RA International reports 'positive contract momentum' through second half

Remote site services company RA International updated the market on its current trading on Tuesday, saying it was expecting to report revenue for the second half of at least $28m, and a gross profit margin at least consistent with the 29.1% reported for the first half.

The AIM-traded firm said that performance reflected “positive contract momentum” during the period, supporting a growing order book into 2021.

It said integrated facilities management revenue for the second half was expected to be “broadly consistent” with the first half, where the company reported record revenue in the division for a six-month period of $15.9m.

Revenue from integrated facilities management constituted the majority of the company's order book, and continued to show “resilience”, the board said, with minimal disruption despite the global impact of Covid-19.

Construction revenue, as the firm had previously highlighted, had felt the largest financial impact of the coronavirus pandemic, primarily as a result of projects being suspended earlier in the year.

RA said those suspended contracts had all since restarted, and the company was delivering the work, although the delays had led to a “significant” deferral of revenue to 2021.

The board said it expected to report revenue for the second half of at least $7m in the division, compared with first half revenue of $10.7m.

Finally, RA said supply chain services revenue had “held up well” in the second half, having included $2.7m of contracts in the first half relating to the provision of Covid-19 related personal protective equipment.

The company said it was expecting to report revenue for the second half of at least $5m, compared with first half revenue of $6.1m, adjusted for that coronavirus-related benefit.

RA said its current order book of $187m highlighted positive contract momentum, particularly in the second half of the year.

In terms of recent new contract wins, the board said that of particular note was a three-year integrated facilities management contract award in east Africa, with a value of $5.4m.

“We exit 2020 encouraged by our financial performance during the year, our contract momentum and growing order book,” said chief executive officer Soraya Narfeldt.

“Reported revenue for the second half of 2020 will be lower than the first half, which we expected in an environment where the Covid-19 pandemic has continued to present varied challenges for us and our customers.

“Looking ahead, we expect Covid-19 uncertainty to continue to influence customer decision-making, and this may affect the timing of commencement of new projects.”

Narfeldt noted that the risks associated with potential delays were increasingly offset by the firm’s growing order book, providing a stronger contractual baseline for the business year-on-year.

“This, combined with the nature of our bid activity, gives us confidence in our growth prospects going forward.

“We are growing with our customers, with clients recognising our global reach, and we are bidding on large, high value contracts, including a number of potentially significant bids in the commercial sector, a key growth area for us which is building real momentum.”

At 1255 GMT, shares in RA International were down 6.52% at 43p.