Annual Report
2020
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WWW.RAINTS.COM
We deliver. Regardless.
Contents
Highlights
Chair’s statement
STRATEGIC REPORT
RA International at a glance
Business model
Our markets
Our strategy
Stakeholders and Section 172 statement
Key performance indicators
Operating review
Financial review
Risk management
CORPORATE GOVERNANCE
Board of Directors
Executive Management Team
Chair’s corporate governance statement
Review of the Board’s effectiveness
Directors’ report
Directors’ responsibility statement
Remuneration Committee report
Audit Committee report
FINANCIAL REPORT
Independent Auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company statement of financial position
Company statement of changes in equity
Notes to the Company financial statements
Shareholder information
1
2
4
8
10
12
14
16
18
21
25
30
32
33
37
38
40
41
44
48
56
57
58
59
60
84
85
86
88
REVENUE
2019
69.1
2020
64.4
ORDER BOOK AT YEAR END
-7%
2019
141
2020
187
REVENUE
2019
69.1
2020
64.4
ORDER BOOK AT YEAR END
REVENUE
NUMBER OF OPERATING COUNTRIES
ORDER BOOK AT YEAR END
-7%
2019
2019
141
69.1
2020
2020
187
64.4
2019
11
2019
2020
2020
141
12
187
+33%
-7%
HIGHLIGHTS
NUMBER OF OPERATING COUNTRIES
NUMBER OF OPERATING COUNTRIES
2019
11
2020
12
Underlying EBITDA
2019
16.3
2020
14.2
-13%
2019
11
+1%
2020
DIVIDEND
12
2019 1.25p
2020
1.35p
+33%
+1%
+33%
+1%
+8%
16.3
2019
Underlying EBITDA
2020 has tested all businesses and we believe it has highlighted the
strengths and resilience of RA International. We have delivered a
step change in order book size and quality since IPO, in line with our
+8%
customer-led growth strategy.
DIVIDEND
Underlying EBITDA
2019 1.25p
2019
-13%
-13%
1.35p
14.2
2020
2020
14.2
2020
16.3
DIVIDEND
2019 1.25p
2020
1.35p
+8%
Sustainable growth
Social responsibility
REVENUE
USD 64.4m
REVENUE
2019
69.1
2020
64.4
LOCAL LABOUR PARTICIPATION
55%
LOCAL LABOUR PARTICIPATION
ORDER BOOK AT YEAR END
LOST TIME INCIDENT RATE
-7%
2019
141
2019
61
2020
187
2020
55
-10%
+33%
2019
117
2020
59
-50%
ORDER BOOK AT YEAR END
USD 187m
ORDER BOOK AT YEAR END
ORDER BOOK AT YEAR END
LOCAL LABOUR PARTICIPATION
NUMBER OF OPERATING COUNTRIES
LOST TIME INCIDENT RATE
TOTAL CARBON EMISSIONS (TCO2E)*
59
LOST TIME INCIDENT RATE
LOCAL LABOUR PARTICIPATION
2019
11
LOST TIME INCIDENT RATE
2020
2019
2019
2019
12
2020
2020
2020
11,296
117
61
7,397
59
55
-50%
-35%
-10%
+1%
2019
117
2020
59
-50%
61
55
-10%
+33%
+33%
-7%
-7%
2019
2019
2020
2020
141
2019
141
187
2020
187
Underlying EBITDA
Underlying EBITDA
2019
2019
2020
2020
16.3
16.3
14.2
14.2
-13%
-13%
REVENUE
REVENUE
2019
2019
2020
2020
69.1
69.1
64.4
64.4
2019
2019
2020
2020
61
61
55
55
2019
2019
2020
2020
11,296
11,296
7,397
7,397
NUMBER OF OPERATING COUNTRIES
NUMBER OF OPERATING COUNTRIES
TOTAL CARBON EMISSIONS (TCO2E)*
12 countries
NUMBER OF OPERATING COUNTRIES
REVENUE
REVENUE
11
2019
TOTAL CARBON EMISSIONS
7,397 (tCO2e)*
TOTAL CARBON EMISSIONS (TCO2E)*
ORDER BOOK AT YEAR END
ORDER BOOK AT YEAR END
2019
2019
2020
2020
2020
2019
2019
11,296
69.1
2019
11
69.1
12
Underlying EBITDA
7,397
2020
12
64.4
64.4
16.3
2020
-35%
-7%
+1%
+1%
-7%
2019
2019
11,296
141
2019
141
DIVIDEND
2020
7,397
187
187
2020
2019 1.25p
2020
-35%
+33%
+33%
2020
14.2
-13%
DIVIDEND
DIVIDEND
2020
1.35p
*For further information on the methodology of calculation and locations of
measurement please refer to the Company’s 2020 Sustainability Report.
+8%
NUMBER OF OPERATING COUNTRIES
NUMBER OF OPERATING COUNTRIES
2019
11
2019
11
2020
12
2020
12
+1%
+1%
2019 1.25p
2019 1.25p
2020
2020
+8%
Shareholder returns
+8%
1.35p
1.35p
UNDERLYING EBITDA
USD 14.2m
Underlying EBITDA
Underlying EBITDA
DIVIDEND
GBP 1.35p
DIVIDEND
DIVIDEND
2019
16.3
2019
16.3
2020
14.2
2020
14.2
-13%
-13%
2019 1.25p
2019 1.25p
2020
1.35p
2020
1.35p
+8%
+8%
LOCAL LABOUR PARTICIPATION
LOST TIME INCIDENT RATE
2019
61
2020
55
-10%
2019
117
2020
59
-50%
We deliver. Regardless. | 1
LOCAL LABOUR PARTICIPATION
LOCAL LABOUR PARTICIPATION
TOTAL CARBON EMISSIONS (TCO2E)*
LOST TIME INCIDENT RATE
LOST TIME INCIDENT RATE
-10%
-10%
2019
2019
2019
2020
2020
2020
11,296
117
117
7,397
59
59
-35%
-50%
-50%
TOTAL CARBON EMISSIONS (TCO2E)*
TOTAL CARBON EMISSIONS (TCO2E)*
LOCAL LABOUR PARTICIPATION
LOCAL LABOUR PARTICIPATION
LOST TIME INCIDENT RATE
LOST TIME INCIDENT RATE
-35%
-35%
2019
61
2019
61
2020
55
2020
55
-10%
-10%
2019
117
2019
117
2020
59
2020
59
-50%
-50%
TOTAL CARBON EMISSIONS (TCO2E)*
TOTAL CARBON EMISSIONS (TCO2E)*
2019
11,296
2019
11,296
2020
7,397
2020
7,397
-35%
-35%
CHAIR’S STATEMENT
Sangita Shah | Non-Executive Chair
Whilst the impact of COVID-19 was a constant during
most of the year and has tested all businesses, I believe
it has highlighted the strengths and resilience of RA. Our
relentless focus on our customers and on anticipating
and responding to their changing needs is at the heart of
our strategy. This approach has created a business that is
built on strong foundations, has transformed in scale and
opportunity since IPO and has a clear roadmap ahead for
sustained profitable growth. RA has been building on this
position over the last 17 years - I believe the potential of this
business is only starting to be realised and the best part of
the RA journey lies ahead.
FINANCIAL PERFORMANCE AND STRATEGIC
EXECUTION
Our financial performance highlights the durability of the
business model. From a revenue perspective, we have seen
growth year on year in our IFM and Supply Chain channels.
Construction activity was most affected by COVID-19,
however, the Group maintained robust profitability despite
the resultant contraction in revenue.
In 2020, we have continued to focus on strengthening our
business and invested in future growth, most notably our
investment to build an 1,800-person camp in a strategically
important location in Northern Mozambique. In spite of
the ongoing instability in the region, we remain confident
that by virtue of the considerable multinational commercial
investment and the significance to both Mozambique and
the international community, the project will come into
fruition. This is a very significant project for RA. We built
up capability in the country over a number of years which
allowed us to secure the USD 60m contract we announced
in August 2020. This is a great example of how our
measured, research-led approach, combined with our ability
to anticipate customer requirements and to demonstrate
local understanding and capability, sets us apart.
The business has been transformed since RA’s IPO in
2018. We came to market with a business concentrated
in supporting humanitarian agencies in Somalia. The
opportunity ahead was to diversify the business, expand
into new geographies and broaden our customer mix to
government and commercial clients, secure larger contracts
and maintain profitability, particularly by growing our IFM
contract base. With these results and with the composition
of our record order book of USD 187m, we have delivered
on the commitments made at IPO. Progress has not been
linear but progress is clear, and is testament to the hard
work and dedication of RA’s committed employees. The
customer-led growth strategy is working and we have even
more opportunity ahead, with the growth of our order
book establishing a stronger financial baseline year on year.
2020 was dominated by the rapid
adjustments which had to be made
in the wake of the unprecedented
health emergency and world-wide
response that unfolded during the
course of the year. Whilst we are
used to dealing with crisis situations,
the response of our colleagues has
been truly remarkable throughout
this period as they have concurrently
dealt with the personal adversity
that continues to affect families and
communities.
On behalf of the Board, it is
fitting that I start this report by
paying tribute to their exemplary
professionalism, dedication
and commitment during these
challenging times.
Thank you.
2 | RA International | Annual Report 2020
In terms of managing the impact of COVID-19 on RA, we
have provided comprehensive reviews of our response in
previous market communications, most recently our 2020
interim results announcement on 8 September 2020 and
provided an update in our current trading announcement
on 15 December 2020.
As a Board, we continue to monitor the situation closely.
COVID-19 remains a challenge for our customers and
clearly the pandemic continues to be a major health crisis
at the time of preparing this report. Whilst the situation
will continue to evolve, the substance of our approach will
not change. We will remain operational, we will continue
to manage the challenges related to ensuring the health
and safety of our staff and clients, and we will be there
for our clients as they return to a more normal working
environment.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(“ESG”) STRATEGY AND CORPORATE CULTURE
The success of RA International comes from operating
responsibly and sustainably. Since the business was founded
in 2004, being a responsible company and employer was
placed firmly at the heart of everything we do. Growing the
business sustainably is a key pillar of our growth strategy
and sustainability is integral to our core business activities
with consideration for the environmental, social and financial
impacts of the decisions we make embedded in our culture.
Our approach is encapsulated in our purpose “to deliver
immediate results and lasting change”.
Lars Narfeldt, our COO, leads our Sustainability efforts. In
2018, we adopted a formal sustainability strategy centred
around the UN Sustainable Development Goals (“UN
SDGs”) to support us in delivering our objectives and
measuring our progress. Our focus areas are Resource
Management, People & Skills Development, and Labour
Rights as these are the areas we have identified where
we can have most impact. Our sustainability strategy
is set out in our dedicated Sustainability Report and I
am pleased to report that we have published our third
such report, which can be found on our website at www.
rainternationalservices.com/sustainability/. Embedded
within this report are our ESG indicators, inclusive of
climate objectives.
This year we have expanded our disclosure framework to
highlight how our established focus areas within the UN
SDGs align to the environment, social and governance
structure. The Sustainability Report also helps to explain
how in supporting communities we are able to foster strong
relationships that are integral to working effectively and
efficiently to the benefit of our clients.
We will continue to review and revise the report in the
future to include further detailed disclosure on our supply
chain and environmental impacts.
Related to our commitment to doing business the
right way, we have been particularly alert to the wider
consequences of the pandemic for colleagues and the
communities in which we operate. We advocated with
clients to allow us to continue to execute our projects in
planned timelines, taking all necessary and recommended
precautions, to continue economic activity in vulnerable
communities. We also maintained staff remuneration for
all employees irrespective of lockdowns prohibiting their
attendance on site and made certain additional payments
to staff in recognition of their continued efforts under
challenging circumstances.
DIVIDEND AND SHAREHOLDER RETURNS
The Board is recommending a final dividend of 1.35p per
share to be paid on 8 July 2021 to shareholders on the
register as of 28 May 2021. The ex-dividend date is 27 May
2021. We see the dividend decision this year, to increase
the dividend per share by 8%, or 21% in USD terms, despite
the impact of COVID-19, as an important indication of both
the financial strength of RA and our confidence in the
future prospects of our business. We continue to adopt
a progressive dividend policy and intend to increase or
maintain the dividend in future years, subject to retaining
sufficient liquidity to meet the needs of the business and to
fund continued growth.
A FINAL NOTE
On behalf of the non-executive Board members, I would
like to thank the Executive Management Team for their
exemplary leadership through the challenges of 2020, our
customers for their support and for trusting us to help solve
their problems and, again, our colleagues for it is only with
their resilience and adaptability that we are able to deliver
for our customers regardless of the challenges that are put
in front of them.
Sangita Shah
Non-Executive Chair
30 March 2021
We deliver. Regardless. | 3
STRATEGIC
REPORT
Sustainable competitive advantage
RA INTERNATIONAL
AT A GLANCE
1,658
STAFF (2020 AVERAGE)
45+
NATIONALITIES
12
COUNTRIES
GROUP HQ IN THE UK
OPERATIONAL HQ IN DUBAI
REGIONAL OFFICES ACROSS AFRICA
UN GLOBAL
COMPACT
SIGNATORY SINCE 2008
PARTICIPANT SINCE 2018
4 | RA International | Annual Report 2020
RA International is a leading
global provider of supply chain,
construction and integrated
facilities management services on
behalf of humanitarian agencies,
governments and commercial
customers.
Listed on AIM since 2018, the Group was founded in
2004 in response to the needs of large organisations, to
better manage and deliver mission-critical humanitarian
and peacekeeping projects in remote locations and
often in challenging circumstances.
Our work often takes place in locations that lack a
functioning infrastructure and a skilled workforce.
Through a combination of experience, innovation
and determination, we find that we can resolve most
challenges. This is summed up by our Company motto:
We deliver. Regardless.
REVENUE BY SECTOR
Humanitarian agencies
Government and commercial
SERVICES
One-supplier model for organisations seeking to operate in
remote and difficult locations
2020
2019
2018
52%
44%
32%
68%
56%
48%
REVENUE BY SERVICE
Integrated facilities management
Construction
Supply chain
21%
19%
2020
2019
4%
2018
42%
41%
49%
30%
40%
54%
SUPPLY CHAIN
USD 14.1m (2019: USD 12.8m)
•
Local, regional and global procurement of
mission-critical equipment, material and
consumables
Consolidation and repacking services
Land, sea and air logistics
Last mile logistics
Warehousing and yard management
Inventory control
Freight forwarding and clearance of goods
•
•
•
•
•
•
CONSTRUCTION
USD 19.1m (2019: USD 27.6m)
•
•
•
•
Project management
Horizontal and vertical engineering
Design and build of permanent, semi-
permanent and temporary facilities such
as accommodation camps, workshops,
warehouses, embassies and offices
Design and build of permanent, semi-
permanent and temporary infrastructure
including power generation, water and waste
management plants and landfills
INTEGRATED FACILITIES MANAGEMENT
USD 31.3m (2019: USD 28.6m)
•
•
Facilities management and maintenance
Plant and equipment operation and
maintenance
Catering, hospitality and accommodation
Cleaning and laundry
Waste management
Vehicle fleet operation and maintenance
Pest and vector control
•
•
•
•
•
We deliver. Regardless. | 5
CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT RA’S ONE-SUPPLIER
OFFERING
As a remote service provider, RA has the broadest service offering on the
market. By designing, building and running what are, in effect, full-functioning
urban environments, we make it possible for our clients and their staff to live
comfortably in remote locations and to keep facilities, vehicles, plant and
equipment operational – leaving them free to focus on the job at hand.
Building full-service camps in remote locations
Facilities
Catering
6 | RA International | Annual Report 2020
Guest welfare
Infrastructure
Facilities management
We deliver. Regardless. | 7
CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT A DIVERSIFIED
BUSINESS MODEL
Our business model is predicated on supplying all our customers’ needs when
operating in remote and challenging locations more efficiently and effectively
than they can themselves. Our approach allows our customers to focus on their
own objectives, while offering employment to local people, supporting small
businesses and communities and generating returns to our investors.
WHAT WE DO
INPUTS
Through a one-supplier model, we can supply our
customers with all their needs when operating in
remote and challenging locations.
SUPPLY CHAIN
For many companies,
the entry point into our
services is through the
supply of project-critical
equipment, goods and
machinery.
CONSTRUCTION
Once established, we
are invited to undertake
construction works
of temporary and
permanent facilities and
infrastructure.
INTEGRATED
FACILITIES
MANAGEMENT (IFM)
Our relationships evolve
into long-term service
contracts, supporting and
maintaining the facilities and
infrastructure our customers
occupy.
8 | RA International | Annual Report 2020
STAFF
Our people are our biggest asset. We are firm believers
in providing stable employment and rewarding career
opportunities, and we invest heavily in skills and career
development so that we can provide unparalleled
service to our customers. We aim to employ over 60%
of all our staff locally and subcontract only when it is
absolutely necessary.
CENTRAL HEAD OFFICE AND
REGIONAL OPERATING OFFICES
Our Dubai head office, central PMO, and network of local
offices enable global delivery of our services.
FACILITIES AND EQUIPMENT
Owning our own facilities and equipment gives us control
over the quality and delivery of our services. Our facilities
include fixed and temporary accommodation, offices
and leisure facilities. Where it is practical to do so, we
own our vehicles and machinery to limit our reliance on
hiring equipment. This approach allows us to progress our
projects without interruption.
STRONG BALANCE SHEET
A strong balance sheet enables us to bid for larger long-
term contracts and enables the rapid mobilisation of
people, materials and equipment.
INTERNATIONAL AND
LOCAL COMPLIANCE
We work to ensure that we are meeting all international
and local standards.
T N E R
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We deliver. Regardless.
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F O C U
OUR COMPETITIVE ADVANTAGE
DELIVERING VALUE
ONE SUPPLIER MODEL
CUSTOMERS
By offering all the services our customer may need,
we are able to provide a more efficient solution than if
they were to source materials, equipment or services
from multiple organisations.
USD 187m order book
Enabling and delivering complex projects, allowing
organisations to focus on their core objectives and
improve efficiency.
SPECIALISED KNOWLEDGE AND LOCAL
INTELLIGENCE
EMPLOYEES
We have long-standing presence and relationships in
the countries where we operate, giving us valuable
insight into the local environment. Because of this,
we can find solutions where others may struggle and
alter our implementation approach as changes on the
ground occur.
56% local labour participation
Providing job opportunities, training and financial security
to local people who may have been affected by conflict,
natural disaster or lack of employment opportunities.
STRONG AND LONG-STANDING CUSTOMER
RELATIONSHIPS
For over 15 years we have worked with UN
organisations and NGOs. More recently we have
established relationships with western governments
and commercial businesses. As a result of our focus
on customer delivery, our relationships with our
customers tend to grow over time, both in terms of
the size of projects we are asked to undertake, and in
geographic spread.
ENVIRONMENT, SOCIAL AND LABOUR
3 sustainability goals we directly impact
Positive impact on communities though people and skills
development and upholding labour rights, and minimising
the negative impacts to the environment through carbon
reduction targets, and water and waste management
initiatives.
POWERFUL REPUTATION FOR DELIVERING
SERVICES RESPONSIBLY
INVESTORS
Over many years we have built trust amongst our
customers and communities and our relationships
are based on a strong ethical foundation to do things
right. Our reputation and experience provides us with
our license to operate in challenging locations and
supports our ability to win new business.
GBP 1.35p dividend
Delivering long-term shareholder value through a clear
growth strategy.
We deliver. Regardless. | 9
CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT
OUR MARKETS EXPLAINED
Clear addressable markets
RA International supports
organisations through the delivery
of complex projects in demanding
environments.
Since we started operating in 2004,
we have built a strong reputation for
service delivery and have delivered
over USD 600m of contracts, which
highlights the scale of the market
opportunity we have.
Our growth has been customer driven, meaning we often
follow our customers from one country to another as we
are called upon to support their mandates and workload.
This is critical to understanding the growth trajectory of the
Company and specifically why we operate in many of the
countries where we do.
Our addressable market is best defined as humanitarian
and western government spend on official development
assistance (ODA) and commercial investment, which
is typically in the infrastructure and natural resources
sectors. We work with reputable organisations only and,
when approached by potential customers, we perform a
significant amount of due diligence.
We split our clients into three categories reflecting these
addressable markets: humanitarian, government, and
commercial.
Humanitarian organisations
Western governments
Commercial clients
Our work with humanitarian
organisations is primarily based on
supporting their peacekeeping and
stabilisation activities in challenging
locations. UN, NGOs, and International
Agencies providing aid or peacekeeping
activities in these environments
require experienced service providers
to support them. RA’s track record at
operating in dynamic environments
and improving local economies through
creation of local employment and
commercial opportunities, makes us a
reliable partner. Our biggest client in this
sector is the UN, which is made up of 15
specialised agencies, 12 peacekeeping
missions and many other entities,
bodies, funds, programmes, and related
organisations spread across the world.
RA currently supports more than 10 UN
entities.
Western governments frequently work
alongside humanitarian organisations
in many of the challenging and remote
areas we tend to operate in, with their
focus often being capacity building
and advancing the rule of law. With a
solid reputation for service delivery,
it was a natural progression for RA
to expand into providing services for
these government clients. Our two
largest clients in this sector are the
US and UK Governments, with RA
supporting amongst others the US State
Department, UK Ministry of Defence,
and the Foreign, Commonwealth and
Development Office (FCO). More
recently, we are being asked to support
government clients outside of Africa.
The work we have done with the US
State Department in Denmark is a good
example of this.
Our track record with humanitarian
agencies and governments demonstrates
the efficacy of our approach, and with
corporate clients in the commercial
sector we have an emerging and
complementary market opportunity.
RA has been contracted by a range
of corporate clients involved in
infrastructure development, mineral
exploration and production, and oil and
gas extraction. Our commercial partners
seek out reliable service providers
who can meet their stringent HSE and
compliance requirements, while ensuring
that their projects are delivered on time,
to the required standards, and within
budget. With our track record as a single
supplier of supply chain, construction
and IFM services, we have a strong value
proposition to offer clients in this sector.
In the last 12 months, we have announced
landmark contracts with corporate
clients, including a contract to build and
operate a camp for a mining company
in North East Africa and a USD 60m
contract to build and operate a remote
camp in Southern Africa.
10 | RA International | Annual Report 2020
OUR ADDRESSABLE MARKETS
Within the humanitarian, peacekeeping and stability, and
commercial sectors there are substantial budgets that we
have opportunities to tap into. Taken together, the budgets
for these markets run into the hundreds of billions of
dollars. Limiting our market to the sectors and geographies
where we currently operate, we estimate a market size of at
least USD 100b in annual expenditure. Of this, we estimate
that 2% to 4% of this budget directly relates to the services
we provide.
In addressing these opportunities, it is important we
develop winning strategies and remain focused on
maintaining a long-term competitive advantage. We
therefore adopt a research-based, intelligence-led
approach to target this customer spend effectively, often
starting our research and reconnaissance years before a
project may begin.
We started our business mainly within the humanitarian
sector supporting UN and peacekeeping missions in
Afghanistan, Sudan and Somalia and at the time of our
IPO in 2018, nearly 90% of our revenue came from this
sector. Now, approximately 50% of our revenue comes
from government and commercial sectors. Broadening our
activity in this way is an important part of our sustainable
growth strategy.
WHY CLIENTS SEEK OUT RA’S SERVICES
Our clients find that attempting to navigate the regulatory
and logistical challenges in establishing and managing a
support system for their staff can be a major distraction
to their core purpose. By putting their trust in RA, our
clients benefit from having secure, well-appointed, and
well-maintained facilities; reliable infrastructure, excellent
life-support in the form of catering, cleaning, laundry, and
pest control; and a reliable supply chain.
Where clients are already well established in a location,
they value that RA has the ability to mobilise quickly and
operate independently, without having to rely on them for
assistance in managing the local operating environment.
HOW OUR STRATEGY TO GROW INTO THESE
LARGE ADDRESSABLE MARKETS IS WORKING
Looking at our progress since we came to market in 2018
shows the successful execution of our growth strategy in
transforming our business. We are winning larger contracts
with increased traction bidding for contracts between USD
10m and USD 100m, we are operating in more countries,
and the scale and quality of our order-book is improving
such that we are establishing a stronger financial baseline
for the business year on year.
Further information on our strategy can be found on page 12.
MARKET DEVELOPMENTS IN 2020 AND LOOKING
AHEAD
The health emergency relating to the COVID-19
pandemic affected all businesses in 2020. Despite the
challenges raised by this crisis, particularly the impact
on our customers’ ability to commence new projects,
we continued to focus on the opportunities to grow and
strengthen our business by growing with our customers
and winning contracts with new customers. During the
year we secured USD 110m of new contract awards,
uplifts and extensions, and closed 2020 with a record
order book value of USD 187m. With over 60% of the
order book represented by IFM contracts, the order book
composition is weighted towards contracts which are high
quality, high value and recurring in nature. We are winning
and delivering contracts in more geographies, including
outside of Africa. This is all in line with our growth strategy
and demonstrates the need for a high quality and trusted
service provider in the markets in which we operate.
Looking ahead, the level of business development activity in
which we are involved is particularly strong. This is buoyed
by the work we have put in to developing relationships with
large US corporations such as Cherokee Nation, and with
commercial customers such as Danakali in the mining sector.
In addition, we are bidding on contracts that will increase
our global reach and that are larger, longer-term and higher-
value, underpinning the future growth of the business.
We deliver. Regardless. | 11
CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT OUR STRATEGY
Customer-led growth
• Diversify the customer base
• Target large, addressable
markets
Achievements in 2020
Future priorities
Government and commercial
customers accounted for 52% of
revenues.
Awarded USD 60m IFM contract in
Mozambique following significant
forward investment in the country.
Continue to grow the Government and
commercial client base.
Target long-term service contracts.
Continue to invest into new territories where
there is an identifiable demand for our
services in order to attract customers.
Target hybrid or one-supplier contracts
• Extol the benefits of a
one-supplier model.
• Cross sell services to new and
existing customers.
Achievements in 2020
Future priorities
IFM revenue increased by 9% despite
the COVID-19 operating environment.
Over 50% of our order book was
awarded through sole source
contracts.
Continue to cross-sell services to our existing
customer base and move more towards one-
supplier contracts.
Win more one-supplier contracts with
commercial customers.
Grow the business sustainably
• Earn a return for shareholders
that is commensurate with
expectations and sustainable.
• Invest in the skills and
development of employees;
target 60% average local labour
participation.
• Manage RA’s resources to
maximise positive social impact
and minimise the environmental
impacts of both our own and our
clients’ operations.
• Introduce innovative new
services that will create greater
efficiency for our clients.
Achievements in 2020
Future priorities
Underlying EBITDA margin of 22.0%
(2019: 23.5%) despite operating many
construction projects at or around
breakeven during COVID-19 related
suspension periods.
Promoted 2% of local staff.
Set a science-based carbon reduction
target of 21% by 2024.
Implemented a company-wide
approach that will enable RA to track a
wider range of sustainability metrics in
a uniform manner.
Generate stable or increasing underlying
EBITDA margins, to fuel cash generation, and
a progressive dividend policy.
Refresh goals 2021 to reset our sustainability
strategy for the next three years.
Increase data gathering of key sustainability
metrics following data gathering.
Adopt innovative construction technology.
Look to return local labour participation to
60%.
Maintain financial strength
• Grow the Company’s order
Achievements in 2020
Future priorities
book through winning larger
and long-term service contracts.
• Maintain a strong balance sheet
and access to capital markets.
Awarded USD 110m in contracts during
2020 increasing RA’s order book to
USD 187m at 30 December 2020.
Continue to grow our order book which
underpins future growth plans and provides
confidence for long-term investment.
Maintain adequate liquidity to both bid for
and execute large contracts.
RA is winning larger, longer-term
contracts; the current order book is
weighted over 2/3 to IFM.
Net cash of USD 11.2m at year end
provides significant liquidity following
a period of extraordinary period of
capital investment.
12 | RA International | Annual Report 2020
I
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OUR STRATEGY IN ACTION:
customer-led growth
C
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D
Y
PARTNERING WITH CHEROKEE NATION FOR
US STATE DEPARTMENT CONTRACTS
In 2019, Cherokee Nation Mechanical (CN)
hired RA International as the main construction
sub-contractor for the security upgrades at
the US Embassy in Juba, South Sudan. CN had
very limited experience working in challenging
environments, relying heavily on RA for all aspects
of the project. The contract was a pilot project
for the US State Department, Overseas Building
Operations (OBO) with a stated objective to
increase the speed of execution of projects
through sole source contracts and compression of
the normal OBO construction cycle.
The Security Upgrades contract consisted of 13
separate construction projects to include interior
and exterior replacements and improvements to
operational and security specifications. Our team
of experienced technicians covered all aspects of
horizontal and vertical construction and executed
them to OBO’s exacting standards. Additionally,
RA provided life support services for the RA and
CN staff working on the project at RA’s own fully-
serviced accommodation including dining and
leisure facilities, and transportation.
Since then, OBO has started the Rapid
Engineering & Construction (REC) program which
includes several sole-source eligible companies
on small to mid-range construction contracts of
USD 5m to USD 50m. Based on the success and
the performance of the CN and RA partnership
on the Juba project, CN designated RA as its sole
teaming partner for the program.
Together, we have since received awards for
two additional projects and we expect that our
partnership will continue to grow given the scope
and opportunities in the REC program.
“RA have been essential to our success working with OBO. Getting the right
skilled and qualified craft labour into some of the countries and areas where we
operate is difficult and RA does this very well. They are particularly equipped to
operate in high-threat and austere environments. Right from the start, when we
put people on the ground in South Sudan, I was just impressed how efficiently
they put things in place to get things done.”
Bill Owens, Operations General Manager, Cherokee Nation Mechanical
We deliver. Regardless. | 13
STAKEHOLDERS
The Board seeks to understand the
expectations and interests of the
Company’s stakeholders, and to
reflect these in the choices it makes
in its efforts towards the long-term
success of the business.
Engagement with RA’s stakeholders, including employees,
clients, contractors, suppliers, and investors forms a central
part in the Company’s decision-making process. The Board
tailors its engagement approach to each stakeholder
group in order to foster effective, sustainable and mutually
beneficial relationships.
The Board’s understanding of its stakeholder interests is
taken into consideration within boardroom discussions
in relation to strategy and planning. The Board considers
how stakeholder expectations may be addressed and how
the Board’s decisions may impact stakeholder interests.
Stakeholder expectations are determined through
information gathered and provided by management and
by direct engagement. The priority of each stakeholder
group may increase or decrease, depending on the impact
a decision may have.
This section of the report serves as our Section 172 (1)
Statement of the Companies Act, and should be read in
conjunction with the Corporate Governance Report. The
statement requires the Directors to act in a way that they
consider, in good faith, would most likely promote the
success of the Company for the benefit of its members as a
whole, taking into account the factors listed in Section 172.
The table below sets out the key stakeholder groups, their
interests and how RA International has engaged with them
over the reporting period.
Why they are important
How we engage
Stakeholder feedback and
key concerns
How we respond and link
to strategy
EMPLOYEES
We employ 1,658 staff from over 45 nationalities.
Our employees are one of
the primary assets of the
business and a key resource
which enables us to deliver our
services and our goals.
• Ongoing training and
• Stable and long-term
development
employment
• Formulation of career paths
• Freely available company
policies and procedures
• Staff engagement surveys
• Personal development
• Competitive pay and
employee benefits
• Training, development and
career prospects
• Working conditions
reviews and work appraisals
• Labour rights
• Newsletters and
• Human rights
management updates
• Team-building and social
events
• Health and safety
• Diversity and inclusion
We aim to do business the right
way, offering competitive pay
and rewarding careers to both
international and local staff.
We seek to develop local staff,
aiming for an overall average
of 60% local staff year on year,
although this may fluctuate due
to contract cycles.
We apply international
employment standards for all
our staff.
CUSTOMERS
Our customers are made up of UN organisations, NGOs, western governments and large commercial
businesses predominantly working in the natural resources sectors.
Strong business relationships
with customers is a vital part
of our growth. Over 95% of
our revenue in 2020 was
repeat business from the
previous year. These long-
term relationships and our
reputation with our customers
strengthens our position in
new bids and tender processes.
• Day-to-day working
relationships and project
management
• Progress reports
• Client meetings
• Marketing and
communications
• Company website
• Delivery of projects on time,
to the required quality and
within budget
• Working with organisations
whose goals and values are
aligned to their own
• Upholding ABC, labour and
human rights
• Close working relationships
based on trust and quality
of delivery
• Health and safety
We work with customers that
uphold the same values as
our own. Our business model
enables us to grow with our
customers, often starting
with supply chain and/or
construction contracts, that
can lead into long-term IFM
service contracts.
By engaging with our
customers and carrying out
extensive research, we are able
to identity future requirements,
developing services
accordingly.
14 | RA International | Annual Report 2020
Why they are important
How we engage
Stakeholder feedback and
key concerns
How we respond and link
to strategy
SUPPLIERS
Our suppliers consist of international organisations, as well as local suppliers, meeting our needs on the
ground and supporting us in delivering our objectives.
We rely on local and
international suppliers to
support us to deliver materials,
equipment and services.
• Initial supplier vetting and
• Prompt payment of invoices
selection
• Purchase orders, contracts
and master service
agreements
• Regular day-to-day
communication to allow for
future planning and quick
resolution of issues
• Regular supplier follow-up
• Health and safety
• Regular supplier visits and
• Working conditions
audits
• Regular product inspections
We work with suppliers who
have comparable business
practices to our own.
We aim to develop local
suppliers to source goods
locally thereby reducing our
carbon footprint. We ensure
that our local suppliers uphold
the same values, ethics
and policies as we apply to
our business practices and
staff through contractual
arrangements.
REGULATORY AUTHORITIES, LOCAL GOVERNMENTS AND COMMUNITIES
We work to international standards, are signatories to the UN Global Compact and have adopted the
Quoted Companies Alliance Corporate Governance Code 2018. We operate side by side with local
communities and work with local governments to secure any necessary permits and permissions.
While our contracts are
exclusively with international
organisations, engagement and
good working relationships
with local governments and
communities provides us with
our license to operate in the
locations where we have a
presence.
In some locations, we are
an important source of
employment, supporting
families, local services and
institutions.
• Regular contact
• Regulatory compliance
through meetings and
correspondence
• Sustainability and Annual
Reports
• Working with local and
international organisations
to provide charitable
support and assistance to
local communities
• Participation in working
groups
• Employment opportunities
• Human rights
• Community investment
and support, including
educational opportunities,
sanitation and health care
• Health and safety
• Protection and enhancement
of the environment
• Commitment towards net-
zero carbon
INVESTORS
Our major shareholders are listed on page 38 of this report and on our website.
If needed, access to the capital
markets provides RA with
necessary funds to fuel growth.
The Company recognises the
significance of transparent and
effective communications with
shareholders.
• Regular meetings
• Submission of management
information and financial
reporting
• Presentations
• Communication through
• Financial performance and
investor returns through
capital gain and/or dividend
• High standards of corporate
governance
• Ethical behaviour
briefings with management
• Awareness of strategy and
• Annual report
• AGM
• Company website
potential risks
Customer-led growth
Hybrid contracts
Sustainable growth
Financial strength
Each year we publish a
sustainability report and an
annual report describing our
strategy, our approach to
sustainability, our governance
structures and performance.
We set priorities that support
us to meet the expectations
of regulatory authorities, local
governments and communities.
The primary communication
tool with our shareholders is
through the Regulatory News
Service (“RNS”), on regulatory
matters and matters of material
substance. We gather feedback
from all investor meetings
to identify any key concerns
and areas for improvement.
An increased focus on
Environmental, Social and
Governance (“ESG”) has led
us to change the way in which
we presented our sustainability
reporting for 2020.
We deliver. Regardless. | 15
CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT
KEY PERFORMANCE INDICATORS
The Directors use a range of financial and non-financial KPIs as a
measure of the Company’s performance against its defined strategy.
Revenue (USDm)
Dividend
Financial KPIs
2016
2017
2018
2019
2020
37.0
51.2
54.8
69.1
64.4
Revenue (USDm)
REVENUE (USD’m)
2016
2017
2018
2019
2020
-7% UNDERLYING OPERATING PROFIT (USD’m) -29%
Underlying operating profit
Dividend
37.0
51.2
54.8
69.1
64.4
6.0
2016
2017
2018
2018
2019
2019
2020
2020
1.00
13.9
14.2
14.7
1.25
10.4
1.35
2018
2019
2020
Order book
2016
2017
2018
2019
2020
1.00
1.25
1.35
100
112
119
141
187
51.2
13.9
14.2
37.0
6.0
Definition
Revenue is defined as the amounts received or receivable for
Underlying operating profit
services delivered during the course of the year. In line with our
Revenue (USDm)
strategy, we aim to grow our revenue by winning new clients and
2016
cross selling services to new and existing clients.
2017
2016
2018
2017
Performance
14.7
2019
2018
The resilience of IFM and Supply Chain revenue helped offset
2020
2019
the lower revenue contribution from Construction which resulted
2020
from clients slowing or temporarily suspending projects during
the year as the health risks relating to COVID-19 became apparent
and global lockdowns became more widespread. As a result a
Underlying EBITDA (USD’m)
Underlying operating profit
significant value of construction work was deferred and will likely
now be recognised in 2021.
2016
2016
2017
Link to strategy:
2017
2018
2018
2019
2019
2020
2020
6.9
6.0
14.2
16.3
54.8
64.4
10.4
14.9
69.1
14.2
14.7
13.9
15.2
10.4
Order book
Definition
The Company uses underlying operating profit (“UOP”) as an
alternative measure to operating profit to better compare the
Underlying EBITDA (USD’m)
profitability of its operations across financial periods. UOP is calculated
as operating profit adjusted for costs which are considered to be
2016
unrelated to the Group’s underlying trading performance.
14.9
2017
Dividend
2016
2017
100
6.9
112
2018
119
2019
2018
2020
2019
Performance
2018
Underlying operating profit for 2020 was USD 10.4m (2019: USD
2019
13.7m). UOP margin was 16.1% (2019: 19.8%). With administrative
2020
expenses of USD 8.4m (2019: USD 8.2m) remaining broadly
consistent year on year, the variance in UOP margin was driven by
variances in revenue and gross margin.
16.3
1.25
2020
1.00
14.2
1.35
15.2
141
187
Order book
2016
Link to strategy:
2017
2018
2019
2020
Revenue (USDm)
Underlying EBITDA (USD’m)
UNDERLYING EBITDA (USD’m)
Local labour participation (%)
-13% DIVIDEND (PENCE PER SHARE)
Dividend
2016
2016
2017
2016
2017
2018
6.9
37.0
51.2
54.8
14.9
15.2
2018
2020
2018
2019
2020
Local labour participation (%)
69.1
14.2
64.4
16.3
2019
Lost time incident rate
2020
1.25
1.35
100
112
119
187
67
+8%
69
141
63
61
55
1.00
2016
2017
Definition
The dividend is the share of profits that the Company pays out to
Order book
its shareholders. It is the Board’s intention to maintain or increase
the annual dividend whilst retaining sufficient working capital to
100
2016
meet the needs of the business and to fund continued growth.
2017
2019
2018
150
617
117
112
561
2020
59
2018
2019
2020
119
141
187
Performance
The Board sees the decision to increase the dividend per share by 8%,
or 21% in USD terms, despite the impact of COVID-19, as an important
indication of both the financial strength of RA and its confidence in
the future prospects of the business. The Board continues to adopt a
progressive dividend policy and intends to increase or maintain the
dividend in future years, subject to retaining sufficient liquidity to meet
the needs of the business and to fund continued growth.
Link to strategy:
Hybrid contracts
Sustainable growth
Financial strength
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Underlying operating profit
2016
63
67
69
2017
2018
2016
6.0
2020
61
13.9
Definition
Management defines underlying EBITDA as operating profit
adjusted for depreciation, share based payments, and costs
which are considered to be unrelated to the Group’s underlying
trading performance. Underlying EBITDA facilitates comparisons
of operating performance from period to period and company to
company by eliminating potential differences caused by variations
in capital structures, tax positions and the age and booked
Lost time incident rate
depreciation on assets.
Local labour participation (%)
2016
Performance
Underlying EBITDA of USD 14.2m helped drive a strong cash
2017
2016
conversion ratio of 291% (2019: 66%), leading to net cash flows
2018
2016
from operations of USD 21.3m in the year (2019: USD 8.7m).
2019
2017
2020
2018
617
63
10.4
14.2
14.7
561
6.9
117
69
59
55
67
61
150
Underlying EBITDA (USD’m)
2020
Link to strategy:
Lost time incident rate
2016
2017
2018
2019
150
117
2020
59
Customer-led growth
14.9
55
15.2
14.2
561
16.3
617
16 | RA International | Annual Report 2020
Local labour participation (%)
2016
2016
2017
2018
2020
2016
2017
2018
2019
2020
59
150
117
Lost time incident rate
63
61
67
69
55
561
617
Revenue (USDm)
Dividend
2016
2017
2018
2019
2020
37.0
51.2
54.8
69.1
64.4
2018
2019
2020
1.00
1.25
1.35
Underlying operating profit
Order book
6.0
2016
2017
2018
2019
2020
13.9
14.2
14.7
10.4
2016
2017
2018
2019
2020
100
112
119
141
187
“We see the dividend decision this year, to increase the dividend per share
by 8% as an important indication of both the financial strength of RA and
our confidence in the future prospects of our business.”
Dividend
2020
37.0
54.8
64.4
14.9
69.1
14.2
16.3
51.2
15.2
6.9
Underlying EBITDA (USD’m)
Revenue (USDm)
2016
2017
2016
2018
2017
2019
2018
2020
2019
Financial KPIs
69.1
64.4
2018
2019
2020
Underlying operating profit
Order book
ORDER BOOK (USD’m)
13.9
14.2
14.7
10.4
2016
2017
2018
2019
2020
100
112
119
Underlying operating profit
Non-financial KPIs
6.0
1.00
1.25
1.35
+33%
2016
2017
2018
2019
2020
10.4
Local labour participation (%)
LOCAL LABOUR PARTICIPATION (%)
2016
2016
Underlying EBITDA (USD’m)
2017
141
187
2018
2016
2020
2017
6.9
13.9
14.2
14.7
-10%
63
61
67
69
55
14.9
Dividend
2018
2019
2020
Order book
2016
2017
2018
2019
2020
1.00
1.25
1.35
100
112
119
141
187
Definition:
The order book is the estimated value of future revenue expected
to be recognised from the remaining performance obligations
on existing contractual arrangements. It excludes framework
agreements and contracts where the Company cannot estimate
with sufficient certainty the expected value of specific task orders.
See page 78 for further information related to the remaining
performance obligations on existing contractual arrangements.
Performance
The Company’s order book at 31 December 2020 stood at USD
187 million, an increase of USD 55m from 30 June 2020, with 62%
comprising high value IFM work. The growth in our order book and
proven resilience of IFM revenue provides confidence to continue to
make long-term investment decisions, even in these dynamic times.
Link to strategy:
15.2
2018
Definition
Local labour participation measures the average percentage of full-
2019
Lost time incident rate
time workers employed in their country of origin over the course of a
2020
calendar year. The Company aims to recruit and develop local people
2016
wherever it is practical to do so. We will often deploy a team of highly
2017
skilled international staff to mobilise new projects if the necessary
2018
skills are not available on the ground. This can cause variations in
2019
local labour participation while local hiring initiatives and training are
2020
ongoing and a handover to local staff is not yet complete.
14.2
16.3
150
561
617
117
59
Performance
The reduction in average local labour participation in 2020 primarily
resulted from the Company successfully completing a number of
construction projects during the year, while the commencement of new
Local labour participation (%)
construction projects has been delayed as a result of the pandemic. We
anticipate local labour participation to increase again by 2022.
2016
Link to strategy:
2016
63
67
SUSTAINABILITY STRATEGY
Lost time incident rate
LOST TIME INCIDENT RATE
2017
2018
2020
Our sustainability strategy is set
out in our dedicated Sustainability
Report 2020 which can be found
on our website.
Embedded within this report are
our ESG indicators, inclusive of
climate objectives.
2016
2017
2018
2019
150
117
2020
59
69
61
55
-50%
561
617
Definition
The lost time incident rate is the number of RIDDOR (Reporting of
Injuries, Diseases and Dangerous Occurrences Regulations 2013)
reportable accidents multiplied by 100,000 and divided by the
average number of employees. Included within the types of accidents
reportable under RIDDOR are injuries to workers which result in
their absence from work for more than 7 days. Prior to 2018, our
HSE statistics included injuries to workers which resulted in their
incapacitation for more than 3 days. The change in methodology,
made so as to ensure the Group was fully compliant with RIDDOR
reporting requirements, partially contributed to the decrease in Lost
Time Incident Rate from 2017 to 2018.
Performance
The Group had only one reportable incident in 2020 and no major
incidents. COVID-19 is a global concern and RA introduced a Triage
Standing Operating Procedure early in 2020 to assist in preventing the
spread of the disease within its locations. This is updated in accordance
with UK Government and World Health Organisation guidance. The
Company has introduced HSE software to improve the level of reporting
for accidents and incidents. This software system is also allowing for
better trend analysis of both injuries and near miss incidences which is
being used to drive accident and incident prevention.
2020 SUSTAINABILITY REPORT
Link to strategy:
We deliver. Regardless. | 17
Revenue (USDm)
37.0
51.2
54.8
6.0
6.9
Underlying EBITDA (USD’m)
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Local labour participation (%)
2016
2016
2017
2018
2020
2016
2017
2018
2019
2020
59
150
117
Lost time incident rate
14.9
15.2
16.3
14.2
63
61
67
69
55
561
617
STRATEGIC REPORT
OPERATING REVIEW
Soraya Narfeldt | Chief Executive Officer
The contracts we announced in the second half of 2020
highlighted how our ability to respond quickly and
demonstrate a “business as usual” approach has been
a key differentiator for us. Our success has continued
into 2021 where in March we were appointed as teaming
partner to Cherokee Nation in connection with two
significant US Government construction projects in the
Middle East and East Asia. We stand ready to mobilise
as and when travel restrictions are lifted, allowing the
respective projects to commence.
As we have grown RA over the years, we have relentlessly
and successfully focused on the diversification of our
business, in terms of geography, customer concentration,
and service channel. We believe this approach will continue
to set us apart, allow us to mitigate the impacts of adverse
events taking place on a local and global scale and drive
sustainable growth through further expansion into our very
significant addressable markets.
Our results for 2020 are a good marker of the strong
foundations we have built as a business, with revenue
of USD 64.4m and underlying operating profit of USD
10.4m highlighting the financial resilience of our business.
Underpinning this performance is the work we have done
to build relationships with our blue-chip clients and to
support them through the challenges of the pandemic.
Whilst construction revenue decreased by USD 8.5m,
we saw year on year growth in IFM revenue, our highest
margin service channel, and in supply chain revenue. IFM
revenue represents 49% of revenue for the year and IFM
contracts now represent 62% of our order book. These are
high quality, higher margin contracts, recurring in nature
and are important indicators of the improving quality of the
business we are building.
CONTRACTS
During 2020, we were awarded new contracts, uplifts, and
extensions to existing contracts of USD 110m. This builds
on our annual track record for contract wins of USD 62m in
2018 and USD 91m in 2019, despite the disruption relating
to the COVID-19 pandemic.
We see growing our customer base and winning larger, long-
term contracts as the primary drivers of sustainable long-term
business growth. During the year, our business development
activity was focused on these objectives, particularly with
respect to the commercial sector. We achieved notable
success in being awarded our largest ever contract in the
commercial sector and also being named a preferred supplier
to support Danakali in developing the Colluli Mine in Eritrea.
We expect this contract value to be in excess of USD 20m.
The current order book of USD 187m does not include any
potential revenue from the Danakali project.
Our customers rely on
us and trust us to deliver
under the most challenging
of circumstances.
OVERVIEW
The spread of COVID-19 throughout the world was rapid
and required us to demonstrate agility and control in our
response, often in an environment of conflicting information,
and in major lockdowns with sites being shut down, and staff
and clients unable to return home. Through the period of
the pandemic, we have continued to execute on our strategy
of supporting our customers, anticipating and responding
to their changing requirements and not letting them down.
Now, more than ever, we can see this strategy is working and
we believe our actions during the crisis will reinforce in our
customers’ minds the value we bring.
This said, clearly the pandemic has not receded as a health
crisis and government enforced restrictions and lock-down
provisions remain in place across the world. While we have
been able to continue executing previously contracted work,
we are seeing new contract awards being delayed as clients
are unable to travel to project worksites. As a result, we
remain cautious about the near-term commercial outlook,
albeit encouraged we continued to receive contract awards
and that bid activity has been high.
18 | RA International | Annual Report 2020
We have delivered a step-change in order book size and quality since IPO,
in-line with our customer-led growth strategy
Contract order book (USD’m)
91
62
112
119
(55)
141
(69)
110
187
(64)
300
250
200
150
100
50
0
2018
Opening
order book
Contract
awards,
uplifts, and
extensions
Contracted
revenue
delivered
2019
Opening
order book
Contract
awards,
uplifts, and
extensions
Contracted
revenue
delivered
2020
Opening
order book
Contract
awards,
uplifts, and
extensions
Contracted
revenue
delivered
2021
Opening
order book
In 2020 we had continued success in diversifying our
customer base, including increasing the percentage of
revenue generated from government and commercial
customers. For 2020, government and commercial
customers represented 52% of revenue, up from 44% last
year and 34% from the time of our IPO in 2018. As we
diversify our customer base, we continue to work closely
with the humanitarian agencies and during the year we
were awarded IFM contracts for the United Nations Mission
in South Sudan (“UNMISS”) and the United Nations Interim
Security Force for Abyei (“UNISFA”); each contract has a
value in excess of USD 5m.
As referenced above, in August 2020 we announced our
award of a USD 60m contract to provide IFM services for
a large international engineering customer in Mozambique.
This landmark contract, initially awarded for a two-year
period, would see RA utilise the 1,800-person camp we
are developing in the strategically important Afungi
Peninsula. As has been widely reported, this area of
Northern Mozambique has seen a persistent threat from
local insurgencies, including Islamic terrorist activity.
These security concerns, alongside COVID-19 and extreme
weather, have led to delays and suspension in development
work related to the project we are supporting.
We maintained a very constructive dialogue with our client
through this extended period of disruption, and prior to the
escalation of hostile activity over the last week, were in final
discussions to agree a one-year extension to the contract,
which we had expected to commence substantially in the
second half of this year. Before the recent suspension of our
activity on the ground, we had continued to develop the
camp such that we would operate the facility on a full or
near-full occupancy basis when the contract commences,
whereas the initial contract scope anticipated occupancy to
ramp up over the first year of the contract. Based on these
revised contractual arrangements, we expected the overall
contract value would be higher than the original value of
USD 60m. Our expectation was that the contract would
make a meaningful financial contribution in the second half
of 2021, but as we announced in our market communication
on 29 March 2021, the Board now expects there will be
further delays in the project that are likely to impact on the
overall financial performance of the Company in the current
financial year. As we have stated, this impact is expected at
the current time to be up to USD 10m of revenue, which the
Board now expects will be recognised in a later financial
period.
Our established market presence with global, blue-
chip customers remains a key pillar in expanding our
geographical presence. We have made good progress
in recent years in broadening and deepening our
geographical footprint, such that in 2020, we delivered
contracts across 12 countries. We expect our strategy to
diversify into new geographies will continue to bear fruit
reflecting both the quality of our research-led approach,
We deliver. Regardless. | 19
CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT OPERATING REVIEW
CONTINUED
which enables us to anticipate the location of future
contracts, and through the deepening relationships we
have with existing customers which leads to opportunities
to support them in new geographies. Importantly, we have
increasing engagement with customers asking us to deliver
material projects outside of Africa, of which our contract
awarded to renovate the US Embassy in Denmark and
recently announced contract awards to undertake works in
the Middle East and East Asia are good examples.
The Company’s order book at 31 December 2020 stood at
USD 187m, an increase of USD 55m from 30 June 2020,
with 62% comprising high value IFM work. The growth in our
order book and proven resilience of IFM revenue provides
confidence to continue to make long-term investment
decisions, even in these dynamic times. To this point, at the
time of IPO we invested in the Company to ensure it could
support annual revenue in the region of USD 100m. With
a growing order book approaching USD 200m and with a
number of large bids outstanding, we need to ensure RA
has the capacity to deal with a step change in activity. As
a result we have commenced a 12 to 24 month investment
programme which will put additional resources in place
to manage the anticipated growth of the business going
forward. An initial step taken in 2020 was the consolidation
of two UAE offices and relocation of a number of regional
staff to the larger Dubai based Head Office.
We recognise that as broad commercial activity returns
to more normal patterns, we could see heightened levels
of project activity by existing and new clients. Effective
business planning to make sure RA is positioned to deliver
on the significant opportunities ahead is currently a key
priority for our business.
CURRENT TRADING AND OUTLOOK
The last few days have been challenging for everyone
connected with RA as we have responded to the hostile
activity in Cabo Delgado, Mozambique where RA has been
operational for the last few years. In these circumstances,
this is a somewhat complex trading update to provide. On
the one hand, we are more confident than ever about the
long-term outlook for our business, and this is reflected
in the Board’s decision to increase our recommended
dividend payment to 1.35p per share. Our order book
and cash profile underpin this confidence and the last
12 months have highlighted the strengths of our business,
including notably the value of our longer-term and
higher-margin IFM contracts.
This confidence needs to be tempered for the current
financial year given the prevailing external conditions
with the situation in Mozambique uncertain and, more
generally, COVID-19 continuing to determine customers’
ability to commence new projects. Prior to the events
20 | RA International | Annual Report 2020
of the last week, we were expecting to see a stronger
second half performance in 2021, as large contracted
projects commenced. Revenue from the deployment of
our camp in Mozambique was a material component of
this phasing, and as we highlighted in our announcement
yesterday, our current expectation is there will be delays
to the commencement of our Mozambique project which
may lead to USD 10m of revenue being deferred to later
financial periods. It may be that this ends up being an
overly conservative view, but it is the prudent view to
provide to our shareholders at this time.
Shareholders should also be aware that the level of
business development activity we are involved in is
particularly strong with encouraging new bid activity on
contracts ranging from USD 10m to USD 50m in value.
We have developed and expanded new relationships with
large US corporations, setting up partnerships and teaming
agreements for new projects in relation to existing global
government programmes. Our recent teaming partner
announcement with Cherokee Nation is a great example of
this and we continue to pursue more contracts together.
We are also now bidding on global UK government
programmes as a prime contractor. These programmes
run for three to five years, providing RA a pool of future
potential work on long term contracts. Our new bids to
existing clients see RA having the opportunity to expand
our geographical footprint to a potential five new countries
in 2021/22. This is an unprecedented level of new business
activity relating to high value contracts.
We also expect heightened levels of project starts from
existing and new clients as commercial activity returns
to normal. Depending on timing, this could materially
strengthen our financial position in the current financial
year but, in any event, we expect the anticipated
acceleration in activity during the course of this year will
bridge to an even stronger performance in 2022.
Soraya Narfeldt
Chief Executive Officer
30 March 2021
FINANCIAL REVIEW
Andrew Bolter | Chief Financial Officer
OVERVIEW
Revenue of USD 64.4m and gross
margin of 29.2% highlight our
financial performance for the year.
Results for the second half are in
line with guidance we provided in
December and we are encouraged
by continued strong cash
generation from our operations.
FINANCIAL HIGHLIGHTS:
Revenue
Gross profit
Gross profit margin
Underlying operating profit
Underlying operating profit
margin
Operating profit
Operating profit margin
Profit before tax
Profit before tax margin
Underlying EBITDA
Underlying EBITDA margin
EPS, basic (cents)
Underlying EPS, basic (cents)*
Net cash (end of period)
2020
USD’m
64.4
18.8
29.2%
10.4
16.1%
7.3
11.3%
6.6
10.3%
14.2
22.0%
3.8
5.6
11.2
2019
USD’m
69.1
21.9
31.7%
13.7
19.8%
13.6
19.7%
13.3
19.2%
16.3
23.5%
7.4
7.4
21.4
The resilience of IFM and supply chain revenue helped
offset the lower revenue and profit contribution from
construction which resulted from clients slowing or
temporarily suspending projects during the year as the
health risks relating to COVID-19 became apparent and
global lockdowns became more widespread. As a result, a
significant value of construction work was deferred and will
likely now be recognised in 2021.
The business generated cash flows from operations
of USD 21.3m during 2020, reflecting strong cash
profitability, with Underlying EBITDA of USD 14.2m,
and working capital benefits from strong receivable
collections. We continued to invest in growth, spending
USD 24.5m on capital expenditure during the year to
develop remote camp facilities in Mozambique and East
Africa, both of which are owned by the Company and
leased to clients on a long-term basis. These investments
were undertaken whilst maintaining significant liquidity to
both execute and bid for large projects.
REVENUE
Reported revenue for 2020 of USD 64.4m (2019: USD 69.1m)
represents a 6.8% decrease year on year. This decrease
resulted from construction projects being suspended due to
COVID-19. These projects recommenced in the second half
of the year, however work progress continued to be affected
by COVID-19 related restrictions and delays. As previously
highlighted, revenue relating to the suspended construction
contracts is deferred in nature rather than cancelled.
* Underlying EPS reflects UOP after deducting net finance costs and taxation,
divided by the weighted average number of ordinary shares outstanding
during the period.
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CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT FINANCIAL REVIEW
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In terms of the wider business, we saw IFM and supply
chain revenue increase 9% and 10% respectively. Revenue
from the IFM service channel proved particularly resilient
during 2020, whilst revenue from supply chain activities
benefitted from USD 2.7m in contracts awarded in the first
half which related to the COVID-19 response in Europe.
Excluding these one-off orders, approximately 75% of
supply chain revenue was earned from long-term contracts,
often three to five years in length.
Revenue by service channel:
Integrated facilities management
Construction
Supply chain services
Total revenue
PROFIT MARGIN
2020
USD’000
31.3
19.1
14.1
64.4
2019
USD’000
28.6
27.6
12.8
69.1
Gross margin in 2020 was 29.2% (2019: 31.7%), with the
decrease primarily resulting from many construction projects
operating at or around gross margin during periods of
project suspension. Overall, we chose to take a pragmatic
approach to support our clients’ interests during periods of
disruption, maintaining project momentum and some level of
commercial activity where possible. While in some cases this
led to inefficient project execution, we believe this strategy
will lead to long-term benefits.
Reconciliation of profit to underlying EBITDA:
Profit
Tax expense
Profit before tax
Finance costs
Investment income
Operating profit
Non-underlying items
Underlying operating profit
Share based payments
Depreciation
Underlying EBITDA
2020
USD’000
6.6
2019
USD’000
12.9
0.1
6.6
1.0
(0.3)
7.3
3.0
10.4
0.1
3.7
14.2
0.4
13.3
0.7
(0.3)
13.6
0.0
13.7
0.0
2.6
16.3
Underlying EBITDA margin in 2020 was 22.0% (2019: 23.5%)
and underlying operating profit margin was 16.1% (2019: 19.8%).
With administrative expenses of USD 8.4m (2019: USD 8.2m)
remaining broadly consistent year on year, the variance in
both Underlying EBITDA and UOP was driven by variances in
revenue and gross margin.
22 | RA International | Annual Report 2020
During the year, the Company incurred non-underlying
costs of USD 3.0m (2019: USD 0.0m). COVID-19 costs
of USD 1.4m are almost entirely incremental staff costs
relating to the pandemic. Further detail on these costs
can be found in note 9 of the consolidated financial
statements. The share based payments charge of
USD 1.2m, relates to the issue of 1.8m restricted Ordinary
Shares in October 2020. Further detail can be found
in note 13 of the consolidated financial statements. In
addition, there were modest expenses incurred in relation
to restructuring, resulting from consolidating two office
facilities and relocating staff to the new Dubai head
office, and acquisition costs related to potential corporate
acquisitions which were being explored in the first half of
2020. These transactions were halted for various reasons
including the incremental level of uncertainty COVID-19
added to target operating forecasts.
Non-underlying items:
COVID-19 costs
Other share based payments
Restructuring costs
Acquisition costs
Total non-underlying items
2020
USD’000
1.4
2019
USD’000
-
1.2
0.3
0.2
3.0
-
-
0.0
0.0
Finance Costs net of Investment Revenue increased to
USD 0.7m (2019: USD 0.4m). The Company earned a lower
return on bank deposits and realised increased foreign
exchange losses resulting primarily from the appreciation in
the Euro and volatility of the UK Pound.
EARNINGS PER SHARE
Basic earnings per share was 3.8 cents in the current period
(2019: 7.4 cents), a reduction of 49% on the prior year,
reflecting the reduction in year-on-year profit and the impact
of certain non-recurring costs described in the profit margin
commentary. Adjusting for non-underlying items, underlying
earnings per share was 5.6 cents (2019: 7.4 cents), a reduction
of 24% on the prior year.
The share buyback programme, which was in operation from
June to September 2020, reduced the weighted average
number of ordinary shares in issue to 172.5m (2019: 173.6m),
partially offsetting the reduction in year-on-year profits.
CASH FLOW
BALANCE SHEET AND LIQUIDITY
Cash flows generated from operations were USD 21.3m in
the year (2019: USD 8.9m), driving a 291% cash conversion
ratio*; a significant improvement from the prior period
(2019: 66%). The strong cash conversion ratio was driven
by underlying EBITDA of USD 14.2m and a period of strong
collections of accounts receivable balances. This was
partially offset by the build up of inventory related to the
Company’s purchase of a 2500-person prefabricated camp
facility, a significant portion of which is being held for use in
upcoming projects we anticipate will commence in H2 2021.
Summary cash flows:
Cash flows generated from
operations
Tax and end of service benefits
paid
Net cash flows from operating
activities
Investing activities (excluding
Capital Expenditure)
Capital Expenditure
Net cash flows from investing
activities
Financing activities (excluding
borrowings)
Proceeds from borrowing
Net cash flows from financing
activities
Net change in cash during the
period
2020
USD’000
21.3
2019
USD’000
8.9
(0.2)
(0.3)
21.1
0.3
(24.5)
(24.1)
(6.8)
6.1
(0.7)
(3.8)
8.7
0.4
(12.4)
(12.0)
(3.2)
-
(3.2)
(6.6)
During the year we invested USD 24.5m in capital
expenditure with the majority of spend relating to
developing our property in Mozambique and expanding
another owned facility in East Africa. We also consolidated
two office premises into a larger newly leased facility in
Dubai. This property will serve as our new Head Office and
has been fit out to allow for expansion in the coming years.
Capital expenditure:
Construction of Mozambique Facility
Expansion of East Africa Facility
Dubai Head Office
Other
Total capital expenditure
2020
USD’000
18.7
3.8
0.9
1.1
24.5
We anticipate capital expenditure of USD 7m to USD 10m
in 2021, with the majority being related to completing the
construction of the Mozambique camp. Incremental spend
is only expected if specifically linked to new projects.
Net assets at 31 December 2020 were USD 72.1m
(2019: USD 69.5m) with fixed assets comprising the
majority of the total balance sheet following the
significant capital expenditure in the year. Excluding
right-to-use assets, 72% of fixed assets relate to land and
buildings which are leased on a long-term basis to clients
or used to support our other projects through their use
as workshops, warehouses, staff accommodation facilities
and offices.
Breakup of net assets:
Cash and cash equivalents
Loan notes
Net cash
Net working capital
Non-current assets
Tangible owned assets
Right-to-use assets
Goodwill
Lease liabilities and end of
service benefit
Net assets
2020
USD’000
17.6
2019
USD’000
21.4
(6.5)
11.2
14.4
51.0
47.3
3.5
0.1
(4.5)
72.1
-
21.4
22.7
28.5
26.1
2.4
0.1
(3.2)
69.5
Net cash of USD 11.2m at 31 December 2020 reflects a
decrease from USD 21.4m at the previous year end yet
still provides the business with significant liquidity after a
period during which we have invested significantly in our
Mozambique facility.
The Company raised USD 6.5m of debt under the Medium-
Term Note programme launched in the second half of
2020. This debt was raised to accelerate the development
of our Mozambique facility and more generally in response
to an increase in client inquiries relating to undertaking
large projects. Under the terms of the MTN programme,
a subsidiary of the Company issued unsecured notes
to investors repayable in the second half of 2022. The
programme was closed on 31 December 2020. Further
details can be found in note 23 of the consolidated financial
statements.
Liquidity and available cash are often assessed by potential
customers during the contract adjudication process.
Given the strength of our balance sheet, strong cash flow
generated by our ongoing contracts, and the success of
the MTN programme, we are satisfied that both metrics are
sufficient so that we can continue to bid for larger projects
and have the financial capacity to mobilise multiple large
projects simultaneously.
* Cash conversion is calculated as cash flows generated from operations divided
by operating profit.
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24 | RA International | Annual Report 2020
SHARE BUYBACK PROGRAMME
On 8 June 2020, the Company commenced a Share Buyback
Programme (the “Buyback”) to provide the Company with
a pool of shares that can be used to incentivise and retain
key directors, officers, and staff. On 9 September 2020, it
was announced that the Board had elected to conclude the
Buyback with immediate effect given the budgeted amount
had been reached. In total, 3.9m shares were repurchased
which represents 2.2% of the issued share capital of the
Company prior to the Buyback commencing.
On 20 October 2020, the company announced it had
re-issued 1.8m of these shares as restricted ordinary
shares (“Restricted Shares”) to key senior members of
staff, including certain persons discharging managerial
responsibilities, as detailed in the announcement. The
Restricted Shares are subject to a six-month lock-in from
the date of issue, during which they cannot be sold or
transferred. At the same time, the Company announced the
issuance of 1.8m share options which are scheduled to vest
over a three-year period. Further details can be found in
note 13 of the consolidated financial statements.
DIVIDEND
The Board is recommending a dividend of 1.35p per share
which, subject to shareholder approval, will be paid on
8 July 2021 to all shareholders on the register at 28 May
2021. A dividend of 1.25p per share totalling USD 2.7m was
declared and authorised during 2020 (2019: USD 2.2m) and
was subsequently paid on 9 July 2020.
Dividends declared
2020
GBP’pence
1.35
2019
GBP’pence
1.25
2018
GBP’pence
1.00
The Board’s intention continues to be to adopt a
progressive dividend policy and to increase the dividend in
future years while retaining sufficient liquidity to meet the
needs of the business and to fund continued growth. The
Board believes the continued growth in our customer base
and the pursuit of a one-supplier model will provide a basis
for continued earnings growth in the future.
Andrew Bolter
Chief Financial Officer
30 March 2021
RISK MANAGEMENT
Here, we outline the principle risks to RA International’s
business, together with how they are managed.
Working in remote and challenging locations requires
the Group to have robust risk controls and policies that
are integrated into all levels of the business. The Audit
Committee considers the Group’s risks at scheduled
meetings (minimum three times per year) and ensures
the Group’s risks are properly understood, quantified and
appropriately managed by the Board.
Day-to-day risk management is the responsibility of the
Executive Management Team (“EMT”) and the Country
Managers. The EMT continually assesses the Group’s
exposure to risk and seeks to ensure that risks are
mitigated wherever possible. RA’s risk register is maintained
by the in-house Legal Officer and changes in risk and
mitigating actions are discussed regularly at Executive
Management Team meetings
The principle risks that the Board believe are most likely to
affect the business operations, impact strategy and financial
performance, and influence reputation are set out below.
There may be other risks that are currently unknown to the
Group or which may become material in the future.
STRATEGIC RISKS
Risk level
PROFITABLE GROWTH
Failure to retain and win profitable business will impact our financial performance and growth. The business is
influenced by ODA budgets, political stability, attitudes towards outsourcing services, and our reputation in the
marketplace.
Key risks:
• mispricing bids,
• inability to resource sufficient
labour, equipment, and
materials,
• not understanding or meeting
our customers or stakeholder
expectations, and
• inadequate capacity of back-
office functions to support the
sales and execution process.
Controls:
• An intelligence-led approach to bidding for contracts, using local intelligence in respect of labour,
materials and regional variances feeds into the tender processes, protecting operating margins.
• Comprehensive bid review process.
• Project timeline and quality of delivery controlled by minimising the sub-contracting of works.
• Investment in local labour and capacity building where possible and practical to enhance local intelligence.
• Supplier onboarding and review procedures.
• Long-term contracts with suppliers to optimise pricing.
Mitigation Priorities:
• Continue to improve and refine the bidding process and ensure our value proposition remains
competitive.
• Hire qualified personnel and subject matter experts with relevant technical expertise.
• Continuous focus on supplier quality, undertaking periodic reviews of suppliers’ facilities, policies and
procedures.
• Identify new suppliers and increase capacity-building efforts to ensure both local and international
suppliers can meet our expanding requirements.
• Continue to invest in departments that enable our sales and execution teams; specifically.
Compliance, QHSE, Human Resources, and project management.
• Further develop and expand our use of Customer Relationship Management processes.
REPUTATION MANAGEMENT
Failure to manage our reputation will mean that we will be less likely to win or renew business from existing
customers or attract new clients. It will also affect our ability to operate in new and existing geographies, attract
growth capital, and attract individuals with the necessary skills and talent.
Key risks:
• bribery and corruption issues
either by our employees or
counterparties,
Controls:
• Stakeholder relationship management programmes in place.
• A zero-tolerance stance on bribery and corruption along with ongoing training programs on ABC
risk management.
• violations of ILO standards, and
• An independent whistleblowing channel.
human rights,
• failure to respond and manage
incidents in a responsible
manner,
• not delivering projects on time
or to required standards, and
• cyber risks and data security
resulting from cyber attack
or unintentional breaches of
company or client trade secrets,
and confidential or otherwise
protected data.
• HR policies in place to safeguard ILO rights and meticulous supervision and audit of local labour
supplier companies, and continuous assessment of their adherence to labour rights and regulations.
• Policies in place with respect to modern slavery, discrimination, and gifts and hospitality.
• Crisis management training undertaken, and crisis team formed.
Mitigation priorities:
• Provide regular training and encourage all employees to use the whistleblowing tool.
• Provide regular training sessions across the whole company on ethical and compliance related subjects.
• Continuous review and updating of company policies in relation to compliance related subjects led
by the in-house Compliance Officer.
• Continue to refine crisis management procedures and identify additional suppliers of crisis/
catastrophe services.
• Enhance internal due diligence procedures for suppliers and third-party contractors.
• Increase the hiring of local HR representatives on worksites.
• Undertaking cyber security audits and executing improvement implementation plan.
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FINANCIAL RISKS
Risk level
FINANCIAL CONTROL FAILURE
Failure to impose strong financial controls may result in: inaccurate and delayed reporting of financial results, the
inability to meet financial contractual reporting obligations, a heightened risk of error and fraud, poor quality data
leading to poor business decisions, inaccurate forecasting, the failure to create a suitable capital structure, and
an inability to make critical financial transactions. In turn, this could lead to financial instability, potential business
losses and a negative impact on our reputation.
Key risks:
• inadequate internal financial
Controls:
• Group finance processes and procedures.
controls surrounding
authorisations, receipts,
payments, and cash
management,
• inaccurate budgets and
forecasts,
• failure to adequately manage
cash flow, and
• misappropriation of assets, theft
or fraud.
• Limit cash payments to the greatest extent possible and limit those staff who have access to cash.
Operations funded on a weekly basis.
• Detailed monitoring of weekly cash flow forecasts.
• Centralisation of payments with CFO approving significant transactions.
Mitigation Priorities:
• Continuous review and enhancement of Group financial policies and procedures.
• Continuous improvement of forecasting and reporting processes.
• Continue to refine group budgeting process.
• Increased focus on training and development of staff to ensure their skillsets meet the expanding
requirements of the Group.
• Continue to put systems in place which allow for greater accuracy in the allocation of shared costs.
LEGAL AND COMPLIANCE RISKS
Risk level
CONTRACT NON-COMPLIANCE
Failure to deliver on contracted client requirements or failure to meet and report against agreed service
performance levels may lead to significant financial penalties, legal notices, onerous contract provisions, or early
termination of contracts. Failure to meet obligations to employees or suppliers may mead to litigation, work
stoppages and reputational damage.
Key risk:
• failure to adhere to contract
Controls:
• Standard Operating Procedures consistent across the Group.
commitments to clients,
employees, suppliers, and other
stakeholders.
• Standard supplier terms and conditions.
• Local professional advisors in all operating jurisdictions.
• Flat organisation structure whereby project and functional managers can access the EMT or
relevant technical experts to interpret and discuss contractual requirements.
Mitigation Priorities:
• Continued refinement of standard operating procedures and project management and performance
monitoring.
• Continued review and enhancement of internal management system (RAMS).
RESPONSIBLE AND ETHICAL BEHAVIOUR
Irresponsible or unethical behaviour can lead to breach of human rights, labour rights, inadequate health and
safety measures leading to sickness, injury or death, issues relating to gender rights and child labour. This
behaviour can arise from the actions of individual employees or as a result of a poor company culture. The result
might be the loss of clients, inability to win new business and loss of reputation.
Key risks:
• failure to communicate the
Controls:
• All new employees undergo induction training to explain the Company’s values, Code of Conduct,
Company’s purpose and values,
company policies and expected behaviour.
• quality, health and safety
• Reporting of unethical behaviour or malpractice through the whistleblowing tool.
practices not adhered to or
ignored, and
• inadequate monitoring of
employee actions.
• All staff handling equipment and materials receive health and safety training where behavioural
norms and attitudes towards health and safety are challenged.
• Labour rights initiatives of governments in countries of operation are supported consistently.
• Health and safety compliant software adopted for reporting accidents and incidents that assists
with trend analysis, which then leads to accident/incident prevention.
Mitigation Priorities:
• Continue to provide regular training and encourage all employees to use the whistleblowing tool.
• Encourage more employees to become advocates for responsible behaviour through the
engagement of the Company’s sustainability strategy.
• Daily training on worksites about health and safety.
• Hiring subject matter experts to understand local culture when hiring local labour.
26 | RA International | Annual Report 2020
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
OPERATIONAL RISKS
Risk level
FAILURE IN MANAGING RESOURCES
Failure to attract, acquire or develop adequate resources could impact financial and operational performance,
and reputation. COVID-19, travel restrictions and delays to the movement of goods has the potential to impact
RA’s logistics and operations in the short term.
Key risks:
• delivery delays of goods,
Controls:
• Standard procurement processes and quality control procedures.
• heightened travel and
• Alternative material and logistics providers in place in order to manage any potential delays, and
transportation restrictions due
to COVID-pandemic and civil
unrest,
• quality-related issues with
equipment and materials
procured, and
• inability to recruit or mobilise
the right skills and labour.
where necessary and economically feasible, RA invests in its own logistics infrastructure.
• Manpower requirements and skillsets are reviewed by several departments to ensure accuracy.
• Group talent acquisition team focused on recruitment with improvements continuously being made
to retention schemes and succession planning, including expansion of reward programmes linked to
performance.
• Flexible working hours and locations where practical.
Mitigation Priorities:
• Potential logistics issues are closely monitored and prioritised to ensure timely delivery of people,
goods and services.
• Establishing RA’s own logistics capabilities in territories where delays are likely to continue to occur.
• Close contact maintained with clients to ensure any delays are communicated and mitigated..
• Continuous improvement of quality control and full life-cycle maintenance activities.
CATASTROPHIC EVENTS
Failure to effectively respond to events that result from our own actions or events that are beyond our control
such as adverse weather, political upheaval, violence, pandemic (COVID-19), climate change or war. Such events
can result in multiple fatalities, severe property and asset damage, travel restrictions, work stoppages, and/or very
serious long-term environmental damage.
Key risks:
• lack of appropriate procedures
Controls:
• Crisis training is undertaken and incident emergency response plans in place.
to tackle incidents,
• delays to contract starts and/
or contract delivery leading
to a reduction and/or delay in
revenues, and
• inadequate or delayed response
to catastrophic events due
to poor health and safety
procedures and policies.
• HSE team includes medical professionals and those with significant experience in crises.
• Triage Standing Operating Procedure introduced in early in 2020 in response to COVID-19 outbreak
to assist in preventing the spread of the disease.
• Group run medical facilities where third-party providers are non-existent or deemed inadequate.
• Internal capacity to perform COVID-19 testing.
• Adequate risk transfer via insurance.
• Strong balance sheet and adequate liquidity to trade through periods of reduced turnover.
Mitigation Priorities:
• Continuous research of environmental risk factors that may affect contract performance.
• Continuous investment in security risk management tools and reports as well as other sources of
local intelligence.
• Continued enhancement of the breadth of insurance coverage.
• Continuous review of crisis management, disaster recovery and business continuity plans.
• Constant update of COVID-19 protocols in line with the UK Government and World Health
Organisation requirements.
We deliver. Regardless. | 27
CORPORATE GOVERNANCEFINANCIAL REPORT
CORPORATE
GOVERNANCE
A strong corporate culture
Since the business was founded in 2004, being a
responsible company and employer was placed
firmly at the heart of everything we do. Growing
the business sustainably is a key pillar of our
growth strategy and sustainability is integral to our
core business activities with consideration for the
environmental, social and financial impacts of the
decisions we make embedded in our culture.
CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT BOARD OF DIRECTORS
The Board is responsible for formulating,
reviewing and approving the Company’s
strategy, budget and corporate actions.
SANGITA SHAH
Non-Executive Chair
SORAYA NARFELDT
Chief Executive Officer
LARS NARFELDT
Chief Operating Officer
ANDREW BOLTER
Chief Financial Officer
Date of appointment:
3 May 2018
Date of appointment:
13 March 2018
Date of appointment:
13 March 2018
Date of appointment:
3 May 2018
Sangita is a qualified accountant
and has extensive experience
in corporate finance, journalism
and senior consultancy. Sangita
brings with her a wealth of
AIM listed and public market
experience. She has held a
number of senior roles within
blue chip organisations, including
Unilever, Mars, Ernst & Young and
KPMG, and is a past President
of the Chartered Institute of
Journalists. Sangita is also a
regular consultant to a number
of companies and to HM Cabinet
Office. Sangita is a frequent
keynote speaker in forums
for the Windsor Leadership
Trust, European Parliament and
European School of Management.
External appointments:
Non-Executive Chair of AIM
traded Bilby plc, a director
of NASDAQ listed Forward
Industries Inc., a director to
Global Reach Technology EMEA
Limited and a director of the
Quoted Companies Alliance.
Committee membership:
R
A
Soraya founded RA International
in 2004 with Lars Narfeldt after
witnessing large organisations
unable to provide a comprehensive
range of services or manage or
implement projects effectively
when operating in remote
locations. This resulted in
inefficiencies that hindered
the progress of peacekeeping,
humanitarian and commercial
projects.
Soraya has been selected as one
of the most influential women
leaders by Arabian Business three
times and was also a finalist for
the Ernst & Young Entrepreneur
of the Year award in 2012. As a
strong advocate and supporter
of responsible business practices
and community-based businesses,
Soraya has contributed to several
high-profile journals including the
Forced Migration Review and has
spoken at various international
industry forums including the
China Mining Summit, IPOA Annual
Summit and the European Bank for
Reconstruction and Development
(EBRD) event.
She has also consulted widely
with officials in RA International’s
countries of operations on
issues such as Corporate Social
Responsibility and on Aid Funded
Projects.
Lars has served for over two
decades in pivotal leadership
and development roles in some
of the world’s most challenging
environments. The first 15 years
of his post university career
were spent working with the
Swedish government and the
UN. He worked with SIDA in
Palestine and with the UN in the
Democratic Republic of Congo,
Uzbekistan, Sierra Leone and
Afghanistan. While in Sierra
Leone, Lars managed a team of
over 2,000 individuals and ran
the UN Volunteer Programme.
As COO, Lars is responsible for
day-to-day operations across the
company. His role encompasses
setting the CSR strategy, HR,
communications and marketing
and compliance. He has been
instrumental in developing the
Company’s strong brand equity
with clients, and in geographies
and markets.
Andrew joined RA International
in 2011 from Ernst & Young’s
Transaction Advisory Services
Group where he was primarily
responsible for assisting multi-
national corporations establish
operations in the Middle East and
Africa.
He is a Canadian Chartered
Accountant, Chartered
Professional Accountant, and a
Chartered Business Valuator. He
has advised on and executed
equity and debt financing
transactions, diligence, valuations,
business planning services,
merger mediations, hedge
structuring and testing, and
other general corporate finance
transactions.
He has also performed and
managed projects relating
to assurance services, tax
structuring, risk management,
internal control audits and system
implementations. Upon joining,
Andrew introduced the Group’s
enterprise resource planning
system and worked with the CEO
to develop a long-term strategic
plan which has contributed to a
more diverse customer base and
significant business growth.
Committee Key: R
Remuneration A
Audit C
Chair
30 | RA International | Annual Report 2020
ALEC CARSTAIRS
Non-Executive Director
PHILIP HAYDN-SLATER
Non-Executive Director
IAN HENDERSON
Non-Executive Director
Date of appointment:
3 May 2018
Date of appointment:
3 May 2018
Date of appointment:
3 May 2018
Alec is a qualified chartered
accountant with over 35 years’
experience of advising companies
ranging from new start-ups to
multi-national corporations,
principally in the oil and gas
sector. During his time at Ernst
& Young Alec acted as Head
of UK Oil and Gas Mergers and
Acquisitions, and becoming
Managing Partner of its Aberdeen
office and an elected member
of the UK Governance Council.
Alec has previously served as
an independent Non-Executive
Director of Ithaca Energy Inc. and
was formerly President of the
Aberdeen & Grampian Chamber
of Commerce.
External appointments:
Director of Cela Consulting
Limited, Director of Vine Trust
and Director of Techfest.
Committee membership:
AC
Philip has over 35 years of City
experience, principally within
institutional sales with a number
of well-known firms. Philip was
co-founder of HD Capital Partners
Ltd, where he was a Director
for over five years. Prior to this
he spent eight years as Head of
Corporate Broking at WH Ireland
Ltd. in London, where he was
responsible for originating and
managing the sales process for a
range of transactions, including
flotations and secondary placings
for corporate clients on AIM and
other international exchanges,
largely in the resources sector.
Philip has worked in both
London and Sydney for financial
organisations that include ABN
Amro, Bankers Trust, James
Capel & Co and Bain Securities
(Deutsche Bank) Sydney.
External appointments:
Non-Executive Chairman of
RiverFort Global Opportunities
plc, Director of ADX Energy
Ltd., and Partner of Eclipse Film
Partners No.35 LLP.
Committee membership:
RC
A
Ian is a qualified chartered
accountant (ACA and FCA), and
holds an LLB in Scots Law and
an MA in Philosophy and Politics
from Edinburgh University. Ian
has had a distinguished career
as an investment manager
in London for over 35 years
during which time he managed,
inter alia, JP Morgan’s Natural
Resources funds for over 20
years, which reached assets of
over USD 10b, and JP Morgan’s
Global Financials fund. Following
his retirement as manager, Ian
became an investment adviser for
the JP Morgan Natural Resources
funds before serving as a Non-
Executive Director of Endeavour
Mining Corporation, the TSX-V
listed gold mining company
operating in West Africa.
External appointments:
Non-Executive Director of BMO
Capital Markets Limited and
Bluejay Mining Plc.
Committee membership:
R
We deliver. Regardless. | 31
CORPORATE GOVERNANCEFINANCIAL REPORTSTRATEGIC REPORT
EXECUTIVE MANAGEMENT TEAM
In addition to the CEO, COO and CFO,
the EMT consists of senior members of
RA International’s management team.
Each member is involved
in operations, often
down to the level of field
implementation, and has
experience working in
remote locations and a
deep understanding of the
profound impact seemingly
small problems can have on
project delivery.
The EMT is supported
by a committed team of
management and senior
staff spread across the
Company, at Head Office,
Regional, Country and
Project level. Country
Managers are particularly
important in ensuring that
the right resources are
in place and available to
bring in projects on time,
on budget and to the right
quality standards. This team
of talented individuals all
contribute to the growth
of the business and are
all committed to bringing
about positive change to the
local communities where RA
works.
SORAYA NARFELDT
Chief Executive Officer
LARS NARFELDT
Chief Operating Officer
ANDREW BOLTER
Chief Financial Officer
For details see page 30
For details see page 30
For details see page 30
TREVOR STRATFORD
Business Development
Director
WILLIAM WARNOCK
Director of US Business
Development
Date of appointment:
April 2011
Date of appointment:
January 2019
Trevor has over 20 years of
expertise in business development
and brings a deep understanding
of remote site service delivery,
project management, contract
management, technical
knowledge and a mindset for
client satisfaction. His mandate
is to extend the Company’s
geographical reach and most
importantly, develop new and
existing customer relationships.
Trevor has worked across
geographies that encompass
South Africa, Zimbabwe, Malawi,
Senegal, Dubai, Iraq and Brazil.
He has commissioned projects in
a variety of industries including
electrical contracting, security,
water treatment, packaging,
and mining. Trevor has drawn
on his diverse experience and
knowledge to enhance the
implementation and service
delivery of the Company’s
projects.
William is responsible for
growing RA International’s US
Government project portfolio
and has played a vital role in
the Company’s transition to
embracing many USG business
practices. William reports to the
CEO on project development
and provides recommendations
for strategic investments. Before
RA International, William served
for 30 years with the US Navy
including acting as Defence
Attaché assigned to the US
Mission in Somalia. He has held
a variety of diplomatic and
military roles and has served as
Commander of all naval forces
deployed to Kuwait and Qatar
where he was responsible for
the employment of over 1,200
US Navy personnel. He has also
served as the Naval Liaison to the
White House under Presidents
Bush and Clinton.
32 | RA International | Annual Report 2020
CHAIR’S CORPORATE
GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
DEAR SHAREHOLDER,
I am pleased to introduce the corporate governance section
of our report. The corporate governance section of our
report explains how the Company’s governance framework
supports the principles of integrity, strong ethical values
and professionalism that are integral to our business. As
Non-Executive Chair of the Company, it is my responsibility
to work with my fellow Board members to ensure that the
Company embraces corporate governance and delivers the
highest standards we can. It is within my role to manage the
Board in the best interests of our many stakeholders. As we
said last year, as a Board we believe that practising good
corporate governance is essential for building a successful
and sustainable business. Our commitment to good
corporate governance has allowed us to build a healthy
corporate culture throughout the organisation. The Board is
fully supportive of embracing the highest levels of corporate
governance possible.
The Company adopts the Quoted Companies Alliance
Corporate Governance Code 2018 (the ‘QCA Code’) which
it believes to be the most appropriate recognised corporate
governance code for RA International. The QCA has ten
principles which the Company is required to adhere to and
to make certain disclosures both within this report and
on its website. The Company’s website disclosures can
be found at https://ragrpplc.co.uk/investors/corporate-
governance/. Additional information relating to how we take
into account wider stakeholder and social responsibilities
can be found in the Company’s Sustainability Report 2020
which can be found at www.rainternationalservices.com/
sustainability/.
2020 has been a particularly challenging year, the impact
of COVID-19 cannot be ignored and we, like virtually all
businesses across the globe, have not been unaffected. The
importance of a united Board working to ensure that the
Company continues to deliver for its shareholders whilst
maintaining high standards of corporate governance is
imperative to the continuing success of the business.
The importance of maintaining strong relationships and
engaging with our shareholders continues, and we have an
active investor relations and communications programme in
place. The Board strives to ensure that there are numerous
opportunities for investors to engage with both the Board
and Executive Management Team. Due to COVID-19 the
Company’s 2020 Annual General Meeting was held as a
closed meeting and shareholders were encouraged to ask
questions directly following the meeting. We continue to
have an open dialogue with all our stakeholders and seek to
ensure that our strategy, business model and performance
are clearly understood. The Executive Management Team
were virtually available to meet with institutional and
retail shareholders and investment analysts, following the
announcement of the Company’s interim and final results.
CORPORATE GOVERNANCE FRAMEWORK
The Board
The Board retains full and effective control over the
Company. The Company holds regularly scheduled
Board meetings throughout the year at which financial,
operations and other reports are considered and, where
appropriate, voted on. Ad hoc Board meetings are held as
and when the demands of the business require. The Board
is responsible for the Group’s strategy, performance, key
financial and compliance issues, approval of any major
capital expenditure and the framework of internal controls.
Individual Directors may engage outside advisors at the
expense of the Company in appropriate circumstances. The
Board is responsible for monitoring the activities of the
Executive Management Team. The Directors believe that
the Board as a whole has a broad range of commercial and
professional skills which enable it to carry out its duties
responsibly and effectively.
At the date of this report, the Board has seven
members comprising three Executive Directors and four
Non- Executive Directors, and whose biographies and roles
are set out on pages 30 to 31. The Non-Executive Directors
bring an independent view to the Board. The Chair has the
responsibility of ensuring that the Board discharges its
responsibilities and is also responsible for facilitating full
and constructive contributions from each member of the
Board in determination of the Group’s strategy and overall
commercial objectives.
We deliver. Regardless. | 33
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CHAIR’S CORPORATE GOVERNANCE STATEMENT
CONTINUED
Roles and Responsibilities
Position
Chair
Roles and Responsibilities
•
The Chair’s role is part-time, she is a Non-Executive Director. The Chair’s primary
responsibility is the leadership of the Board, showing objective judgement and
promoting a culture of openness and debate, and ensuring its effectiveness in
all aspects of its role including maintaining effective communication with RA’s
shareholders and other stakeholders. The Chair is also responsible for ensuring the
integrity, openness and effectiveness of the Board/Executive relationship. This is
effected through meetings, as well as contact with other Board members.
•
The Chair also has the responsibility, in conjunction with the Company Secretary, for
ensuring that all Directors are aware of their duties and are able to perform them.
•
The Chair ensures that the Board Committees are appropriately structured.
Executive Management Team •
Non-Executive Directors
•
The Chief Executive Officer is responsible for the day to day running of the Group’s
operations and for implementing the strategy agreed by the Board. She plays a pivotal
role in developing and reviewing the strategy in consultation with the Board and
executing it with the support of the Executive Management Team. The Chief Operating
Officer is responsible for the Company’s daily operations and Company’s sustainability
efforts, and the Chief Financial Officer is responsible for the Company’s financial
controls and reporting to the Board.
The Non-Executive Directors bring independent judgement and have a particular
responsibility to challenge independently and constructively the performance of
Executive Management and to monitor the performance of the Executive Management
Team in the delivery of agreed objectives and targets. In meeting this responsibility,
the Non-Executive Directors meet periodically without the Executive Management
Team present who must be satisfied with the integrity of the Group’s financial
statements and with the robustness of RA’s internal control.
•
•
The Non-Executive Directors have the responsibility of ensuring that the Board
discharges its responsibilities, and are also responsible for facilitating full and
constructive contributions from each member of the Board in determination of the
Company’s strategy and overall commercial objectives.
The Non-Executive Directors are required to be free from any relationships or
circumstances which are likely to affect the independence of their judgement and
undertake that they have sufficient time to discharge their responsibilities effectively.
Governance structure
The Company is committed to a corporate culture that is
based on sound ethical values and behaviours and it seeks
to instil these values across the organisation as a whole. The
Board is fully committed to taking this responsibility very
seriously.
The Company has adopted a code on dealings in securities
which the Board regards as appropriate for an AIM listed
company and is compliant with the UK Market Abuse
Regulations. The Company takes all reasonable steps to
ensure compliance by the Directors, employees and agents
with the provisions of the AIM rules relating to dealings in
the Company’s securities.
The Directors take the issue of bribery and corruption
seriously. The Directors acknowledge the importance
of ensuring that the Company, its employees and those
third parties to which the business engages with are
operating within the requirements of the Bribery Act. The
Company has adopted and implemented comprehensive
anti-bribery and corruption policies and procedures (the
‘ABC Policies’) and the Directors impose a zero-tolerance
approach to non-compliance. It is the Executive Directors’
responsibility to ensure that all of the Company’s
employees, in the various locations, are complying
with the ABC policies and that the Company has in
place adequate procedures to ensure that its partners,
contractors and suppliers do not engage in bribery or
corrupt activity.
Culture and social responsibility
The Board believes that running a sustainable business
should benefit everyone, including its customers, employees
34 | RA International | Annual Report 2020
and the host communities in locations in which the
Company operates. Having a multi-cultural and multi-
lingual workforce of people who are experienced with the
way in which operations work in Africa and beyond is key
to delivering this. Accordingly, the Company cooperates
respectfully with people on the ground, building trust and
goodwill. This has been especially important during this
challenging year. The Company provides stable employment
and training to local unskilled or semi-skilled labourers. To
this end, the Company has a direct impact on the wellbeing
of its employees’ families, and on the local economy in
general.
More information can be found in the Company’s
Sustainability Report 2021, which is available on the
Company’s website.
Board diversity
The Board recognises the benefits of diverse skill sets,
capabilities, backgrounds and experience to the effective
functioning of the Board and delivery of strategy. Both the
CEO and the Chair are females representing 28.5% of the
Board.
Male
Female
71.5%
28.5%
Matters reserved for the Board
The Board retains full and effective control over the
Company and is responsible for the Company’s strategy
and key financial and compliance issues. There are certain
matters that are reserved for the Board, and they include
but are not limited to:
Strategy and Management
Approval of: long-term objectives, commercial strategic
aims, annual operating and capital expenditure budgets,
extending the Company’s activities into new business, any
decision to cease to operate all or any material part of the
Company’s business.
Structure and Capital
Capital structure, major changes to the Company’s corporate
structure, changes to the management and control structure,
change to the Company’s listing, alteration of the Company’s
articles of association, change in the Company’s accounting
reference date, registered name or business name.
Financial Reporting and Controls
Approval of: interim and year end accounts, management
statements and any other preliminary announcements of
financial results, annual reports, dividend policy, declaration
of any dividend and significant changes in accounting
policies/practice.
Internal Controls
Ensuring maintenance of a sound system of internal control
and risk management.
Finance
Raising new capital and confirmation of major financing
facilities, recommendation of dividends, operating and
capital expenditure budgets, granting of security over any
material Company asset.
Contracts
All contracts above USD 7.0m, major capital expenditure
over USD 2.5m, contracts which are material or strategic,
contracts outside of the approved budget and not in the
ordinary course of business, major investments or any
acquisitions/disposals and transactions with Directors or
other related parties which are not in the ordinary course of
business.
Communications
Approval or resolutions and documentation put forward
to shareholders, approval of circulars, prospectuses and
listing particulars and approval of press releases concerning
matters decided by the Board.
Board membership and other appointments
Director and senior management appointments and the
Company’s succession planning are evaluated on a regular
basis.
Delegation of Authority
Division of responsibilities between the Chair, the Chief
Executive and Executive Directors, delegated levels of
authority, including the Chief Executive’s authority limits,
establishment of Board Committees and approval of terms
of reference of Board Committees.
Corporate Governance Matters
Review of the Company’s overall corporate governance
arrangements.
We deliver. Regardless. | 35
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CHAIR’S CORPORATE GOVERNANCE STATEMENT
CONTINUED
Other
Policies including the share dealing code, appointment or
change of the Company’s principal professional advisers
and auditors, overall levels of insurance for the Company,
material litigation, any decision likely to have a material
impact on the Company or Company from any perspective
including, but not limited to, financial, operational, strategic
or reputational, matters reserved for Board decisions and
which the Board considers suitable for delegation are
contained in the terms of reference of its Committees, and
the grant of options, warrants or any other form of security
convertible into shares.
Board Committees
The Board has two sub-Committees, namely the Audit
Committee and Remuneration Committee, with delegated
responsibility to monitor their respective areas and to
report back to the full Board. Board Committees operate
under clearly defined terms of reference to ensure proper
functioning of the Committees and effective application
of best practice. Board Committees are required to report
back to the Board following a Committee meeting.
The Remuneration Committee report can be found on
page 41 and the Audit Committee report can be found on
page 44
On behalf of the Board
Sangita Shah
Non-Executive Chair
30 March 2021
36 | RA International | Annual Report 2020
REVIEW OF THE BOARD’S
EFFECTIVENESS
FOR THE YEAR ENDED 31 DECEMBER 2020
HOW THE BOARD OPERATES
The Board meets formally four times a year with ad hoc Board
meetings as the business demands. There is a strong flow
of communication between the Directors, and in particular
between the CEO and Chair. The Board has a structured
agenda for the year ensuring that all relevant matters are
considered, with sufficient time allowed for discussion. Board
meeting agendas are set in consultation with both the CEO
and Chair, with consideration being given to both standing
agenda items and the strategic and operational needs of the
business. Comprehensive Board papers are circulated well in
advance of meetings, giving Directors ample time to review
the documentation and enabling an effective meeting. Minutes
are drawn up to reflect a true record of the discussions and
decisions made. Resulting actions are tracked for appropriate
delivery and follow up.
The Directors have a broad knowledge of the business
and understand their duties as directors of a UK company
quoted on AIM and are developing appropriate corporate
governance procedures and looking forward to building
further on the governance structure already in place.
The Company’s Nomad provides annual board room training.
The Directors have access to the Company’s Nominated
Adviser (Nomad) who also provides an annual board room
training and the Company Secretary helps keep the Board up
to date in corporate governance and liaises with the Nomad
on areas of AIM requirements. The Company Secretary has
frequent communication with both the Chair and CEO and
is available to other members of the Board as required. The
Directors also have access to the Company’s auditors and
lawyers as and when required and the Directors are able, at
the Company’s expense to obtain advice from other external
advisors if required.
REVIEW OF BOARD EFFECTIVENESS
The Board considers that its effectiveness and the individual
performance of its Directors is vital to the success of the
Company.
The need to meet the requirements of the QCA that a
formal Board evaluation process was recognised. In 2020,
the Company conducted its second internal review of Board
effectiveness. As part of the process, Directors were asked to
evaluate the Board structure, membership and functioning,
compensation, culture and ethics, and corporate governance.
Following this, one-to-one interviews were held between the
Chair and each Board member.
BOARD AND BOARD COMMITTEE ATTENDANCE
AT MEETINGS DURING 2020
Board meetings
(4 scheduled)
Audit
Committee
meetings (3)
Remuneration
Committee
meetings (3)
Sangita Shah
Soraya Narfeldt
Lars Narfeldt
Andrew Bolter
Alec Carstairs
Ian Henderson
Philip Haydn-Slater
On behalf of the Board
Sangita Shah
Non-Executive Chair
30 March 2021
4
4
4
4
4
4
4
3
N/A
N/A
N/A
3
N/A
3
3
N/A
N/A
N/A
N/A
3
3
We deliver. Regardless. | 37
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
PRINCIPAL ACTIVITIES
SUBSTANTIAL SHAREHOLDERS
The Company is a global provider of services in remote
and challenging locations. It specialises in three service
channels: construction, integrated facilities management,
and supply chain. The Company has a strong and loyal
customer base, largely comprising UN agencies, western
governments and global corporations.
The Company provides comprehensive, flexible,
mission-critical support to its clients enabling them to
focus on the delivery of their respective businesses and
services. The Company’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.
A detailed explanation of the Company’s principle
activities and business model can be found on pages 4 to 7
and page 8 respectively.
RESULTS AND DIVIDENDS
During 2020, a final dividend payment of 1.25p per share was
declared to shareholders of the Company on 9 July 2020.
The profit for the year ended 31 December 2020 was
USD 6.6m.
The Board is recommending a final dividend of 1.35p
per share. Subject to shareholder approval at the 2021
AGM, the final dividend for 2020 will become due and
payable on 8 July 2021 to shareholders on the register as
of 28 May 2021.
DIRECTORS
The Directors who served during the period and at the
date of this Report are as follows:
Sangita Shah
Soraya Narfeldt
Lars Narfeldt
Andrew Bolter
Alec Carstairs
Ian Henderson
Non-Executive Chair
Executive Director
Executive Director
Executive Director
Non-Executive Director
Non-Executive Director
Philip Haydn-Slater
Non-Executive Director
38 | RA International | Annual Report 2020
As at 31 December 2020 the Company was aware of the
following major shareholders representing 3% or more of
voting rights attached to the issued Ordinary Share capital
of the Company.
Soraya Narfeldt
Lars Narfeldt
Jupiter Asset Management Limited
River and Mercantile Asset Management
Major
shareholder
representing
3% or more
of voting
rights
55.9%
24.5%
6.4%
3.1%
DIRECTORS’ INTERESTS
The Directors who held office at 31 December 2020 had the
following interests in the ordinary shares in the capital of
the Company:
Sangita Shah
Soraya Narfeldt
Lars Narfeldt
Andrew Bolter
Alec Carstairs
Ian Henderson
Philip Haydn-Slater
GOING CONCERN
Number of
ordinary shares
42,983
95,857,145
42,000,000
1,412,061
108,743
—
100,000
The financial information for the year to 31 December
2020 has been prepared assuming that the Company will
continue as a going concern. Under the going concern
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention
nor the necessity of liquidation, ceasing trading or seeking
protection from creditors pursuant to laws or regulations.
Appointment Date
3 May 2018 to present
13 March 2018 to present
13 March 2018 to present
3 May 2018 to present
3 May 2018 to present
3 May 2018 to present
3 May 2018 to present
In assessing the basis of preparation of the financial
statements, the Board has undertaken a rigorous assessment
of going concern, considering financial forecasts covering a
period to 30 June 2022 and utilising scenario analysis to test
the adequacy of the Group’s liquidity. These include multiple
scenarios which specifically forecast the continued impact
of COVID-19 on the Group’s trading, principally the impact
of delays relating to the timing of new project awards and
commencement date of new projects. Under all scenarios,
the Group has concluded that it has sufficient cash reserves
to fund trading, continued capital investment and payment
of proposed dividends through the going concern period.
The Group has access to a USD 2m overdraft facility, which
is not expected to be utilised at any point throughout the
going concern period, and there are no capital repayments
associated with the loan notes issued during the year.
The Group has performed a comprehensive analysis with
respect to the potential operational and financial risks
associated with COVID-19. The primary impact of COVID-19 on
the Group is that new contract awards and the commencement
of new projects continue to be delayed as a result of the
Group’s clients being unable to travel to project sites. Based
on discussions with customers, the Board expects that many
of these pending awards will be formally made in the second
half of 2021 and that execution of substantial project work will
commence towards the end of 2021 or early 2022.
The Board has approved financial forecasts that take into
account the above referenced scenario as well as potential
downside sensitivities which include the delay of all new
significant contract awards until 2022. Under all of these
scenarios the Group continues to be cash positive and
further mitigations, such as delaying capex spend, have
been identified to preserve cash if required to provide
additional headroom and remain cash positive if there was
a worsening of conditions beyond the downside scenarios
considered. Any scenario whereby trading performance
is worse than those modelled is considered to be remote
given the level of committed contracted work in place.
The Board has also assessed the Group’s ability to overcome
the operating challenges associated with continuing to
service clients throughout the term of the pandemic and
has concluded that the Group will be able to continue to
meet its contractual commitments. The Board has come
to this conclusion given that the Group has been able to
meet its contractual requirements throughout the COVID-19
pandemic period. Additionally, the Group’s primary activity
is undertaking projects in locations where a crisis situation
is either ongoing or there is a reasonable expectation
that a crisis will occur during the term of the project. As a
result, the Group has existing plans in place to address the
operating challenges associated with restrictions on both
the movement of people and goods. It also has existing
infrastructure, procedures, and insurance in place to address
the safety and security of its staff and assets.
Under all scenarios, the Group has sufficient cash reserves
to be able to operate for the foreseeable future. On that
basis, the Board is therefore satisfied that it is appropriate
to adopt the going concern basis of accounting in preparing
the financial statements.
AUDITOR
Each person who is a Director at the date of approval of this
Annual Report confirms that:
•
•
So far as the Director is aware, there is no relevant audit
information of which the auditor is unaware, and
The Directors has taken all steps that they ought to
have taken as a Director to make themselves aware of
any relevant audit information and to establish that the
auditor is aware of that information.
This information is given and should be interpreted in
accordance with the provisions of s418 of the Companies
Act 2006.
STREAMLINED ENERGY AND CARBON
REPORTING
The Directors are aware of the introduction of Streamlined
Energy and Carbon Reporting Framework (SECR). Which
requires companies subject to SECR to include information
relating to their energy use and associated Green House
Gas (GHG) emissions. The Company, being categorised
as an unquoted company under the UK Companies Act, is
required to report only the UK energy use, and UK; scope
1, scope 2 and scope 3 GHG emissions. Given RA has no
physical trading operations located in the UK, the quantum
for all categories for the current and prior period are nil.
STRATEGIC REPORT
The Company is required by the Companies Act 2006 to
include a Strategic Report in its Annual Report. The information
that fulfils this requirement can be found on pages 4 to 27.
Please refer to our Section 172 statement, specifically
page 14, for evidence of the Directors’ engagement with
suppliers, customers and others during the financial year.
Signed by order of the Directors
On behalf of the Board
AMBA Secretaries Limited
Company Secretary
30 March 2021
We deliver. Regardless. | 39
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT DIRECTORS’ RESPONSIBILITY STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable laws and regulations.
Company law requires the Directors to prepare Group and
Company financial statements for each financial year. The
Directors are required by the AIM Rules of the London
Stock Exchange to prepare Group financial statements
in accordance with international accounting standards in
conformity with the requirements of the Companies Act
2006, and have elected under company law to prepare
the Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable
law), including Financial Reporting Standard 101, ‘Reduced
Disclosure Framework’ (FRS 101).
The Company financial statements are required by law and
international accounting standards in conformity with the
requirements of the Companies Act 2006 to present fairly
the financial position and performance of the Company, the
Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that
Act to financial statements giving a true and fair view are
references to their achieving a fair presentation.
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
the Company and of the profit or loss of the Company for
that period.
In preparing each of the Group and Company financial
statements, the Directors are required to:
•
provide additional disclosures when compliance with
the specific requirements in IFRSs, and in respect of
the parent company financial statements, FRS 101, is
insufficient to enable users to understand the impact of
particular transactions, other events and conditions on
the Group and Company financial position and financial
performance.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and the Company’s transactions and disclose
with reasonable accuracy at any time the financial position
of the Group and the Company and enable them to
ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act
2006.
They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website.
Legislation in the UK governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
On behalf of Board
•
•
•
select suitable accounting policies and then apply them
consistently,
make judgements and accounting estimates that are
reasonable,
Andrew Bolter
Chief Financial Officer
30 March 2021
for the Group financial statements, state whether they
have been prepared in accordance with IFRS as adopted
by the EU and, for the Company financial statements,
state whether applicable UK accounting standards
have been followed, subject to any material departures
disclosed and explained in the Company financial
statements,
•
prepare the financial statements on a going concern
basis unless it is inappropriate to presume that the
Group and the Company will continue in business, and
40 | RA International | Annual Report 2020
REMUNERATION COMMITTEE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The Remuneration Committee held three meetings during
2020. Members’ attendance records are disclosed in the
Corporate Governance Report on page 37 contained in this
Annual Report.
PLANS FOR 2021
•
•
Review third party advice to determine Director
Remuneration packages including bonus levels linked to
clear performance objectives.
Upon obtaining third party advice, consider further
awards to be made to the Executive Team and senior
management team in the form of Long Term Incentive
Awards.
EXECUTIVE DIRECTORS’ SERVICE CONTRACTS
The Company’s policy on Directors’ service contracts are
indicated below:
Director
Effective term
Notice period
Soraya Narfeldt
Lars Narfeldt
Andrew Bolter
29 June 2018
29 June 2018
29 June 2018
6 months
6 months
6 months
Non-Executive letters of appointment
Director
Sangita Shah
Alec Carstairs
Ian Henderson
Effective term
29 June 2018
29 June 2018
29 June 2018
Philip Haydn-Slater
29 June 2018
Appointment
Term
3 years
3 years
3 years
3 years
2020 ACTIVITIES
•
•
•
The Remuneration Committee engaged a third-party
advisor during 2020 to provide guidance on the optimal
structure of an Executive Directors’ remuneration
package, including benchmarking on levels of annual
bonuses and how this could be linked to performance.
The Remuneration Committee explored and approved a
share incentive scheme which was rolled out in October
2020 across the business.
A Company-wide salary increase was agreed by the
Remuneration Committee.
THE REMUNERATION COMMITTEE
The Remuneration Committee is a standing committee
of the Board of the Company and is comprised of three
Non- Executive Directors, whose names and profiles are set
out on pages 30 to 31. It is the Remuneration Committee’s
responsibility to review the performance of the Executive
Directors and to make recommendations to the Board on
matters relating to their remuneration and terms of service.
The Remuneration Committee assists the Board in
discharging its oversight responsibilities relating to
the attraction, compensation, evaluation and retention
of Executive Directors and key senior management
employees. It aims to ensure that the Company’s
remuneration policy attracts and retains employees
with the right skills and expertise needed to enable the
Company to achieve its goals and strategies, and that
fair and competitive compensation, with appropriate
performance incentives, are awarded.
The Remuneration Committee aims to ensure that the
Company’s remuneration policy is aligned with and
promotes the implementation of the Company’s strategy
and effective risk management for the long term and all
employees and Executive Directors are appropriately
remunerated. The Remuneration Committee also makes
recommendations to the Board on proposals for the
granting of share options and other equity incentives
pursuant to any employee share option scheme or equity
incentive plans in operation from time to time.
We deliver. Regardless. | 41
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
REMUNERATION COMMITTEE REPORT
CONTINUED
DIRECTORS’ REMUNERATION
Fees/basic salary1
GBP’000
Benefits in kind
GBP’000
Other
remuneration2
GBP’000
Total
2020
GBP’000
Total
2019
GBP’000
Executive
Soraya Narfeldt
Lars Narfeldt
Andrew Bolter
Non-Executive
Sangita Shah
Alec Carstairs
Philip Haydn-Slater
Ian Henderson
Total
302
193
194
82
52
52
52
927
22
17
11
—
—
—
—
50
18
6
282
—
—
—
—
342
216
487
82
52
52
52
306
1,283
329
207
211
81
51
51
51
981
DIRECTORS’ SHARE OPTIONS
The Directors recognise the need to attract, incentivise and retain employees and the importance of ensuring that all
employees are well motivated and are able to identify closely with the performance of the Company. To that end, the
Company introduced the Share Option Scheme 2018 (“Scheme”) under which options may be granted to eligible employees
from time to time, acting through the Board and subject to the rules of the Scheme.
The principle terms of the Scheme are summarised below.
Option awards under the Scheme provide the right to acquire a certain number of ordinary shares in the Company in
the future, subject to the satisfaction of any specified performance conditions set at the discretion of the Remuneration
Committee. The Scheme is a UK non-tax advantaged, discretionary share option plan which provides for the grant of options
to employees of the Company. The Board believes that the Scheme is an effective mechanism to incentivise key employees
of the Company.
Performance options under the Scheme were granted to Andrew Bolter (Executive Director) as set out on the below and
have performance vesting conditions.
Option holder
Date of grant
Share options
Andrew Bolter
29 June 2018
1,304,347
Option exercise period
(with performance
conditions)
From the third
anniversary of
Admission to the
sixth anniversary of
Admission
Exercise price GBP
0.10
The vesting of options granted under the Scheme are conditional on continuous employment and the achievement of a
hurdle total shareholder return as at the end of the three-year performance period.
If at the end of the performance period, the performance condition is not satisfied, the option will immediately lapse and
cease to be exercisable.
The Company’s stock price was 51.50 pence as at the close of 31 December 2020.
1 The Executive Directors each have two employment contracts with the Company. One with the Company in connection with their role as a Director, and another with
a subsidiary reflecting their role as a member of Executive Management. The above figure denotes the total base salary for both employment contracts. Executive
Management contracts are denominated in United Arab Emirate dirhams and have been converted to UK Pounds at a rate of 1 UAE Dirham: GBP 0.2187, being the average
exchange rate during 2020.
2 Other remuneration includes end of service benefits which are defined in note 25 of the annual financial statements and share based payments which are
detailed in note 13.
42 | RA International | Annual Report 2020
NON-EXECUTIVE DIRECTORS
The below represents the annual fees paid to the Non-
Executive Directors.
Non-Executive Directors
Fees (GBP)
Sangita Shah
Alec Carstairs
Philip Haydn-Slater
Ian Henderson
82,000
52,000
52,000
52,000
CONSIDERATION BY THE DIRECTORS
OF MATTERS RELATING TO DIRECTORS’
REMUNERATION
The Committee is responsible for making recommendations
to the Board regarding the framework for the remuneration
of the Executive Directors and other members of the
Executive Management Team. The Committee works within
its terms of reference, and its role includes:
•
•
•
•
•
Determining and agreeing with the Board, the
Remuneration Policy for all Executive Directors and
under guidance of the Executive Directors, other
members of Executive Management Team.
Ensuring Executive Director remuneration packages are
competitive.
Determining whether annual bonus payments should
be made and approving levels for individual Executive
Directors.
Determining each year whether any awards/grants
should be made under the incentive schemes and the
value of such awards.
Considering any new long-term incentive scheme
awards and performance criteria.
• Agreeing Directors’ service contracts and notice periods.
The Company is committed to maintaining an open and
transparent dialogue with shareholders on all aspects of
Remuneration within the Company.
Philip Haydn–Slater
Remuneration Committee Chairman
30 March 2021
We deliver. Regardless. | 43
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT AUDIT COMMITTEE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
during the financial year is set out in the Corporate
Governance report on page 37.
The Audit Committee has considered the Company’s
internal control and risk management policies and systems,
their effectiveness and the requirements for an internal
audit function in the context of the Company’s overall risk
management system. The Audit Committee is satisfied that
the Company does not currently require an internal audit
function, however, it will continue to periodically review the
situation.
The Audit Committee has responsibility for reviewing the
adequacy and security of the Company’s arrangements
for its employees and contractors to raise concerns about
possible wrongdoing in financial reporting, fraud, and
bribery and ensure that appropriate follow up action is
taken. No issues have been highlighted.
The Audit Committee has assessed the impact of COVID-19
on the Company, both with respect to the viability of the
business and the necessary disclosures required to be
included in the financial accounts. Uncertainty surrounding
the timing of new project awards and when recently
awarded projects will begin to generate substantial revenue
(and positive operating cash flows) is seen as the primary
risk in the business achieving its short-term financial targets.
The Audit Committee has reviewed multiple scenarios
detailing how delays in project awards and commencement
may affect the Company’s liquidity position and has
challenged management on assumptions and judgements
made in preparing these scenarios. The Audit Committee is
satisfied that under adverse trading conditions, specifically
an environment in which movement restrictions caused by
COVID-19 remain widely prevalent throughout 2021, the
Company will continue to trade as a going concern. The
Audit Committee has also assessed COVID-19 costs, which
have been presented within non-underlying items, and
concluded that these expenses are primarily discretionary
in nature and in all cases directly result from the ongoing
COVID-19 pandemic.
The external auditors, Ernst & Young, were re-appointed
during the financial year by shareholders at the
Company’s AGM. The Audit Committee shall undertake a
comprehensive review of the quality, effectiveness, value
and independence of the audit provided by Ernst & Young
each year, seeking the views of the wider Board, together
with relevant members of the Committee.
2020 ACTIVITIES:
•
•
•
Reviewed and approved the Company’s 2020 Interim
Report.
Reviewed and approved the 2020 audit plan presented
by the Company’s auditors.
Reviewed the independence and competence of the
Company’s auditors, Ernst & Young.
The Audit Committee is responsible for reviewing and
monitoring the effectiveness of the Company’s financial
reporting, internal control policies, and procedures for the
identification, assessment and reporting of risk. The latter
two areas are integral to the Company’s core management
processes and the Committee devotes significant time
to receiving and reviewing reports from the Executive
Management Team and external auditors relating to the
interim and annual accounts and the accounting and
internal control systems in use throughout the Company.
The Audit Committee is also responsible for overseeing the
relationship with the external auditor.
An essential part of the integrity of the financial statements
lies around the key assumptions and estimates or
judgements to be made. The Committee reviews key
judgements prior to publication of the financial statements
at both the end of the financial year and at the end of the
six-month interim period, as well as considering significant
issues throughout the year. In particular, this includes
reviewing any subjective material assumptions within the
Company’s activities to enable an appropriate determination
of asset valuation, provisioning and the accounting
treatment thereof. The Audit Committee reviewed and was
satisfied that the judgements exercised by management on
material items contained within the Report and Financial
Statements are reasonable.
The Audit Committee comprises three Non-Executive
Directors whose names and profiles are set out on page 30
and 31. Although not a member of the Audit Committee, the
Chief Financial Officer, whose name and profile is set out on
page 30 is invited to attend meetings.
The Committee has engaged Ernst & Young LLP (EY) to
act as external auditors and they are also invited to attend
Committee meetings, unless they have a conflict of interest.
The Audit Committee also meets with the auditors without
management in attendance. The Audit Committee has
committed to meet no less than three times in each financial
year and has unrestricted access to the Company’s external
auditors. In 2020, the Audit Committee met three times and
the members attendance record at Committee meetings
44 | RA International | Annual Report 2020
RESPONSIBILITIES
The Committee reviews and makes recommendations to the
Board on:
• any change in accounting policies,
•
•
•
•
•
•
decisions requiring a major element of judgement and
risk,
compliance with accounting standards and legal and
regulatory requirements,
disclosures in the Interim and Annual Report and
financial statements,
reviewing the effectiveness of the Company’s financial
and internal controls,
any significant concerns of the external auditor about
the conduct, results or overall outcome of the annual
audit of the Company, and
any matters that may significantly affect the
independence of the external auditor.
Alec Carstairs
Chairman of the Audit Committee
30 March 2021
We deliver. Regardless. | 45
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT FINANCIAL
STATEMENTS
Resilient business model
Our financial performance highlights the
durability of the business model. From a
revenue perspective, we have seen growth year
on year in our IFM and supply chain channels.
Construction activity was most affected by
COVID-19, however, the Group maintained
robust profitability despite the challenges
presented throughout 2020.
46 | RA International | Annual Report 2020
We deliver. Regardless. | 47
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
OPINION
In our opinion:
•
•
•
RA International Group plc’s group financial statements and parent company financial statements (the “financial
statements”) give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December
2020 and of the Group’s profit for the year then ended,
the Group financial statements have been properly prepared in international accounting standards conformity with the
requirements of the Companies Act 2006,
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of RA International Group plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2020 which comprise:
Group
Consolidated balance sheet as at 31 December 2020
Parent company
Balance sheet as at 31 December 2020
Consolidated income statement for the year then ended
Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the
year then ended
Statement of cash flows for the year then ended
Consolidated statement of changes in equity for the year
then ended
Related notes 1 to 8 to the financial statements including a
summary of significant accounting policies
Consolidated statement of cash flows for the year then
ended
Related notes 1 to 31 to the financial statements, including a
summary of significant accounting policies
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable
law and international accounting standards in conformity with the requirements of the Companies Act 2006. The financial
reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law
and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and
Parent Company’s ability to continue to adopt the going concern basis of accounting included:
•
In conjunction with our walkthrough of the Group’s financial close process, we confirmed our understanding of
management’s going concern assessment process and also engaged with management early to ensure all key factors
were considered in their assessment.
48 | RA International | Annual Report 2020
•
•
•
•
•
•
We obtained management’s going concern assessment, including the cash forecasts and models for the going concern
period ending 30 June 2022. The Group has modelled adverse scenarios, including delay of all new significant contract
awards until 2022, in their forecasts in order to incorporate severe but plausible changes in key assumptions to the
forecasted liquidity of the Group.
We have tested the factors and assumptions included in each modelled scenario for the cash forecast and covenant
calculation and we have tested the impact of COVID-19 included in each forecasted scenario.
We considered the appropriateness of the methods used to calculate the cash forecasts and determined through
inspection and testing of the methodology and calculations that the methods utilised were appropriately sophisticated to
be able to make an assessment for the entity.
We considered the mitigating factors included in the cash forecasts that are within the control of the Group, which
included potential deferral of capital expenditure. This included our review of the Group’s non-operating cash outflows
and evaluating the Group’s ability to control these outflows as mitigating actions if required. We also verified actual
current cash positions and credit facilities available to the Group, as well as assumptions applied with respect to
utilisation and capital repayments of loan notes.
We have performed reverse stress testing, principally related to further delays in contract execution, in order to identify
what factors, either in isolation or in combination with other factors, would lead to the Group utilising all liquidity during
the going concern period.
We reviewed the Group’s going concern disclosures included in the Annual Report in order to assess that the disclosures
were appropriate and in conformity with the reporting standards.
The Group experienced a decline in both revenue and profits generated during 2020 as a result of the impact of COVID-19.
The continuation of this global pandemic is expected to cause further delays in commencement and execution of certain
contracts over the going concern assessment period.
CONCLUSION
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a going
concern from when the financial statements are authorised for issue until 30 June 2022.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a
guarantee as to the Group’s ability to continue as a going concern.
OVERVIEW OF OUR AUDIT APPROACH
Audit scope
Key audit matters
Materiality
•
•
•
•
•
We performed an audit of the complete financial
information of all components.
The components where we performed full audit
procedures accounted for 100% of profit before tax
100% of revenue and 100% of total assets.
Risk of misstatement due to management override,
fraud and error, specifically around revenue
recognition.
Risk of non-compliance with laws and regulations.
Overall Group materiality of $331,000 which
represents 5% of profit before tax.
We deliver. Regardless. | 49
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT
CONTINUED
AN OVERVIEW OF THE SCOPE OF THE PARENT COMPANY AND GROUP AUDITS
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial
statements. All trading activity is managed and reported through the Group’s Dubai subsidiary, and we have classified this
entity as full scope providing 100% coverage of the Group’s trading activities. We take into account size, risk profile, the
organisation of the Group and effectiveness of Group-wide controls, changes in the business environment and other factors
when assessing the level of work to be performed.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, we designated the Dubai entity as full scope and performed an
audit of the complete financial information.
The reporting components where we performed audit procedures accounted for 100% (2019: 100%) of the Group’s profit
before tax, 100% (2019: 100%) of the Group’s revenue and 100% (2019: 100%) of the Group’s total assets.
All audit work performed for the purposes of the audit was undertaken by the primary audit team.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.
50 | RA International | Annual Report 2020
Risk
Our response to the risk
Key observations communicated to
the Audit Committee
We communicated to the Audit
Committee that:
•
•
•
Through our walkthrough
procedures performed, and
assessment of key internal
controls, we assessed the
design and implementation
of the controls in place to be
appropriate.
After examination of the
correlations between revenue
streams through debtors to
cash, no material issues were
identified.
Through our journal entry
testing, specifically revenue
manual journal postings near
year end and related to any
judgements or assumptions
applied by management, we
had identified no material
issues.
•
Revenue had been recorded
appropriately.
We concluded that revenue
recognition accounting
policies adopted are inline with
requirements of IFRS15 and have
been applied consistently.
Risk of misstatement due to
management override, fraud and
error, specifically around revenue
recognition.
Refer to accounting policies
(page 62) and Notes 5 and 6 of the
consolidated financial statements
(page 68).
Auditing standards require that
we consider the risk of fraud or
management override of internal
controls in relation to revenue
recognition.
The Group generates revenue through
3 service channels: integrated facilities
management ($31.3m), construction
($19.1m) and supply chain services
($14.0m) (see accounting policies
Note 4, page 62). We recognise that
sales arrangements vary depending
on the service being provided with
accommodation and supply requiring
minimal judgement. Accordingly, we
focused on construction and longer-
term services contracts.
The complexity and judgements are
mainly related to estimation of the
cost to complete of the projects,
expected revenues and the related
percentage of completion which
the group applies for recognising
revenues. The determination of the
cost to complete impacts the value
and timing of revenue and profit
recognised over the life of the project,
and is the key area of judgement and
estimation that could have a material
impact on the financial statements.
Our principal audit procedures included:
•
•
•
•
•
•
•
Performing walkthroughs of the different
revenue cycles to gain an understanding
of when the revenue should be
recognised, identification and assessment
of judgements or assumptions applied.
Obtaining an understanding and
evaluating the key internal controls
which support the project management
and accounting. These included on the
percentage of completion, estimates to
complete for both revenue and costs and
provisions for loss making projects or
unbilled receivables.
Detailed substantive procedures on
individually significant projects as
well as high risk projects, such as loss
making or particular locations. This
included challenging the assumptions
and estimates applied by management
and substantiating transactions with
underlying documents including
contracts and change orders.
Utilising computer assisted data analytics
techniques to examine the correlation of
revenue streams through debtors to cash;
highlighting anomalies and non-routine
transactions (business activities) and
perform focused procedures on these
transactions.
Made enquires of non-finance staff,
to challenge our understanding and
accounting applied on open or active
projects at year end. Discussions
undertaken with CEO, COO, in-country
management team and project managers.
Detailed manual journal entry testing
and review of top side entries, applying
particular focus to individually unusual
and/or material revenue manual journals.
Reviewing management’s assessment
of IFRS 15 applied to new contracts and
challenging key assumptions applied in
their assessment to ensure consistent
application of standard and accounting
policies.
We performed full scope audit procedures
over this risk area, which covered 100% of the
risk amount.
We deliver. Regardless. | 51
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT
CONTINUED
Risk
Our response to the risk
Key observations communicated to
the Audit Committee
We communicated to the Audit
Committee that:
•
•
•
Through our walkthrough of the
expenditure cycle, we assessed
the design and implementation
of the relevant controls to be
effective.
Through our journal entry
testing, specifically those
manual journal postings
affecting cash balances, no
transactions of an unsupported
or non-bona fide business
nature were identified.
Through our testing of large
and unusual cash receipts and
payments, all items tested were
considered to be bona-fide
business transactions.
Based on the audit procedures
performed, no instances of
non-compliance with laws and
regulations were noted.
Risk of non-compliance with laws
and regulations
Refer to accounting policies and
Note 4 of the consolidated financial
statements (page 62).
Auditing standards require that we
consider the risk of non-compliance
with laws and regulations on the
financial statements.
RA International operate in countries
that rank amongst the highest on the
Transparency International Corruption
Perceptions Index and have limited
legal structures. Both factors increase
the risk of corruption and bribery.
There is a risk that if the controls and
policies in place are not sufficient
to prevent or detect bribery or
instances of corruption, there could
be a material impact on the financial
statements due to unrecorded
liabilities or impact of reputational
risk such as recoverability of assets or
continued revenue / profit generation.
Our principal audit procedures included:
•
•
•
Enquiries of management (including
the Group’s Legal Counsel, the Chief
Executive Officer, Chief Operating Officer
and Chief Financial Officer of the Group)
as well as the Audit Committee, as to
whether the entity is in compliance with
such laws and regulations.
Review of company policies and
procedures related to risk management,
including Anti Bribery and Corruption
(“ABC”) and whistleblowing policies.
Review of Board minutes, inspection of
correspondence, if any, with the relevant
licensing or regulatory authorities,
review of significant contracts (including
external advice on legal, tax and
jurisdiction specific matters).
•
Performance of targeted procedures on
the procurement process:
o
o
o
Performed walkthrough of
the expenditure cycle to gain
an understanding of different
procurement processes and controls
in place to address risks associated
with ABC.
Using data analytical tools to identify
unusual journal postings originating
from cash (such as manual cash
payments and receipts).
Detailed testing of cash payments
and higher risk expenditure (including
travel and entertainment, advances
and bonuses).
We performed full scope audit procedures
over this risk area.
52 | RA International | Annual Report 2020
In the prior year, our Auditor’s Report included a key audit matter in relation to management’s consideration of the potential
impact on going concern due to the impact of COVID-19 on the wider financial markets and the Company’s share price. In the
current year, there is greater certainty as to the impact of COVID-19 and implications from a going concern perspective. The
level of uncertainty and need for significant judgements to be applied by management has reduced, as a result we no longer
consider going concern to be a key audit matter.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements
on the audit and in forming our audit opinion.
MATERIALITY
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the
nature and extent of our audit procedures.
We determined materiality for the Group to be $442,000 (2019: $644,000), which is 5% (2019: 5%) of profit before tax. We
believe that profit before tax provides us with an appropriate basis for determining misstatements of importance to the users
of the financial statements.
We determined materiality for the Parent Company to be $588,000 (2019: $695,000), which is 1% (2019: 1%) of total equity.
The Parent Company is nontrading and principal activity that of a holding company; therefore we consider it appropriate to
adopt equity as basis for materiality as this is considered the key performance metric of users of accounts.
During the course of our audit, we reassessed initial materiality for the Group based on the final results position. This resulted
in final materiality being assessed at $331,000, which is a decrease of $111,000. No change was noted for Parent Company
materiality.
PERFORMANCE MATERIALITY
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our
judgement was that performance materiality was 75% (2019: 75%) of our planning materiality, namely $331,000 (2019:
$483,000). We have set performance materiality at this percentage due to various considerations including the past history
of misstatements, our ability to assess the likelihood of misstatements, the effectiveness of the internal control environment
and other factors affecting the entity and its financial reporting.
REPORTING THRESHOLD
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $22,000
(2019: $32,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. Our reporting threshold was updated after reassessing materiality to $17,000,
being 5% of our final materiality.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our opinion.
OTHER INFORMATION
The other information comprises the information included in the Annual Report other than the financial statements and our
Auditor’s Report thereon. The Directors are responsible for the other information within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such
We deliver. Regardless. | 53
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT
CONTINUED
material inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements, and
•
the Strategic Report and Directors’ Report have been prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the group and the Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us, or
•
the parent company financial are not in agreement with the accounting records and returns, or
• certain disclosures of Directors’ remuneration specified by law are not made, or
• we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ Responsibilities Statement set out on page 40, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an Auditor’s Report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
EXPLANATION AS TO WHAT EXTENT THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING
IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
54 | RA International | Annual Report 2020
for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance
of the Company and management.
•
•
•
•
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined
that the most significant are those that relate to the reporting framework (IFRS, Companies Act 2006, AIM Listing Rules)
and the relevant tax compliance regulations in the jurisdictions in which the Group operates. In addition, we concluded
that there are certain significant laws and regulations in relation to health and safety, employee matters and anti-bribery
and corruption practices.
We understood how the Group is complying with those frameworks by making enquiries of management, those
responsible for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through our
review of Board minutes, papers provided to the Audit Committee and correspondence received from regulatory bodies
and noted that there was no contradictory evidence.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and
regulations. Our procedures included a review of Board minutes to identify any non-compliance with laws and
regulations, a review of the reporting to the Audit Committee on compliance with regulations, enquiries of legal counsel
and management as well as utilisation of data analytical tools to review for potential non-compliance with laws and
regulations with a focus on manual journals and transactions which have heightened risk by nature. Further details of the
procedures performed, and our observations are included in the key audit matters section of this report.
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might
occur by meeting with management, including within various parts of the business, to understand where they considered
there was susceptibility to fraud. We also considered performance targets and the potential for management to manage
earnings or influence the perceptions of analysts. Where this risk was considered to be higher, we performed audit
procedures to address each identified fraud risk. Areas identified the greatest potential for fraud included revenue
recognition and in common with all audits under ISAs (UK), we are also required to perform specific procedures to
respond to the risk of management override. Based on this understanding we designed audit procedures to identity
non-compliance with such laws and regulations. Our procedures involved enquiries of management (including CEO, COO,
CFO, Non-Executive Directors and internal legal counsel), review of the Group’s policies and procedures related to risk
management, review of Board minutes, inspection of correspondence, if any, with the relevant licensing or regulatory
authorities, and review of significant contracts. Further details of the procedures performed, and our observations are
included in the key audit matters section of this report.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s Report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an Auditor’s Report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Paul Copland (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Edinburgh
Date: 30 March 2021
We deliver. Regardless. | 55
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
Revenue
Cost of sales
Gross profit
Administrative expenses
Underlying operating profit
Non-underlying items
Operating profit
Investment revenue
Finance costs
Profit before tax
Tax expense
Profit and total comprehensive income for the year
Basic and diluted earnings per share (cents)
Notes
2020
USD’000
7
9
9
9
11
12
64,441
(45,647)
18,794
(8,429)
10,365
(3,046)
7,319
278
(970)
6,627
(61)
6,566
3.8
2019
USD’000
Restated
69,064
(47,174)
21,890
(8,204)
13,686
(46)
13,640
294
(675)
13,259
(384)
12,875
7.4
*
The Company has modified the presentation of the Consolidated Statement of Comprehensive Income to reclassify holding company expenses as
administrative expenses. See note 5.
56 | RA International | Annual Report 2020
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Assets
Non-current assets
Property, plant, and equipment
Goodwill
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Merger reserve
Treasury shares
Share based payment reserve
Retained earnings
Total equity
Non-current liabilities
Loan notes
Lease liabilities
Employees’ end of service benefits
Current liabilities
Lease liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Notes
2020
USD’000
2019
USD’000
16
17
18
19
20
21
22
23
24
25
24
26
50,886
138
51,024
9,142
12,666
17,632
39,440
90,464
24,300
18,254
(17,803)
(1,363)
177
48,509
72,074
6,471
3,720
517
10,708
318
7,364
7,682
18,390
90,464
28,516
138
28,654
6,178
24,520
21,393
52,091
80,745
24,300
18,254
(17,803)
—
47
44,685
69,483
—
2,397
391
2,788
437
8,037
8,474
11,262
80,745
The financial statements were approved by the Board of Directors on 30 March 2021 and signed on its behalf by:
Soraya Narfeldt
CEO
Andrew Bolter
CFO
The attached notes 1 to 31 form part of the consolidated financial statements.
We deliver. Regardless. | 57
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Share
capital
USD’000
Share
premium
USD’000
Merger
reserve
USD’000
Treasury
shares
USD’000
As at 1 January 2019
24,300
18,254
(17,803)
Total comprehensive income for the period
Share based payments (note 13)
Dividends declared and paid (note 14)
—
—
—
—
—
—
—
—
—
As at 31 December 2019
24,300
18,254
(17,803)
Total comprehensive income for the period
Share based payments (note 13)
Dividends declared and paid (note 14)
Purchase of treasury shares (note 22)
Issuance of treasury shares (note 22)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(2,600)
1,237
Share
based
payment
reserve
USD’000
16
—
31
—
47
—
130
—
—
—
Retained
earnings
USD’000
Total
USD’000
34,013
58,780
12,875
12,875
—
31
(2,203)
(2,203)
44,685
69,483
6,566
6,566
—
130
(2,674)
(2,674)
—
(2,600)
(68)
1,169
As at 31 December 2020
24,300
18,254
(17,803)
(1,363)
177
48,509
72,074
58 | RA International | Annual Report 2020
CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Operating activities
Operating profit
Adjustments for non-cash and other items:
Depreciation on property, plant, and equipment
Loss on disposal of property, plant, and equipment
Unrealised differences on translation of foreign balances
Provision for employees’ end of service benefits
Share based payments
Working capital adjustments:
Inventories
Trade and other receivables
Trade and other payables
Cash flows generated from operations
Tax paid
Employees’ end of service benefits paid
Net cash flows from operating activities
Investing activities
Investment revenue received
Purchase of property, plant, and equipment
Proceeds from disposal of property, plant, and equipment
Acquisition of subsidiary (net of cash acquired)
Net cash flows used in investing activities
Financing activities
Proceeds from borrowings
Repayment of lease liabilities
Finance costs paid
Dividends paid
Purchase of treasury shares
Net cash flows used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents as at start of the period
Effect of foreign exchange on cash and cash equivalents
Cash and cash equivalents as at end of the period
Notes
2020
USD’000
2019
USD’000
7,319
13,640
16
16
25
13
11
25
16
16
23
24
14
22
20
20
3,731
93
5
209
1,299
12,656
(2,964)
12,240
(616)
21,316
(117)
(83)
21,116
278
(24,450)
24
—
2,577
46
(165)
174
31
16,303
(1,607)
(8,306)
2,559
8,949
(144)
(133)
8,672
294
(12,358)
170
(106)
(24,148)
(12,000)
6,084
(564)
(970)
(2,674)
(2,600)
(724)
(3,756)
21,393
(5)
17,632
—
(370)
(675)
(2,203)
—
(3,248)
(6,576)
27,804
165
21,393
We deliver. Regardless. | 59
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
1 CORPORATE INFORMATION
The principal activity of RA International Group plc (“RAI” or the “Company”) and its subsidiaries (together the “Group”) is
providing services in demanding and remote areas. These services include construction, integrated facilities management, and
supply chain services.
RAI was incorporated on 13 March 2018 as a public company in England and Wales under registration number 11252957. The
address of its registered office is One Fleet Place, London, EC4M 7WS.
2 BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006. They have been prepared under the historical cost basis
and have been presented in United States Dollars (USD). All values are rounded to the nearest thousand (USD’000), except
where otherwise indicated.
Going concern
In assessing the basis of preparation of the financial statements the Board has undertaken a rigorous assessment of going
concern, considering financial forecasts covering a period to 30 June 2022 and utilising scenario analysis to test the adequacy
of the Group’s liquidity. These include multiple scenarios which specifically forecast the continued impact of COVID-19 on
the Group’s trading, principally the impact of delays relating to the timing of new project awards and commencement date
of new projects. Under all scenarios, the Group has concluded that it has sufficient cash reserves to fund trading, continued
capital investment and payment of proposed dividends through the going concern period. The Group has access to a USD 2m
overdraft facility, which is not expected to be utilised at any point throughout the going concern period, and there are no
capital repayments associated with the loan notes issued during the year.
The Group has performed a comprehensive analysis with respect to the potential operational and financial risks associated
with COVID-19. The primary impact of COVID-19 on the Group is that new contract awards and the commencement of new
projects continue to be delayed as a result of the Group’s clients being unable to travel to project sites. Based on discussions
with customers, the Board expects that many of these pending awards will be formally made in the second half of 2021 and that
execution of substantial project work will commence towards the end of 2021 or early 2022.
The Board has approved financial forecasts that take into account the above referenced scenario as well as potential downside
sensitivities which include the delay of all new significant contract awards until 2022. Under all of these scenarios the Group
continues to be cash positive and further mitigations, such as delaying capex spend, have been identified to preserve cash if
required to provide additional headroom and remain cash positive if there was a worsening of conditions beyond the downside
scenarios considered. Any scenario whereby trading performance is worse than those modelled is considered to be remote
given the level of committed contracted work in place.
The Board has also assessed the Group’s ability to overcome the operating challenges associated with continuing to service
clients throughout the term of the pandemic and has concluded that the Group will be able to continue to meet its contractual
commitments. The Board has come to this conclusion given that the Group has been able to meet its contractual requirements
throughout the COVID-19 pandemic period. Additionally, the Group’s primary activity is undertaking projects in locations where
a crisis situation is either ongoing or there is a reasonable expectation that a crisis will occur during the term of the project.
As a result, the Group has existing plans in place to address the operating challenges associated with restrictions on both the
movement of people and goods. It also has existing infrastructure, procedures, and insurance in place to address the safety and
security of its staff and assets.
Under all scenarios, the Group has sufficient cash reserves to be able to operate for the foreseeable future. On that basis, the
Board is therefore satisfied that it is appropriate to adopt the going concern basis of accounting in preparing the financial
statements.
60 | RA International | Annual Report 2020
3 BASIS OF CONSOLIDATION
The financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2020.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if,
the Group has:
• power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee),
• exposure, or rights, to variable returns from its involvement with the investee, and
•
the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when
the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
•
•
•
the contractual arrangement with the other vote holders of the investee,
rights arising from other contractual arrangements, and
the Group’s voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Company loses control over the subsidiary. Assets, liabilities, income, and expenses of a
subsidiary acquired or disposed of during the year are included in the financial statements from the date the Group gains
control until the date the Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of a subsidiary to bring their accounting policies into line
with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.
If the Company loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling
interest, and other components of equity while any resultant gain or loss is recognised in the profit or loss. Any investment
retained is recognised at fair value.
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, which is measured at the fair value on the acquisition date. The net identifiable
assets acquired, and liabilities assumed are recorded at their respective fair values on the acquisition date. Acquisition-
related costs are expensed as incurred and included in acquisition costs.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
We deliver. Regardless. | 61
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4 SIGNIFICANT ACCOUNTING POLICIES
Revenue recognition
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer
at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or
services. The Group has concluded that it is acting as a principal in all its revenue arrangements.
Sale of goods (supply chain services)
Revenue from the sale of goods and the related logistics services is recognised when control of ownership of the goods have
passed to the buyer, usually on delivery of the goods.
Construction
Typically, revenue from construction contracts is recognised at a point in time when performance obligations have been met.
Generally, this is the same time at which client acceptance has been received. Dependant on the nature of the contracts, in
some cases revenue is recognised over time using the percentage of completion method on the basis that the performance
does not create an asset with an alternative use and the Group has an enforceable right to payment for performance
completed to date. Contract revenue corresponds to the initial amount of revenue agreed in the contract and any variations
in contract work, claims and incentive payments are recognised only to the extent that it is highly probable that they will
result in revenue, and they are capable of being reliably measured.
Services (integrated facilities management)
Revenue from providing services is recognised over time, applying the time elapsed method for accommodation and similar
services to measure progress towards complete satisfaction of the service, as the customers simultaneously receive and
consume the benefits provided by the Group.
Cost of sales
Cost of sales represent costs directly incurred or related to the revenue generating activities of the Group, including staff
costs, materials and depreciation.
Contract balances
Trade receivables
A receivable represents the Group’s right to an amount of consideration that is unconditional, meaning only the passage of
time is required before payment of the consideration is due.
Accrued revenue
Accrued revenue represents the right to consideration in exchange for goods or services transferred to a customer in
connection with fulfilling contractual performance obligations. If the Group performs by transferring goods or services to a
customer before invoicing, accrued revenue is recognised in an amount equal to the earned consideration that is conditional
on invoicing. Once an invoice has been accepted by the customer accrued revenue is reclassified as a trade receivable.
Customer advances
If a customer pays consideration before the Group transfers goods or services to the customer, a customer advance is
recognised when the payment is received by the Group. Customer advances are recognised as revenue when the Group
meets its obligations to the customer.
Borrowing costs
Borrowing costs directly attributable to the construction of an asset are capitalised as part of the cost of the asset.
Capitalisation commences when the Group incurs costs for the asset, incurs borrowing costs and undertakes activities that
are necessary to prepare the asset for its intended use or sale. Capitalisation ceases when the asset is ready for use or sale.
All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs
that are incurred in connection with the borrowing of funds.
62 | RA International | Annual Report 2020
Tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted
at the reporting date in the countries where the Group operates and generates taxable income. Management periodically
evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.
Property, plant, and equipment
Property, plant, and equipment are stated at cost less accumulated depreciation and any impairment in value. Capital work-
in-progress is not depreciated until the asset is ready for use. Depreciation is calculated on a straight-line basis over the
estimated useful lives. At the end of the useful life, assets are deemed to have no residual value. Contract specific assets are
depreciated over the lesser of the length of the project, or the useful life of the asset. The useful life of general property, plant
and equipment is as follows:
Buildings
Machinery, motor vehicles, furniture and equipment
Leasehold improvements
Lesser of 5 to 20 years
and term of land lease
2 to 10 years
Lesser of 10 years and term of land lease
The carrying values of property, plant, and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed
the estimated recoverable amount, the assets are written down, with the write down recorded in profit or loss to their
recoverable amount, being the greater of their fair value less costs to sell and their value in use.
Expenditure incurred to replace a component of an item of property, plant, and equipment that is accounted for separately
is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is
capitalised only when it increases future economic benefits of the related item of property, plant, and equipment. All other
expenditure is recognised in profit or loss as the expense is incurred.
An item of property, plant, and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use. Any gain or loss arising on 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.
Goodwill
Goodwill is stated as cost less accumulated impairment losses. Cost is calculated as the total consideration transferred less
net assets acquired.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs include those expenses incurred in bringing each
product to its present location and condition. Cost is calculated using the weighted average method. Net realisable value is
based on estimated selling price less any further costs expected to be incurred in disposal.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and balances with banks, which are readily convertible to known amounts
of cash and have a maturity of three months or less from the date of acquisition. This definition is also used for the
consolidated cash flow statement.
We deliver. Regardless. | 63
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 unless the asset is carried at a revalued amount, in which case, the reversal is treated as a
revaluation increase.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of
profit or loss.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of
time is recognised as a finance cost.
Financial instruments
i) Financial assets
Initial recognition and measurement
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics
and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant
financing component or for which the Group has applied the practical expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing component or for which the Group has applied the practical expedient
are measured at the transaction price determined under IFRS 15.
Subsequent measurement
Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to
impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified, or impaired.
Other receivables are subsequently measured at amortised cost.
64 | RA International | Annual Report 2020
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.
When arriving at the ECL we consider historical credit loss experience including any adjustments for forward-looking factors
specific to the debtors and the economic environment.
A financial asset is deemed to be in default when internal or external information indicates that the Group is unlikely to
receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A
financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Income from financial assets
Investment revenue relates to interest income accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected
life of the financial asset to that asset’s net carrying amount.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially recognised at fair value and subsequently classified at fair value through profit or loss, loans and
borrowings, or payables. Loans and borrowings and payables are recognised net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables and loan notes.
Subsequent measurement
The measurement of financial liabilities depends on their classification as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as held at fair value through profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of
recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial liability as at fair value
through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
This category also includes derivative financial instruments entered into by the Group that are not designated as hedging
instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for
trading unless they are designated as effective hedging instruments.
We deliver. Regardless. | 65
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Loans and payables
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability
and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.
Leases
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liability. The cost of right-of-use assets includes the amount of lease liabilities
recognised and initial direct costs incurred. Right-of-use assets are depreciated on a straight-line basis over the shorter of
the lease term and the estimated useful lives of the assets.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. In calculating the present value of lease payments, the Group uses its incremental
borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for
the lease payment made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change
in the lease term or a change in the lease payments.
Short-term leases and leases on low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e. those leases that have a lease
term of 12 months or less from the commencement date). It also applies the lease of low-value assets recognition exemption
to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are
recognised as an expense on a straight-line basis over the lease term.
Employees’ end of service benefits
The Group provides end of service benefits to its employees in accordance with local labour laws. The entitlement to these
benefits is based upon the 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. The Group accounts for these
benefits as a defined contribution plan under IAS 19.
Treasury shares
Treasury shares are held as a deduction from equity and are held at cost price.
66 | RA International | Annual Report 2020
Share based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby
employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an
appropriate valuation model, further details of which are provided in note 13.
That cost is recognised in employee benefits expense, included in administrative expenses, together with a corresponding
increase in equity (share based payment reserve), over the period in which the service and, where applicable, the
performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions
at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best
estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss
for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of
awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of
equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any
other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting
conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an
award unless there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions
have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested
irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
Contingencies
Contingent liabilities are not recognised in the financial statements, they are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but
disclosed when an inflow of economic benefits is probable.
Foreign currencies
The Group’s financial statements are presented in USD, which is the functional currency of all Group companies. Items
included in the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot
rate of exchange prevailing at the reporting date. All differences are taken to profit or loss.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at
the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
Foreign currency share capital (including any related share premium or additional paid-in capital) is translated using the
exchange rates as at the dates of the initial transaction. The value is not remeasured.
We deliver. Regardless. | 67
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
5 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New and amended standards and interpretations
Amendments and interpretations that apply for the first time in 2020 do not have a significant impact on the financial
statements of the Group. The Group has not early adopted any standards, interpretations or amendments that have been
issued but are not yet effective.
Presentation of Statement of Consolidated Income
The Company has modified the presentation of the Consolidated Statement of Comprehensive Income to reclassify holding
company expenses as administrative expenses, so as to increase the similarity of presentation to sector comparators. The
Company believes this provides a more meaningful basis for users of the financial statements. Prior period results have
been restated accordingly, resulting in administrative expenses as previously disclosed in the prior period income statement
increasing from USD 7,156,000 to USD 8,204,000 with no change to operating profit as a result of these reclassifications. Prior
period underlying operating profit has decreased from USD 14,734,000 to USD 13,686,000 as a result of this reclassification.
Current year holding company expenses amount to USD 1,140,000 and are included in administrative expenses.
6 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that may
affect the reported amount of assets and liabilities, revenue, expenses, disclosure of contingent liabilities, and the resultant
provisions and fair values. Such estimates are necessarily based on assumptions about several factors and actual results may
differ from reported amounts.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods affected.
a) Judgements
Use of Alternative Performance Measures
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 refers to these as non-underlying items and considers items suitable for separate presentation
that are outside normal operations and are material to the results of the Group either by virtue of size or nature. See note 9
for further details on specific balances which are classified as non-underlying items.
b) Estimates and assumptions
Percentage of completion
The Group 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 2020, USD 1,083,000 of accrued revenue had been calculated using the percentage-of-completion
method (2019: USD 2,806,000), of which USD 398,000 is supported by customer verifications (2019: USD 884,000).
Revisions to profit or loss arising from changes in estimates are accounted for in the period when the changes occur.
IFRS 16 – interest rate
In some jurisdictions where the Group holds long-term leases, the incremental borrowing rate is not readily determinable.
As a result, the incremental borrowing rate is estimated with reference to risk adjusted rates in other jurisdictions where a
market rate is determinable, and the Group’s cost of funding.
68 | RA International | Annual Report 2020
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:
Integrated facilities management
Construction
Supply chain services
Revenue by recognition timing:
Revenue recognised over time
Revenue recognised at a point in time
2020
USD’000
2019
USD’000
31,265
19,085
14,091
64,441
28,600
27,634
12,830
69,064
2020
USD’000
2019
USD’000
40,118
24,323
64,441
38,450
30,614
69,064
Geographic segment
The Group primarily operates in Africa and as such the CODM considers Africa and Other locations to be the only geographic
segments of the Group. The below geography split is based on the location of project implementation.
Revenue by geographic area of project implementation:
Africa
Other
Non-current assets by geographic area:
Africa
Other
Revenue split by customer
Customer A
Customer E
Customer F
Customer D
Customer G
Customer B
Customer C
Other
2020
USD’000
2019
USD’000
61,161
3,280
64,441
68,735
329
69,064
2020
USD’000
2019
USD’000
47,687
3,337
51,024
27,527
1,127
28,654
2020
%
2019
%
24
10
10
9
9
7
4
27
100
30
3
2
6
9
13
11
26
100
We deliver. Regardless. | 69
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
8 GROUP INFORMATION
The Company operates through its subsidiaries, listed below, which are legally or beneficially, directly or indirectly owned and
controlled by the Company.
The extent of the Company’s beneficial ownership and the principal activities of the subsidiaries are as follows:
Name of the entity
RA Africa Holdings Limited
Country of incorporation
British Virgin Islands
100%
Beneficial ownership
Registered address
RA Asia Holdings Limited
British Virgin Islands
100%
RASB Holdings Limited
British Virgin Islands
100%
RA International Limited
Cameroon
100%
RA International RCA
Central African Republic
100%
RA International Chad
Chad
RA International DRC SARL
Democratic Republic of
Congo
RA Property ApS
Denmark
RA International Guyana Inc.
Guyana
Raints Kenya Limited
Kenya
RA International Limited
Malawi
Raints Mali
Mali
RA International Limitada
Mozambique
Royal Food Solutions S.A
Mozambique
RA International Niger
Niger
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70 | RA International | Annual Report 2020
3rd floor, J&C Building, PO
Box 362, Road Town, Torola
Virgin Islands (British) VG110
3th floor, J&C Building, PO
Box 362, Road Town, Torola
Virgin Islands (British) VG110
3th floor, J&C Building, PO
Box 362, Road Town, Torola
Virgin Islands (British) VG110
537 Rue Njo-Njo, Bonaprisi,
PO Box 1245, Douala,
Cameroon
Avenue des Martyrs, Bangui,
Central African Republic
N'djamena, Chad
Kinshasa, Sis No106,
Boulevard Du 30 Juin, Dans
La Commune De La Gombe
EN RD, Congo
Tuborg Boulevard 12, 4
DK- 2900 Helerup, Denmark
210 New Market Street,
Georgetown, Guyana
770 Faith Ave, Runda Estate,
Nairobi City (North), Nairobi,
Kenya
Hanover House, Hanover
Avenue, Independence Drive,
Blantyre, Malawi
Bamako-Niarela Immeuble
Sodies Appartement C/7,
Mali
Distrito KAMPFUMO, Bairro
Sommarchield, Rua. Jose
Graverinha, no 198, R/C,
Maputo, Mozambique
Distrito Urbano 1, Bairro
Central, Rua do Sol, 23
Maputo, Mozambique
Niamey, Quartier Cite
Piudriere, Avenue du
Damergou, CI-48, Niger
Beneficial ownership
Registered address
Name of the entity
RA Contracting and Facility
Management LLC
Country of incorporation
Qatar
RA International*
Somalia
RA International FZCO
South Sudan
Reconstruction and
Assistance Company Ltd
Sudan
RA International Limited
Tanzania
RA International FZCO
UAE
RA International General
Trading LLC
RA SB Ltd.
RA International Global
Operations Limited
UAE
UAE
UK
RA International Limited
Uganda
REMSCO Uganda (SMC)
Limited
Uganda
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Berkshire General Insurance
Limited
United States of America
100%
* RA International in Somalia is not an incorporated legal entity.
63 Aniza, Doustor St. 905,
Salam International, Qatar
Mogadishu, Somalia
Plot no. 705, Block 3-K
South, , Airport Road, Hai
Matar South Sudan
115 First Quarter Graif west-
Khartoum, Kharthoum,
Republic of Sudan
369 Toure Drive, Oysterbay,
PO Box 62, Dar Es Salaam,
Tanzania
Office Number S101221O39,
Jebel Ali Free Zone, Dubai,
United Arab Emirates
Building 41, 3B Street, Al
Quoz Industrial Area 1, PO
Box 115774, Dubai, United
Arab Emirates
RAK International Corporate
Centre, Ras Al Khaimah,
United Arab Emirates
1 Fleet Place, London, EC4M
7WS, United Kingdom
4th Floor, Acacia Mall, Plot
14-18, Cooper Road, Kololo,
Kampala, Uganda
4th Floor, Acacia Mall, Plot
14-18, Cooper Road, Kololo,
Kampala, Uganda
1 Church Street, 5th Floor,
Burlington, Chittenden,
Vermont, 05401, United
States of America
We deliver. Regardless. | 71
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
9 PROFIT FOR THE PERIOD
Profit for the period is stated after charging:
Staff costs
Materials
Depreciation
Holding company expenses
Staff costs relate to wages and salaries plus directly attributable expenses.
Non-underlying items
Acquisition costs
COVID-19 costs
Restructuring costs
Other share based payments (note 13)
2020
USD’000
2019
USD’000
19,845
17,571
3,731
1,140
21,775
20,671
2,577
1,048
2020
USD’000
2019
USD’000
175
1,433
269
1,169
3,046
46
—
—
—
46
Acquisition costs
Costs incurred by the Group related to potential corporate acquisitions are expensed as incurred. Acquisition costs mainly
comprise professional fees and travel costs. The acquisition of new companies is not considered to be part of the Group’s normal
operations, and therefore management has chosen to disclose these costs separately on the basis as that outlined above.
COVID-19 costs
These costs were incurred due to the COVID-19 pandemic and almost entirely comprise of incremental staff costs. These
incremental staff costs primarily relate to staff salaries paid to employees unable to work due to local lockdowns or
international travel restrictions preventing their access to worksites (USD 853,000) and discretionary payments made to
employees working throughout the pandemic (USD 388,000). All payments made were non-contracted and at the discretion
of executive management. Incremental project costs associated with PPE consumption and COVID-19 testing are also included
in this balance (USD 192,000). General inefficiencies experienced as a result of COVID-19 have not been included given the high
level of judgement inherent in undertaking this exercise and as a result, continue to be included within cost of sales.
Restructuring costs
In 2020, the Group closed two offices in the United Arab Emirates and consolidated all country staff into a larger corporate
office (Head Office). In addition, the Group relocated staff from other geographical locations to Head Office. The Group
anticipates the increased centralisation of its project management, support, and administrative functions to both improve
executional capabilities through increased communication, and result in cost savings as the Group continues to grow. This
restructuring exercise was completed in 2020 and is considered to be non-recurring.
Auditor compensation
Amounts paid or payable by the Group in respect of audit and non-audit services to the Auditor are shown below.
Fees for the audit of the interim accounts
Fees for the audit of the Company annual accounts
Fees for the audit of the subsidiary annual accounts
Additional fee for the prior year audit of the Group annual accounts
Total audit fees
Non-audit related services
Total non-audit fees
72 | RA International | Annual Report 2020
2020
USD’000
2019
USD’000
—
138
72
45
255
—
—
25
115
60
—
200
54
54
10 EMPLOYEE EXPENSES
The average number of employees (including Directors) employed during the period was:
Directors
Executive management
Staff
The aggregate remuneration of the above employees was:
Wages and salaries
Social security costs
Share based payments
2020
7
6
1,645
1,658
2019
7
6
1,763
1,776
2020
USD’000
2019
USD’000
18,200
95
1,299
19,594
17,466
77
31
17,574
The remuneration of the Directors and other key management personnel of the Group are detailed in note 30.
11 TAX
The tax charge on the profit for the year is as follows:
Current tax:
UK corporation tax on profit for the year
Non-UK corporation tax
Adjustment for prior years
Tax charge for the year
2020
USD’000
2019
USD’000
—
61
—
61
—
240
144
384
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:
Profit before tax
Expected tax charge based on the standard average rate of
corporation tax in the UK of 19% (2019: 19%)
Effects of:
Deferred tax asset not recognised
Exemptions and foreign tax rate difference
Adjustment for prior years
Tax charge for the year
2020
USD’000
2019
USD’000
6,627
1,259
13,259
2,519
102
(1,300)
—
61
86
(2,365)
144
384
The main UK corporation tax rate reduced from 20% to the current rate of 19% on 1 April 2017. The Finance Act 2016 includes
legislation to reduce the tax rate further to 17% from 1 April 2020. This became law when The Finance Act 2016 received
Royal Assent on 15 September 2016. Following the budget resolution on 17 March 2020, the main UK corporation tax will
remain at 19% from 1 April 2020 (cancelling the enacted cut to 17%) therefore a rate of 19% as been applied.
The Group benefits from tax exemptions granted to its customers who are predominantly governments and large
intragovernmental organisations, as well as zero corporate tax rates in certain countries of operation. The CODM is not aware
of any factors that indicate the tax rates in these countries will materially change in future periods or that tax exemptions
granted will no longer be available to the Group.
We deliver. Regardless. | 73
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
12 EARNINGS PER SHARE
The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit
attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during
the period. Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders of the Group
by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of
ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
Profit for the period (USD’000)
Basic weighted average number of ordinary shares
Effect of employee share options
Diluted weighted average number of shares
Basic earnings per share (cents)
Diluted earnings per share (cents)
13 SHARE BASED PAYMENT EXPENSE
The Group recognised the following expenses related to equity-settled payment transactions:
Performance share plan
Employee retention share plan
Other share based payments
2020
2019
6,566
12,875
172,451,137 173,575,741
1,407,232
—
173,858,369 173,575,741
3.8
3.8
7.4
7.4
2020
USD’000
2019
USD’000
31
99
1,169
1,299
31
—
—
31
Performance Share Plan
On Admission, the Company introduced a Performance Share Plan (“PSP”) whereby options may be granted to eligible
employees. Awards vest after a performance period of 3 years subject to continuous employment and the achievement of a
hurdle total shareholder return (“TSR”) as at the end of the performance period.
Employee Retention Share Plan
In October 2020, the Company introduced an Employee Retention Share Plan (“ERSP”) and granted share options to a
number of senior employees. Awards vest annually subject to continuous employment. There are no TSR linked vesting
conditions associated with these options.
At 31 December, the following unexercised share options to acquire ordinary shares under the PSP and ERSP were outstanding:
Year of grant
2018
2020
Share plan
Vesting
date
Exercise
price
GBP
Number of
options
2020
Number of
options
2019
PSP
ERSP
ERSP
ERSP
29 June 2021
1 May 2021
1 May 2022
1 May 2023
0.10
0.10
0.10
0.10
2,065,216 2,826,085
—
—
—
3,811,540 2,826,085
291,054
582,108
873,162
74 | RA International | Annual Report 2020
Outstanding at 1 January
Granted during the year
Forfeited during the year
Outstanding at 31 December
Number of
options
2020
2,826,085
1,843,047
(857,592)
3,811,540
Weighted
average
exercise
price
2020
GBP
Number of
options
2019
0.10 2,826,085
—
0.10
0.10
—
0.10 2,826,085
Weighted
average
exercise
price
2019
GBP
0.10
—
—
0.10
Options issued under the PSP were valued using the Monte Carlo Simulation model using the following inputs:
Weighted average share price
Expected volatility
Risk free rate
56p (USD 0.74)
10.10%
1.24%
This method is considered to be the most appropriate for valuing options granted under schemes where there are changes
in performance conditions by which the options are measured, such as for TSR based awards. The fair value of the options at
the grant date was USD 96,000 and a charge of USD 31,000 (2019: USD 31,000) was recognised in administrative expenses
for the fiscal year ended 2020.
Options issued under the ERSP were valued using the Black Scholes model using the following inputs:
Weighted average share price
Expected volatility
Risk free rate
49p (USD 0.64)
49.70%
0.00%
The fair value of the options at the grant date was USD 722,000. A charge of USD 35,000 (2019: nil) was recognised in cost
of sales and USD 64,000 (2019: nil) was recognised in administrative expenses for the fiscal year ended 2020. The expected
volatility input utilised represents the historic volatility of the share price of the Company since Admission.
Other share based payments
On 19 October 2020, the Company agreed to issue a total of 1,840,449 restricted Ordinary Shares (the “Restricted Shares”)
to senior members of staff, including certain persons discharging managerial responsibilities. The Restricted Shares are
subject to a six month lock-in from the date of issue, during which they cannot be sold or transferred. Ordinary Shares issued
pursuant to the award of the Restricted Shares were satisfied from the pool of Ordinary Shares held in Treasury. The fair value
of the shares on the grant date was GBP 0.49 (USD 0.64) per share. A charge of USD 1,169,000 (2019: nil) was recognised as
a non-underlying item given the non-reoccurring nature of this transaction and since the discretionary awards are not part of
the formal share based payment performance plan of the Company
Warrants
On Admission, in exchange for brokerage services provided to the Company during its IPO, the Company issued a warrant
instrument granting its primary broker the right to subscribe for 671,514 ordinary shares of the Company. The warrants
are exercisable for five years from the date of Admission at a subscription price of GBP 0.728 (USD 0.923) per ordinary
share. They are non-transferrable and are subject to typical anti-dilution rights to adjust on a proportional basis for share
consolidations, share splits and stock dividends. The Company used the Black-Scholes model to value the warrants at the
grant date. The fair value of the warrants is nil.
14 DIVIDENDS
During the period, a dividend of 1.25 pence (USD 0.02) per share (173,575,741 shares) totalling GBP 2,170,000 (USD 2,674,000)
was declared and paid (2019: 1 pence (USD 0.01) per share (173,575,741 shares) totalling GBP 1,736,000 (USD 2,203,000)).
We deliver. Regardless. | 75
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
15 ALTERNATIVE PERFORMANCE MEASURES
APMs used by the Group are defined below along with a reconciliation from each APM to its IFRS equivalent, and an
explanation of the purpose and usefulness of each APM. APMs are non-IFRS measures.
In general, APMs are presented externally to meet investors’ requirements for further clarity and transparency of the Group’s
financial performance. APMs are also used internally by management to evaluate business performance and for budgeting
and forecasting purposes.
Profit
Tax expense
Profit before tax
Finance costs
Investment income
Operating profit
Non-underlying items
Underlying operating profit
Share based payment expense
Depreciation
Underlying EBITDA
2020
USD’000
2019
USD’000
6,566
61
6,627
970
(278)
7,319
3,046
10,365
130
3,731
14,226
12,875
384
13,259
675
(294)
13,640
46
13,686
31
2,577
16,294
Underlying Operating Profit (“UOP”)
The Group uses UOP as an alternative measure to Operating Profit to allow comparison of the profitability of its operations
across financial periods. UOP is calculated as Operating Profit adjusted for costs which are considered to be unrelated to the
Group’s underlying trading performance.
Underlying Operating Margin is calculated as UOP divided by revenue.
Underlying EBITDA
Management defines Underlying EBITDA as Operating Profit adjusted for depreciation, share based payments, and costs
which are considered to be unrelated to the Group’s underlying trading performance. Underlying EBITDA facilitates
comparisons of operating performance from period to period and company to company by eliminating potential differences
caused by variations in capital structures, tax positions and the age and booked depreciation on assets. The Group has
introduced this APM in the current year for the reasons stated above.
Underlying EPS
Underlying EPS reflects underlying operating profit after deducting net finance costs and taxation, divided by the weighted
average number of ordinary shares outstanding during the period. This alternative measure of EPS enables shareholder
return from the underlying business operations to be better evaluated across periods.
Reported EPS, basic
Impact of non-underlying items
Underlying EPS, basic
Reported EPS, diluted
Impact of non-underlying items
Underlying EPS, diluted
2020
cents
2019
cents
3.8
1.8
5.6
3.8
1.7
5.5
7.4
—
7.4
7.4
—
7.4
Net Cash
Net cash represents cash less overdraft balances, term loans and notes outstanding. This is a commonly used metric, helpful
to stakeholders when analysing the business.
76 | RA International | Annual Report 2020
16 PROPERTY, PLANT, AND EQUIPMENT
Cost:
At 1 January 2020
Additions
Disposals
At 31 December 2020
Depreciation:
At 1 January 2020
Charge for the year
Relating to disposals
At 31 December 2020
Net carrying amount:
At 31 December 2020
Cost:
At 1 January 2019
Additions
Disposals
At 31 December 2019
Depreciation:
At 1 January 2019
Charge for the year
Relating to disposals
At 31 December 2019
Net carrying amount:
At 31 December 2019
Right-of-use
assets -
land and
buildings
USD’000
Machinery,
motor
vehicles,
furniture and
equipment
USD’000
Land and
buildings
USD’000
Leasehold
improvements
USD’000
Total
USD’000
3,375
1,768
—
5,143
940
675
—
1,615
16,605
22,372
(4)
14,892
1,206
(601)
38,973
15,497
1,475
961
(4)
2,432
4,290
2,030
(566)
5,754
471
872
(151)
1,192
122
65
(69)
118
35,343
26,218
(756)
60,805
6,827
3,731
(639)
9,919
3,528
36,541
9,743
1,074
50,886
Right-of-use
assets -
land and
buildings
USD’000
Machinery,
motor
vehicles,
furniture and
equipment
USD’000
Land and
buildings
USD’000
Leasehold
improvements
USD’000
Total
USD’000
2,814
561
—
9,605
7,288
(288)
10,515
5,090
(713)
3,375
16,605
14,892
585
355
—
940
888
606
(19)
1,475
3,233
1,549
(492)
4,290
451
20
—
471
55
67
—
122
23,385
12,959
(1,001)
35,343
4,761
2,577
(511)
6,827
2,435
15,130
10,602
349
28,516
During the year, capitalised interest of USD 136,000 was included in Land and Buildings (2019: nil), representing 100% of
borrowing costs.
Information related to lease liabilities is available in note 24.
The table below indicates the rents resulting from lease contracts which are not capitalised and are therefore expensed in the year.
Short-term leases
2020
USD’000
2019
USD’000
1,112
1,599
Short-term leases include amounts paid for vehicles and heavy equipment rental, as well as short-term property leases.
We deliver. Regardless. | 77
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
17 GOODWILL
As at 1 January
Acquisitions
As at 31 December
18 INVENTORIES
Materials and consumables
Goods-in-transit
There was no write down to NRV made in relation to inventory as at 31 December 2020 (2019: nil).
19 TRADE AND OTHER RECEIVABLES
Trade receivables
Accrued revenue
Deposits
Prepayments
Other receivables
2020
USD’000
2019
USD’000
138
—
138
—
138
138
2020
USD’000
2019
USD’000
8,166
976
9,142
4,839
1,339
6,178
2020
USD’000
2019
USD’000
7,319
2,410
116
1,021
1,800
10,820
10,916
221
1,381
1,182
12,666
24,520
Invoices are generally raised on a monthly basis, upon completion, or part completion of performance obligations as agreed
with the customer on a contract-by-contract basis.
During the year 100% of accrued revenue was subsequently billed and transferred to trade receivables from the opening
unbilled balance in the period (2019: 100%).
As at 31 December the transaction price allocated to remaining performance obligations was USD 187,000,000 (2019: USD
141,000,000). This represents revenue expected to be recognised in subsequent periods arising on existing contractual
arrangements. The Group has not taken the practical expedient in IFRS 15.121 not to disclose information about performance
obligations that have original expected durations of one year or less and therefore no consideration from contracts with
customers is excluded from these amounts. All revenue is expected to be recognised within the next 5 years.
As at 31 December the ageing of trade receivables was as follows:
Not past due
Overdue by less than 30 days
Overdue by between 30 and 60 days
Overdue by more than 60 days
2020
USD’000
2019
USD’000
5,184
938
653
544
7,319
7,396
1,058
1,383
983
10,820
Trade receivables are non-interest bearing and generally have payment terms of 30 days. No ECL was recorded as at
31 December 2020 (2019: nil) and all receivables are expected, on the basis of past experience, to be fully recoverable.
78 | RA International | Annual Report 2020
20 CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statement of financial position comprised of cash at bank of USD 17,632,000
(2019: USD 21,393,000).
21 SHARE CAPITAL
Authorised, issued and fully paid
173,575,741 shares (2019: 173,575,741 shares) of GBP 0.10 (2019: GBP 0.10) each
2020
USD’000
2019
USD’000
24,300
24,300
22 TREASURY SHARES
As at 1 January
Acquired in the period
Issued in the period (note 13)
As at 31 December
23 LOAN NOTES
The table below summarises the loan notes:
As at 1 January
Additions
As at 31 December
2020
Number
2020
USD’000
2019
Number
2019
USD’000
—
3,868,000
(1,840,449)
2,027,551
—
2,600
(1,237)
1,363
—
—
—
—
—
—
—
—
2020
USD’000
2019
USD’000
—
6,471
6,471
—
—
—
During the year loan notes were issued to retail investors. These notes carry an annual fixed interest rate of 7.00% (2019: nil)
for GBP denominated notes and 7.50% (2019: nil) for USD denominated notes. The term of the note issuance is 24 months
with principal to be repaid as a bullet payment upon maturity. Interest is paid on a quarterly basis, semi-annual basis, or at
maturity, at the option of the investor. At 31 December 2020, USD 387,000 (2019: nil) was included in Other Receivables
relating to loan notes committed but where cash was not yet received This cash was received shortly after year end.
Current
Non-current
2020
USD’000
2019
USD’000
—
6,471
—
—
We deliver. Regardless. | 79
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
24 LEASE LIABILITIES
Movements in the provision recognised in the consolidated statement of financial position are as follows:
As at 1 January
Additions
Interest
Payments
As at 31 December
Current
Non-current
2020
USD’000
2019
USD’000
2,834
1,768
533
(1,097)
4,038
318
3,720
2,643
561
493
(863)
2,834
437
2,397
Interest of USD 533,000 (2019: USD 493,000) relating to the above lease liabilities has been included in Finance Costs for the
year.
As at 31 December the maturity profile of lease liabilities was as follows:
3 months or less
3 to 12 months
1 to 5 years
Over 5 years
2020
USD’000
2019
USD’000
92
226
2,000
1,720
4,038
332
105
795
1,602
2,834
The Group had total cash outflows relating to leases of USD 2,209,000 in 2020 (2019: USD 2,462,000). This is the total of
short-term lease payments from note 16 and payments from note 24.
25 EMPLOYEES’ END OF SERVICE BENEFITS
Movements in the provision recognised in the consolidated statement of financial position are as follows:
As at 1 January
Provided during the year
End of service benefits paid
As at 31 December
26 TRADE AND OTHER PAYABLES
Accounts payable
Accrued expenses
Accrued tax expense
Customer advances
2020
USD’000
2019
USD’000
391
209
(83)
517
350
174
(133)
391
2020
USD’000
2019
USD’000
5,163
1,931
182
88
7,364
5,342
1,705
150
840
8,037
All customer advances recorded at 31 December 2019 were subsequently recognised as revenue in 2020 and all customer
advances held at 31 December 2020 were subsequently recognised as revenue in 2021.
80 | RA International | Annual Report 2020
27 CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Non-current liabilities
Loan notes
Lease liabilities
Current liabilities
Loan notes
Lease liabilities
Non-current liabilities
Loan notes
Lease liabilities
Current liabilities
Loan notes
Lease liabilities
1 January
2020
USD’000
Cash flows
USD’000
New leases
USD’000
Other
USD’000
31 December
2020
USD’000
—
6,084
2,397
—
437
—
—
(1,097)
—
1,642
—
126
2,834
4,987
1,768
387
(319)
6,471
3,720
—
852
920
—
318
10,509
1 January
2019
USD’000
Cash flows
USD’000
New leases
USD’000
Other
USD’000
31 December
2019
USD’000
—
2,532
—
111
2,643
—
—
—
(863)
(863)
—
301
—
260
561
—
(436)
—
929
493
—
2,397
—
437
2,834
The ‘Other’ column includes the effect of reclassification of non-current portion of leases to current due to the passage of time,
the effect of contracted loan note amounts not yet received, and the effect of accrued interest not yet paid.
28 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Group was not exposed to any significant interest rate risk on its interest-bearing liabilities.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to
the Group’s operating activities when revenue or expenses are denominated in a different currency from the Group’s functional
currency, as well as cash and cash equivalents held in foreign currency accounts.
At 31 December 2020, the Group held foreign cash and cash equivalents of GBP 2,270,000 (USD 3,099,000). Additionally, the
Group held GBP denominated loans of GBP 982,000 (USD 1,341,000). UK pound sterling is primarily held by the Group to settle
payment obligations denominated in GBP. As at 31 December 2019, the Group held GBP 2,040,000 (USD 2,689,000) and had
nil GBP denominated loans.
The Group’s exposure to foreign currency variances for all other currencies is not material.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to
incur a financial loss. The Group is exposed to credit risk on its bank balances and receivables.
The Group seeks to limit its credit risk with respect to banks by only dealing with reputable banks as determined by the
CODM and with respect to customers by only dealing with creditworthy customers and continuously monitoring outstanding
receivables. The Company’s five largest customers account for 54% of outstanding accounts receivable at 31 December 2020
(2019: 73%).
We deliver. Regardless. | 81
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
28 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Receivables split by customer
Customer D
Customer E
Customer B
Customer F
Customer A
Customer C
Other
2020
%
2019
%
16
15
14
12
7
3
33
2
—
12
9
31
29
17
100
100
No material credit risk is deemed to exist due to the nature of the Group’s customers, who are predominantly governments and
large intragovernmental organisations.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group limits its
liquidity risk by ensuring bank facilities are available.
The Group’s terms of sale generally require amounts to be paid within 30 days of the date of sale. Trade payables are settled
depending on the supplier credit terms, which are generally 30 days from the date of delivery of goods or services.
As at 31 December the maturity profile of trade payables and loan notes was as follows:
As at 31 December 2020
Loan notes
Trade payable
As at 31 December 2019
Loan notes
Trade payable
Less than
3 months
USD’000
3 to 12
Months
USD’000
3 to 12
Months
USD’000
12 to 24
Months
USD’000
—
5,163
5,163
—
—
—
—
—
—
6,471
—
6,471
Less than
3 months
USD’000
3 to 12
Months
USD’000
3 to 12
Months
USD’000
12 to 24
Months
USD’000
—
5,333
5,333
—
9
9
—
—
—
—
—
—
Total
USD’000
6,471
5,163
11,634
Total
USD’000
—
5,342
5,342
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 2020 amounted to USD 2,000,000 (2019: USD 2,000,000) and carry
interest of 1M LIBOR +3.50% per annum (2019: 1M LIBOR +3.50%).
The Group manages its liquidity risk by maintaining significant cash reserves.
The Group’s cash and cash equivalents balance is substantially all held in institutions holding a Moody’s long-term deposit
rating of A1 or above.
82 | RA International | Annual Report 2020
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 2020.
Capital comprises share capital, share premium, merger reserve, treasury shares, share based payment reserve and retained
earnings and is measured at USD 72,074,000 as at 31 December 2020 (2019: USD 69,483,000).
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.
There were no transactions with related parties during the year (2019: nil). No outstanding balances with related parties are
included in the consolidated statement of financial position at 31 December 2020 (2019: nil).
30 COMPENSATION
Compensation of key management personnel
The remuneration of key management during the year was as follows:
Short-term benefits
Stock-based compensation
2020
USD’000
2019
USD’000
1,734
1,200
2,934
1,628
31
1,659
The key management personnel comprise of 6 (2019: 6) individuals. Included in key management personnel are 3 (2019: 3)
Directors.
Compensation of Directors
The remuneration of Directors during the year was as follows:
Short-term benefits
Stock-based compensation
Highest paid Director
The remuneration of the highest paid Director during the year was as follows:
Short-term benefits
Stock-based compensation
2020
USD’000
2019
USD’000
1,312
340
1,652
1,291
14
1,305
2020
USD’000
2019
USD’000
276
340
616
423
—
423
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
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.
We deliver. Regardless. | 83
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT COMPANY STATEMENT OF
FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Assets
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Merger reserve
Treasury shares
Share based payment reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Total equity and liabilities
Notes
2020
USD’000
2019
USD’000
50,047
50,047
4
5
6
7
8,009
933
8,942
58,989
24,300
18,254
9,897
(1,363)
177
7,578
58,843
146
58,989
12,675
645
13,320
63,367
24,300
18,254
9,897
—
47
10,788
63,286
81
63,367
The Company has taken the exemption conferred by section 408 of the Companies Act 2006 not to publish the profit and loss
of the Parent Company within these accounts. The result for the Company for the year was a loss of USD 536,000 (2019: profit
of USD 14,552,000).
The financial statements of the Company (registration number 11252957) were approved by the Board of Directors on 30
March 2021 and signed on its behalf by:
Soraya Narfeldt
CEO
Andrew Bolter
CFO
The attached notes 1 to 8 form part of the Financial Statements.
84 | RA International | Annual Report 2020
COMPANY STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
As at 1 January 2019
Total comprehensive income for the period
Share based payments
Dividends declared and paid
Share
capital
USD’000
24,300
Share
premium
USD’000
18,254
Merger
reserve
USD’000
9,897
—
—
—
—
—
—
—
—
—
As at 31 December 2019
24,300
18,254
9,897
Total comprehensive income for the period
Share based payments
Dividends declared and paid
Purchase of treasury shares (note 6)
Issuance of treasury shares (note 6)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Share
based
payment
reserve
USD’000
Treasury
shares
USD’000
—
—
—
—
—
—
—
—
(2,600)
1,237
16
—
31
—
47
—
130
—
—
—
Retained
earnings
USD’000
Total
USD’000
(1,561)
50,906
14,552
14,552
—
31
(2,203)
(2,203)
10,788
63,286
(536)
—
(536)
130
(2,674)
(2,674)
—
—
(2,600)
1,237
As at 31 December 2020
24,300
18,254
9,897
(1,363)
177
7,578
58,843
We deliver. Regardless. | 85
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE COMPANY
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
1 BASIS OF PREPARATION
The financial statements have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and the Companies Act 2006), including Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ (FRS101) under the historical cost basis and have been presented in USD, being the functional
currency of the Company.
The Company has applied a number of exemptions available under FRS 101. Specifically, the requirement(s) of:
(a) paragraphs 91-99 of IFRS 13 Fair Value Measurement,
(b) paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative information in respect of paragraph
79(a)(iv) of IAS 1,
(c) paragraphs 10(d), 10(f), and 134-136 of IAS 1 Presentation of Financial Statements,
(d) IAS 7 Statement of Cash Flows,
(e) 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors,
(f) 17 of IAS 24 Related Party Disclosures and IAS 24 Related Party Disclosures to disclose related party transactions entered
into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly
owned by such a member, and
(g) paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.
2 SIGNIFICANT ACCOUNTING POLICIES
Except noted below, all accounting policies applied to the Company are consistent with that of the Group.
Investments
Investments held by the company are stated at cost less provision for diminution in value.
3 EMPLOYEE EXPENSES
The average number of employees employed during the period was:
Directors
The aggregate remuneration of the above employees was:
Wages and salaries
Social security costs
4 TRADE AND OTHER RECEIVABLES
Prepayments
Due from subsidiary
VAT recoverable
2020
7
2019
7
2020
USD’000
2019
USD’000
410
46
456
400
45
445
2020
USD’000
2019
USD’000
83
7,878
48
27
12,636
12
8,009
12,675
Amounts due from subsidiary represent amounts due from RA International FZCO, an immediate subsidiary, and are non-
interest bearing and payable on demand.
86 | RA International | Annual Report 2020
5 SHARE CAPITAL
Authorised, issued, and fully paid:
Ordinary shares of GBP 0.10 each
6 TREASURY SHARES
As at 1 January
Acquired in the period
Issued in the period
As at 31 December
7 TRADE AND OTHER PAYABLES
Trade payables
Accruals
2020
Number
2020
USD’000
2019
Number
2019
USD’000
173,575,741
24,300 173,575,741
24,300
2020
Number
2020
USD’000
2019
Number
2019
USD’000
—
3,868,000
(1,840,499)
2,027,501
—
2,600
(1,237)
1,363
—
—
—
—
—
—
—
—
2020
USD’000
2019
USD’000
44
102
146
19
62
81
8 RELATED PARTY TRANSACTIONS
The Directors have taken advantage of the exemption under paragraph 8(j) and 8(k) of FRS101 and have not disclosed
transactions with other wholly owned group undertakings. There are no other related party transactions.
We deliver. Regardless. | 87
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT SHAREHOLDER INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2020
CORPORATE INFORMATION
Registered office
One Fleet Place
London
EC4M 7WS
Website
www.raints.com
Registered number
11252957
Legal entity identifier code
213800N6RTATELJU6797
Listing information
AIM, London
Symbol: RAI
Date of Annual General Meeting
8 June 2021
ADVISERS:
Nominated adviser and broker
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Solicitors to the Company
Dentons UK and Middle East LLP
One Fleet Place
London
EC4M 7WS
Auditors
Ernst & Young LLP
144 Morrison St
Edinburgh
EH3 8EX
Investor and media relations
Bamburgh Capital Limited
50 Brown Street
Manchester
M2 2JT
Registrars
To 30 April 2021:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
From 1 May 2021:
Equiniti Limited
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Company Secretary
To 30 April 2021:
AMBA Secretaries Limited
400 Thames Valley Park Drive
Reading
RG6 1PT
From 1 May 2021:
Elemental Company Secretary Limited
27 Old Gloucester Street
London
WC1N 3AX
SHAREHOLDER QUERIES
The investors section of our website contains a wide
range of information of interest to institutional and private
investors, including: latest news and press releases, annual
reports, investor presentations and sustainability reports.
For investor queries please email: investors@raints.com
88 | RA International | Annual Report 2020
Designed and Printed by Perivan
Contents
Highlights
Chair’s statement
STRATEGIC REPORT
RA International at a glance
Business model
Our markets
Our strategy
Stakeholders and Section 172 statement
Key performance indicators
Operating review
Financial review
Risk management
CORPORATE GOVERNANCE
Board of Directors
Executive Management Team
Chair’s corporate governance statement
Review of the Board’s effectiveness
Directors’ report
Directors’ responsibility statement
Remuneration Committee report
Audit Committee report
FINANCIAL REPORT
Independent Auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company statement of financial position
Company statement of changes in equity
Notes to the Company financial statements
Shareholder information
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10
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14
16
18
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We deliver. Regardless.