Ra Internation. Regulatory News (RAI)

10 April 2019

RA INTERNATIONAL GROUP PLC

("RA International" or the "Company" and, together with its subsidiaries, the "Group")

Results for the year-ended 31 December 2018

Year of progress; continued expansion and diversification

RA International Group PLC (AIM: RAI), a leading provider of services to remote locations in Africa and the Middle East, is pleased to announce its results for the year ended 31 December 2018.

Financial highlights

· Admission to AIM on 29 June 2018 raised gross proceeds of £18.8m (approximately USD 24.7m)

· Full year revenue increased 7% to USD 54.8m (2017: USD 51.2m)

· Underlying profit increased by 6% to USD 13.3m (2017: USD 12.5m) on margin of 24% (2017: 24%)

· Profit decreased to USD10.0m (2017: 12.4m) as a result of USD 3.3m in exceptional items being charged in the period, primarily relating to the IPO

· Cash of USD 27.8m (2017: USD 5.6m) and no debt as at 31 December 2018

· Proposed final full year maiden dividend of 1.0p per share

Operational highlights

· Strong progress across all strategic objectives

· Significant contracts awarded in the year:

o USD 19.9m contract with UNICEF to provide accommodation and office services, recently uplifted to USD 22.8m

o USD 30.4m contract with United Nations Support Office in Somalia to construct power infrastructure

o USD 9.1m contract with URS Group, a subsidiary of AECOM, to construct a runway

o USD 5.6m contract with a large US company to provide support services in Central Africa

o USD 5.6m contract with UK MOD for construction and IFM services in Oman

· Contracted revenue backlog of USD 119m (2017: USD 112m) at year end and awaiting award notification on a number of large bids

· Average contract term of 4.4 years (2017: 4.0 years) when weighted by contract value

· Significantly expanded operations; entering Mali, Oman, and Sudan and executing projects in 9 countries during the year (2017: 6)

· Increased the capacity and capability of our management and administrative teams through adding a number of senior hires

· Established a group Project Management Office in Nairobi in readiness for future growth and to support multiple large-scale projects

· The credibility gained from the Admission to AIM has led to invitations to bid for opportunities which were previously unavailable to us, both from existing and new customers

Post year end highlights and Outlook

· Significantly expanded operating footprint in Mozambique through the purchase of a 49% interest in Royal Food Solutions S.A and the acquisition of land to develop a large camp facility

· Signed a Master Service Agreement with IAP Worldwide Services to provide global supply chain services. The first order is for USD 8.5m and relates to sub-Saharan Africa

· Awarded a number of new contracts and contract extensions; contracted revenue backlog is now USD 130m, providing a sound platform for growth

· 2019 revenue expected to grow by approximately 10%

· Several large bids with humanitarian and commercial organisations are in progress, some of which are transformational in nature. Due to longer sales cycles, the Company is not currently anticipating significant revenue generation from these projects in 2019

Soraya Narfeldt, Chief Executive Officer, commented:

"2018 was a year of progress for the Group as we secured the additional funding required to achieve our strategic objectives and take our business to the next stage of growth. We are proud to have achieved a successful listing on AIM and look forward to creating value for our shareholders in the next phase of the business's development.

"The progress delivered during the year was underpinned by our focus on diversifying our geographic presence, strengthening our customer base and broadening the mix of services we offer our clients. As a result, we have been awarded significant contracts during the period, and are now well positioned to take on larger bids.

The Board believes that the prospects for RA are as strong as ever and remains confident that the Group's momentum will continue throughout 2019 and we look forward to another year of progress."

Notes to summary table of financial results:

* * * * *

Enquiries:

About RA International 

RA International is a leading provider of services in remote locations across Africa and the Middle East. It specialises in three service channels: construction; integrated facilities management; and supply chain. It has a strong and loyal customer base, largely comprising UN agencies, western governments and global corporations.

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

CHAIRMAN'S STATEMENT

Overview

In my first statement since the Company's Admission to AIM, in mid-2018, I am pleased to report that RA International has made strong progress and has delivered a solid performance in its first year on market.

Results

For the year ended 31 December 2018, underlying profit increased by 6.3% to USD 13.3m on revenues of USD 54.8m (2017: USD 51.2m).

The contracted revenue backlog as at 31 December 2018 was USD 119m compared to USD 112m the previous year.

Placing and balance sheet

In June 2018, the Company completed a placing to raise USD 21.4m (after expenses) alongside the Company's Admission to trading on AIM. With a strengthened balance sheet the Company is well placed to commence bidding on larger and longer-term contracts in line with our strategy. Since Admission to AIM the Board has been encouraged by the positive feedback, from existing and potential customers, on the Company's PLC-status and the opportunities this has provided.

As a result of the above activity, net cash at 31 December 2018 was USD 27.8m and net assets were USD 59.2m.

Governance

Given the nature of RA's business, the Board is committed to the maintenance and continuous review of the highest of compliance and governance standards. As a service provider to the UN and western governments, RA International is required to have a strict level of policies and procedures in place in order to secure contracts. Since Admission, RA International has adhered to the QCA Corporate Governance Code which the Directors feel is appropriate to the Company's size and structure and published our first Sustainability Report. More information can be found in the Corporate Governance section on our website.

People

RA International employs over 2,000 people across Africa and the Middle East. Whenever possible, our goal is to recruit and develop the skills of the local communities. Over the years we have seen local employee participation increase to 69% across our operation, contributing significantly to successful service delivery. This is a trend we want to continue, as it is both good for our business and the wider communities in which we work. Our international staff are often deployed as a means to recruit and develop local people towards an eventual handover. Undoubtedly the key asset of RA lies in its people: I would like to thank all our people for their unstinting dedication and support in helping us to build strong communities.

Dividend

As stated in the Admission Document, the Directors intend to adopt a progressive dividend policy whilst retaining sufficient capital to meet both the working capital needs of the business and to fund continued growth. The Directors remain confident in the Company's ability to deliver its strategy and, as such, propose a maiden full year dividend of 1.0p per share to be paid on July 3, 2019 to the shareholders on the register as at May 24, 2019. The ex-dividend date in May 23, 2019.

Sangita Shah

Chairman

CHIEF EXECUTIVE OFFICER'S OPERATING REVIEW

We made strong progress across our strategic objectives during the year. These are to:

· Broaden our customer base

· Diversify our geographic reach

· Target longer-term contracts

· Cross-sell our services to new and existing customers

Contracts

Our strengthened balance sheet, following our Admission to AIM in June 2018, enabled us to bid for larger and longer-term contracts. The average contract value at 31 December 2018 was USD 7.2m with an average duration of 4.4 years when weighted by contract value.

We have increased geographical presence; the Company executed projects in 9 countries in 2018 compared to 6 in 2017; entering Mali, Oman, and Sudan. In addition, we increased revenue from Government and Commercial customers. Together, revenue from these clients made up almost 40% of our total revenue in 2018 compared to less than 30% a year ago.

Having advocated the benefits of a 'one-supplier' model for years, we have now started to see significant demand for 'hybrid' projects where we may perform services from two or more of our service channels. Examples include recent projects executed for UNICEF and the UK MOD. There are significant efficiencies which can be passed on to the client when remote site operators are able to seamlessly transition from construction to providing IFM services. We continue to advocate this delivery model and have structured our organisation in a way which best allows us to build infrastructure and take care of the occupying tenants.

Despite seeing an increase in the size and complexity of our contracts, our delivery record remains excellent, reflecting our commitment to delivering our projects on time and to a high standard. Our growth model continues to be "customer led" and, in addition to targeting new customers, our focus remains on ensuring we meet the needs of existing clients. We secured significant new contracts and contract renewals from the UN. Most notable amongst these was a 5-year contract with UNICEF which has recently been uplifted to USD 22.8m, and a USD 30m power infrastructure project with the United Nations Support Office in Somalia.

As at 31 December 2018 the company reported a backlog revenue of USD 119m compared to USD 112m the previous year.

At our half year we outlined our strategy for US Government contracts, whereby we partner with US companies in order to support them winning work across the African continent. Our strategy has started to produce results, with two large and strategically important, contracts awarded with new clients in the second half of 2018.

The first was a USD 9.1m contract awarded by URS Group, Inc., a subsidiary of AECOM, to provide construction services in Somalia repairing an asphalt runway for the US Naval Facilities Engineering Command. In December, we announced a second contract with a large US company, to provide support services in connection to strengthening the capacity of local security sector institutions in a Central African country, on behalf of the US Government.

New business opportunities

The credibility gained and strengthened balance sheet resulting from the Admission to AIM has led to invitations to bid for opportunities which were previously unavailable to us, both from existing and new customers.

The biggest uplift is in the commercial sector, particularly from mining and oil & gas companies where we are bidding for a number of large construction and service projects. Becoming a UK quoted company has also strengthened RA International's position when bidding for UK Government contracts, as evidenced by our increasing work from the MOD and FCO.

While our revenue backlog and bid pipeline is larger than ever before, many of the tenders now have longer preparation and adjudication periods and many involve several counterparties (such as where we are a subcontractor to a US company). Contract awards are, therefore, taking longer than originally anticipated but we remain confident that our strategy will deliver great value to our stakeholders.

Operations

During the year we initiated operations in Sudan, Mali and Oman and increased our presence in the Central African Republic.

Additionally, we recently, announced that we have significantly expanded operations in Mozambique, having acquired a 49% stake in a well-established local integrated facilities management company and a 150,000 m2 parcel of land in the North of the country. Our plan is to construct a large, fully integrated and serviced camp in order to support upcoming gas projects in the region, and we are in the process of securing potential anchor tenants. The project is an example of one approach we are taking to further target new opportunities.

Our goal is to recruit and develop local people whenever it is practical to do so. Local labour participation is one of our key performance indicators and has grown consistently over the years. In 2018 local hires accounted for 69% of total employees compared to 67% in 2017, and 63% in 2016. As we enter new territories, we often need to bring in staff from oustide if the necessary skills are not available on the ground. This may cause variations in the percentage of local labour we employ until the required training and handover is complete.

In late 2017 we identified that we needed to scale-up and build a robust back-office function. This was driven by our ambition to deliver more large projects simultaneously, coupled with the significant reporting requirements of our customers and internal compliance requirements. As a result, in 2018 the Company's processes were structured so as to have an enabling function and a delivery function. To establish the delivery function, a project management office (PMO) was established in Nairobi that is responsible for implementing contracts. Deputy Country Managers report into the PMO and are responsible for project delivery in our operational areas. The enabling office is managed from Dubai and includes finance, HR, procurement, business development, communications, strategy, compliance and other senior level roles. To support these functions and strengthen the management team we made a number of key senior level appointments in 2018.

On 1 January 2019 William Warnock joined the executive management team as Director of US Business Development, having worked previously with RA International as a consultant. CAPT Warnock has been instrumental in enabling the Company's transition to United States Government (USG) business practises and is responsible for expanding RA International's client base to USG organisations and contractors operating in Africa. He communicates directly with the CEO on project development and provides recommendations for strategic investments. In addition, he continues to leverage his expertise as the former defence attaché assigned to the US Mission Somalia.

Outlook

We remain focused on our strategic objectives as we work to deliver on our rising backlog of contracts (presently USD 130 million). During the year, we streamlined our operations to three service offerings, construction, integrated facilities management and supply chain.

We aim to execute our strategy through four independent pillars:

· Broaden our customer base

· Diversify our geographic reach

· Target longer-term contracts

· Cross-sell our services to new and existing customers

We continue to see strong business opportunities in the government sector and expect US and UK Government work to continue to increase as a portion of our overall revenue. We also anticipate strong growth from our Supply Chain service channel as we continue to bid on larger projects.

We continue to target work from commercial clients and have a number of large bids outstanding relating to the mining sector. Additionally, we have recently expanded into Mozambique to further target work from the oil & gas industry. Given the longer sales cycle involved when compared with Humanitarian or Government projects, we are not anticipating significant revenue generation from these projects in 2019 but are still expecting growth in revenue from commercial customers.

The Company is in a stronger position now than it was a year ago, and there are currently many large bids outstanding on which we are awaiting notification and where we are very well positioned to capitalise on our reputation for reliability and can-do approach. Many of the bids outstanding are transformational in nature and significance and while we await notice of awards we continue to bid on similar opportunities.

FINANCIAL REVIEW

Overview

Financial performance for the fiscal year ended 2018 is broadly in line with our expectations. The Group reported revenue and underlying profit of USD 54.8m and USD 13.3m, representing an increase of 7.0% and 6.3% respectively when compared with the prior year. Statutory profit was USD 10.0m (2017: 12.4m) and includes USD 3.3m of non-reoccurring exceptional items relating to the Admission to AIM and unrealised FX charges.

Underlying operating profit, which is used by the Group's management to assess operating performance, grew by 4.6% to USD 14.2m (2017: USD 13.6m).

Revenue

Despite the Company experiencing delays in the commencement of several projects in late 2018, the USD 28.7m revenue reported in the second half of 2018 represents the highest half-year revenue total reported by the Group since its formation in 2004.

As indicated in the interim financial review, the Group does not experience seasonality, but it does frequently execute short term contracts (STCs) which often have a significant effect on revenue and profitability in a given quarter or half-year period. The Group reported revenue from STCs of USD 8.3m in 2018 compared with USD 7.0m in 2017. As the Group continues to secure higher value, longer-term contracts, it is expected that the effect of STCs will diminish.

Profit

Gross profit margin in 2018 decreased slightly to 37.7% (2017: 38.9%) resulting from a decrease in cost reimbursements received relating to prior periods. In connection with implementing IFRS 15 in 2018, the Group has reclassified non-contracted cost reimbursements to direct costs whereas in the past these payments were recorded as other income. It is not expected that the value of non-contracted cost reimbursements will be significant in future periods. Excluding cost reimbursements, gross margin was consistent at 37.0% for both periods.

Underlying profit increased by 6.3% to USD 13.3m in 2018 (2017: USD 12.5m) and underlying margin was broadly consistent across the current and prior period at 24.2% and 24.4% respectively despite the impact of non-contacted cost reimbursements.

Exceptional items

Exceptional items of USD 2.9m were recorded as costs for the year. These items represent expenses incurred in relation to the Company's Admission to AIM, which in accordance with international accounting standards, are presented as expenses in the income statement. Within the accounts, exceptional items are split into two categories: advisory fees and other costs associated with the Admission totalled USD 1.3m and stock-based compensation totalled USD 1.6m. The stock-based compensation charge relates to the transfer of shares by the majority shareholder of the Company to certain employees at the AIM Admission date. While the Company was not a party to this transfer, IFRS mandates that the transaction be accounted for as a cost on the date of the share grant. The transfer of shares was conditional on the Company's successful Admission to AIM.

Earnings Per Share

On June 29, 2018 the Company listed on AIM and issued 33,575,741 new shares representing a 24.0% increase in total shares outstanding.

Normalised earnings per share for 2018 both basic and diluted, was 8.4 cents per share (2017: 8.9 cents per share). Basic earnings per share, both basic and diluted, was 6.3 cents per share (2017: 8.9 cents per share).

Cashflow

The Company targets a 100% cash conversion ratio but significant increases in operational activity, such as mobilising for material contracts, may lead to short-term divergences.

Net cash flow from operations in the year was USD 10.9m (2017: USD 12.5m) which represents 80.1% cash conversion (2017: 92.0%). The primary factors contributing to the differential were:

1) A build-up of trade receivables, primarily from UN agencies: trade receivables were USD 10.0m at 31 December 2018, USD 3.8m higher than at December 31, 2017. The Group received payments totalling USD 3.5m within the first half of January 2019 including payment of 55.3% of receivables overdue at 31 December 2018.

2) Increased inventory due to project mobilisation: inventory balances increased USD 1.6m from 31 December 2017 resulting from higher levels of inventory on site and in-transit relating to construction works being undertaken in the Central African Republic (CAR) for MINUSCA and the execution of projects in Somalia; specifically, the construction of power infrastructure for UNSOS and a conference centre being built for the use of UNICEF and other customers.

Balance Sheet

Net of share issuance and AIM Admission costs, the Group raised USD 21.4m in proceeds. Net cash increased to USD 27.8m at 31 December 2018 (2017: USD 5.6m) and the Group repaid all debt balances in 2018.

Liquidity and net cash are often assessed by potential customers during the contract adjudication process. The completion of the Admission to AIM and related fundraising was a milestone for the Group in that it now qualifies to bid for larger projects and has the financial capacity to mobilize for multiple large projects simultaneously. Net assets at 31 December 2018 were USD 59.2m with the majority of the total balance sheet comprising cash and other current assets.

The Group continues to invest in revenue generating fixed assets, investing over USD 4 million to upgrade and expand its camp facilities to accommodate UNICEF and other customers contracting with the Group for accommodation services. 

Other investment initiatives include:

· The purchase and mobilisation of a fleet of heavy-duty trucks in CAR to greater improve our operating capability and efficiency in the country.

· Water purification equipment which once installed will distribute drinking water throughout our facilities in Mogadishu, removing the need for single-use water bottles.

· Upgrading certain construction equipment to be used in connection with the URS construction contract and other upcoming projects.

· Purchasing a 400-man tented camp which was leased to a client in 2018 and is being repurposed in connection with another project commencing in 2019.

Dividend

The Directors have proposed a maiden full year dividend of 1.0p per share to be paid to shareholders on the register as at May 24, 2019. The ex-dividend date in May 23, 2019.

1 Comparative financial information has been restated following adoption of IFRS 15. Further details can be found within Note 5 of the consolidated financial statements and accompanying notes.

2 Full definitions and explanations of the purpose and usefulness of each non-IFRS Alternative Performance Measure used by the Group can be found within Note 18 of the consolidated financial statements and accompanying notes.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2018

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2018

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2018

* Merger reserve represents the difference between the share capital of RA International FZCO and the nominal value of the shares issued by the Company to acquire RA International FZCO (note 8).

** Total comprehensive income recognised in 2017 has been restated due to the adoption of IFRS 15 (note 5).

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2018

NOTES TO THE COMPANY FINANCIAL STATEMENTS

For the year ended 31 December 2018

1 CORPORATE INFORMATION

The principal activity of RA International Group plc ("RAI" or the "Company") and its subsidiaries (together the "Group") is providing services in demanding and remote areas. These services include construction, integrated facilities management, and supply chain services. 

RAI was incorporated on 13 March 2018 as a public company in England and Wales under registration number 11252957. The address of its registered office is One Fleet Place, London, EC4M 7WS. The Company acquired, by way of a share for share exchange (the "Exchange") the entire issued share capital of RA International FZCO and its subsidiaries ("RA") on 12 April 2018. The Group reorganisation is treated as a common control transaction, for which there is no specific accounting guidance under IFRS. Consequently, the integration of the Company has been accounted for using merger accounting principles. The policy, which does not conflict with International Financial Reporting Standards (IFRS), reflects the economic substance of the transaction.

The adoption of merger accounting presents the Company as if it had always been the parent of the Group. As the Company was not incorporated until 13 March 2018, the financial statements of the Group represent a continuation of the financial statements of RA International FZCO, the former parent of the Group. Comparative information presented in these financial statements, relate to that of RA, not the Group. 

2 BASIS OF PREPARATION

The financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB) as adopted by the European Union and the Companies Act 2006. They have been prepared under the historical cost basis and have been presented in United States Dollars (USD), being the functional currency of the Company.

The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the years ended 31 December 2018 or 2017 but is derived from those accounts. Statutory accounts for the year ended 31 December 2018 will be delivered to the Registrar of companies in due course. The auditor has reported on the accounts; its report was unqualified, did not contain an emphasis of matter reference and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

3 BASIS OF CONSOLIDATION

The financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2018. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

· Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);

· Exposure, or rights, to variable returns from its involvement with the investee; and

· The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

· The contractual arrangement with the other vote holders of the investee;

· Rights arising from other contractual arrangements; and

· The Group's voting rights and potential voting rights.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Company loses control over the subsidiary. Assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

When necessary adjustments are made to the financial statements of a subsidiary to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. 

If the Company loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest, and other components of equity while any resultant gain or loss is recognised in the profit or loss. Any investment retained is recognised at fair value.

Business combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at the fair value on the acquisition date. The net identifiable assets acquired, and liabilities assumed are recorded at their respective fair values on the acquisition date. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

4 SIGNIFICANT ACCOUNTING POLICIES

Revenue recognition

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has concluded that it is acting as a principal in all its revenue arrangements.

Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.

Construction

Revenue from construction contracts is recognised at a point in time when performance obligations have been met. 

Services

Revenue from rendering of services is recognised over time, using the output method to measure progress towards complete satisfaction of the service.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Contract balances

Trade receivables

A receivable represents the Group's right to an amount of consideration that is unconditional, meaning only the passage of time is required before payment of the consideration is due.

Accrued revenue

Accrued revenue represents the right to consideration in exchange for goods or services transferred to a customer in connection with fulfilling contractual performance obligations. If the Group performs by transferring goods or services to a customer before invoicing, accrued revenue is recognised in an amount equal to the earned consideration that is conditional on invoicing. Once an invoice has been accepted by the customer accrued revenue is reclassified as a trade receivable.

Customer advances

If a customer pays consideration before the Group transfers goods or services to the customer, a customer advance is recognised when the payment is received by the Group. Customer advances are recognised as revenue when the Group meets its obligations to the customer.

Taxation

Current tax expense is based on taxable profit for the year and is recognised in profit or loss. Taxable profit may differ from net profit reported in the statement of comprehensive income because it excludes items of income and expense that are taxable or deductible in other years, and it excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. 

Property, plant, and equipment

Property, plant, and equipment are stated at cost less accumulated depreciation and any impairment in value. Capital work-in-progress is not depreciated until the asset is ready for use. Depreciation is calculated on a straight-line basis over the estimated useful lives as follows:

The carrying values of property, plant, and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down, with the write down recorded in profit or loss to their recoverable amount, being the greater of their fair value less costs to sell and their value in use.

Expenditure incurred to replace a component of an item of property, plant, and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant, and equipment. All other expenditure is recognised in profit or loss as the expense is incurred.

An item of property, plant, and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and carrying amount of the asset) is included in the profit or loss in the year the asset is derecognised.

Assets' residual values, useful lives, and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if appropriate.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs include those expenses incurred in bringing each product to its present location and condition. Cost is calculated uses the weighted average method. Net realisable value is based on estimated selling price less any further costs expected to be incurred in disposal.

Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs to sell and its value in use. An asset's recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used maximising the use of observable inputs. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded entities or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group's cash-generating units to which the individual assets are allocated. These budgets and forecasts generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or CGU's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the profit or loss.

Financial instruments

i) Financial assets

Initial recognition and measurement

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.

Derecognition of financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when the rights to receive cash flows from the asset has expired.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.

A financial asset is deemed to be impaired when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are initially recognised at fair value and subsequently classified at fair value through profit or loss, loans and borrowings, or payables. Loans and borrowings and payables are recognised net of directly attributable transaction costs.

The Group's financial liabilities include trade and other payables.

Subsequent measurement

The measurement of financial liabilities depends on their classification as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as held at fair value through profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Loans and borrowings

This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.

Employees' end of service benefits

The Group provides end of service benefits to its employees in accordance with local labour laws. The entitlement to these benefits is based upon the employees' final salary and length of service, subject to the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment. 

Share based payments

Employees (including senior executives) of the Group receive remuneration in the form of share based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in note 16.

That cost is recognised in employee benefits expense, together with a corresponding increase in equity (share based payment reserve), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group's best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

Leases

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the consolidated statement of comprehensive income on a straight-line basis over the lease term.

Contingencies

Contingent liabilities are not recognised in the financial statements, they are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.

Foreign currencies

The Group's financial statements are presented in USD, which is the functional currency of all Group companies. Items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange prevailing at the reporting date. All differences are taken to profit or loss. 

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Foreign currency share capital (including any related share premium or additional paid-in capital) is translated using the exchange rates as at the dates of the initial transaction. The value is not remeasured.

5 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

New and amended standards and interpretations

The Group applied IFRS 15 for the first time, using a fully retrospective approach. The nature and effect of the changes as a result of the adoption of this new accounting standard are described below.

Several other amendments and interpretations apply for the first time in 2018, such as IFRS 9 Financial Instruments. Following assessment, there were no reclassifications or estimated credit losses and therefore the adoption of IFRS 9 did not have a significant impact on the financial statements of the Group. The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue, and related interpretations. It applies, with limited exceptions, to all revenue arising from contracts with customers. IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

IFRS 15 requires entities to exercise judgement, taking into consideration all relevant facts and circumstances when applying each step of the model to contracts with their customers. Where deemed appropriate, the Group will utilise the practical expedient within IFRS15, allowing revenue to be recognised at the amount which the Group has the right to invoice, where that amount corresponds directly with the value to the customer of the Group's performance completed to date.

The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

The Group is principally engaged in construction, integrated facilities management, and supply chain services in demanding and remote areas. 

For contracts with customers in which the sale of goods is generally the only performance obligation, adoption of IFRS 15 does not have any significant impact on the Group's revenue and profit or loss. The Group's revenue recognition occurs at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods.

With respect to services income, services are satisfied over time given that the customer simultaneously receives and consumes the benefits provided by the Group. Consequently, under IFRS 15 the Group continues to recognise revenue for these service contracts and the service components of hybrid contracts over time rather than at a point of time.

(a) Construction revenue

Before the adoption of IFRS 15, all construction revenue was recognised using the percentage of completion method. When performing a review of contracts in connection with the implementation of IFRS 15, the Group assessed that certain contracts contained specific performance obligations that were required to be met before revenue could be recognised in accordance with the requirements of the new standard. As a result, revenue reported in 2017 decreased by USD 2,188,000. There was a corresponding increase in customer advances of USD 780,000, a decrease in accrued revenue of USD 1,367,000 and a decrease in retention receivables of USD 41,000. A decrease in direct costs of USD 939,000 was also recognised, together with the corresponding increase in prepayments.

There was no impact to balances reported in relation to any accounting periods beginning prior to 1 January 2017.

(b) Reclassification of other income

Other income has been reclassified to be included in revenue and direct costs. The Group assessed the nature of other income balances and concluded it partly reflects: (i) the continuing trade of the business to be classified as revenue under IFRS 15; and (ii) reimbursement of non-contracted costs recognised as expenses in prior periods to be recognised in the same expense category as where the cost was originally recorded.

Impact on statement of profit or loss (increase/(decrease) in profit)

Impact on the consolidated statement of financial position (increase/(decrease))

The impact on the statement of cash flows for the year ended 31 December 2017 only relates to the changes in profit before tax from continuing operations, certain adjustments to reconcile profit before tax to net cash flows from operating activities and working capital adjustments. There was no impact on the net cash flows from operating, investing or financing activities.

6 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the financial statements requires management to make judgements, estimates and assumptions that may affect the reported amount of assets and liabilities, revenues, expenses, disclosure of contingent liabilities, and the resultant provisions and fair values. Such estimates are necessarily based on assumptions about several factors and actual results may differ from reported amounts.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

a) Judgments

Use of Alternative Performance Measures

IAS1 requires material items to be disclosed separately in a way that enables users to assess the quality of a company's profitability. In practice, these are commonly referred to as 'exceptional' items, but this is not a concept defined by IFRS and therefore there is a level of judgement involved in arriving at an Alternative Performance Measure (APM) which excludes such exceptional items. The Group considers items which are material and outside its normal operating practice to be suitable for separate presentation. Further details are in note 18.

b) Estimates and assumptions

Percentage of completion

The Group uses the output percentage-of-completion method when accounting for contract revenue on its long-term construction contracts. Use of the percentage-of-completion method requires the Group to estimate the progress of contracts based on surveys of work performed. The Group has determined this basis of revenue recognition is the best available measure on such contracts and where possible seeks customer verification of percentage-of-completion calculations as at financial reporting dates.

The accuracy of percentage-of-completion estimates has a material impact on the amount of revenue and related profit recognised. As at 31 December 2018, USD 1,676,000 of accrued revenue had been calculated using the percentage-of-completion method (2017: USD 1,486,000).

Revisions to profit or loss arising from changes in estimates are accounted for in the period when the changes occur.

7 SEGMENTAL INFORMATION

For management purposes, the Group is organised into one segment based on its products and services, which is the provision of services in demanding and remote areas. Accordingly, the Group only has one reportable segment. The Group's Chief Operating Decision Maker (CODM) monitors the operating results of the business as a single unit for the purpose of making decisions about resource allocation and assessing performance. The CODM is considered to be the Board of Directors.

Operating segments

Revenue, operating results, assets and liabilities presented in the financial statements relate to the provision of services in demanding and remote areas.

Revenue by service channel:

The Group allocates a contract to a specific service channel based on the nature of the primary deliverable to the customer. The Group does not allocate revenue to multiple service channels from a contract. If the Group were to allocate revenue to multiple service channels from its contracts, a significant value of construction revenue would be reclassified to the other service channels; additionally, a significant value of integrated facilities management revenue would be reclassified to supply chain services.

Geographic segment

The Group solely operates in Africa and the Middle East and the CODM considers this to be the only geographic segments of the Group. The below geography split is based on the location of project implementation.

Revenue by geographic area of project implementation:

Non-current assets by geographic area:

8 GROUP REORGANISATION

Share for Share Exchange

On 12 April 2018, RAI acquired 100% ownership of RA through a share for share exchange transaction (the "Exchange"). The cost of RA was established and accounted for with reference to IAS 27 which states that when a parent reorganises the structure of its group by establishing a new entity as its parent, and meets specific criteria, the new parent measures cost at the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the date of the reorganisation. In the case of the Exchange, RA was the former parent of the Group and all relevant criteria were met, as a result the cost of RA was determined to be USD 29,278,000, being the carrying amount of the equity of RA at the date of the Exchange.

The consideration paid to the shareholders of RA was 139,999,998 ordinary shares of GBP 0.10 each.

The difference between the total equity balances of RA and the nominal value of shares issued by RAI at the date of the Exchange is recorded as a merger reserve. Upon consolidation, all intra-group transactions, balances, income and expense are eliminated, and the merger reserve is equal to the difference between the nominal value of the shares issued by RAI and the total share capital and additional contributed capital of RA at the date of the Exchange.

Initial Public Offering

On 29 June 2018, RAI undertook an initial public offering (IPO) and was admitted to trade on the Alternative Investment Market (AIM), a sub-market of the London Stock Exchange. New ordinary shares of 33,575,741 were issued on the date of the IPO bringing the total number of shares outstanding to 173,575,741. These shares have a par value of GBP 0.10 and were sold by RAI at GBP 0.56 per share.

During the IPO process, the Group incurred USD 2,059,000 of expenses which were incremental and directly attributed to the equity raise. As per IAS 32, these costs are to be accounted for as a deduction from equity raised and as a result the net proceeds of the IPO were USD 22,672,000.

9 GROUP INFORMATION

The Company operates through its subsidiaries, listed below, which are legally or beneficially, directly or indirectly owned and controlled by the Company.

The extent of the Company's beneficial ownership and the principal activities of the subsidiaries are as follows:

* RA International in Somalia is not an incorporated legal entity.

10 ACQUISITION OF SUBSIDIARY

RA SB Ltd.

On 1 January 2018, the Group acquired 100% ownership of RA SB Ltd. and its subsidiary (together "RASB"), from one of its shareholders, who is also a member of key management. The purchase consideration of USD 594,000 represents the net book value of RASB as at 1 January 2018. RA SB Ltd. is registered in Ras Al Khaimah, UAE and operates in the Republic of Sudan through its subsidiary which provides remote site services to the mining industry. The acquisition is consistent with the Group's strategy of operating across Africa.

The fair values of the identifiable assets and liabilities of RASB as at the date of acquisition were:

Net cash outflow on acquisition

Acquisition costs of USD 6,000 relating to the acquisition of RASB are included in acquisition costs within the current accounting period.

For the year ended 31 December 2018, RASB contributed USD 1,754,000 revenue and USD 350,000 profit before finance costs to the Group results.

11 PROFIT FOR THE PERIOD

Profit for the period is stated after charging:

Amounts paid or payable by the Group in respect of audit and non-audit services to the Auditor are shown below.

The non-audit fees incurred in the current year represent services undertaken by a separate EY team as part of the Group's IPO process and as part of a corporate acquisition that was completed in 2019 (see note 32). No members of the audit team were involved in undertaking these non-audit procedures and strict independence processes were in place. All non-audit services, post IPO, have been assessed and approved by the Audit Committee.

12 EMPLOYEE EXPENSES

The average number of employees (including directors) employed during the period was:

The aggregate remuneration of the above employees was:

The remuneration of the Directors and other key management personnel of the Group are detailed in note 30.

13 EXCEPTIONAL ITEMS

* Share listing costs represent advisory, legal, and other costs incurred in connection with the IPO which have not been accounted for as a deduction from equity raised.

14 TAXATION

The tax charge on the profit for the year is as follows:

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:

* Expenses not deductible represent the costs incurred relating to the share for share exchange and IPO.

Based on an evaluation performed by management on its operations, management has assessed that the Group is not exposed to any corporate tax liabilities. This is primarily a result of the Group benefitting from tax exemptions granted to its customers who are predominantly governments and large supranational organisations, as well as zero corporate tax rates in certain countries of operation.

15 EARNINGS PER SHARE

The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

Normalised earnings per share is calculated by dividing the profit before exceptional items and unrealised differences on translation of foreign balances attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period.

Since a new parent entity was established by means of a share for share exchange and the Group's financial statements have been presented as a continuation of the existing group, the number of shares taken as being in issue for both the current and preceding periods are the number of shares issued by the new parent entity. As a result, the historical weighted average number of shares presented in the comparative EPS calculation is 139,999,998, being the number of ordinary shares exchanged for the entire share capital of RA.

16 SHARE BASED PAYMENT EXPENSE

The Group recognised the following expenses related to equity-settled payment transactions:

Performance Share Plan

During the year, the Company introduced a Performance Share Plan (PSP) whereby options may be granted to eligible employees. Awards vest after a performance period of 3 years subject to continuous employment and the achievement of a hurdle total shareholder return (TSR) as at the end of the performance period. 

Options issued under the PSP plan were valued using the Monte Carlo Simulation model which is considered to be the most appropriate for valuing options granted under schemes where there are changes in performance conditions by which the options are measured, such as for TSR based awards.

The fair value of the options at the grant date was USD 96,000 and a charge of USD 16,000 (2017: nil) was recognised in administrative expenses for the fiscal year ended 2018.

Other share based payments

On Admission, in exchange for brokerage services provided to the Company during its IPO, the Company issued a warrant instrument granting its primary broker the right to subscribe for 671,514 ordinary shares of the Company. The warrants are exercisable for five years from the date of Admission at a subscription price of GBP 0.728 (USD 0.923) per ordinary share. They are non-transferrable and are subject to typical anti-dilution rights to adjust on a proportional basis for share consolidations, share splits and stock dividends. The Company used the Black-Scholes model to value the warrants at the grant date. The fair value of the warrants is nil.

On Admission, the majority shareholder of RAI gifted 2,142,855 personally owned shares of the Company to certain employees of RA International FZCO as a reward for past employment service. The fair value of the shares on the grant date was GBP 0.56 (USD 0.74) per share. A charge of USD 1,602,000 (2017: nil) was recognised in exceptional items.

 The Monte Carlo and Black-Scholes models used the following inputs:

17 DIVIDENDS

Before the Group reorganisation, dividends of USD 12,500 per share (10 shares) totalling USD 125,000 were declared and paid in 2018 (2017: USD 77,466 per share (10 shares) totalling USD 774,660). Proposed dividends on ordinary shares are subject to approval at the annual general meeting and are not recognised as a liability as at 31 December.

18 ALTERNATIVE PERFORMANCE MEASURES

APMs used by the Group are defined below along with a reconciliation from each APM to its IFRS equivalent, and an explanation of the purpose and usefulness of each APM. APMs are non-IFRS measures.

In general, APMs are presented externally to meet investors' requirements for further clarity and transparency of the Group's financial performance. APMs are also used internally by management to evaluate business performance and for budgeting and forecasting purposes.

Underlying Operating Profit (UOP)

The Group uses UOP as an alternative measure to Operating Profit to better compare the profitability of its operations across financial periods. UOP is calculated as Operating Profit less holding company expenses and acquisition costs.

On 29 June 2018, RAI listed on AIM and began to incur costs associated with being a listed company. No holding company expenses were incurred in 2017 and a full year of these expenses are anticipated to be incurred in 2019. Both holding company expenses and acquisition costs do not relate to the day-to-day operating business of the Group.

Previously, the Group had used earnings before interest, tax, depreciation and amortisation (EBITDA) to assess the underlying performance of the business however so as to better align internal budgeting and forecasting with financial reporting the Group has reclassified depreciation so as to be included in the calculation of UOP and Operating Profit.

Underlying Operating Margin is calculated as UOP divided by revenue.

Underlying Profit (UP)

The Group uses UP as an alternative measure to Profit so as to better compare the profitability of the Group across financial periods. To calculate UP exceptional items and unrealised differences on translation of foreign balances are deducted from Profit.

Exceptional items are excluded as they are by definition incurred outside of the normal operating practice of the Group. Unrealised differences on translation of foreign balances are temporary gains or losses in the value of foreign denominated cash balances held by the Group at the reporting date. These foreign cash balances are held to settle expenses arising in future periods in the same currencies.

Underlying Profit Margin is calculated as UP divided by revenue.

Normalised Earnings per Share (Normalised EPS)

Normalised EPS represents earnings per share calculated as dividing UP by the weighted average number of ordinary shares outstanding during the period. Normalised EPS provides a more comparable figure when analysing profitability on a per share basis across financial periods.

Net Cash

Net cash represents cash less overdraft balances, term loans and notes outstanding.

19 PROPERTY, PLANT, AND EQUIPMENT

20 INVENTORIES