,314) (970)
Dividends paid 14 (3,206) (2,674)
Purchase of treasury shares 23 - (2,600)
Proceeds from share options exercised 23 34 -
------------------------------------------------- ------------------ ------------------
Net cash flows used in financing activities (1,312) (724)
----------------------------------------------------- ------------------ ------------------
Net decrease in cash and cash equivalents (8,967) (3,756)
Cash and cash equivalents as at start
of the period 21 17,632 21,393
Effect of foreign exchange on cash and
cash equivalents (133) (5)
------------------------------------------------- ------------------ ------------------
Cash and cash equivalents as at end
of the period 21 8,532 17,632
================================================= ================== ==================
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
1 CORPORATE INFORMATION
The principal activity of RA International Group plc ("RAI" or
the "Company") and its subsidiaries (together the "Group") is
providing services in demanding and remote areas. These services
include construction, integrated facilities management, and supply
chain services.
RAI was incorporated on 13 March 2018 as a public company in
England and Wales under registration number 11252957. The address
of its registered office is One Fleet Place, London, EC4M 7WS.
2 BASIS OF PREPARATION
The consolidated financial statements have been prepared in
accordance with UK adopted international accounting standards. They
have been prepared under the historical cost basis and have been
presented in United States Dollars ("USD"). All values are rounded
to the nearest thousand (USD'000), except where otherwise
indicated.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2021
or 2020 but is derived from those accounts. Statutory accounts for
the year ended 31 December 2020 have been delivered to the
Registrar of companies and those for 2021 will be delivered in due
course. The auditor has reported on both sets of accounts; its
reports were unqualified, did not contain an emphasis of matter
reference and did not contain statements under section 498 (2) or
(3) of the Companies Act 2006.
Going concern
In assessing the basis of preparation of the financial
statements the Board has undertaken a rigorous assessment of going
concern, considering financial forecasts covering a period to 30
June 2023 and utilising scenario analysis to test the adequacy of
the Group's liquidity. The primary uncertainties facing the
business at present are related to the timing and success of
contract awards, as well as the time frame and value at which
unutilised fixed assets and inventory can be used or sold.
In addition to a Base Case scenario, additional scenarios were
prepared which reflect the primary uncertainties facing the
business. One forecasts a worst-case trading environment whereby
the Group is not awarded any new contracts in the future. Another
assumes that the Group is unable to sell or dispose of a
significant value of currently unutilised assets and as a result
continues to incur the related storage costs throughout the going
concern period, additionally all working
capital assumptions were assumed to deteriorate to levels unseen
previously. Under all scenarios, the Group has concluded that it
has sufficient cash reserves and facilities to fund trading,
capital investment, and principal and interest repayments
associated with loan notes maturing during the period.
During May 2022, the Group refinanced its debt so as to extend
and synchronise the maturity date. Of the USD 10m loan notes
outstanding at 31 December 2021, USD 1.6m were not refinanced and
will be repaid utilising the USD 3.6m of new funding raised through
this new programme. The loan notes now mature in November of 2024.
The Group also has access to a GBP 10m long-term debt facility
which is not expected to be utilised at any point throughout the
going concern period.
Under all scenarios reviewed by the Board the Group continues to
have sufficient cash reserves to operate for the foreseeable
future. Any scenario whereby trading performance is worse than
those modelled is considered to be remote given the level of
committed contracted work in place. On that basis, the Board is
therefore satisfied that it is appropriate to adopt the going
concern basis of accounting in preparing the financial
statements.
Climate change
In preparing the financial statements, the management has
considered the impact of the physical and transition risks of
climate change and identified this as an emerging risk but have
concluded that it does not have a material impact on the
recognition and measurement of the assets and liabilities in these
financial statements as at 31 December 2021.
3 BASIS OF CONSOLIDATION
The financial statements comprise the financial statements of
the Company and its subsidiaries as at 31 December 2021. Control is
achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, the
Group has:
-- power over the investee (i.e., existing rights that give it
the current ability to direct the relevant activities of the
investee),
-- exposure, or rights, to variable returns from its involvement with the investee, and
-- the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting
rights results in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- the contractual arrangement with the other vote holders of the investee,
-- rights arising from other contractual arrangements, and
-- the Group's voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Company loses control over the
subsidiary. Assets, liabilities, income, and expenses of a
subsidiary acquired or disposed of during the year are included in
the financial statements from the date the Group gains control
until the date the Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements
of a subsidiary to bring their accounting policies into line with
the Group's accounting policies. All intra-group assets and
liabilities, equity, income, expenses, and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary, without a
change of control, is accounted for as an equity transaction.
If the Company loses control over a subsidiary, it derecognises
the related assets (including goodwill), liabilities,
non-controlling interest, and other components of equity while any
resultant gain or loss is recognised in the profit or loss. Any
investment retained is recognised at fair value.
Business combinations
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, which is measured at the fair value
on the acquisition date. The net identifiable assets acquired, and
liabilities assumed are recorded at their respective fair values on
the acquisition date. Acquisition- related costs are expensed as
incurred and included in acquisition costs.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances, and pertinent conditions as at the acquisition
date.
4 SIGNIFICANT ACCOUNTING POLICIES
Revenue recognition
Revenue from contracts with customers is recognised when control
of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Group expects
to be entitled in exchange for those goods or services. The Group
has concluded that it is acting as a principal in all its revenue
arrangements.
Sale of goods (supply chain)
Revenue from the sale of goods and the related logistics
services is recognised when control of ownership of the goods have
passed to the buyer, usually on delivery of the goods.
Construction
Typically, revenue from construction contracts is recognised at
a point in time when performance obligations have been met.
Generally, this is the same time at which client acceptance has
been received. Dependent on the nature of the contracts, in some
cases revenue is recognised over time using the percentage of
completion method on the basis that the performance does not create
an asset with an alternative use and the Group has an enforceable
right to payment for performance completed to date. Contract
revenue corresponds to the initial amount of revenue agreed in the
contract and any variations in contract work, claims, and incentive
payments are recognised only to the extent that it is highly
probable that they will result in revenue, and they are capable of
being reliably measured.
Services (integrated facilities management)
Revenue from providing services is recognised over time,
applying the time elapsed method for accommodation and similar
services to measure progress towards complete satisfaction of the
service, as the customers simultaneously receive and consume the
benefits provided by the Group.
Cost of sales
Cost of sales represent costs directly incurred or related to
the revenue generating activities of the Group, including staff
costs, materials, and depreciation.
Contract balances
Trade receivables
A receivable represents the Group's right to an amount of
consideration that is unconditional, meaning only the passage of
time is required before payment of the consideration is due.
Accrued revenue
Accrued revenue represents the right to consideration in
exchange for goods or services transferred to a customer in
connection with fulfilling contractual performance obligations. If
the Group performs by transferring goods or services to a customer
before invoicing, accrued revenue is recognised in an amount equal
to the earned consideration that is conditional on invoicing. Once
an invoice has been accepted by the customer accrued revenue is
reclassified as a trade receivable.
Customer advances
If a customer pays consideration before the Group transfers
goods or services to the customer, a customer advance is recognised
when the payment is received by the Group. Customer advances are
recognised as revenue when the Group meets its obligations to the
customer.
Borrowing costs
Borrowing costs directly attributable to the construction of an
asset are capitalised as part of the cost of the asset.
Capitalisation commences when the Group incurs costs for the asset,
incurs borrowing costs and undertakes activities that are necessary
to prepare the asset for its intended use or sale. Capitalisation
ceases when the asset is ready for use or sale. All other borrowing
costs are expensed in the period in which they occur. Borrowing
costs consist of interest and other costs that are incurred in
connection with the borrowing of funds.
Tax
Current income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted
at the reporting date in the countries where the Group operates
and generates taxable income. Management periodically evaluates
positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Property, plant, and equipment
Property, plant, and equipment are stated at cost less
accumulated depreciation and any impairment in value. Capital
work-in-progress is not depreciated until the asset is ready for
use. Depreciation is calculated on a straight line basis over the
estimated useful lives. At the end of the useful life, assets are
deemed to have no residual value. Contract specific assets are
depreciated over the lesser of the length of the project, or the
useful life of the asset. The useful life of general property,
plant, and equipment is as follows:
Buildings Lesser of 5 to 20 years and term of land lease
Machinery, motor vehicles, furniture and equipment 2 to 10 years
Leasehold improvements Lesser of 10 years, or term of lease
The carrying values of property, plant, and equipment are
reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable. If any
such indication exists and where the carrying values exceed the
estimated recoverable amount, the assets are written down, with the
write down recorded in profit or loss to their recoverable amount,
being the greater of their fair value less costs to sell and their
value in use.
Expenditure incurred to replace a component of an item of
property, plant, and equipment that is accounted for separately is
capitalised and the carrying amount of the component that is
replaced is written off. Other subsequent expenditure is
capitalised only when it increases future economic benefits of the
related item of property, plant, and equipment. All other
expenditure is recognised in profit or loss as the expense is
incurred.
An item of property, plant, and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and
carrying amount of the asset) is included in the profit or loss in
the year the asset is derecognised.
Assets' residual values, useful lives, and methods of
depreciation are reviewed at each financial year end, and adjusted
prospectively, if appropriate.
Goodwill
Goodwill is stated as cost less accumulated impairment losses.
Cost is calculated as the total consideration transferred less net
assets acquired.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs include those expenses incurred in bringing each
product to its present location and condition. Cost is calculated
using the weighted average method. Net realisable value is based on
estimated selling price less any further costs expected to be
incurred in disposal.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and balances
with banks, which are readily convertible to known amounts of cash
and have a maturity of three months or less from the date of
acquisition. This definition is also used for the consolidated cash
flow statement.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the
Group estimates the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or cash-generating
unit's ("CGU") fair value less costs to sell and its value in use.
An asset's recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. In determining fair value less costs to sell, an
appropriate valuation model is used, maximising the use of
observable inputs. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded entities or
other available fair value indicators.
The Group bases its impairment calculation on detailed budgets
and forecasts which are prepared separately for each of the Group's
CGUs to which the individual assets are allocated. These budgets
and forecasts generally cover a period of five years. For longer
periods, a long-term growth rate is calculated and applied to
project future cash flows after the fifth year.
Impairment losses relating to continuing operations are
recognised in those expense categories consistent with the function
of the impaired asset.
An assessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists,
the Group estimates the asset's or CGU's recoverable amount. A
previously recognised impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset's
recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the profit or loss unless the asset is
carried at a revalued amount, in which case, the reversal is
treated as a revaluation increase.
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. The expense
relating to a provision is presented in the statement of profit or
loss.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
Financial instruments
i) Financial assets
Initial recognition and measurement
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them.
With the exception of trade receivables that do not contain a
significant financing component or for which the Group has applied
the practical expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient are
measured at the transaction price determined under IFRS 15.
Subsequent measurement
Financial assets at amortised cost are subsequently measured
using the effective interest method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is
derecognised, modified, or impaired.
Other receivables are subsequently measured at amortised
cost.
Derecognition of financial assets
A financial asset (or, where applicable a part of a financial
asset or part of a group of similar financial assets) is
derecognised when the rights to receive cash flows from the asset
has expired.
Impairment of financial assets
The Group recognises an allowance for expected credit losses
("ECLs") for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all
the cash flows that the Group expects to receive, discounted at an
approximation of the original effective interest rate. The expected
cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual
terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that
result from default events that are possible within the next twelve
months (a twelve-month ECL). For those credit exposures for which
there has been a significant increase in credit risk since initial
recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a
simplified approach in calculating ECLs. Therefore, the Group does
not track changes in credit risk, but instead recognises a loss
allowance based on lifetime ECLs at each reporting date. When
arriving at the ECL we consider historical credit loss experience
including any adjustments for forward-looking factors specific to
the debtors and the economic environment.
A financial asset is deemed to be in default when internal or
external information indicates that the Group is unlikely to
receive the outstanding contractual amounts in full before taking
into account any credit enhancements held by the Group. A financial
asset is written off when there is no reasonable expectation of
recovering the contractual cash flows.
Income from financial assets
Investment revenue relates to interest income accrued on a time
basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially recognised at fair value and
subsequently classified at fair value through profit or loss, loans
and borrowings, or payables. Loans and borrowings and payables are
recognised net of directly attributable transaction costs.
The Group's financial liabilities include trade and other
payables and loan notes.
Subsequent measurement
The measurement of financial liabilities depends on their
classification as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as held at fair
value through profit or loss.
Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in IFRS 9 are
satisfied. The Group has not designated any financial liability as
at fair value through profit or loss.
Financial liabilities are classified as held for trading if they
are incurred for the purpose of repurchasing in the near term. This
category also includes derivative financial instruments entered
into by the Group that are not designated as hedging instruments in
hedge relationships as defined by IFRS 9. Separated embedded
derivatives are also classified as held for trading unless they are
designated as effective hedging instruments.
Loans and payables
This is the category most relevant to the Group. After initial
recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the EIR method. Gains and losses
are recognised in profit or loss when the liabilities are
derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under
the liability is discharged, cancelled, or expires.
Where an existing financial liability is replaced by another
from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in the
profit or loss.
Leases
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liability. The cost of right-of-use
assets includes the amount of lease liabilities recognised and
initial direct costs incurred. Right-of-use assets are depreciated
on a straight line basis over the shorter of the lease term and the
estimated useful lives of the assets.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. In calculating the present value of
lease payments, the Group uses its incremental borrowing rate at
the lease commencement date because the interest rate implicit in
the lease is not readily determinable. After the commencement date,
the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payment made. In
addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term or a change in
the lease payments.
Short-term leases and leases on low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases (i.e. those leases that have a lease term of
twelve months or less from the commencement date). It also applies
the lease of low-value assets recognition exemption to leases that
are considered to be low value. Lease payments on short-term leases
and leases of low-value assets are recognised as an expense on a
straight line basis over the lease term.
Employees' end of service benefits
The Group provides end of service benefits to its employees in
accordance with local labour laws. The entitlement to these
benefits is based upon the employee's final salary and length of
service, subject to the completion of a minimum service period. The
expected costs of these benefits are accrued over the period of
employment. The Group accounts for these benefits as a defined
contribution plan under IAS 19.
Treasury shares
Treasury shares are held as a deduction from equity and are held
at cost price.
Share based payments
Employees (including senior executives) of the Group receive
remuneration in the form of share based payments, whereby employees
render services as consideration for equity instruments
(equity-settled transactions).
The cost of equity-settled transactions is determined by the
fair value at the date when the grant is made using an appropriate
valuation model, further details of which are provided in note
13.
That cost is recognised in employee benefits expense, included
in administrative expenses, together with a corresponding increase
in equity (share based payment reserve), over the period in which
the service and, where applicable, the performance conditions are
fulfilled (the vesting period). The cumulative expense recognised
for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has
expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The expense or credit in the
statement of profit or loss for a period represents the movement in
cumulative expense recognised as at the beginning and end of that
period.
Service and non-market performance conditions are not taken into
account when determining the grant date fair value of awards, but
the likelihood of the conditions being met is assessed as part of
the Group's best estimate of the number of equity instruments that
will ultimately vest. Market performance conditions are reflected
within the grant date fair value. Any other conditions attached to
an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to an immediate
expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest
because non-market performance and/or service conditions have not
been met. Where awards include a market or non-vesting condition,
the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all
other performance and/or service conditions are satisfied.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted earnings
per share.
Contingencies
Contingent liabilities are not recognised in the financial
statements, they are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. A contingent
asset is not recognised in the financial statements but disclosed
when an inflow of economic benefits is probable.
Foreign currencies
The Group's financial statements are presented in USD, which is
the functional currency of all Group companies. Items included in
the financial statements of each entity are measured using that
functional currency.
Transactions in foreign currencies are initially recorded at the
functional currency rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
are retranslated at the functional currency spot rate of exchange
prevailing at the reporting date. All differences are taken to
profit or loss.
Non-monetary items that are measured at historical cost in a
foreign currency are translated using the exchange rates as at the
dates of the initial transactions. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Foreign currency share capital (including any related share
premium or additional paid-in capital) is translated using the
exchange rates as at the dates of the initial transaction. The
value is not remeasured.
5 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New and amended standards and interpretations
Amendments and interpretations that apply for the first time in
2021 do not have a significant impact on the financial statements
of the Group. The Group has not early adopted any standards,
interpretations, or amendments that have been issued but are not
yet effective.
Presentation of Consolidated Statement of Financial Position
Property, plant, and equipment ("PPE") as presented in the prior
period on the face of the balance sheet includes a USD 3,528,000
reclassification to Right-of-Use Assets ("ROU") as a result of a
presentational change where ROU is now separately disclosed. PPE as
at 1 January 2020 would have been USD 26,081,000 on a similar
basis. A third balance sheet for the beginning of the preceding
period (1 January 2020) has not been presented on the basis that
the information does not have a material effect on the information
already presented for the Group.
6 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the financial statements requires management
to make judgements, estimates, and assumptions that may affect the
reported amount of assets and liabilities, revenue, expenses,
disclosure of contingent liabilities, and the resultant provisions
and fair values. Such estimates are necessarily based on
assumptions about several factors and actual results may differ
from reported amounts.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods
affected.
a) Judgements
Use of Alternative Performance Measures
IAS 1 requires material items to be disclosed separately in a
way that enables users to assess the quality of a company's
profitability. In practice, these are commonly referred to as
"exceptional" items, but this is not a concept defined by IFRS and
therefore there is a level of judgement involved in arriving at an
Alternative Performance Measure ("APM") which excludes such
exceptional items. The Group refers to these as non-underlying
items and considers items suitable for separate presentation that
are outside normal operations and are material to the results of
the Group either by virtue of size or nature. See note 9 for
further details on specific balances which are classified as
non-underlying items.
b) Estimates and assumptions
Percentage of completion
The Group primarily uses the output percentage-of-completion
method when accounting for contract revenue on its long- term
construction contracts. Use of the percentage-of-completion method
requires the Group to estimate the progress of contracts based on
surveys of work performed. The Group has determined this basis of
revenue recognition is the best available measure on such contracts
and where possible seeks customer verification of
percentage-of-completion calculations as at financial reporting
dates.
The accuracy of percentage-of-completion estimates has a
material impact on the amount of revenue and related profit
recognised. As at 31 December 2021, USD 3,837,000 of accrued
revenue had been calculated using the percentage-of-completion
method (2020: USD 1,083,000), of which USD 845,000 is supported by
customer verifications (2020: USD 398,000).
Revisions to profit or loss arising from changes in estimates
are accounted for in the period when the changes occur.
IFRS 16 - interest rate
In some jurisdictions where the Group holds long-term leases,
the incremental borrowing rate is not readily determinable. As a
result, the incremental borrowing rate is estimated with reference
to risk adjusted rates in other jurisdictions where a market rate
is determinable, and the Group's cost of funding.
Provision for asset impairment
In March 2021, insurgents attacked the town of Palma,
Mozambique. This led to Total Energies ("Total") suspending their
development works in the region and declaring force majeure. As a
result, the Group's contract to build and operate a 1,800-person
camp was suspended (the Palma Project). At the time of the attack,
RA had purchased substantially all of the assets required to
complete the project and was approximately two weeks from
commencing revenue generating activities.
As a result of this catastrophic event and the lack of evidence
of this time to conclude on the fair value of these assets, the
Group has impaired the full carrying value of assets which are
associated with the Palma Project. Further details of this
impairment charge can be found in note 9.
Provision for unavoidable costs
Following the March 2021 attack on Palma, Mozambique the Group
began incurring unavoidable costs relating to the Offsite Assets.
It is estimated that these assets will be fully disposed of by
December 2022.
7 SEGMENTAL INFORMATION
For management purposes, the Group is organised into one segment
based on its products and services, which is the provision of
services in demanding and remote areas. Accordingly, the Group only
has one reportable segment. The Group's Chief Operating Decision
Maker ("CODM") monitors the operating results of the business as a
single unit for the purpose of making decisions about resource
allocation and assessing performance. The CODM is considered to be
the Board of Directors.
Operating segments
Revenue, operating results, assets, and liabilities presented in
the financial statements relate to the provision of services in
demanding and remote areas.
Revenue by service channel:
2021 2020
USD'000 USD'000
Integrated facilities management 31,162 31,265
Construction 14,221 19,085
Supply chain services 9,212 14,091
---------------- ----------------
54,595 64,441
Revenue by recognition timing:
2021 2020
USD'000 USD'000
Revenue recognised over time 41,320 40,118
Revenue recognised at a point in
time 13,275 24,323
---------------- ----------------
54,595 64,441
Geographic segment
The Group primarily operates in Africa and as such the CODM
considers Africa and Other locations to be the only geographic
segments of the Group. The below geography split is based on the
location of project implementation.
Revenue by geographic area of project implementation:
2021 2020
USD'000 USD'000
Africa 52,357 61,161
Other 2,238 3,280
---------------- ----------------
54,595 64,441
Non-current assets by geographic area:
2021 2020
USD'000 USD'000
Africa 28,448 47,687
Other 2,438 3,337
---------------- ----------------
30,886 51,024
Revenue split by customer:
2021 2020
% %
Customer A 25 24
Customer E 14 10
Customer F 11 10
Customer D 10 9
Customer G 9 9
Customer B 6 7
Customer H 4 -
Customer C 1 4
Other 20 27
---------------- ----------------
100 100
8 GROUP INFORMATION
The Company operates through its subsidiaries, listed below,
which are legally or beneficially, directly or indirectly owned and
controlled by the Company.
The extent of the Company's beneficial ownership and the
principal activities of the subsidiaries are as follows:
Name of the Country Beneficial Registered address
entity of incorporation ownership
RA Africa Holdings British Virgin 100% 3rd floor, J&C Building, PO
Limited Islands Box 362, Road Town, Torola
Virgin Islands (British) VG110
RA International British Virgin 100% 3th floor, J&C Building, PO
Commercial Services Islands Box 362, Road Town, Torola
Limited Virgin Islands (British) VG110
RASB Holdings British Virgin 100% 3th floor, J&C Building, PO
Limited Islands Box 362, Road Town, Torola
Virgin Islands (British) VG110
RA International Cameroon 100% 537 Rue Njo-Njo, Bonaprisi,
Limited PO Box 1245, Douala, Cameroon
RA International Central African 100% Avenue des Martyrs, Bangui,
RCA Republic Central African Republic
RA International Chad 100% N'djamena, Chad
Chad
RA International Democratic 100% Kinshasa, Sis No106, Boulvevard
DRC SARL Republic Du 30 Juin, Dans La Commune
of Congo De La Gombe EN RD, Congo
RA Property ApS Denmark 100% Tuborg Boulevard 12, 4 DK-2900
Helerup, Denmark
RA International Guyana 100% 210 New Market Street, Geoegetown,
Guyana Inc. Guyana
Raints Kenya Kenya 100% 770 Faith Ave, Runda Estate,
Limited Nairobi City (North), Nairobi,
Kenya
RA International Lebanon 100% Beirut Souks, Souk El Dahab,
SARL section no 1144, plot no 1479,
Beirut, Lebanon
RA International Malawi 100% Hanover House, Hanover Avenue,
Limited Independence Drive, Blantyre,
Malawi
Raints Mali Mali 100% Bamako-Niarela Immeuble Sodies
Appartement C/7, Mali
RA International Mozambique 100% Distrito KAMPFUMO, Bairro Sommarchield,
Limitada Rua. Jose Graverinha, no 198,
R/C, Maputo, Mozambique
Royal Food Solutions Mozambique 100% Distrito Urbano 1, Bairro Central,
S.A Rua do Sol, 23 Maputo, Mozambique
RA International Niger 100% Niamey, Quartier Cite Piudriere,
Niger Avenue du Damergou, CI-48, Niger
RA Contracting Qatar 100% 63 Aniza, Doustor St. 905, Salam
and Facility International, Qatar
Management LLC
RA International(*) Somalia 100% Mogadishu, Somalia
RA International South Sudan 100% Plot no. 705, Block 3-K South,
FZCO , Airport Road, Hai Matar South
Sudan
Reconstruction Sudan 100% 115 First Quarter Graif west-Khartoum,
and Assistance Kharthoum, Republic of Sudan
Company Ltd
RA International Tanzania 100% 369 Toure Drive, Oysterbay,
Limited PO Box 62, Dar Es Salaam, Tanzania
RA International UAE 100% Office Number S101221O39, Jebel
FZCO Ali Free Zone, Dubai, United
Arab Emirates
RA International UAE 100% Building 41, 3B Street, Al Quoz
General Trading Industrial Area 1, PO Box 115774,
LLC Dubai, United Arab Emirates
RA SB Ltd. UAE 100% RAK International Corporate
Centre, Ras Al Khaimah, United
Arab Emirates
RA International UK 100% 1 Fleet Place, London, EC4M
Global Operations 7WS, United Kingdom
Limited
RA International Uganda 100% 4th Floor, Acacia Mall, Plot
Limited 14-18, Cooper Road, Kololo,
Kampala, Uganda
REMSCO Uganda Uganda 100% 4th Floor, Acacia Mall, Plot
(SMC) Limited 14-18, Cooper Road, Kololo,
Kampala, Uganda
RA Federal Services United States 100% 3411 Silverside Road, Tatnall
LLC of America Building #104,
Wilmington, DE 19810
RA-RME LLC United States 67% 3411 Silverside Road, Tatnall
of America Building #104,
Wilmington, DE 19810
Berkshire General United States 100% 1 Church Street, 5th Floor,
Insurance Limited of America Burlington, Chittenden, Vermont,
05401, United States of America
(*) RA International in Somalia is not an incorporated legal
entity
9 PROFIT FOR THE PERIOD
Loss/profit for the period is stated after charging:
2021 2020
USD'000 USD'000
Staff costs 22,088 19,845
Materials 12,887 17,571
Depreciation 4,855 3,731
Staff costs relate to wages and salaries plus directly
attributable expenses.
Non-underlying items
2021 2020
USD'000 USD'000
Acquisition costs - 175
COVID-19 costs 765 1,433
Restructuring costs - 269
Other share based payments (note
13) - 1,169
Palma Project, Mozambique 31,457 -
---------------- ----------------
Total non-underlying items 32,222 3,046
Acquisition costs
Costs incurred by the Group related to corporate acquisitions
are expensed as incurred. Acquisition costs mainly comprise
professional fees and travel costs. The acquisition of new
companies is not considered to be part of the Group's normal
operations, and therefore management has chosen to disclose these
costs separately on the basis as that outlined above. Acquisition
costs in 2020 relate to potential corporate acquisitions which were
being explored in the first half of the 2020. These transactions
were halted for various reasons including the incremental level of
uncertainty COVID-19 added to target operating forecasts.
COVID-19 costs
These costs were incurred due to the COVID-19 pandemic and
primarily comprise of incremental staff costs and PPE. These
incremental staff costs relate to staff salaries paid to employees
unable to work due to local lockdowns or international travel
restrictions preventing their access to worksites (2021: USD
374,000; 2020: USD 853,000) and discretionary payments made to
employees working throughout the pandemic (2021: nil; 2020: USD
388,000). All payments made were non-contracted and at the
discretion of executive management. Incremental project costs
associated with PPE consumption and COVID-19 testing are also
included in this balance (2021: USD 391,000; 2020: USD 192,000).
General inefficiencies experienced as a result of COVID-19 have not
been included given the high level of judgement inherent in
undertaking this exercise and as a result, continue to be included
within cost of sales.
Restructuring costs
In 2020, the Group closed two offices in the United Arab
Emirates and consolidated all country staff into a larger corporate
office ("Head Office"). In addition, the Group relocated staff from
other geographical locations to Head Office. This restructuring
exercise was completed in 2020.
Palma Project, Mozambique
In March 2021, insurgents attacked the town of Palma,
Mozambique. This led to Total suspending their development works in
the region and declaring force majeure. As a result, the Group's
contract to build and operate a 1800-person camp was suspended (the
Palma Project). At the time of the attack, RA had purchased
substantially all of the assets required to complete the project
and was approximately two weeks from commencing revenue generating
activities.
2021 2020
USD'000 USD'000
-------------------------------------- ----------- -----------
Provision for asset impairment 23,410 -
Permanent asset impairment 2,145 -
Incremental costs incurred but unpaid 1,058 -
Provision for unavoidable costs 1,422 -
-------------------------------------- ----------- -----------
Total of non-cash charges 28,035 -
Incremental costs incurred and paid 3,422 -
-------------------------------------- ----------- -----------
31,457 -
-------------------------------------- ----------- -----------
As a result of this catastrophic event, the Group has incurred
significant incremental costs and impaired assets which are
associated with the Palma Project.
Provision for asset impairment
As at the date of these accounts, the force majeure is still in
place and development work has not recommenced. While the security
situation has improved, and commercial activity is returning to the
Palma area, Total has recently indicated that while they are
committed to restarting works in the region, they are not
undertaking any works at present, and they will re -- evaluate the
situation so as to assess if there are conditions to return. These
conditions include a sustained level of security in the region, and
the return of the local population to normal living conditions.
Following a number of conversations with a wide range of third
parties directly or indirectly involved in returning security to
the Cabo Delgado region, the CODM is hopeful that the conditions
for Total's return will be met and development works will
recommence. However, there remains significant uncertainty as to
when the force majeure will be lifted and what RA's role will be in
the recommenced development works. The Group stands well placed to
benefit from the restart of activities in the region given the
investment made in the area, but at this stage, given the variables
indicated above, the CODM cannot reasonably attribute a fair value
to these assets.
Given this uncertainty, and in accordance with IAS 36, after a
significant amount of deliberation both as a board and with third
-- party advisers, the CODM has decided to recognise a provision to
impair the full value of assets relating to the Palma Project.
The CODM will undertake regular assessments to establish if
there is a basis for reversal of the impairment provision
(recovery). These assessments will be made at least every six
months or when an event transpires which may indicate a material
change in the value of the Palma Project assets.
The Palma Project assets can be divided into three separate
groups:
1. Palma Assets
The Palma Assets relate to the land, infrastructure, and other
assets located within the RA Camp facility near the town of Palma,
Mozambique. As at the time these accounts were published, the
security situation in Cabo Delgado province remains volatile and
significant security measures must be taken to access the camp
facility. Given the assets are not currently generating a
commercial return, the uncertainty regarding the future commercial
returns from these assets, and the lack of a ready market for the
Palma Assets, an impairment provision has been established equal to
their carrying value.
2. Offsite Assets
These consist of equipment and material located within various
secure storage locations in Africa and the Middle East. Although
the best use of the Offsite Assets is on the Palma Project, given
the uncertainty as to when Total will recommence development
activities, the CODM believe it to be in the best interest of
stakeholders that the Group dispose of these assets in the short
term so as to cease incurring unavoidable costs.
Given the nature, location and customs status of the Offsite
Assets, a limited market exists for these items. As a result, an
impairment provision has been established for the full carrying
value of the assets.
3. Other Assets
These consist of non -- tangible assets such as tax and
receivable balances. The Group has recorded an impairment provision
in relation to the full value of tax assets and other balances that
have been deemed unrecoverable as a result of the March 2021
attack.
The below table provides a breakup of these balances by asset
class:
Fixed Assets Other Assets
Inventory Total
USD'000 USD'000 USD'000 USD'000
---------------- --------------------- ------------ ----------------- --------
Palma Assets 15,257 137 - 15,394
Offsite Assets 4,050 3,177 - 7,227
Other Assets - - 789 789
---------------- --------------------- ------------ ----------------- --------
19,307 3,314 789 23,410
---------------- --------------------- ------------ ----------------- --------
Permanent asset impairment
While the Group's camp facility near Palma Mozambique was not
directly attacked, at the time of the attack the Group incurred
impairment losses resulting from the theft or vandalism of its
assets. The Group has also incurred losses when disposing of assets
which were originally purchased for use on the Palma Project. These
losses, incurred during 2021, are permanent and as a result, there
is no need to reassess the value of these assets in the future.
Permanent impairment losses relating to the Palma Project totalled
USD 2,145,000 as at 31 December 2021. Included in this balance is
USD 138,000 relating to the impairment of goodwill.
Incremental costs
As at 31 December 2021, the Group had incurred USD 4,480,000 in
incremental costs directly related to the March 2021 attack on
Palma, Mozambique and the resulting suspension of development
activities by Total. These expenses primarily relate to logistics,
storage, and security costs, but also include costs such as staff
evacuation and mental health counselling provided to staff. At the
time of the attack, a significant value of assets were on-route to
Palma and post attack, it was no longer possible to safely offload
goods in the Palma area. As a result, goods had to be stored in
their current locations in Europe, the Middle East, and East
Africa, or where possible, shipped to more economical storage
locations. Of these incremental costs USD 3,422,000 were paid for
during 2021 and USD 1,058,000 were accrued but unpaid as at 31
December 2021.
Provision for unavoidable costs
The Group has recorded a provision of USD 1,422,000 relating to
unavoidable costs associated with the Offsite Assets. Management
anticipates that the Offsite Assets will be fully disposed of by
December 2022.
Auditor Compensation
Amounts paid or payable by the Group in respect of audit and
non-audit services to the Auditor are shown below.
2021 2020
USD'000 USD'000
Fees for the audit of the Company
annual accounts 164 138
Fees for the audit of the subsidiary
annual accounts 74 72
Additional fee for the prior year
audit of the Group annual accounts - 45
-------------- --------------
Total audit fees 238 255
Non-audit related services - -
-------------- --------------
10 EMPLOYEE EXPENSES
The average number of employees (including directors) employed
during the period was:
2021 2020
Directors 7 7
Executive management 5 6
Staff 1,157 1,645
---------------- ----------------
1,169 1,658
The aggregate remuneration of the above employees was:
2021 2020
USD'000 USD'000
Wages and salaries 17,804 18,200
Social security costs 153 95
Share based payments 487 1,299
-------------- --------------
18,444 19,594
The remuneration of the Directors and other key management
personnel of the Group are detailed in note 31.
11 TAX
The tax charge on the profit for the year is as follows:
2021 2020
USD'000 USD'000
Current tax:
UK corporation tax on profit for - -
the year
Non-UK corporation tax 80 61
Adjustment for prior years (160) -
-------------- --------------
Tax charge for the year (80) 61
Factors affecting the tax charge
The tax assessed for the year varies from the standard rate of
corporation tax in the UK. The difference is explained below:
2021 2020
USD'000 USD'000
Loss (profit) before tax (32,160) 6,627
-------------- --------------
Expected tax charge based on the
standard average rate of corporation
tax in the UK of 19% (2020: 19%) (6,110) 1,259
Effects of:
Deferred tax asset not recognised 105 102
Exemptions and foreign tax rate
difference 6,085 (1,300)
Adjustment for prior years (160) -
-------------- --------------
Tax charge for the year (80) 61
The Group benefits from tax exemptions granted to its customers
who are predominantly governments and large intragovernmental
organisations, as well as zero corporate tax rates in certain
countries of operation. The CODM is not aware of any factors that
indicate the tax rates in these countries will materially change in
future periods or that tax exemptions granted will no longer be
available to the Group.
The main rate of UK corporation tax is 19% and will increase to
25% on 1 April 2023. The expected impact as a result of this change
is not considered material for the Group.
12 EARNINGS PER SHARE
The Group presents basic earnings per share ("EPS") data for its
ordinary shares. Basic EPS is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the period
plus the weighted average number of ordinary shares that would be
issued on conversion of all the dilutive potential ordinary shares
into ordinary shares.
2021 2020
Profit for the period (USD'000) (32,080) 6,566
Basic weighted average number of
ordinary shares 171,660,947 172,451,137
Effect of employee share options 1,447,842 1,407,232
-------------- --------------
Diluted weighted average number
of shares 173,108,789 173,858,369
Basic earnings per share (cents) (18.7) 3.8
Diluted earnings per share (cents) (18.5) 3.8
13 SHARE BASED PAYMENT EXPENSE
The Group recognised the following expenses related to
equity-settled payment transactions:
2021 2020
USD'000 USD'000
Performance share plan 16 31
Employee retention share plan 471 99
Other share based payments - 1,169
-------------- --------------
487 1,299
Performance Share Plan
On Admission, the Company introduced a Performance Share Plan
("PSP") whereby options may be granted to eligible employees.
Awards vest after a performance period of 3 years subject to
continuous employment and the achievement of a hurdle total
shareholder return ("TSR") as at the end of the performance
period.
Employee Retention Share Plan
In October 2020, the Company introduced an Employee Retention
Share Plan ("ERSP") and granted share options to a number of senior
employees. Awards vest annually subject to continuous employment.
There are no TSR linked vesting conditions associated with these
options.
At 31 December, the following unexercised share options to
acquire ordinary shares under the PSP and ERSP were
outstanding:
Year of Grant Share Vesting Exercise Number Number
Plan Date of of
price options options
GBP 2021 2020
29 June
2018 PSP 2022 0.10 2,065,216 2,065,216
2020 ERSP 1 May 2021 0.10 31,280 291,054
ERSP 1 May 2022 0.10 549,869 582,108
ERSP 1 May 2023 0.10 824,800 873,162
------- ---------------------------- --------- ---------- ----------
2021 ERSP 1 May 2021 0.10 17,212 -
ERSP 1 May 2022 0.10 84,520 -
ERSP 1 May 2023 0.10 151,830 -
ERSP 1 May 2024 0.10 150,292 -
---------- ----------
3,875,019 3,811,540
Weighted Weighted
average average
Number exercise Number exercise
of of
options price options price
2021 2021 2020 2020
GBP GBP
Outstanding at 1 January 3,811,540 0.10 2,826,085 0.10
Granted during the year 458,348 0.10 1,843,047 0.10
Exercised during the year (243,653) 0.10 - 0.10
---------- --------- ---------- ---------
Forfeited during the year (151,216) 0.10 (857,592) 0.10
---------- --------- ---------- ---------
Outstanding at 31 December 3,875,019 0.10 3,811,540 0.10
Options issued under the PSP were valued using the Monte Carlo
Simulation model using the following inputs:
Weighted average share 56p (USD
price 0.74)
Expected volatility 10.10%
Risk free rate 1.24%
This method is considered to be the most appropriate for valuing
options granted under schemes where there are changes in
performance conditions by which the options are measured, such as
for TSR based awards. The fair value of the options at the grant
date was USD 96,000 and a charge of USD 16,000 (2020: USD 31,000)
was recognised in administrative expenses for the fiscal year ended
2021.
Options issued under the ERSP were valued using the Black
Scholes model using the following inputs:
average share Expected Risk
price volatility free
rate
----- --------------- ----------- -----
2020 49p (USD 0.64) 49.70% 0.00%
----- --------------- ----------- -----
2021 49p (USD 0.68) 48.60% 0.00%
----- --------------- ----------- -----
The total fair value of the options at the grant date was USD
919,000. A charge of USD 117,000 (2020: USD 35,000) was recognised
in cost of sales and USD 354,000 (2020: USD 64,000) was recognised
in administrative expenses for the fiscal year ended 2021. The
expected volatility input utilised represents the historic
volatility of the share price of the Company since Admission.
Other Share Based Payments
On 19 October 2020, the Company agreed to issue a total of
1,840,449 restricted ordinary shares (the "Restricted Shares") to
senior members of staff, including certain persons discharging
managerial responsibilities. The Restricted Shares are subject to a
six-month lock-in from the date of issue, during which they cannot
be sold or transferred. Ordinary shares issued pursuant to the
award of the Restricted Shares were satisfied from the pool of
ordinary shares held in Treasury. The fair value of the shares on
the grant date was GBP 0.49 (USD 0.64) per share. A charge of USD
1,169,000 was recognised as a non-underlying item given the
non-reoccurring nature of this transaction and since the
discretionary awards are not part of the formal share based payment
performance plan of the Company.
Warrants
On Admission, in exchange for brokerage services provided to the
Company during its IPO, the Company issued a warrant instrument
granting its primary broker the right to subscribe for 671,514
ordinary shares of the Company. The warrants are exercisable for
five years from the date of Admission at a subscription price of
GBP 0.728 (USD 0.923) per ordinary share. They are
non-transferrable and are subject to typical anti-dilution rights
to adjust on a proportional basis for share consolidations, share
splits, and stock dividends. The Company used the Black Scholes
model to value the warrants at the grant date. The fair value of
the warrants is nil.
14 DIVIDS
During the period, a dividend of 1.35p (USD 0.02) per share
(171,662,973 shares) totalling GBP 2,317,000 (USD 3,206,000) was
declared and paid (2020: 1.25p (USD 0.02) per share (173,575,741
shares) totalling GBP 2,170,000 (USD 2,674,000)).
15 ALTERNATIVE PERFORMANCE MEASURES
APMs used by the Group are defined below along with a
reconciliation from each APM to its IFRS equivalent, and an
explanation of the purpose and usefulness of each APM. APMs are
non-IFRS measures.
In general, APMs are presented externally to meet investors'
requirements for further clarity and transparency of the Group's
financial performance. APMs are also used internally by management
to evaluate business performance and for budgeting and forecasting
purposes.
2021 2020
USD'000 USD'000
(Loss)/Profit (32,080) 6,566
Tax benefit/(expense) (80) 61
-------------- --------------
(Loss)/Profit before tax (32,160) 6,627
Finance costs 1,314 970
Investment income (55) (278)
-------------- --------------
Operating (loss)/profit (30,901) 7,319
Non-underlying items 32,222 3,046
-------------- --------------
Underlying operating profit 1,321 10,365
Share based payment expense 487 130
Depreciation 4,855 3,731
-------------- --------------
Underlying EBITDA 6,663 14,226
Underlying Operating Profit ("UOP")
The Group uses UOP as an alternative measure to Operating Profit
to allow comparison of the profitability of its operations across
financial periods. UOP is calculated as Operating Profit adjusted
for costs which are considered to be unrelated to the Group's
underlying trading performance.
Underlying Operating Margin is calculated as UOP divided by
revenue.
Underlying EBITDA
Management defines Underlying EBITDA as Operating Profit
adjusted for depreciation, share based payments, and costs which
are considered to be unrelated to the Group's underlying trading
performance. Underlying EBITDA facilitates comparisons of operating
performance from period to period and company to company by
eliminating potential differences caused by variations in capital
structures, tax positions, and the age and booked depreciation on
assets.
Underlying EPS
Underlying EPS reflects underlying operating profit after
deducting net finance costs and taxation, divided by the weighted
average number of ordinary shares outstanding during the period.
This alternative measure of EPS enables shareholder return from the
underlying business operations to be better evaluated across
periods.
2021 2020
cents cents
Reported EPS, basic (18.7) 3.8
Impact of non-underlying items 18.8 1.8
Underlying EPS, basic 0.1 5.6
Reported EPS, diluted (18.5) 3.8
Impact of non-underlying items 18.6 1.7
Underlying EPS, diluted 0.1 5.5
Net Cash
Net cash represents cash less overdraft balances, term loans,
and notes outstanding. This is a commonly used metric, helpful to
stakeholders when analysing the business. Negative net cash is
referred to a net debt position.
16 PROPERTY, PLANT, AND EQUIPMENT
Machinery,
motor
vehicles,
Land and furniture Leasehold
and
buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2021 38,973 15,497 1,192 55,662
Additions 2,526 774 178 3,478
Disposals (1,580) (2,156) - (3,736)
---------------- ---------------- ---------------- ----------------
At 31 December
2021 39,919 14,115 1,370 55,404
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 January 2021 2,432 5,754 118 8,304
Charge for the
year 1,416 2,294 247 3,957
Relating to disposals (125) (1,747) - (1,872)
Provision for
impairment 17,715 1,788 - 19,503
---------------- ---------------- ---------------- ----------------
At 31 December
2021 21,438 8,089 365 29,892
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 31 December
2021 18,481 6,026 1,005 25,512
Machinery,
motor
vehicles,
Land and furniture Leasehold
and
buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2020 16,605 14,892 471 31,968
Additions 22,372 1,206 872 24,450
Disposals (4) (601) (151) (756)
---------------- ---------------- ---------------- ----------------
At 31 December
2020 38,973 15,497 1,192 55,662
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 January 2020 1,475 4,290 122 5,887
Charge for the
year 961 2,030 65 3,056
Relating to disposals (4) (566) (69) (639)
---------------- ---------------- ---------------- ----------------
At 31 December
2020 2,432 5,754 118 8,304
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 31 December
2020 36,541 9,743 1,074 47,358
During the year, capitalised interest of USD 114,000 was
included in Land and Buildings (2020: USD 136,000), representing
22% of borrowing costs (2020: 100%). From 1 April 2021, upon the
suspension of construction activities in Palma, Mozambique, the
Group ceased capitalising interest relating to the Palma Camp
development.
17 RIGHT-OF-USE ASSETS
2021 2020
USD'000 USD'000
Cost:
At 1 January 5,143 3,375
Additions 2,744 1,768
Disposals - -
---------------- ----------------
At 31 December 7,887 5,143
---------------- ----------------
Depreciation:
At 1 January 1,615 940
Charge for the
year 898 675
Relating to disposals - -
---------------- ----------------
At 31 December 2,513 1,615
---------------- ----------------
Net carrying amount:
At 31 December 5,374 3,528
Information related to lease liabilities is available in note
25.
The table below indicates the rents resulting from lease
contracts which are not capitalised and are therefore expensed in
the year.
2021 2020
USD'000 USD'000
Short-term leases 1,308 1,112
Short-term leases include amounts paid for vehicles and heavy
equipment rental, as well as short-term property leases.
18 GOODWILL
2021 2020
USD'000 USD'000
As at 1 January 138 138
Acquisitions (138) -
-------------- --------------
As at 31 December - 138
19 INVENTORIES
2021 2020
USD'000 USD'000
Materials and consumables 8,123 8,166
Goods-in-transit 1,274 976
-------------- --------------
9,397 9,142
A provision of USD 3,314,000 has been recognised in 2021
reflecting the cost of inventory relating to Palma, Mozambique
(2020: nil). See note 9.
20 TRADE AND OTHER RECEIVABLES
2021 2020
USD'000 USD'000
Trade receivables 8,942 7,319
Accrued revenue 5,281 2,410
Deposits 112 116
Prepayments 1,039 1,021
Other receivables 1,148 1,800
-------------- --------------
16,522 12,666
Invoices are generally raised on a monthly basis, upon
completion, or part completion of performance obligations as agreed
with the customer on a contract by contract basis.
During the year 100% of accrued revenue was subsequently billed
and transferred to trade receivables from the opening unbilled
balance in the period (2020: 100%).
As at 31 December the transaction price allocated to remaining
performance obligations was USD 100,000,000 (2020: USD
187,000,000). This represents revenue expected to be recognised in
subsequent periods arising on existing contractual arrangements.
The Group has not taken the practical expedient in IFRS 15.121 not
to disclose information about performance obligations that have
original expected durations of one year or less and therefore no
consideration from contracts with customers is excluded from these
amounts. All revenue is expected to be recognised within the next
five years.
As at 31 December the ageing of trade receivables was as
follows:
2021 2020
USD'000 USD'000
Not past due 5,855 5,184
Overdue by less than 30 days 1,509 938
Overdue by between 30 and 60 days 294 653
Overdue by more than 60 days 1,284 544
-------------- --------------
8,942 7,319
Trade receivables are non-interest bearing and generally have
payment terms of 30 days. An ECL of USD 505,000 was recorded as at
31 December 2021 (2020: nil). All other receivables are expected,
on the basis of past experience, to be fully recoverable.
21 CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statement of
financial position comprised of cash at bank of USD 8,532,000
(2020: USD 17,632,000).
22 SHARE CAPITAL
2021 2020
USD'000 USD'000
Authorised, issued and fully paid
173,575,741 shares (2020: 173,575,741
shares) of GBP 0.10 (2020: GBP
0.10) each 24,300 24,300
23 TREASURY SHARES
2021 2021 2020 2020
Number USD'000 Number USD'000
As at 1 January 2,027,551 1,363 - -
Acquired in the period -- - 3,868,000 2,600
Issued in the period (note
13) (243,653) (164) (1,840,449) (1,237)
-------------- -------------- -------------- --------------
As at 31 December 1,783,898 1,199 2,027,551 1,363
24 LOAN NOTES
The table below summarises the loan notes:
2021 2020
USD'000 USD'000
As at 1 January 6,471 -
Additions 3,529 6,471
-------------- --------------
As at 31 December 10,000 6,471
Current 10,000 -
Non-current - 6,471
During the year loan notes were issued to retail investors.
These notes carry an annual fixed interest rate of 7.00% (2020:
7.00%) for GBP denominated notes and 7.50% (2020: 7.50%) for USD
denominated notes. The term of the note issuance is up to 24 months
with principal to be repaid as a bullet payment upon maturity.
Interest is paid on a quarterly basis, semi-annual basis, or at
maturity, at the option of the investor. At 31 December 2020, USD
387,000 was included in Other Receivables relating to loan notes
committed but where cash was not yet received. This cash was
received shortly after year end and is included in 2021 proceeds
from borrowings in the statement of cash flows.
25 LEASE LIABILITIES
Movements in the provision recognised in the consolidated
statement of financial position are as follows:
2021 2020
USD'000 USD'000
As at 1 January 4,038 2,834
Additions 2,744 1,768
Interest 527 533
Payments (1,269) (1,097)
-------------- --------------
As at 31 December 6,040 4,038
Current 834 318
Non-current 5,206 3,720
Interest of USD 527,000 (2020: USD 533,000) relating to the
above lease liabilities has been included in Finance Costs for the
year.
As at 31 December the maturity profile of lease liabilities was
as follows:
2021 2020
USD'000 USD'000
3 months or less 102 92
3 to 12 months 732 226
1 to 5 years 2,125 2,000
Over 5 years 3,081 1,720
-------------- --------------
6,040 4,038
The Group had total cash outflows relating to leases of USD
2,577,000 in 2021 (2020: USD 2,209,000). This is the total of
short-term lease payments from note 17 and payments from note
25.
26 EMPLOYEES' OF SERVICE BENEFITS
Movements in the provision recognised in the consolidated
statement of financial position are as follows:
2021 2020
USD'000 USD'000
As at 1 January 517 391
Provided during the year 433 209
End of service benefits paid (219) (83)
-------------- --------------
As at 31 December 731 517
27 TRADE AND OTHER PAYABLES
2021 2020
USD'000 USD'000
Accounts payable 6,478 5,163
Accrued expenses 2,702 1,931
Accrued tax expense 161 182
Customer advances 494 88
-------------- --------------
9,835 7,364
All customer advances recorded at 31 December 2020 were
subsequently recognised as revenue in 2021 and all customer
advances held at 31 December 2021 were subsequently recognised as
revenue in 2022.
28 PROVISIONS
2021 2020
USD'000 USD'000
As at 1 January - -
Provided during the year 1,422 -
-------------- --------------
As at 31 December 1,422 -
Following the March 2021 attack on Palma, Mozambique the Group
began incurring unavoidable costs relating to the Offsite Assets.
It is estimated that these assets will be fully disposed of by
December 2022.
A USD 1,422,000 provision relating to these costs was recorded
in 2021, with the full charge being reflected in the consolidated
statement of comprehensive income.
29 CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
1 January 31 December
2021 Cash flows New leases Other 2021
USD'000 USD'000 USD'000 USD'000 USD'000
Non-current
liabilities
Loan notes 6,471 3,529 - (10,000) -
Lease liabilities 3,720 - 2,184 (698) 5,206
Current liabilities
Loan notes - - - 10,000 10,000
Lease liabilities 318 (1,269) 560 1,225 834
---------------- ---------------- ---------------- ---------------- ----------------
10,509 2,260 2,744 527 16,040
1 January 31 December
2020 Cash flows New leases Other 2020
USD'000 USD'000 USD'000 USD'000 USD'000
Non-current
liabilities
Loan notes - 6,084 - 387 6,471
Lease liabilities 2,397 - 1,642 (319) 3,720
Current liabilities
Loan notes - - - - -
Lease liabilities 437 (1,097) 126 852 318
---------------- ---------------- ---------------- ---------------- ----------------
2,834 4,987 1,768 920 10,509
The 'Other' column includes the effect of reclassification of
non-current portion of leases to current due to the passage of
time, the effect of contracted loan note amounts not yet received,
and the effect of accrued interest not yet paid.
30 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group was not exposed to any
significant interest rate risk on its interest-bearing
liabilities.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group's exposure to the risk
of changes in foreign exchange rates relates primarily to the
Group's operating activities when revenue or expenses are
denominated in a different currency from the Group's functional
currency, as well as cash and cash equivalents held in foreign
currency accounts.
At 31 December 2021, the Group held foreign cash and cash
equivalents of GBP 1,067,000 (USD 1,441,000). Additionally, the
Group held GBP denominated loans of GBP 1,354,000 (USD 1,787,000).
UK pound sterling is primarily held by the Group to settle payment
obligations denominated in GBP. As at 31 December 2020, the Group
held GBP 2,270,000 (USD 3,099,000) and GBP denominated loans of GBP
982,000 (USD 1,341,000).
The Group's exposure to foreign currency variances for all other
currencies is not material.
Credit risk
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. The Group is exposed to credit risk on its
bank balances and receivables.
The Group seeks to limit its credit risk with respect to banks
by only dealing with reputable banks as determined by the CODM and
with respect to customers by only dealing with creditworthy
customers and continuously monitoring outstanding receivables. The
Company's 5 largest customers account for 63% of outstanding
accounts receivable at 31 December 2021 (2020: 54%).
Receivables split by customer
2021 2020
% %
Customer D 21 16
Customer B 17 14
Customer E 14 15
Customer C 8 3
Customer F 6 12
Customer A 5 7
Other 29 33
-------------- --------------
100 100
No material credit risk is deemed to exist due to the nature of
the Group's customers, who are predominantly governments and large
intragovernmental organisations.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group limits
its liquidity risk by ensuring bank facilities are available.
The Group's terms of sale generally require amounts to be paid
within 30 days of the date of sale. Trade payables are settled
depending on the supplier credit terms, which are generally 30 days
from the date of delivery of goods or services.
As at 31 December the maturity profile of trade payables and
loan notes was as follows:
As at 31 December
2021
Less than 3 to 12 3 to 12 12 to 24
3 months Months Months Months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Loan notes - - 10,000 - 10,000
Trade payable 6,478 - - - 6,478
---------------- ---------------- ---------------- ---------------- ----------------
6,478 - 10,000 - 16,478
As at 31 December
2020
Less than 3 to 12 3 to 12 12 to 24
3 months Months Months Months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Loan notes - - - 6,471 6,471
Trade payable 5,163 - - - 5,163
---------------- ---------------- ---------------- ---------------- ----------------
5,163 - - 6,471 11,634
Liabilities falling due within twelve months are recognised as
current on the consolidated statement of financial position.
Liabilities falling due after twelve months are recognised as
non-current.
The unutilised bank overdraft facilities at 31 December 2021
amounted to USD 10,000,000 (2020: USD 2,000,000) and carry interest
of 1m LIBOR +3.50% per annum (2020: 1m LIBOR +3.50%).
The Group manages its liquidity risk by maintaining significant
cash reserves.
The Group's cash and cash equivalents balance is substantially
all held in institutions holding a Moody's long-term deposit rating
of Aa3 or above.
Capital management
The primary objective of the Group's capital management is to
ensure that it maintains a healthy capital ratio in order to
support its business and maximise shareholder value. The Group
manages its capital structure and makes adjustments to it in light
of changes in business conditions.
No changes were made in the objectives, policies, or processes
during the year ended 31 December 2021.
Capital comprises share capital, share premium, merger reserve,
treasury shares, share based payment reserve, and retained earnings
and is measured at USD 37,309,000 as at 31 December 2021 (2020: USD
72,074,000).
31 RELATED PARTY DISCLOSURES
Related parties represent shareholders, directors and key
management personnel of the Group, and entities controlled, jointly
controlled, or significantly influenced by such parties. Pricing
policies and terms of these transactions are approved by the
Group's management.
There were no transactions with related parties during the year
(2020: nil). No outstanding balances with related parties are
included in the consolidated statement of financial position at 31
December 2021 (2020: nil).
32 COMPENSATION
Compensation of key management personnel
The remuneration of key management during the year was as
follows:
2021 2020
USD'000 USD'000
Short-term benefits 1,874 1,734
Stock based compensation 16 1,200
---------------- ----------------
1,890 2,934
The key management personnel comprise of 5 (2020: 6)
individuals. Included in key management personnel are 3 (2020: 3)
Directors.
Compensation of directors
The remuneration of directors during the year was as
follows:
2021 2020
USD'000 USD'000
Short-term benefits 1,611 1,312
Stock based compensation 9 340
-------------- --------------
1,620 1,652
Highest paid director
The remuneration of the highest paid director during the year
was as follows:
2021 2020
USD'000 USD'000
Short-term benefits 490 276
Stock based compensation - 340
-------------- --------------
490 616
The amount disclosed in the tables is the amount recognised as
an expense during the reporting year related to key management
personnel and Directors of the Group.
33 STANDARDS ISSUED BUT NOT YET EFFECTIVE
No other standards and interpretations that are issued, but not
yet effective, up to the date of issuance of the Group's financial
statements are expected to have a material impact on the Group.
34 SUBSEQUENT EVENTS
During May 2022, the Group completed a refinancing and
fundraising exercise. The purpose of the exercise was to
synchronise and extend the maturity of the USD 10m of loan notes
issued by the Group during 2020 and 2021, which were due to mature
in the second half of 2022.
A total of USD 12.0m in loan notes were issued to retail
investors. These notes carry an annual fixed interest rate of 7.50%
for GBP denominated notes and 8.00% for USD denominated notes.
The term of the note issuance is 30 months with principal to be
repaid as a bullet payment upon maturity in November 2024. Interest
is paid on a quarterly basis.
Of the USD 12.0m notes issued, USD 8.4m relates to a refinancing
of notes outstanding at 31 December 2021 and USD 3.6m relates to
new investment.
Notes outstanding at 31 December 2021 which were not refinanced
as part of the May 2022 issuance will be repaid in the second half
of 2022 as per the original maturity date
COMPANY STATEMENT OF FINANCIAL POSITION
2021 2020
Notes USD'000 USD'000
Assets
Non-current assets
Investments 50,047 50,047
-------------- --------------
Current assets
Trade and other receivables 4 5,754 8,009
Cash and cash equivalents 113 933
-------------- --------------
5,867 8,942
-------------- --------------
Total assets 55,914 58,989
Equity and liabilities
Equity
Share capital 5 24,300 24,300
Share premium 18,254 18,254
Merger reserve 9,897 9,897
Treasury shares 6 (1,199) (1,363)
Share based payment reserve 534 177
Retained earnings 3,819 7,578
-------------- --------------
Total equity 55,605 58,843
-------------- --------------
Current liabilities
Trade and other payables 7 309 146
-------------- --------------
Total equity and liabilities 55,914 58,989
As at 31 December 2021
The Company has taken the exemption conferred by Section 408 of
the Companies Act 2006 not to publish the profit and loss of the
parent company within these accounts. The result for the Company
for the year was a loss of USD 553,000 (2020: USD 536,000).
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Share
Based
Share Share Merger Treasury Payment Retained
Capital Premium Reserve Shares Reserve Earnings Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1
January
2020 24,300 18,254 9,897 - 47 10,788 63,286
Total
comprehensive
income for
the period - - - - - (536) (536)
Share based
payments - - - - 130 - 130
Dividends
declared
and paid - - - - - (2,674) (2,674)
Purchase
of treasury
shares (note
6) - - - (2,600) - - (2,600)
Issuance
of treasury
shares (note
6) - - - 1,237 - - 1,237
-------------- -------------- -------------- -------------- -------------- -------------- --------------
As at 31
December
2020 24,300 18,254 9,897 (1,363) 177 7,578 58,843
Total
comprehensive
income for
the period - - - - - (553) (553)
Share based
payments 487 487
Dividends
declared
and paid - - - - - (3,206) (3,206)
Issuance
of treasury
shares (note
6) - - - 164 (130) - 34
-------------- -------------- -------------- -------------- -------------- -------------- --------------
As at 31
December
2021 24,300 18,254 9,897 (1,199) 534 3,819 55,605
The attached notes 1 to 8 form part of the Financial
Statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2021
1 BASIS OF PREPARATION
The financial statements have been prepared in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and the
Companies Act 2006), including
Financial Reporting Standard 101 "Reduced Disclosure Framework"
("FRS 101") under the historical cost
basis and have been presented in USD, being the functional
currency of the Company.
The Company has applied a number of exemptions available under
FRS 101. Specifically, the requirement(s) of:
(a) paragraphs 91-99 of IFRS 13 "Fair Value Measurement",
(b) paragraph 38 of IAS 1 "Presentation of Financial Statements"
to present comparative information in respect of paragraph
79(a)(iv) of IAS 1,
(c) paragraphs 10(d), 10(f), and 134-136 of IAS 1 "Presentation
of Financial Statements",
(d) IAS 7 "Statement of Cash Flows",
(e) 30 and 31 of IAS 8 "Accounting Policies, Changes in
Accounting Estimates and Errors",
(f) 17 of IAS 24 "Related Party Disclosures" and IAS 24 Related
Party Disclosures to disclose related party transactions entered
into between two or more members of a group, provided that any
subsidiary which is a party to the transaction is wholly owned by
such a member, and
(g) paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36
"Impairment of Assets".
2 SIGNIFICANT ACCOUNTING POLICIES
Except noted below, all accounting policies applied to the
Company are consistent with that of the Group.
Investments
Investments held by the company are stated at cost less
provision for diminution in value.
3 EMPLOYEE EXPENSES
The average number of employees employed during the period
was:
2021 2020
Directors 7 7
The aggregate remuneration of the above employees was:
2021 2020
USD'000 USD'000
Wages and salaries 469 410
Social security costs 53 46
-------------- --------------
522 456
4 TRADE AND OTHER RECEIVABLES
2021 2020
USD'000 USD'000
Prepayments 18 83
Due from subsidiary 5,703 7,878
VAT recoverable 33 48
-------------- --------------
5,754 8,009
Amounts due from subsidiary represent amounts due from RA
International FZCO, an immediate subsidiary, and are non-interest
bearing and payable on demand.
5 SHARE CAPITAL
2021 2021 2020 2020
Number USD'000 Number USD'000
Authorised, issued, and fully
paid:
Ordinary shares of GBP 0.10
each 173,575,741 24,300 173,575,741 24,300
6 TREASURY SHARES
2021 2021 2020 2020
Number USD'000 Number USD'000
As at 1 January 2,027,501 1,363 - -
Acquired in the period - - 3,868,000 2,600
Issued in the period (243,653) (164) (1,840,499) (1,237)
---------------- ---------------- ---------------- ----------------
As at 31 December 1,783,898 1,199 2,027,551 1,363
7 TRADE AND OTHER PAYABLES
2021 2020
USD'000 USD'000
Trade payables 146 44
Accruals 163 102
-------------- --------------
309 146
8 RELATED PARTY TRANSACTIONS
The Directors have taken advantage of the exemption under
paragraph 8(j) and 8(k) of FRS 101 and have not disclosed
transactions with other wholly owned Group undertakings. There are
no other related party transactions.
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END
FR UNVVRUOUVURR
(END) Dow Jones Newswires
May 26, 2022 02:01 ET (06:01 GMT)
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