TIDMRAI
RNS Number : 6900V
RA International Group PLC
10 April 2019
10 April 2019
RA INTERNATIONAL GROUP PLC
("RA International" or the "Company" and, together with its
subsidiaries, the "Group")
Results for the year-ended 31 December 2018
Year of progress; continued expansion and diversification
RA International Group PLC (AIM: RAI), a leading provider of
services to remote locations in Africa and the Middle East, is
pleased to announce its results for the year ended 31 December
2018.
2018 2017 Change
USD'000 USD'000
Restated(1)
Revenue 54,805 51,215 +7%
Underlying profit(2) 13,252 12,471 +6%
Profit (after exceptional items) 9,954 12,471 (20%)
Normalised EPS (cents)(3) 8.4 8.9
Basic EPS (cents) 6.3 8.9
Net Cash (end of period)(4) 27,804 5,602
Financial highlights
-- Admission to AIM on 29 June 2018 raised gross proceeds of
GBP18.8m (approximately USD 24.7m)
-- Full year revenue increased 7% to USD 54.8m (2017: USD 51.2m)
-- Underlying profit increased by 6% to USD 13.3m (2017: USD
12.5m) on margin of 24% (2017: 24%)
-- Profit decreased to USD10.0m (2017: 12.4m) as a result of USD
3.3m in exceptional items being charged in the period, primarily
relating to the IPO
-- Cash of USD 27.8m (2017: USD 5.6m) and no debt as at 31 December 2018
-- Proposed final full year maiden dividend of 1.0p per share
Operational highlights
-- Strong progress across all strategic objectives
-- Significant contracts awarded in the year:
o USD 19.9m contract with UNICEF to provide accommodation and
office services, recently uplifted to USD 22.8m
o USD 30.4m contract with United Nations Support Office in
Somalia to construct power infrastructure
o USD 9.1m contract with URS Group, a subsidiary of AECOM, to
construct a runway
o USD 5.6m contract with a large US company to provide support
services in Central Africa
o USD 5.6m contract with UK MOD for construction and IFM
services in Oman
-- Contracted revenue backlog of USD 119m (2017: USD 112m) at
year end and awaiting award notification on a number of large
bids
-- Average contract term of 4.4 years (2017: 4.0 years) when weighted by contract value
-- Significantly expanded operations; entering Mali, Oman, and
Sudan and executing projects in 9 countries during the year (2017:
6)
-- Increased the capacity and capability of our management and
administrative teams through adding a number of senior hires
-- Established a group Project Management Office in Nairobi in
readiness for future growth and to support multiple large-scale
projects
-- The credibility gained from the Admission to AIM has led to
invitations to bid for opportunities which were previously
unavailable to us, both from existing and new customers
Post year end highlights and Outlook
-- Significantly expanded operating footprint in Mozambique
through the purchase of a 49% interest in Royal Food Solutions S.A
and the acquisition of land to develop a large camp facility
-- Signed a Master Service Agreement with IAP Worldwide Services
to provide global supply chain services. The first order is for USD
8.5m and relates to sub-Saharan Africa
-- Awarded a number of new contracts and contract extensions;
contracted revenue backlog is now USD 130m, providing a sound
platform for growth
-- 2019 revenue expected to grow by approximately 10%
-- Several large bids with humanitarian and commercial
organisations are in progress, some of which are transformational
in nature. Due to longer sales cycles, the Company is not currently
anticipating significant revenue generation from these projects in
2019
Soraya Narfeldt, Chief Executive Officer, commented:
"2018 was a year of progress for the Group as we secured the
additional funding required to achieve our strategic objectives and
take our business to the next stage of growth. We are proud to have
achieved a successful listing on AIM and look forward to creating
value for our shareholders in the next phase of the business's
development.
"The progress delivered during the year was underpinned by our
focus on diversifying our geographic presence, strengthening our
customer base and broadening the mix of services we offer our
clients. As a result, we have been awarded significant contracts
during the period, and are now well positioned to take on larger
bids.
The Board believes that the prospects for RA are as strong as
ever and remains confident that the Group's momentum will continue
throughout 2019 and we look forward to another year of
progress."
Notes to summary table of financial results:
(1)Comparative financial information has been restated
following adoption of IFRS 15.
(2)Underlying profit represents profit before non-reoccurring
exceptional items and unrealised FX charges.
(3)Normalised earning per share represents basic earnings
per share excluding exceptional items and unrealised
FX charges.
(4) Net cash represents the end of period cash balance
less term loans and notes outstanding.
* * * * *
Enquiries:
RA International Group PLC Via Hudson Sandler
Soraya Narfeldt, Chief Executive Officer
Lars Narfeldt, Chief Operating Officer
Andrew Bolter, Chief Financial Officer
Cenkos Securities PLC (Nominated Adviser
and Broker)
Beth McKiernan +44 (0)131 220
Derrick Lee 6939
Hudson Sandler LLP (Financial PR & IR) +44 (0)207 796
Daniel de Belder 4133
Nelly Akpaka rainternational@hudsonsandler.com
About RA International
RA International is a leading provider of services in remote
locations across Africa and the Middle East. It specialises in
three service channels: construction; integrated facilities
management; and supply chain. It has a strong and loyal customer
base, largely comprising UN agencies, western governments and
global corporations.
The Group provides comprehensive, flexible, mission critical
support to its clients enabling them to focus on the delivery of
their respective businesses and services. RA International's focus
on integrity and values alongside on-going investment in people,
locations and operations has over time created a reliable and
trusted brand within its sector.
CHAIRMAN'S STATEMENT
Overview
In my first statement since the Company's Admission to AIM, in
mid-2018, I am pleased to report that RA International has made
strong progress and has delivered a solid performance in its first
year on market.
Results
For the year ended 31 December 2018, underlying profit increased
by 6.3% to USD 13.3m on revenues of USD 54.8m (2017: USD
51.2m).
The contracted revenue backlog as at 31 December 2018 was USD
119m compared to USD 112m the previous year.
Placing and balance sheet
In June 2018, the Company completed a placing to raise USD 21.4m
(after expenses) alongside the Company's Admission to trading on
AIM. With a strengthened balance sheet the Company is well placed
to commence bidding on larger and longer-term contracts in line
with our strategy. Since Admission to AIM the Board has been
encouraged by the positive feedback, from existing and potential
customers, on the Company's PLC-status and the opportunities this
has provided.
As a result of the above activity, net cash at 31 December 2018
was USD 27.8m and net assets were USD 59.2m.
Governance
Given the nature of RA's business, the Board is committed to the
maintenance and continuous review of the highest of compliance and
governance standards. As a service provider to the UN and western
governments, RA International is required to have a strict level of
policies and procedures in place in order to secure contracts.
Since Admission, RA International has adhered to the QCA Corporate
Governance Code which the Directors feel is appropriate to the
Company's size and structure and published our first Sustainability
Report. More information can be found in the Corporate Governance
section on our website.
People
RA International employs over 2,000 people across Africa and the
Middle East. Whenever possible, our goal is to recruit and develop
the skills of the local communities. Over the years we have seen
local employee participation increase to 69% across our operation,
contributing significantly to successful service delivery. This is
a trend we want to continue, as it is both good for our business
and the wider communities in which we work. Our international staff
are often deployed as a means to recruit and develop local people
towards an eventual handover. Undoubtedly the key asset of RA lies
in its people: I would like to thank all our people for their
unstinting dedication and support in helping us to build strong
communities.
Dividend
As stated in the Admission Document, the Directors intend to
adopt a progressive dividend policy whilst retaining sufficient
capital to meet both the working capital needs of the business and
to fund continued growth. The Directors remain confident in the
Company's ability to deliver its strategy and, as such, propose a
maiden full year dividend of 1.0p per share to be paid on July 3,
2019 to the shareholders on the register as at May 24, 2019. The
ex-dividend date in May 23, 2019.
Sangita Shah
Chairman
CHIEF EXECUTIVE OFFICER'S OPERATING REVIEW
We made strong progress across our strategic objectives during
the year. These are to:
-- Broaden our customer base
-- Diversify our geographic reach
-- Target longer-term contracts
-- Cross-sell our services to new and existing customers
Contracts
Our strengthened balance sheet, following our Admission to AIM
in June 2018, enabled us to bid for larger and longer-term
contracts. The average contract value at 31 December 2018 was USD
7.2m with an average duration of 4.4 years when weighted by
contract value.
We have increased geographical presence; the Company executed
projects in 9 countries in 2018 compared to 6 in 2017; entering
Mali, Oman, and Sudan. In addition, we increased revenue from
Government and Commercial customers. Together, revenue from these
clients made up almost 40% of our total revenue in 2018 compared to
less than 30% a year ago.
Having advocated the benefits of a 'one-supplier' model for
years, we have now started to see significant demand for 'hybrid'
projects where we may perform services from two or more of our
service channels. Examples include recent projects executed for
UNICEF and the UK MOD. There are significant efficiencies which can
be passed on to the client when remote site operators are able to
seamlessly transition from construction to providing IFM services.
We continue to advocate this delivery model and have structured our
organisation in a way which best allows us to build infrastructure
and take care of the occupying tenants.
Despite seeing an increase in the size and complexity of our
contracts, our delivery record remains excellent, reflecting our
commitment to delivering our projects on time and to a high
standard. Our growth model continues to be "customer led" and, in
addition to targeting new customers, our focus remains on ensuring
we meet the needs of existing clients. We secured significant new
contracts and contract renewals from the UN. Most notable amongst
these was a 5-year contract with UNICEF which has recently been
uplifted to USD 22.8m, and a USD 30m power infrastructure project
with the United Nations Support Office in Somalia.
As at 31 December 2018 the company reported a backlog revenue of
USD 119m compared to USD 112m the previous year.
At our half year we outlined our strategy for US Government
contracts, whereby we partner with US companies in order to support
them winning work across the African continent. Our strategy has
started to produce results, with two large and strategically
important, contracts awarded with new clients in the second half of
2018.
The first was a USD 9.1m contract awarded by URS Group, Inc., a
subsidiary of AECOM, to provide construction services in Somalia
repairing an asphalt runway for the US Naval Facilities Engineering
Command. In December, we announced a second contract with a large
US company, to provide support services in connection to
strengthening the capacity of local security sector institutions in
a Central African country, on behalf of the US Government.
New business opportunities
The credibility gained and strengthened balance sheet resulting
from the Admission to AIM has led to invitations to bid for
opportunities which were previously unavailable to us, both from
existing and new customers.
The biggest uplift is in the commercial sector, particularly
from mining and oil & gas companies where we are bidding for a
number of large construction and service projects. Becoming a UK
quoted company has also strengthened RA International's position
when bidding for UK Government contracts, as evidenced by our
increasing work from the MOD and FCO.
While our revenue backlog and bid pipeline is larger than ever
before, many of the tenders now have longer preparation and
adjudication periods and many involve several counterparties (such
as where we are a subcontractor to a US company). Contract awards
are, therefore, taking longer than originally anticipated but we
remain confident that our strategy will deliver great value to our
stakeholders.
Operations
During the year we initiated operations in Sudan, Mali and Oman
and increased our presence in the Central African Republic.
Additionally, we recently, announced that we have significantly
expanded operations in Mozambique, having acquired a 49% stake in a
well-established local integrated facilities management company and
a 150,000 m(2) parcel of land in the North of the country. Our plan
is to construct a large, fully integrated and serviced camp in
order to support upcoming gas projects in the region, and we are in
the process of securing potential anchor tenants. The project is an
example of one approach we are taking to further target new
opportunities.
Our goal is to recruit and develop local people whenever it is
practical to do so. Local labour participation is one of our key
performance indicators and has grown consistently over the years.
In 2018 local hires accounted for 69% of total employees compared
to 67% in 2017, and 63% in 2016. As we enter new territories, we
often need to bring in staff from oustide if the necessary skills
are not available on the ground. This may cause variations in the
percentage of local labour we employ until the required training
and handover is complete.
In late 2017 we identified that we needed to scale-up and build
a robust back-office function. This was driven by our ambition to
deliver more large projects simultaneously, coupled with the
significant reporting requirements of our customers and internal
compliance requirements. As a result, in 2018 the Company's
processes were structured so as to have an enabling function and a
delivery function. To establish the delivery function, a project
management office (PMO) was established in Nairobi that is
responsible for implementing contracts. Deputy Country Managers
report into the PMO and are responsible for project delivery in our
operational areas. The enabling office is managed from Dubai and
includes finance, HR, procurement, business development,
communications, strategy, compliance and other senior level roles.
To support these functions and strengthen the management team we
made a number of key senior level appointments in 2018.
On 1 January 2019 William Warnock joined the executive
management team as Director of US Business Development, having
worked previously with RA International as a consultant. CAPT
Warnock has been instrumental in enabling the Company's transition
to United States Government (USG) business practises and is
responsible for expanding RA International's client base to USG
organisations and contractors operating in Africa. He communicates
directly with the CEO on project development and provides
recommendations for strategic investments. In addition, he
continues to leverage his expertise as the former defence attaché
assigned to the US Mission Somalia.
Outlook
We remain focused on our strategic objectives as we work to
deliver on our rising backlog of contracts (presently USD 130
million). During the year, we streamlined our operations to three
service offerings, construction, integrated facilities management
and supply chain.
We aim to execute our strategy through four independent
pillars:
-- Broaden our customer base
-- Diversify our geographic reach
-- Target longer-term contracts
-- Cross-sell our services to new and existing customers
We continue to see strong business opportunities in the
government sector and expect US and UK Government work to continue
to increase as a portion of our overall revenue. We also anticipate
strong growth from our Supply Chain service channel as we continue
to bid on larger projects.
We continue to target work from commercial clients and have a
number of large bids outstanding relating to the mining sector.
Additionally, we have recently expanded into Mozambique to further
target work from the oil & gas industry. Given the longer sales
cycle involved when compared with Humanitarian or Government
projects, we are not anticipating significant revenue generation
from these projects in 2019 but are still expecting growth in
revenue from commercial customers.
The Company is in a stronger position now than it was a year
ago, and there are currently many large bids outstanding on which
we are awaiting notification and where we are very well positioned
to capitalise on our reputation for reliability and can-do
approach. Many of the bids outstanding are transformational in
nature and significance and while we await notice of awards we
continue to bid on similar opportunities.
FINANCIAL REVIEW
Overview
Financial performance for the fiscal year ended 2018 is broadly
in line with our expectations. The Group reported revenue and
underlying profit of USD 54.8m and USD 13.3m, representing an
increase of 7.0% and 6.3% respectively when compared with the prior
year. Statutory profit was USD 10.0m (2017: 12.4m) and includes USD
3.3m of non-reoccurring exceptional items relating to the Admission
to AIM and unrealised FX charges.
Underlying operating profit, which is used by the Group's
management to assess operating performance, grew by 4.6% to USD
14.2m (2017: USD 13.6m).
2018 2017
USD'000 USD'000
Restated(1)
Revenue 54,805 51,215
Underlying operating profit(2) 14,212 13,585
Underlying profit(2) 13,252 12,471
Profit (after exceptional items) 9,954 12,471
Normalised EPS (cents)(2) 8.4 8.9
Basic EPS (cents) 6.3 8.9
Net Cash (end of period)(2) 27,804 5,602
Revenue
Despite the Company experiencing delays in the commencement of
several projects in late 2018, the USD 28.7m revenue reported in
the second half of 2018 represents the highest half-year revenue
total reported by the Group since its formation in 2004.
As indicated in the interim financial review, the Group does not
experience seasonality, but it does frequently execute short term
contracts (STCs) which often have a significant effect on revenue
and profitability in a given quarter or half-year period. The Group
reported revenue from STCs of USD 8.3m in 2018 compared with USD
7.0m in 2017. As the Group continues to secure higher value,
longer-term contracts, it is expected that the effect of STCs will
diminish.
Profit
Gross profit margin in 2018 decreased slightly to 37.7% (2017:
38.9%) resulting from a decrease in cost reimbursements received
relating to prior periods. In connection with implementing IFRS 15
in 2018, the Group has reclassified non-contracted cost
reimbursements to direct costs whereas in the past these payments
were recorded as other income. It is not expected that the value of
non-contracted cost reimbursements will be significant in future
periods. Excluding cost reimbursements, gross margin was consistent
at 37.0% for both periods.
Underlying profit increased by 6.3% to USD 13.3m in 2018 (2017:
USD 12.5m) and underlying margin was broadly consistent across the
current and prior period at 24.2% and 24.4% respectively despite
the impact of non-contacted cost reimbursements.
Exceptional items
Exceptional items of USD 2.9m were recorded as costs for the
year. These items represent expenses incurred in relation to the
Company's Admission to AIM, which in accordance with international
accounting standards, are presented as expenses in the income
statement. Within the accounts, exceptional items are split into
two categories: advisory fees and other costs associated with the
Admission totalled USD 1.3m and stock-based compensation totalled
USD 1.6m. The stock-based compensation charge relates to the
transfer of shares by the majority shareholder of the Company to
certain employees at the AIM Admission date. While the Company was
not a party to this transfer, IFRS mandates that the transaction be
accounted for as a cost on the date of the share grant. The
transfer of shares was conditional on the Company's successful
Admission to AIM.
Earnings Per Share
On June 29, 2018 the Company listed on AIM and issued 33,575,741
new shares representing a 24.0% increase in total shares
outstanding.
Normalised earnings per share for 2018 both basic and diluted,
was 8.4 cents per share (2017: 8.9 cents per share). Basic earnings
per share, both basic and diluted, was 6.3 cents per share (2017:
8.9 cents per share).
Cashflow
The Company targets a 100% cash conversion ratio but significant
increases in operational activity, such as mobilising for material
contracts, may lead to short-term divergences.
Net cash flow from operations in the year was USD 10.9m (2017:
USD 12.5m) which represents 80.1% cash conversion (2017: 92.0%).
The primary factors contributing to the differential were:
1) A build-up of trade receivables, primarily from UN agencies:
trade receivables were USD 10.0m at 31 December 2018, USD 3.8m
higher than at December 31, 2017. The Group received payments
totalling USD 3.5m within the first half of January 2019 including
payment of 55.3% of receivables overdue at 31 December 2018.
2) Increased inventory due to project mobilisation: inventory
balances increased USD 1.6m from 31 December 2017 resulting from
higher levels of inventory on site and in-transit relating to
construction works being undertaken in the Central African Republic
(CAR) for MINUSCA and the execution of projects in Somalia;
specifically, the construction of power infrastructure for UNSOS
and a conference centre being built for the use of UNICEF and other
customers.
Balance Sheet
Net of share issuance and AIM Admission costs, the Group raised
USD 21.4m in proceeds. Net cash increased to USD 27.8m at 31
December 2018 (2017: USD 5.6m) and the Group repaid all debt
balances in 2018.
Liquidity and net cash are often assessed by potential customers
during the contract adjudication process. The completion of the
Admission to AIM and related fundraising was a milestone for the
Group in that it now qualifies to bid for larger projects and has
the financial capacity to mobilize for multiple large projects
simultaneously. Net assets at 31 December 2018 were USD 59.2m with
the majority of the total balance sheet comprising cash and other
current assets.
The Group continues to invest in revenue generating fixed
assets, investing over USD 4 million to upgrade and expand its camp
facilities to accommodate UNICEF and other customers contracting
with the Group for accommodation services.
Other investment initiatives include:
-- The purchase and mobilisation of a fleet of heavy-duty trucks
in CAR to greater improve our operating capability and efficiency
in the country.
-- Water purification equipment which once installed will
distribute drinking water throughout our facilities in Mogadishu,
removing the need for single-use water bottles.
-- Upgrading certain construction equipment to be used in
connection with the URS construction contract and other upcoming
projects.
-- Purchasing a 400-man tented camp which was leased to a client
in 2018 and is being repurposed in connection with another project
commencing in 2019.
Dividend
The Directors have proposed a maiden full year dividend of 1.0p
per share to be paid to shareholders on the register as at May 24,
2019. The ex-dividend date in May 23, 2019.
1 Comparative financial information has been restated following
adoption of IFRS 15. Further details can be found within Note 5 of
the consolidated financial statements and accompanying notes.
(2) Full definitions and explanations of the purpose and
usefulness of each non-IFRS Alternative Performance Measure used by
the Group can be found within Note 18 of the consolidated financial
statements and accompanying notes.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2018
2018 2017
Notes USD'000 USD'000
Restated
Revenue 7 54,805 51,215
Direct costs 11 (34,168) (31,268)
---------------- ----------------
Gross profit 20,637 19,947
Administrative expenses 11 (6,425) (6,362)
---------------- ----------------
Underlying operating profit 14,212 13,585
Acquisition costs (82) -
Holding company expenses (505) -
---------------- ----------------
Operating profit 13,625 13,585
Investment revenue 34 -
Finance costs (407) (1,114)
---------------- ----------------
Underlying profit 13,252 12,471
Unrealised differences on translation of
foreign balances (364) (46)
Exceptional items 13 (2,934) -
---------------- ----------------
Profit and total comprehensive income for
the period 9,954 12,425
Basic and diluted earnings per share (cents) 15 6.3 8.9
Normalised basic and diluted earnings per
share (cents) 15 8.4 8.9
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2018
2018 2017
Notes USD'000 USD'000
Restated
Assets
Non-current assets
Property, plant, and equipment 19 16,395 9,170
---------------- ----------------
Current assets
Inventories 20 4,263 2,660
Trade and other receivables 21 15,962 12,669
Cash and cash equivalents 22 27,804 7,469
---------------- ----------------
48,029 22,798
---------------- ----------------
Total assets 64,424 31,968
Equity and liabilities
Equity
Share capital 23 24,300 272
Additional contributed capital 23 - 1,809
Share premium 18,254 -
Merger reserve (17,803) -
Share based payment reserve 16 -
Retained earnings 34,427 23,020
---------------- ----------------
Total equity 59,194 25,101
---------------- ----------------
Non-current liabilities
Term loans and notes 24 - 6
Employees' end of service benefits 25 350 251
---------------- ----------------
350 257
---------------- ----------------
Current liabilities
Term loans and notes 24 - 1,861
Trade and other payables 26 4,880 4,749
---------------- ----------------
4,880 6,610
---------------- ----------------
Total liabilities 5,230 6,867
---------------- ----------------
Total equity and liabilities 64,424 31,968
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2018
Share
Additional Based
Share Contributed Share Merger Payment Retained
Capital Capital Premium Reserve(*) Reserve Earnings Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 1
January
2017 272 1,809 - - - 11,370 13,451
Total
comprehensive
income for
the
period(**) - - - - - 12,425 12,425
Dividends
declared
and paid
(note 17) - - - - - (775) (775)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 31
December
2017 272 1,809 - - - 23,020 25,101
Total
comprehensive
income for
the period - - - - - 9,954 9,954
Share exchange
(note 8) 19,612 (1,809) - (17,803) - - -
Issue of
share capital
(note 8) 4,416 - 18,254 - - - 22,670
Non-cash
employee
compensation
(note 16) - - - - - 1,578 1,578
Share based
payments
(note 16) - - - - 16 - 16
Dividends
declared
and paid
(note 17) - - - - - (125) (125)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
As at 31
December
2018 24,300 - 18,254 (17,803) 16 34,427 59,194
(*) Merger reserve represents the difference between the share
capital of RA International FZCO and the nominal value of the
shares issued by the Company to acquire RA International FZCO (note
8).
(**) Total comprehensive income recognised in 2017 has been
restated due to the adoption of IFRS 15 (note 5).
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2018
2018 2017
Notes USD'000 USD'000
Restated
Operating activities
Profit for the period 9,954 12,425
Adjustments for non-cash and other items:
Depreciation on property, plant, and
equipment 19 1,310 935
Loss on disposal of property, plant,
and equipment 19 120 163
Amortisation of intangible assets - 17
Investment revenue (34) -
Finance costs 407 1,114
Unrealised differences on translation
of foreign balances 364 46
Provision for employees' end of service
benefits 25 116 283
Share based payments 16 16 -
Exceptional items 13 2,934 -
---------------- ----------------
15,187 14,983
Working capital adjustments:
Inventories (1,587) 685
Accounts receivable, deposits, and
other receivables (2,627) (2,589)
Accounts payable and accruals (58) (580)
---------------- ----------------
Cash flows generated from operations 10,915 12,499
Employees' end of service benefits
paid 25 (17) (221)
Stock-based compensation and related
costs 16 (24) -
---------------- ----------------
Net cash flows from operating activities 10,874 12,278
---------------- ----------------
Investing activities
Release / (deposit) of cash margin against
guarantees issued 22 2,000 (2,000)
Deposits under lien released during
the year 22 - 201
Purchase of property, plant, and equipment 19 (8,683) (3,405)
Proceeds from disposal of property,
plant, and equipment 19 97 23
Acquisition of subsidiary (net of cash
acquired) 10 (565) -
---------------- ----------------
Net cash flows used in investing activities (7,151) (5,181)
---------------- ----------------
Financing activities
Repayment of term loans and notes 24 (1,867) (3,160)
Proceeds from term loans and notes 24 - 2,432
Investment revenue received 34 -
Finance costs paid (406) (1,114)
Dividends paid 17 (125) (775)
Share listing costs 8 (1,332) -
Issue of share capital (net of issue
costs paid) 8 22,672 -
---------------- ----------------
Net cash flows from / (used in) financing
activities 18,976 (2,617)
---------------- ----------------
Net increase in cash and cash equivalents 22,699 4,480
Cash and cash equivalents as at start
of the period 22 5,469 1,035
Effect of foreign exchange on cash and
cash equivalents (364) (46)
---------------- ----------------
Cash and cash equivalents as at end
of the period 22 27,804 5,469
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2018
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. The
Company acquired, by way of a share for share exchange (the
"Exchange") the entire issued share capital of RA International
FZCO and its subsidiaries ("RA") on 12 April 2018. The Group
reorganisation is treated as a common control transaction, for
which there is no specific accounting guidance under IFRS.
Consequently, the integration of the Company has been accounted for
using merger accounting principles. The policy, which does not
conflict with International Financial Reporting Standards (IFRS),
reflects the economic substance of the transaction.
The adoption of merger accounting presents the Company as if it
had always been the parent of the Group. As the Company was not
incorporated until 13 March 2018, the financial statements of the
Group represent a continuation of the financial statements of RA
International FZCO, the former parent of the Group. Comparative
information presented in these financial statements, relate to that
of RA, not the Group.
2 BASIS OF PREPARATION
The financial statements have been prepared in accordance with
IFRS as issued by the International Accounting Standards Board
(IASB) as adopted by the European Union and the Companies Act 2006.
They have been prepared under the historical cost basis and have
been presented in United States Dollars (USD), being the functional
currency of the Company.
The financial information set out in this preliminary
announcement does not constitute the Group's statutory accounts for
the years ended 31 December 2018 or 2017 but is derived from those
accounts. Statutory accounts for the year ended 31 December 2018
will be delivered to the Registrar of companies in due course. The
auditor has reported on the accounts; its report was 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.
3 BASIS OF CONSOLIDATION
The financial statements comprise the financial statements of
the Company and its subsidiaries as at 31 December 2018. 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 administrative expenses.
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
Revenue from the sale of goods is recognised when the
significant risks and rewards of ownership of the goods have passed
to the buyer, usually on delivery of the goods.
Construction
Revenue from construction contracts is recognised at a point in
time when performance obligations have been met.
Services
Revenue from rendering of services is recognised over time,
using the output method to measure progress towards complete
satisfaction of the service.
Interest income
Interest income is 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.
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.
Taxation
Current tax expense is based on taxable profit for the year and
is recognised in profit or loss. Taxable profit may differ from net
profit reported in the statement of comprehensive income because it
excludes items of income and expense that are taxable or deductible
in other years, and it excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by
the statement of financial position date.
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 as follows:
Buildings Lesser of 20 years and term
of land lease
Leasehold improvements 10 years or term of lease
Furniture and fixtures 5 years
Shipping containers 20 years
IT equipment 5 years
Tools and equipment 5 to 10 years
Motor vehicles 10 years
The carrying values of property, plant, and equipment are
reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable. If any
such indication exists and where the carrying values exceed the
estimated recoverable amount, the assets are written down, with the
write down recorded in profit or loss to their recoverable amount,
being the greater of their fair value less costs to sell and their
value in use.
Expenditure incurred to replace a component of an item of
property, plant, and equipment that is accounted for separately is
capitalised and the carrying amount of the component that is
replaced is written off. Other subsequent expenditure is
capitalised only when it increases future economic benefits of the
related item of property, plant, and equipment. All other
expenditure is recognised in profit or loss as the expense is
incurred.
An item of property, plant, and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and
carrying amount of the asset) is included in the profit or loss in
the year the asset is derecognised.
Assets' residual values, useful lives, and methods of
depreciation are reviewed at each financial year end, and adjusted
prospectively, if appropriate.
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
uses the weighted average method. Net realisable value is based on
estimated selling price less any further costs expected to be
incurred in disposal.
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
cash-generating units 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.
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.
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
12-months (a 12-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.
A financial asset is deemed to be impaired 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.
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.
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 borrowings
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.
Employees' end of service benefits
The Group provides end of service benefits to its employees in
accordance with local labour laws. The entitlement to these
benefits is based upon the employees' final salary and length of
service, subject to the completion of a minimum service period. The
expected costs of these benefits are accrued over the period of
employment.
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 given in note 16.
That cost is recognised in employee benefits expense, 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.
Leases
Leases where the lessor retains substantially all the risks and
benefits of ownership of the asset are classified as operating
leases. Operating lease payments are recognised as an expense in
the consolidated statement of comprehensive income on a
straight-line basis over the lease term.
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
The Group applied IFRS 15 for the first time, using a fully
retrospective approach. The nature and effect of the changes as a
result of the adoption of this new accounting standard are
described below.
Several other amendments and interpretations apply for the first
time in 2018, such as IFRS 9 Financial Instruments. Following
assessment, there were no reclassifications or estimated credit
losses and therefore the adoption of IFRS 9 did 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.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18
Revenue, and related interpretations. It applies, with limited
exceptions, to all revenue arising from contracts with customers.
IFRS 15 establishes a five-step model to account for revenue
arising from contracts with customers and requires that revenue be
recognised at an amount that reflects the consideration to which an
entity expects to be entitled in exchange for transferring goods or
services to a customer.
IFRS 15 requires entities to exercise judgement, taking into
consideration all relevant facts and circumstances when applying
each step of the model to contracts with their customers. Where
deemed appropriate, the Group will utilise the practical expedient
within IFRS15, allowing revenue to be recognised at the amount
which the Group has the right to invoice, where that amount
corresponds directly with the value to the customer of the Group's
performance completed to date.
The standard also specifies the accounting for the incremental
costs of obtaining a contract and the costs directly related to
fulfilling a contract. In addition, the standard requires extensive
disclosures.
The Group is principally engaged in construction, integrated
facilities management, and supply chain services in demanding and
remote areas.
For contracts with customers in which the sale of goods is
generally the only performance obligation, adoption of IFRS 15 does
not have any significant impact on the Group's revenue and profit
or loss. The Group's revenue recognition occurs at a point in time
when control of the asset is transferred to the customer, generally
on delivery of the goods.
With respect to services income, services are satisfied over
time given that the customer simultaneously receives and consumes
the benefits provided by the Group. Consequently, under IFRS 15 the
Group continues to recognise revenue for these service contracts
and the service components of hybrid contracts over time rather
than at a point of time.
(a) Construction revenue
Before the adoption of IFRS 15, all construction revenue was
recognised using the percentage of completion method. When
performing a review of contracts in connection with the
implementation of IFRS 15, the Group assessed that certain
contracts contained specific performance obligations that were
required to be met before revenue could be recognised in accordance
with the requirements of the new standard. As a result, revenue
reported in 2017 decreased by USD 2,188,000. There was a
corresponding increase in customer advances of USD 780,000, a
decrease in accrued revenue of USD 1,367,000 and a decrease in
retention receivables of USD 41,000. A decrease in direct costs of
USD 939,000 was also recognised, together with the corresponding
increase in prepayments.
There was no impact to balances reported in relation to any
accounting periods beginning prior to 1 January 2017.
(b) Reclassification of other income
Other income has been reclassified to be included in revenue and
direct costs. The Group assessed the nature of other income
balances and concluded it partly reflects: (i) the continuing trade
of the business to be classified as revenue under IFRS 15; and (ii)
reimbursement of non-contracted costs recognised as expenses in
prior periods to be recognised in the same expense category as
where the cost was originally recorded.
Impact on statement of profit or loss (increase/(decrease) in
profit)
2017
Adjustments USD'000
Revenue (a),(b) (2,045)
Direct costs (a),(b) 1,948
----------------
Gross profit (97)
Other income (b) (1,152)
Administrative expenses -
----------------
Underlying profit from operations (1,249)
Acquisition costs -
Holding company expenses -
----------------
Operating profit (1,249)
Basic and diluted earnings per share
(cents) (0.9)
Normalised basic and diluted earnings
per share (cents) (0.9)
Impact on the consolidated statement of financial position
(increase/(decrease))
2017
Adjustments USD'000
Current assets
Trade and other receivables (a) (469)
----------------
Total assets (469)
Equity and liabilities
Equity
Retained earnings (a) (1,249)
----------------
Total equity (1,249)
----------------
Current liabilities
Trade and other payables (a) 780
----------------
Total liabilities 780
----------------
Total equity and liabilities (469)
The impact on the statement of cash flows for the year ended 31
December 2017 only relates to the changes in profit before tax from
continuing operations, certain adjustments to reconcile profit
before tax to net cash flows from operating activities and working
capital adjustments. There was no impact on the net cash flows from
operating, investing or financing activities.
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, revenues, 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) Judgments
Use of Alternative Performance Measures
IAS1 requires material items to be disclosed separately in a way
that enables users to assess the quality of a company's
profitability. In practice, these are commonly referred to as
'exceptional' items, but this is not a concept defined by IFRS and
therefore there is a level of judgement involved in arriving at an
Alternative Performance Measure (APM) which excludes such
exceptional items. The Group considers items which are material and
outside its normal operating practice to be suitable for separate
presentation. Further details are in note 18.
b) Estimates and assumptions
Percentage of completion
The Group 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 2018, USD 1,676,000 of accrued
revenue had been calculated using the percentage-of-completion
method (2017: USD 1,486,000).
Revisions to profit or loss arising from changes in estimates
are accounted for in the period when the changes occur.
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:
2018 2017
USD'000 USD'000
Construction 29,479 22,821
Integrated facilities management 23,145 25,414
Supply chain services 2,181 2,980
---------------- ----------------
54,805 51,215
The Group allocates a contract to a specific service channel
based on the nature of the primary deliverable to the customer. The
Group does not allocate revenue to multiple service channels from a
contract. If the Group were to allocate revenue to multiple service
channels from its contracts, a significant value of construction
revenue would be reclassified to the other service channels;
additionally, a significant value of integrated facilities
management revenue would be reclassified to supply chain
services.
Geographic segment
The Group solely operates in Africa and the Middle East and the
CODM considers this 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:
2018 2017
USD'000 USD'000
Africa 48,003 51,045
Other 6,802 170
---------------- ----------------
54,805 51,215
Non-current assets by geographic area:
2018 2017
USD'000 USD'000
Africa 14,378 8,935
Other 2,017 235
---------------- ----------------
16,395 9,170
8 GROUP REORGANISATION
Share for Share Exchange
On 12 April 2018, RAI acquired 100% ownership of RA through a
share for share exchange transaction (the "Exchange"). The cost of
RA was established and accounted for with reference to IAS 27 which
states that when a parent reorganises the structure of its group by
establishing a new entity as its parent, and meets specific
criteria, the new parent measures cost at the carrying amount of
its share of the equity items shown in the separate financial
statements of the original parent at the date of the
reorganisation. In the case of the Exchange, RA was the former
parent of the Group and all relevant criteria were met, as a result
the cost of RA was determined to be USD 29,278,000, being the
carrying amount of the equity of RA at the date of the
Exchange.
USD'000
Equity balances of RA at date
of Exchange
Share capital 272
Additional contributed capital 1,809
Retained earnings 27,700
----------------
Total equity balances of RA at
date of Exchange 29,781
The consideration paid to the shareholders of RA was 139,999,998
ordinary shares of GBP 0.10 each.
The difference between the total equity balances of RA and the
nominal value of shares issued by RAI at the date of the Exchange
is recorded as a merger reserve. Upon consolidation, all
intra-group transactions, balances, income and expense are
eliminated, and the merger reserve is equal to the difference
between the nominal value of the shares issued by RAI and the total
share capital and additional contributed capital of RA at the date
of the Exchange.
Initial Public Offering
On 29 June 2018, RAI undertook an initial public offering (IPO)
and was admitted to trade on the Alternative Investment Market
(AIM), a sub-market of the London Stock Exchange. New ordinary
shares of 33,575,741 were issued on the date of the IPO bringing
the total number of shares outstanding to 173,575,741. These shares
have a par value of GBP 0.10 and were sold by RAI at GBP 0.56 per
share.
During the IPO process, the Group incurred USD 2,059,000 of
expenses which were incremental and directly attributed to the
equity raise. As per IAS 32, these costs are to be accounted for as
a deduction from equity raised and as a result the net proceeds of
the IPO were USD 22,672,000.
USD'000
Reconciliation of IPO proceeds
Proceeds from issue of share capital 24,731
Costs incurred and attributable
to issue of share capital (2,059)
----------------
Net proceeds from issue of share
capital 22,672
9 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 entity Country of incorporation Beneficial ownership Principal activities
2018 2017
RA Africa Holdings Limited British Virgin Islands 100% 100% Holding of residual
shareholdings in Company
subsidiaries.
RA International Limited Cameroon 100% 100% Construction, integrated
facilities management, and
supply chain services.
RA International RCA Central African Republic 100% 100% Construction, integrated
facilities management, and
supply chain services.
RA International Chad Chad 100% - Construction, integrated
facilities management, and
supply chain services.
RA International DRC SARL Democratic Republic of Congo 100% 100% Construction, integrated
facilities management, and
supply chain services.
Raints Ghana Limited Ghana 100% 100% Construction, integrated
facilities management, and
supply chain services.
Windward Insurance PCC Guernsey 100% 100% Providing intra-group
Limited - Berkshire Cell insurance services.
Raints Kenya Limited Kenya 100% 100% Construction, integrated
facilities management, and
supply chain services.
RA International Limited Malawi 100% 100% Construction, integrated
facilities management, and
supply chain services.
Raints Mali Mali 100% - Construction, integrated
facilities management, and
supply chain services.
RA International Limitada Mozambique 100% 100% Construction, integrated
facilities management, and
supply chain services.
RA International Niger Niger 100% - Construction, integrated
facilities management, and
supply chain services.
RA International(*) Somalia 100% 100% Construction, integrated
facilities management, and
supply chain services.
RA International FZCO South Sudan 100% 100% Construction, integrated
facilities management, and
supply chain services.
Reconstruction and Assistance Sudan 100% - Construction, integrated
Company Ltd facilities management, and
supply chain services.
RA International Limited Tanzania 100% 100% Construction, integrated
facilities management, and
supply chain services.
RA International FZCO UAE 100% 100% Providing intra-group
administrative services.
RA International General UAE 100% 100% Providing intra-group
Trading LLC administrative services.
RA SB Ltd. UAE 100% - Holding of residual
shareholdings in Company
subsidiaries.
RA International Limited Uganda 100% 100% Construction, integrated
facilities management, and
supply chain services.
REMSCO Uganda (SMC) Limited Uganda 100% - Construction, integrated
facilities management, and
supply chain services.
(*) RA International in Somalia is not an incorporated legal
entity.
10 ACQUISITION OF SUBSIDIARY
RA SB Ltd.
On 1 January 2018, the Group acquired 100% ownership of RA SB
Ltd. and its subsidiary (together "RASB"), from one of its
shareholders, who is also a member of key management. The purchase
consideration of USD 594,000 represents the net book value of RASB
as at 1 January 2018. RA SB Ltd. is registered in Ras Al Khaimah,
UAE and operates in the Republic of Sudan through its subsidiary
which provides remote site services to the mining industry. The
acquisition is consistent with the Group's strategy of operating
across Africa.
The fair values of the identifiable assets and liabilities of
RASB as at the date of acquisition were:
USD'000
Assets
Property, plant, and equipment 69
Inventories 16
Accounts receivable, deposits,
and other receivables 688
Bank balances and cash 29
Liabilities
Accounts payable and accruals (208)
----------------
Net assets 594
Net cash outflow on acquisition
USD'000
Consideration paid 594
Less:
Bank balances and cash acquired (29)
----------------
565
Acquisition costs of USD 6,000 relating to the acquisition of
RASB are included in acquisition costs within the current
accounting period.
For the year ended 31 December 2018, RASB contributed USD
1,754,000 revenue and USD 350,000 profit before finance costs to
the Group results.
11 PROFIT FOR THE PERIOD
Profit for the period is stated after charging:
2018 2017
USD'000 USD'000
Staff costs 20,518 18,732
Materials 10,688 9,966
Depreciation 1,310 935
Amounts paid or payable by the Group in respect of audit and
non-audit services to the Auditor are shown below.
2018 2017
USD'000 USD'000
Fees for the audit of the interim 25 -
accounts
Fees for the audit of the Company 116 -
annual accounts
Fees for the audit of the subsidiary
annual accounts 60 60
---------------- ----------------
Total audit fees 201 60
Audit related assurance services - -
Non-audit related services 75 -
Fees in relation to the IPO 457 -
---------------- ----------------
Total non-audit fees 532 -
The non-audit fees incurred in the current year represent
services undertaken by a separate EY team as part of the Group's
IPO process and as part of a corporate acquisition that was
completed in 2019 (see note 32). No members of the audit team were
involved in undertaking these non-audit procedures and strict
independence processes were in place. All non-audit services, post
IPO, have been assessed and approved by the Audit Committee.
12 EMPLOYEE EXPENSES
The average number of employees (including directors) employed
during the period was:
2018 2017
Directors 4 -
Executive management 5 5
Staff 2,016 1,856
---------------- ----------------
2,025 1,861
The aggregate remuneration of the above employees was:
2018 2017
USD'000 USD'000
Wages and salaries 15,836 13,765
Social security costs 34 2
---------------- ----------------
15,870 13,767
The remuneration of the Directors and other key management
personnel of the Group are detailed in note 30.
13 EXCEPTIONAL ITEMS
2018 2017
USD'000 USD'000
Share listing costs(*) 1,332 -
Stock-based compensation and related 1,602 -
costs (note 16)
---------------- ----------------
2,934 -
(*) Share listing costs represent advisory, legal, and other
costs incurred in connection with the IPO which have not been
accounted for as a deduction from equity raised.
14 TAXATION
The tax charge on the profit for the year is as follows:
2018 2017
USD'000 USD'000
Current tax:
UK corporation tax on profit for - -
the year
Non-UK corporation tax - -
---------------- ----------------
Tax charge for the year - -
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:
2018 2017
USD'000 USD'000
Profit before tax 9,954 12,425
---------------- ----------------
Expected tax charge based on the
standard average rate of corporation
tax in the UK of 19% (2017: 19%) 1,891 2,361
Effects of:
Expenses not deductible(*) 257 -
Deferred tax asset not recognised 39 -
Exemptions and foreign tax rate
difference (2,187) (2,361)
---------------- ----------------
Tax charge for the year - -
(*) Expenses not deductible represent the costs incurred
relating to the share for share exchange and IPO.
Based on an evaluation performed by management on its
operations, management has assessed that the Group is not exposed
to any corporate tax liabilities. This is primarily a result of the
Group benefitting from tax exemptions granted to its customers who
are predominantly governments and large supranational
organisations, as well as zero corporate tax rates in certain
countries of operation.
15 EARNINGS PER SHARE
The Group presents basic earnings per share (EPS) data for its
ordinary shares. Basic EPS is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the period
plus the weighted average number of ordinary shares that would be
issued on conversion of all the dilutive potential ordinary shares
into ordinary shares.
Normalised earnings per share is calculated by dividing the
profit before exceptional items and unrealised differences on
translation of foreign balances attributable to ordinary
shareholders of the Group by the weighted average number of
ordinary shares outstanding during the period.
Since a new parent entity was established by means of a share
for share exchange and the Group's financial statements have been
presented as a continuation of the existing group, the number of
shares taken as being in issue for both the current and preceding
periods are the number of shares issued by the new parent entity.
As a result, the historical weighted average number of shares
presented in the comparative EPS calculation is 139,999,998, being
the number of ordinary shares exchanged for the entire share
capital of RA.
2018 2017
Profit for the period (USD'000) 9,954 12,425
Basic weighted average number
of ordinary shares 157,109,829 139,999,998
Effect of warrants - -
Effect of employee share options - -
---------------- ----------------
Diluted weighted average number
of shares 157,109,829 139,999,998
Basic earnings per share (cents) 6.4 8.9
Diluted earnings per share (cents) 6.4 8.9
Profit for the period before
exceptional items and unrealised
differences in foreign balances
(USD'000) 13,252 12,471
Normalised basic earnings per
share (cents) 8.4 8.9
Normalised diluted earnings
per share (cents) 8.4 8.9
16 SHARE BASED PAYMENT EXPENSE
The Group recognised the following expenses related to
equity-settled payment transactions:
2018 2017
USD'000 USD'000
Performance Share Plan 16 -
Other share based payments 1,602 -
---------------- ----------------
1,618 -
Performance Share Plan
During the year, 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.
Weighted Weighted
average average
Number exercise Number exercise
of of
options price options price
2018 2018 2017 2017
GBP GBP
Outstanding at 1 January - - - -
Granted during the year 2,826,085 0.10 - -
---------------- ---------------- ---------------- ----------------
Outstanding at 31 December 2,826,085 0.10 - -
Options issued under the PSP plan were valued using the Monte
Carlo Simulation model which 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 (2017: nil) was recognised in
administrative expenses for the fiscal year ended 2018.
Other share based payments
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.
On Admission, the majority shareholder of RAI gifted 2,142,855
personally owned shares of the Company to certain employees of RA
International FZCO as a reward for past employment service. The
fair value of the shares on the grant date was GBP 0.56 (USD 0.74)
per share. A charge of USD 1,602,000 (2017: nil) was recognised in
exceptional items.
The Monte Carlo and Black-Scholes models used the following
inputs:
2018
Weighted average share 56p (USD
price 0.74)
Expected volatility 10.10%
Risk free rate 1.24%
17 DIVIDS
Before the Group reorganisation, dividends of USD 12,500 per
share (10 shares) totalling USD 125,000 were declared and paid in
2018 (2017: USD 77,466 per share (10 shares) totalling USD
774,660). Proposed dividends on ordinary shares are subject to
approval at the annual general meeting and are not recognised as a
liability as at 31 December.
18 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.
Underlying Operating Profit (UOP)
The Group uses UOP as an alternative measure to Operating Profit
to better compare the profitability of its operations across
financial periods. UOP is calculated as Operating Profit less
holding company expenses and acquisition costs.
On 29 June 2018, RAI listed on AIM and began to incur costs
associated with being a listed company. No holding company expenses
were incurred in 2017 and a full year of these expenses are
anticipated to be incurred in 2019. Both holding company expenses
and acquisition costs do not relate to the day-to-day operating
business of the Group.
Previously, the Group had used earnings before interest, tax,
depreciation and amortisation (EBITDA) to assess the underlying
performance of the business however so as to better align internal
budgeting and forecasting with financial reporting the Group has
reclassified depreciation so as to be included in the calculation
of UOP and Operating Profit.
Underlying Operating Margin is calculated as UOP divided by
revenue.
Underlying Profit (UP)
The Group uses UP as an alternative measure to Profit so as to
better compare the profitability of the Group across financial
periods. To calculate UP exceptional items and unrealised
differences on translation of foreign balances are deducted from
Profit.
Exceptional items are excluded as they are by definition
incurred outside of the normal operating practice of the Group.
Unrealised differences on translation of foreign balances are
temporary gains or losses in the value of foreign denominated cash
balances held by the Group at the reporting date. These foreign
cash balances are held to settle expenses arising in future periods
in the same currencies.
Underlying Profit Margin is calculated as UP divided by
revenue.
Normalised Earnings per Share (Normalised EPS)
Normalised EPS represents earnings per share calculated as
dividing UP by the weighted average number of ordinary shares
outstanding during the period. Normalised EPS provides a more
comparable figure when analysing profitability on a per share basis
across financial periods.
Net Cash
Net cash represents cash less overdraft balances, term loans and
notes outstanding.
19 PROPERTY, PLANT, AND EQUIPMENT
Machinery,
motor
vehicles,
furniture Leasehold
and
Buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2018 6,011 6,010 126 12,147
Additions 3,690 4,668 325 8,683
Acquired on business combination 17 52 - 69
Disposals (113) (215) - (328)
---------------- ---------------- ---------------- ----------------
At 31 December 2018 9,605 10,515 451 20,571
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 January 2018 560 2,391 26 2,977
Charge for the year 330 951 29 1,310
Relating to disposals (2) (109) - (111)
---------------- ---------------- ---------------- ----------------
At 31 December 2018 888 3,233 55 4,176
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 31 December 2018 8,717 7,282 396 16,395
Machinery,
motor
vehicles,
furniture Leasehold
and
Buildings equipment improvements Total
USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2017 3,952 5,057 65 9,074
Additions 2,059 1,285 61 3,405
Disposals - (332) - (332)
---------------- ---------------- ---------------- ----------------
At 31 December 2017 6,011 6,010 126 12,147
---------------- ---------------- ---------------- ----------------
Depreciation:
At 1 January 2017 326 1,846 16 2,188
Charge for the year 234 691 10 935
Relating to disposals - (146) - (146)
---------------- ---------------- ---------------- ----------------
At 31 December 2017 560 2,391 26 2,977
---------------- ---------------- ---------------- ----------------
Net carrying amount:
At 31 December 2017 5,451 3,619 100 9,170
20 INVENTORIES
2018 2017
USD'000 USD'000
Materials and consumables 3,241 1,786
Goods-in-transit 1,022 874
---------------- ----------------
4,263 2,660
There was no provision recognised in relation to inventory as at
31 December 2018 (2017: nil).
21 ACCOUNTS RECEIVABLE, DEPOSITS, AND OTHER RECEIVABLES
2018 2017
USD'000 USD'000
Restated
Trade receivables 9,992 6,214
Accrued revenue 3,393 4,176
Deposits 213 180
Prepayments 584 1,404
Other receivables 1,780 695
---------------- ----------------
15,962 12,669
Trade receivables are non-interest bearing and are generally on
terms of 30 days. As at 31 December 2018 no trade receivables were
impaired (2017: nil).
During the year 100% of accrued revenue was subsequently billed
and transferred to trade receivables from the opening unbilled
balance in the period (2017: 100%).
As at 31 December the ageing of unimpaired trade receivables was
as follows:
2018 2017
USD'000 USD'000
Neither impaired nor past due 5,912 1,270
Not impaired but overdue by less
than 30 days 3,249 1,200
Not impaired but overdue by between
30 and 60 days 285 792
Not impaired but overdue by more
than 60 days 546 2,952
---------------- ----------------
9,992 6,214
Unimpaired receivables are expected, on the basis of past
experience, to be fully recoverable.
22 CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statement of
financial position comprised of cash at bank of USD 27,804,000
(2017: USD 7,469,000). Of the total balance of cash and cash
equivalents, USD 1,719,000 (2017: USD 2,000,000) represents
restricted cash.
The balance of restricted cash held by the Group at 31 December
2018 relates to cash held in Group bank accounts which cannot be
withdrawn on demand. The balance of restricted cash held by the
Group at 31 December 2017 relates to cash margin provided to a
commercial bank against the issuance of a guarantee to a
subsidiary. Due to the respective terms, restricted cash is
considered to be liquid.
23 SHARE CAPITAL
2018 2017
USD'000 USD'000
Authorised, issued and fully paid
173,575,741 shares (2017: 10 shares) of GBP
0.10 (2017: AED 100,000) each 24,300 272
Additional contributed capital - 1,809
Additional contributed capital did not carry interest and was
payable to the shareholders only upon the liquidation of the
Group.
24 TERM LOANS AND NOTES
1 January 31 December
2018 Cash flows Other 2018
USD'000 USD'000 USD'000 USD'000
Current:
Term loans and notes 1,861 (1,867) 6 -
Non-current:
Term loans and notes 6 - (6) -
1 January 31 December
2017 Cash flows Other 2017
USD'000 USD'000 USD'000 USD'000
Current:
Term loans and notes 2,011 (728) 578 1,861
Non-current:
Term loans and notes 584 - (578) 6
In 2017 the term loans carried interest rates ranging from LIBOR
plus 5.50% per annum to LIBOR plus 8.76% per annum. The term loans
were fully settled during the prior year.
Notes carried a fixed interest rate ranging from 5.50%
(guaranteed notes) to 8.00% (unguaranteed notes) per annum. The
terms of the notes were 10 or 18 months and principal was repaid as
a bullet payment upon maturity. Interest was paid on a quarterly
basis, semi-annual basis, or at maturity, at the option of the
investor. The guaranteed notes were 80% principal guaranteed
through insurance.
25 EMPLOYEES' OF SERVICE BENEFITS
Movements in the provision recognised in the consolidated
statement of financial position are as follows:
2018 2017
USD'000 USD'000
As at 1 January 251 189
Provided during the year 116 283
End of service benefits paid (17) (221)
---------------- ----------------
As at 31 December 350 251
26 ACCOUNTS PAYABLE AND ACCRUALS
2018 2017
USD'000 USD'000
Restated
Accounts payable 3,440 1,635
Accrued expenses 1,412 1,942
Customer advances 28 1,172
---------------- ----------------
4,880 4,749
All customer advances recorded at 31 December 2017 were
subsequently recognised as revenue in 2018 and all customer
advances held at 31 December 2018 are expected to be recognised as
revenue in the next 12 months.
27 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
(vehicle loans and notes).
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 2018, the Group held foreign cash and cash
equivalents of GBP 4,432,000 (USD 5,624,000). UK pound sterling is
primarily held by the Group to settle payment obligations
denominated in GBP. As at 31 December 2017, the Group held GBP
319,000 (USD 430,000).
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 and with respect to customers
by only dealing with credit worthy customers and continuously
monitoring outstanding receivables. Its 5 largest customers account
for 78% of outstanding accounts receivable at 31 December 2018
(2017: 95%).
Revenue split by customer
2018 2017
% %
Customer A 30 59
Customer B 26 12
Customer C 13 11
Other 31 18
---------------- ----------------
100 100
No material credit risk is deemed to exist due to the nature of
the Group's customers.
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.
Liabilities falling due within 12 months are recognised as
current on the consolidated statement of financial position.
Liabilities falling due after 12 months are recognised as
non-current.
The unutilised bank overdraft facilities at 31 December 2018
amounted to USD 2,000,000 (2017: USD 2,000,000) and carry interest
of 1.50% per annum (2017: 1.50%). The facilities require a cash
margin guarantee to be paid upfront; 100% margin for USD drawdowns
and 120% margin for GBP drawdowns.
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 2018.
Capital comprises share capital, share premium, merger reserve,
share based payment reserve and retained earnings and is measured
at USD 59,541,000 as at 31 December 2018 (2017: USD
25,101,000).
28 OPERATING LEASE COMMITMENTS
Commitments under non-cancellable operating leases at the
current rates approximate to the following:
2018 2017
USD'000 USD'000
Future minimum lease payments:
Within one year 336 245
After one year but not more than
five years 1,298 979
More than five years 1,522 1,714
---------------- ----------------
3,156 2,938
29 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.
On 1 January 2018, the Group acquired 100% ownership of RA SB
Ltd. from one of its shareholders, who is also a member of key
management. Further details are detailed in note 10.
There were no outstanding balances with related parties included
in the consolidated statement of financial position at 31 December
2018 (2017: nil).
30 COMPENSATION
Compensation of key management personnel
The remuneration of key management during the year was as
follows:
2018 2017
USD'000 USD'000
Short-term benefits 1,367 662
Stock based compensation 1,672 -
---------------- ----------------
3,039 662
The key management personnel comprise of 5 (2017: 2)
individuals. Included in key management personnel are 3 (2017: 2)
directors.
Compensation of directors
The remuneration of directors during the year was as
follows:
2018 2017
USD'000 USD'000
Short-term benefits 1,071 662
Stock based compensation 569 -
---------------- ----------------
1,640 662
Highest paid director
The remuneration of the highest paid director during the year
was as follows:
2018 2017
USD'000 USD'000
Short-term benefits 276 560
Stock based compensation 569 -
---------------- ----------------
845 560
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.
31 STANDARDS ISSUED BUT NOT YET EFFECTIVE
The new and amended standards and interpretations that are
issued, but not yet effective, up to the date of issuance of the
Group's financial statements are disclosed below. The Group intends
to adopt these new and amended standards and interpretations, if
applicable, when they become effective.
IFRS 16 Leases
IFRS 16 was issued in January 2016 and it replaces IAS 17
Leases, IFRIC 4 Determining Whether an Arrangement Contains a
Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the
Substance of Transactions Involving the Legal Form of a Lease. IFRS
16 sets out the principles for the recognition, measurement,
presentation, and disclosure of leases and requires lessees to
account for all leases under a single on-balance sheet model
similar to the accounting for finance leases under IAS 17. The
standard includes two recognition exemptions for lessees - leases
of 'low-value' assets (e.g., personal computers) and short-term
leases (i.e., leases with a lease term of 12 months or less). At
the commencement date of a lease, a lessee will recognise a
liability to make lease payments (i.e., the lease liability) and an
asset representing the right to use the underlying asset during the
lease term (i.e., the right-of-use asset). Lessees will be required
to separately recognise the interest expense on the lease liability
and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability
upon the occurrence of certain events (e.g., a change in the lease
term, a change in future lease payments resulting from a change in
an index or rate used to determine those payments). The lessee will
generally recognise the amount of the remeasurement of the lease
liability as an adjustment to the right-of-use asset.
IFRS 16, which is effective for annual periods beginning on or
after 1 January 2019, requires lessees and lessors to make more
extensive disclosures than under IAS 17.
The Group will continue to assess the potential effect of IFRS
16 on its financial statements and is yet to quantify the
anticipated impact of the adoption of IFRS 16. Please refer to note
28 for an indication of the Group's current operating leases.
Transition to IFRS 16
The Group plans to adopt IFRS 16 retrospectively to each prior
reporting period presented.
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.
32 SUBSEQUENT EVENTS
Subsequent to year end, the Group expanded its operations in
Mozambique. through acquiring a parcel of land in Northern
Mozambique. Additionally, the Group purchased a 49% shareholding in
Royal Food Solutions S.A, a family-owned Mozambique based provider
of integrated facilities management services.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UKAURKSASRUR
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