# RA International Group PLC See significant increase in bid pipeline

- Link: https://www.directorstalkinterviews.com/ra-international-group-plc-see-significant-increase-in-bid-pipeline/412758674
- Published: 2018-09-19T07:24:38+01:00
- Author: Giles Arbor

**RA International Group PLC** (LON:RAI), a leading provider of services to remote
locations in Africa and the Middle East, has today announced its interim results
in respect of the six months ended 30 June 2018.

**INTERIM HIGHLIGHTS**

· Admission to trading on AIM on 29 June 2018 raising gross proceeds of £18.8m (
approximately US$24.7m)

· Half yearly revenue of US$ 23.9 m and EBITDA(1) of US$ 7.4m

· During the period, total contracts awarded of approximately US$ 33m including 
a 5-year contract with UNICEF providing, accommodation, catering, cleaning services
and offices for their staff

· Net cash of US$ 28.0m at 30 June 2018

· Acquired RA SB Ltd., a provider of remote site services in Sudan, in line with
strategy of further geographical expansion in Africa

· Commenced a US$ 5.2m construction and services project in Oman for the UK MOD.
Besides supporting the Company’s geographical diversification efforts, the successful
mobilisation of this contract demonstrates RA International’s ability to support
UK Government agencies worldwide

(1)EBITDA is earnings before interest, tax, depreciation and the deduction of exceptional
items detailed within the Condensed Consolidated Income Statement.

 

**POST PERIOD HIGHLIGHTS**

· Company now debt free with US$ 0.6m of term loans settled in H1 18 and remaining
US$ 1.3m settled by 31 August 2018

· Contracted revenue backlog of US$ 114m at 31 August 2018 with US$ 63m of contracts
awarded since 1 January 2018

· The average term of ongoing contracts is 2.2 years or 4.2 years when weighted 
by contract value

· Five-year contract of US$ 30m awarded by the United Nations Support Office in 
Somalia, in line with the Company’s focus on securing larger and longer-term contracts
supporting key customers

· Regional project Management Office established and opened in Nairobi, Kenya, to
provide technical project support leading to future project efficiencies around 
Africa

> **Soraya Narfeldt, CEO of RA International, commented:**
> “The Company is delivering on its strategy of geographical expansion and securing
> larger and longer term contracts. We have seen a significant increase in the bid
> pipeline since admission to trading on AIM in June, and we expect this to translate
> into contracts in the second half of this year and beyond.
> “We are now focussing on larger contracts, and being a publicly quoted company
> will enhance our status and competitive position. We are grateful to the support
> shown by shareholders since June and look forward to the next phase of RA International’s
> development.”

**Background to the Company**

RA International is a leading provider of services to remote locations in Africa
and the Middle East. It specialises in five service verticals: construction; integrated
facilities management; operation and maintenance; accommodation; and supply chain
logistics. It has a strong customer base, largely comprising UN agencies, western
governments and global corporations.

The Group provides comprehensive, flexible, mission critical support to its clients
enabling them to focus on the delivery of their respective businesses and services.
RA International’s focus on integrity and values alongside on-going investment in
people, locations and operations has over time created a reliable and trusted brand
within its sector.

 

**CHIEF EXECUTIVE’S REVIEW**

**Admission to AIM**

Admission to AIM was an important step in the Group’s development, enabling us to
raise additional capital to support our strategic objectives of broadening our geographical
presence and undertaking larger, multi-year contracts with both existing and new
customers, and in new sectors such as mining and oil and gas. By becoming a public
company we are able to build on our existing strong reputation within our market
place and provide additional confidence to customers when we bid for larger contracts.

The funds we raised at the time of Admission in addition to our existing cash resources,
will be utilised to fund the following:

· strengthen the Group’s balance sheet enabling us to meet customer demand to bid
on larger scale contracts within our core competencies;

· promote a client multiplier effect, adding to the Group’s ability to upsell additional
services to existing clients. Opportunities for upselling have been identified across
all five verticals; and

· enter new territories and sectors through leveraging existing relationships and
reputation.

**Contracts**

The Company reported backlog revenue at 31 August of US$ 114m compared with US$ 
112m at 31 December 2017, with US$ 63m worth of new contracts awarded this financial
year to date. The average term of ongoing contracts is 2.2 years or 4.2 years when
weighted by contract value.

During the period, we have delivered on our long-term strategy of providing high
quality and reliable service to generate trust with our customers. We have built
on our existing relationship with the United Nations, resulting in a 5-year contract
with UNICEF for accommodation, offices, catering and cleaning services. Following
this award, the UN High Commissioner for Refugees (UNHCR) renewed their contract
with RA International for similar services in Mogadishu for a long-term period.

We announced on 16 August 2018, post period end, that the Company successfully bid
and was selected by the United Nations Support Office and the African Mission in
Somalia to deliver a power infrastructure project worth US$ 30m over 5 years.

The Company continues to actively bid on future contracts with larger contract values
and longer terms. Additionally, we expect to continue to win follow on work from
our key clients based on the quality and execution of our projects. A prime example
of this, was the contract win for the UK MOD in Oman. This was a customer led contract
win which expanded our geographical footprint. Further contract awards from the 
UK MOD and FCO demonstrate a continued confidence in RA International as a service
provider to UK Government agencies.

The Company’s strategy for US Government business development is to partner with
companies for each of the Africa-centric Government programs and support them in
winning work across the continent. In addition, the Company has partnered with a
firm who specialise in Overseas Building Operations for the US Department of State
and is bidding on multiple projects at present.

Since the Company’s Admission to AIM in June it has also bid or is in the process
of bidding for large construction and service contracts in the mining, oil and gas
sector.

While there are a number of factors that influence the timing of contract awards
and the recognition of revenue, we are confident that a proportion of our significant
pipeline will contribute to our full year results for 2019. We maintain close relationships
with our customers and look forward to providing updates on a number of contracts
during the remainder of the year.

**Operations**

We have completed a number of key operational projects so far in 2018, including
the acquisition of RA SB Ltd. in Sudan which adds an additional geographic territory
to our already strong African coverage. Through this acquisition we have been able
to enter into a support contract within the mining, oil and gas industry.

During the period, we appointed a Legal Officer and Group Compliance Manager to 
work at Group level, and further enhanced our operating capacity through the hiring
of a new Group Supply Chain Manager and Head of Engineering. We also opened a Project
Management Office in Nairobi, Kenya, on 10 September 2018 to support ongoing project
work in the region. It is anticipated that the consolidation of technical project
support in Kenya will lead to future efficiencies when executing projects across
Africa.

Overall, the Company has reduced its East Africa concentration, increasing projects
in Central African Republic, Oman and Sudan. We have increased local hires from 
62% in 2016 to 67% in 2017 and in 2018 we are very pleased to have 70% of total 
employees of RA International being local staff.

The UN is a significant customer for us and to ensure we continue to meet the agency’s
high Sustainable Development Goals (SDG), we have initiated work on developing a
new Corporate Social Responsibility (CSR) strategy. This will be done by formalizing
our [sustainability](https://www.directorstalkinterviews.com/sustainability-green-stocks-news)
work and pursuing a new structure that will revolve around the SDG, with the intention
of creating lasting long-term impact for our stakeholders and the environment.

**Strategy for growth**

There are four core elements to our strategy to enhance our growth plans:

1. Diversify our customer base;

2. Diversify our geographic reach;

3. Bid for larger, longer-term contracts which we have started to submit since our
Admission in June; and

4. Cross sell our services to new and existing customers.

**Market Developments**

Overseas Development Aid (ODA) expenditure by international governments is driven
by a number of aims including providing stability in conflicted regions, promoting
democracy, contributing to counter terrorism and law enforcement efforts, as well
as humanitarian aid to alleviate short term humanitarian crises. ODA can be delivered
bilaterally, directly by individual governments, or multilaterally, through a multitude
of organisations such as UN agencies, and charitable organisations. RA International
typically undertakes contracts for western governments and international agencies
to help deliver ODA in remote locations, as well as acting for international companies.

In 2016, UN agencies and USAID spent approximately US$ 4.4 billion and US$ 3.1 billion
respectively in the Central African Republic, the Democratic Republic of Congo, 
Eritrea, Ethiopia, Libya, Mali, Somalia, South Sudan and Sudan. These are countries
in which the Group is presently working or can provide its services at short notice.
In the same year the UK, which is the second largest contributor by monetary value
in overseas aid to Africa, spent approximately £2.9 billion in ODA to Africa. In
aggregate, over US$100 billion in planned expenditure has been announced by the 
US, UK, United Nations and the mining sector for investment in Africa in the next
three years. RA International believes that a proportion of this planned expenditure
will be directly related to the services the Company is able to deliver.

The US is the largest contributor by monetary value in overseas aid to Africa and
the majority of the US Government funds spent is through Indefinite Delivery/Indefinite
Quantity (IDIQ) contracts. IDIQ contracts are awarded, after a pre-qualification
round, to a group of 3 to 5 companies who compete for Task Orders over a 5 to 10
year period. For the most part, only US companies can qualify for these IDIQ contracts
because of security clearance requirements. Most of these companies that qualify
to bid on Task Orders do not have a large presence in Africa and require a partner
to execute the primary contract scope or provide support services. This presents
a significant opportunity for RA International given the scope of our service offering,
geographical reach, and experience successfully completing US Government projects.

**Current Trading and Outlook**

At RA International, we are committed to delivering our projects to a high standard
and on time. Our contract delivery in the first half of the year has remained excellent.
Looking to the future, both the size and contract length of the bids we are working
on has increased. We are continuing to diversify our customer base and deliver geographical
expansion. The management undertook a huge challenge in the first half of the year
with the Admission to AIM and we have been delighted with the support we have seen
from the London market. We look forward to the second half of 2018 with confidence.

Soraya Narfeldt

Chief Executive Officer

19 September 2018

Share on: