RA International Group PLC (AIM: RAI), a specialist provider of complex and integrated remote site services to Humanitarian, Governmental and Commercial organisations globally, provides a pre-close trading update for the 12-month period to 31 December 2021.
The Company expects to report revenue for the year to December 2021 of approximately USD 54m and an Underlying EBITDA of approximately USD 7m. While revenue is in line with management expectations, reduced revenue in comparison with the prior year impacted gross margin. Gross margin in the period was also impacted by the general inefficiencies of operating under COVID-19, including travel restrictions, quarantine requirements and supply chain delays. G&A costs increased by USD 2m in the year, reflecting the full year impact of investment undertaken in 2020 to support anticipated growth.
The Company order book as at 31 December 2021 was USD 100m, reflecting revenue drawdown in the period and ongoing delays connected to new contract wins and tenders. These projects remain in the pipeline, and we remain confident of awards, however timelines are beyond our control.
The Group closed the year with cash on the balance sheet of USD 9m, resulting in a modest net debt position of USD 1m. This reflects an additional USD 4m tranche of debt raised under the Medium-Term Note programme and elevated levels of Mozambique-related inventory which have not yet unwound due to delays in commencing alternative projects.
Soraya Narfeldt, CEO of RA International, commented:
"This has been a frustrating period, with client and COVID-19 related operating constraints continuing to cause inefficiencies and exceptional delays in executing projects, in tender issues, awards and in project mobilisations. This has impacted our profitability for the last six months of 2021 and also stalled our order book momentum. However, the underlying business has remained profitable through this disruption and our solid balance sheet supports our forward looking requirements.
As a management team we are not going to react passively waiting for these headwinds to abate. We have reflected on our strong track record supporting blue-chip customers in the Humanitarian and Government sectors relative to the emerging opportunity we have in the Commercial sector. Over the last two years or so, through the pandemic and other events, we have seen particular risks and delays with new business activity in the Commercial sector. As a result, going forward, we will be more selective in the projects we look to undertake in this sector, and it will be less of a focus of our business development activities.
Our confidence in our core business supporting our Humanitarian and Government clients remains high. We are particularly encouraged about the opportunity we have in the Government space, where we are building a specialist capability with respect to supporting US government activity overseas, including with our partner Cherokee Nation. We are also looking to prioritise work with UK government departments including the MoD and the FCDO as well as other international government agencies. Overall, we expect Government clients to become an increasingly important part of our business over time, decreasing the risk profile of our clients and diversifying geographically into markets to mitigate operational risks. We will align our resources with these high quality clients alongside our continued focus on securing high quality IFM contracts.
We will update shareholders more fully with respect to our strategic focus and outlook when we report our 2021 audited results, which we expect to announce in late April 2022."