TIDMWSG

RNS Number : 8320M

Westminster Group PLC

14 May 2020

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN

Westminster Group Plc

('Westminster', the 'Group' or the 'Company')

Final Results

Westminster Group Plc (AIM: WSG), a leading supplier of managed services and technology-based security solutions worldwide, announces its Final Results for the 12 months to 31 December 2019.

Highlights include:

Operational:

-- EBITDA^ profit of GBP0.1m from underlying continuing and discontinued operations (2018 restated* loss of GBP0.4m)

   --      Strong performance by both Managed Services and Technology Divisions 
   --      Secured new Managed Services project in Tema Port, Ghana 

-- Secured a $3.48m USD contract for the provision of advanced container screening solutions to two separate ports in an Asian country

   --      West Africa airport operations performed at record levels 
   --      Acquired French security and support services company, Euro Ops 

-- Successfully delivered the remainder of the $4.5m USD vehicle screening contract in the Middle East, that the Company secured in 2018

   --      Significant progress with several large-scale project opportunities 
   --      Supplied products and solutions to 66 countries across the world 
   --      Formed Strategic Joint Venture, Westminster Arabia, in Saudi Arabia 
   --      Entered into strategic alliance with the Gulf Aviation Academy in Bahrain 

-- Entered into strategic alliance with the Tunisian Academy for Civil Aviation Safety and Security Training

-- Provided training throughout 2019 to various airports, including several major hubs, across the Middle East, Africa and Asia

-- Board strengthened in terms of skills and experience with the appointment of two new Non-Executive Directors Charles Cattaneo in January 2019 and Mawuli Ababio in November 2019

Financial:

   --      Revenues up by 63% to GBP10.9m (2018: GBP6.7m) 

-- Recurring Revenue ^ (such as Managed Service contracts) in the year up by 46% to GBP5.6m (2018: GBP3.8m)

   --      Fourth consecutive year of double-digit percentage revenue growth 

-- EBITDA ^ profit from underlying continuing and discontinued operations of GBP0.1m (2018: restated* loss GBP0.4m)

   --      Total Equity / Net Assets grows from GBP1.1m in 2018 to GBP1.9m in 2019 

Post period End:

   --      2020 commenced on a strong and profitable note with Q1 orders and revenues ahead of budget 

-- Q1 2020 revenues increased by 22% to over GBP4.5m (Q1 2019: GBP3.7m), producing a healthy profit at both pre and post-tax levels

-- Q1 2020 passenger numbers for our West Africa airport operations at record levels before airport closed end of March due to Coronavirus

-- 5-year main contract signed relating to Ghana port managed services project awarded in June 2019

-- Completed balance of $3.48m USD of advanced container screening solutions for two ports in Asia secured in 2018

-- Reduced the Group's convertible loan notes by GBP561,250 to GBP1,683,750, maturity date for the balance extended to 1 May 2021

-- Coronavirus (COVID-19) Pandemic causing disruption to airport security and training operations but effect mitigated by significant increase in fever screening product sales.

* restated as a result of the implementation of IFRS16

^ This is an Alternative Performance Measure refer to Note 2 for further details

Commenting on the results and prospects, Peter Fowler, Chief Executive of Westminster said:

"I am delighted to report that 2019 was a record year for the Group with a 63% (GBP4.2m) year on year increase in revenues to GBP10.9m (2018: GBP6.7m), our fourth year of double-digit percentage revenue growth and shows the momentum we are building.

"Both the Managed Services and Technology divisions delivered an impressive performance during the year, both financially and operationally. Financially our Managed Services Division achieved a 50% increase in revenues to GBP5.5m (2018: GBP3.7m) whilst our Technology Division achieved an impressive 80% increase in revenues to GBP5.4m (2018: GBP3.0m). Operationally both Divisions had a busy year and made excellent progress on a number of fronts.

"2020 has started on an equally positive note, building on the success of 2019 with both order intake and revenues ahead of budget. Q1 delivered revenues of over GBP4.5m, an increase of more than 22% over the same period in 2019 (Q1 2019: GBP3.7m), and I am pleased to report our management accounts show we made a healthy profit of several hundred thousand GBP in the quarter at both pre and post-tax levels as we begin to benefit from new contracts and the investment we have been making in our business over the years.

"The current Coronavirus (COVID-19) pandemic, in addition to the tragic loss of life, is of course having a profound impact on the global economy and businesses across the globe. As a company operating globally the pandemic has affected parts of our business in various ways. The business model we have been developing is based on multiple revenue streams, many of which are from long term or recurring contracts, from diverse sources in varying parts of the world and this has proved invaluable during the current pandemic. Whilst some parts of our business have been adversely affected and others have seen little impact, some have experienced significant growth, particularly our sales of fever screening and safety solutions.

"We entered 2020 with visibility of over GBP8m of annual recurring revenue for the year from long term managed services, guarding and maintenance contracts and because of the nature of our long term contracts, where we have experienced reductions in such revenue streams during the COVID-19 disruption these are expected to resume quickly once the pandemic passes. We not only have more large-scale project opportunities under discussions than ever before but in view of the COVID-19 situation we continue to expand our online and non-contact sales opportunities and are developing new opportunities as our business model evolves.

"Over the next few months and years, we have an opportunity to achieve unprecedented growth from the prospects we are pursuing, and the Board and I remain committed to delivering on this potential."

For further information please contact:

 
Westminster Group Plc                      Media enquiries via Walbrook 
                                            PR 
Rt. Hon. Sir Tony Baldry - Chairman 
Peter Fowler - Chief Executive Officer 
Mark Hughes - Chief Financial Officer 
 
S. P. Angel Corporate Finance LLP (NOMAD 
 & Broker) 
Stuart Gledhill                            020 3470 0470 
Caroline Rowe 
 
Walbrook (Investor Relations) 
Tom Cooper                                 020 7933 8780 
Paul Vann                                  0797 122 1972 
Nick Rome                                  Westminster@walbrookpr.com 
 

Notes:

Westminster Group plc is a specialist security and services group operating worldwide via an extensive international network of agents and offices in over 50 countries.

Westminster's principal activity is the design, supply and ongoing support of advanced technology security solutions, encompassing a wide range of surveillance, detection (including Fever Detection), tracking and interception technologies and the provision of long-term managed services contracts such as the management and running of complete security services and solutions in airports, ports and other such facilities together with the provision of manpower, consultancy and training services. The majority of its customer base, by value, comprises governments and government agencies, non-governmental organisations (NGO's) and blue-chip commercial organisations.

The Westminster Group Foundation was formed in 2014 as an initiative of Westminster Group plc. during the West African Ebola Crisis.

The Foundation's goal is to support the communities in which the Group operates by working with local partners and other established charities to provide goods or services for the relief of poverty and the advancement of education and healthcare particularly in the developing world.

The Westminster Group Foundation is a Charitable Incorporated Organisation, CIO, registered with the Charities Commission number 1158653.

Chairman's Statement

Overview

I am pleased to present the Westminster Group plc. Final Results for the year ended 31 December 2019 which was a record year for the Group both in terms of revenue and growth.

I am also pleased to report we achieved a record 63% growth in revenues to GBP10.9m, an increase of GBP4.2m over the GBP6.7m reported in 2018. This is the fourth consecutive year of double-digit percentage revenue growth and the highest growth rate since Westminster's shares were admitted to trading on AIM in 2007. Encouragingly our recurring revenue ^ also rose strongly, up by 46% to GBP5.6m (2018: GBP3.8m). Accordingly, we have delivered an improved financial position with an EBITDA^ profit from underlying continuing and discontinued operations of GBP0.1m (2018: loss GBP0.4m restated). This bodes well for our future trading and demonstrates what the Group is capable of. Q1 2020 has already commenced on a strong footing ahead of budget with revenues of over GBP4m, being around 30% up on Q1 2019 (GBP3.1m).

A key achievement in the year was that within only two weeks from receiving a letter of intent in June 2019 and our being appointed as technical partner running the container screening operations in the new $1.5bn container port in Ghana, we mobilised, set up and were running a complex screening operation in time for the port opening. As Chairman, I was impressed by our team's ability to deliver such a complex operation in a short timescale.

Both our operating divisions are performing well. Enquiry levels remain healthy and levels of interest in the Group's services are growing. Both divisions are developing and pursuing sizeable business opportunities and it is encouraging to see our Technology division securing important contracts such as $3.48m USD contract announced in April 2019. More detail on the strategic developments, projects and opportunities we are undertaking is covered in the CEO's Strategic Report.

During the year the Group raised GBP1.55m gross from the issue of new equity to support the development of the Group. In January 2020 we announced we had secured a flexible financing facility consisting of a GBP3.0m mezzanine loan supported by a GBP1.75m Equity Placing and Sharing Agreement and elected to draw down an initial GBP1.5m to commence a redemption programme of the Company's GBP2.245m Convertible Loan Notes. This was due to be completed before 30 June 2020 but due to the Coronavirus pandemic this was extended with the support and consent of noteholders to 1 May 2021. With the option to draw down further funds at our discretion, this financing facility provides us with the necessary flexibility needed to support the continued growth of the business.

Corporate Conduct

As a company whose shares are traded on the AIM market of the London Stock Exchange, we recognise the importance of sound corporate governance throughout our organisation giving our shareholders and other stakeholders including employees, customers, suppliers and the wider community confidence in our business. We endeavour to deliver on our corporate Vision and Mission Statements in an ethical and sensitive manner irrespective of race, colour or creed. This is not only a requirement of a well-run public company but makes good commercial and business sense.

In my capacity as Executive Chairman, I have ultimate responsibility for ensuring the Board adopts and implements a recognised corporate governance code in accordance with our stock market status. Accordingly, the Board has adopted, and is working to, the Quoted Companies Alliance (QCA) Corporate Governance Code 2018. The Chief Executive Officer (CEO) has responsibility for the implementation of governance throughout our organisation, commensurate with our size of business and worldwide operations.

The QCA Corporate Governance Code 2018 has ten key principles and we set out on our website how we apply those principles to our business, and more detailed information is provided in these accounts.

We operate worldwide with a focus on emerging markets and in a sector where discretion, professionalism and confidentiality are essential. It is vitally important that we maintain the highest standards of corporate conduct. The Corporate Governance Report sets out the detailed steps that we undertake to ensure that our standards, and those of our agents, can stand any scrutiny by Government or other official bodies.

Social Responsibility

As a Group, we take our corporate social responsibilities very seriously, particularly as we operate in emerging markets and in some cases in areas of poverty and deprivation. I am proud of the support and assistance we as a company provide in many of the regions in which we operate, and I would like to pay tribute to our employees and other individuals and organisations for their generous support and contributions to our registered charity, the Westminster Group Foundation. We work with local partners and other established charities to provide goods or services for the relief of poverty or advancement of education or healthcare making a difference to the lives of the local communities in which we operate. For more information or to donate please visit www.wg-foundation.org .

Employees and Board

It is with great sadness that in 2019 we marked the passing of Lt Col Sir Malcolm Ross GCVO, OBE, GCStJ, DL.

Sir Malcolm was Westminster's Chairman from 2007 and was an inspirational and supportive leader. Sir Malcolm was a true Gentleman in every sense of the word and a hard-working public servant. In 2017 Sir Malcolm moved to Deputy Chairman in order to allow more time for his public duties and yet he continued to devote considerable support to the Company.

Sir Malcolm was a former member of the Royal Household of the Sovereign of the United Kingdom, and from 2006, that of the Prince of Wales (retired March 2008). He was made an OBE in 1988 and joined the Royal Victorian Order in 1994 as a CVO. He was knighted as a KCVO in 1999, and advanced to GCVO in 2005. He had been a member of the Royal Company of Archers since 1981, and a Freeman of the City of London since 1994. In 2006, he was made Her Majesty's Lord Lieutenant of the Stewartry of Kirkcudbright. Until recently Sir Malcolm was also the Lord Prior of The Order of St John.

He was a wonderful man and will be greatly missed by a great many people, not least all at Westminster.

The vacancy left by Sir Malcolm's passing was filled in November 2019 by Mawuli Ababio stepping up from our international advisory board to Non-Executive Director. Mawuli is based in Accra, Ghana and has extensive board and corporate governance experience having served on several listed and unlisted boards over the last 20 years, both as an Executive and Non-Executive Director. His experience across the whole of sub-Saharan Africa is already proving to be invaluable to the Group. Mawuli has taken over the chair of the Remuneration Committee.

In January 2019 Charles Cattaneo joined the board as a Non-Executive Director. Charles has been a director of a number of public and private companies and is currently the Chairman of the Midlands Regional Advisory Group of the London Stock Exchange. His wealth of City and corporate finance knowledge and experience gained from a variety of business sectors, in particular advising AIM companies and serving on boards of growing and successful companies, is of great value to our business as we expand and deliver on our significant potential. As a Chartered Accountant he has taken over as Chair of the Audit Committee.

Also, in January 2019, James Sutcliffe, by agreement, left the Westminster Group Plc board to take on the role as Chairman of the International Advisory Board, where the benefit of his extensive international experience and high-level Government contacts overseas can be of significant value to the Company's business development and expansion going forward.

We continue to work closely with and receive excellent support from the Foreign Office and UK Diplomatic Missions around the world and I am very grateful for the support these and other governmental departments provide to our teams and our operations worldwide.

At the time of writing we are in the midst of the global Coronavirus (COVID-19) pandemic which, in addition to the tragic loss of life, has major implications for the global economy creating material uncertainty and challenges. The duration and full impact of this pandemic is difficult to predict at the present time although we are seeing encouraging signs that the worst now appears to be over in some parts of the world with some countries looking to gradually relax restrictions. As a company operating globally the pandemic has affected parts of our business in various ways. Some parts of our business have been adversely affected, others have seen little impact, whilst some have seen significant growth. The Chief Executive Officer's Report provides some detail on the challenges this pandemic has created and how we have responded to the situation.

Meeting with the Group's ever-expanding team of consummate professionals is one of the Board's more pleasurable responsibilities. As a service-based business, our employees are key to delivering success. On behalf of the Board, I want to congratulate Westminster's management and employees around the globe for their achievements and the vital contribution they have made to our success in 2019 and the way in which they have risen to the challenges and opportunities presented by COVID-19.

I would finally like to extend my appreciation to our investors for their continued support and to our strategic investors who are bringing their expertise to help deliver value for all.

Rt. Hon Sir Tony Baldry DL

Chairman

Chief Executive Officer's Report

Business Description

The Westminster Group is a global integrated security services company delivering niche security solutions and long-term managed services to high growth and emerging markets around the world, with a particular focus on long term recurring revenue ^ business.

Our target customer base is primarily governments and governmental agencies, critical infrastructure (such as airports, ports & harbours, borders and power plants), and large-scale commercial organisations worldwide.

We deliver our wide range of Land, Sea and Air solutions and services through a number of operating companies that are currently structured into two operating divisions; Managed Services and Technology; both primarily focused on international business as follows:

Managed Services division

Focusing on long term (typically 10 - 25 years) recurring revenue ^ managed services contracts such as the management and operation of security solutions in airports, ports and other such facilities, together with the provision of manpower, consultancy and training services.

Technology division

Focussing on providing advanced technology led security solutions encompassing a wide range of surveillance, detection, tracking, screening and interception technologies to governments and organisations worldwide.

In addition to providing our business with a broad range of opportunities, these two divisions offer cost effective dynamics and vertical integration with the Technology division providing vital infrastructure and complex technology solutions and expertise to the Managed Services division. This reduces both supplier exposure and cost and provides us with increasing purchasing power. Our Managed Services division provides a long-term business platform to deliver other cost-effective incremental services from the Group.

We have a successful track record of delivering a wide range of solutions to governments and blue-chip organisations around the world. Our reputation grows with each new contract delivered - this in turn underpins our strong brand and provides a platform from which we can expand our business.

Business Review

As highlighted in the Chairman's Statement, 2019 was a record year for the Group with 63% (GBP4.2m) year on year increase in revenues to GBP10.9m (2018: GBP6.7m), our fourth year of double-digit revenue growth and shows the momentum we are building. We are greatly encouraged that within this revenue growth, recurring revenue ^ from our managed services, guarding and maintenance contracts (including 6 months of contribution from our Ghana operations and 8 months of Euro Ops) grew by 46% (GBP1.8m) to GBP5.6m (2018: GBP3.8m). This is significant as our growing base of contracted recurring revenue^ is what underpins the future growth of the business.

We continue to invest in our worldwide business development programmes in order to deliver on our growth potential, particularly in our long-term major managed services projects. Operating in frontier markets is time consuming, complex and costly but the potential rewards are substantial. Despite the cost of business development, the set up costs for our Ghana project and the costs associated with setting up our various strategic alliances and joint ventures around the world, we are pleased to report a greatly improved EBITDA^ performance for the full year with a profit from underlying continuing and discontinued operations of GBP0.1m as compared with 2018 which was a GBP0.4m (restated) EBITDA^ loss from underlying continuing and discontinued operations. As a business we are operationally geared in that we have relatively fixed operating costs and as our revenues continue to grow our profitability will grow proportionally faster. In this respect we believe we are now approaching an inflection point.

Both the Managed Services and Technology divisions delivered an impressive performance during the year, both financially and operationally. Financially our Managed Services Division achieved a 50% increase in revenues to GBP5.5m (2018: GBP3.7m) whilst our Technology Division achieved an impressive 80% increase in revenues to GBP5.4m (2018: GBP3.0m). Operationally both Divisions had a busy year and made excellent progress on a number of fronts.

Enquiry levels remain healthy and levels of interest in the Group's services continues to grow across both Divisions. However, whilst our Technology Division provides the technological resources and platform to expand our operations around the world and is capable of delivering large scale projects, it is our Managed Services Division, with its potential for delivering large scale, long term, recurring revenue ^ and transformational growth, which is increasingly our core focus, particularly within the transportation security sector.

Passenger numbers for our West Africa airport operations for the year are at record levels and the last few months of 2019 were consistently some of the highest monthly traffic numbers experienced since we commenced operations there.

Building on the growing success of our aviation training business we have constructed a training facility at our UK Headquarters in Banbury so that we can conduct specialist technical and operational training courses for airline and airport delegates from around the world. The facility was completed and opened in early 2019 and has undertaken numerous training courses including for one of the largest airlines in Europe.

In February we delivered the remainder of the $4.5m USD vehicle screening contract in the Middle East, which the Company secured in 2018.

In March 2019 we had entered into a Technical Partnership Agreement with a Ghanaian company, Scanport Ltd. In June 2019, we announced a letter of intent had been received acknowledging Westminster as the Technical Partner and setting out the preliminary terms regarding the appointment and scope of work relating to a container screening project at the new container port, Terminal 3 at Tema, Ghana.

Terminal 3 is a new $1.5 billion investment project by Meridian Port Services ('MPS') which is creating one of the most advanced port operations in Africa, if not the world. The first two berths opened on 28 June 2019 and the first commercial vessel successfully docked on 3 July 2019. The third berth became operational in Q1 2020 and the fourth berth is due for completion at the end of 2020. When complete it will expand the port's capacity from around 1 million Twenty-foot Equivalent Units ('TEU') p.a. to over 3.5 million p.a.

Despite not having formal contracts in place due to unrelated issues within the port, Scanport-Westminster were officially appointed and have been successfully running the container screening and secondary search operations since the port opened on 28 June 2019, with Westminster providing the technical management and operations and Scanport responsible for local costs, management and employment.

The formal contract confirming the appointment for a renewable 5-year term was eventually signed in March 2020 naming Westminster as the designated Technical Partner for the duration of the contract. Revenues are based on a percentage of the relevant port tariffs which are shared between Scanport and Westminster and are driven by container traffic volumes passing through the Port. Westminster's share of revenues during the soft opening and start-up phase of operations in 2019 amounted to several hundred thousand USD and we look forward to the operation producing a meaningful contribution to our revenues in 2020 as the port continues to expand, the new berths come on stream, capacity and throughput increases, and new tariffs come into operation.

We are excited by the prospects of this long-term managed services project and we expect Ghana to be an important and growing part of our business.

In April 2019, our Technology division announced the award of a $3.48m USD contract for the provision of advanced container screening solutions to two separate ports in an Asian country. Following manufacture and site preparation works the first of these was delivered in November 2019 and the second unit was dispatched in January 2020.

In May 2019, we announced we had acquired Euro Ops, a French based aviation security and support services company which, through its sister company, Euro Ops International (also trading as ICare), provides aviation support services such as Airport Security, Aircrew Management, Humanitarian Logistics, Operations & Dispatch, Ground Handling etc. Euro Ops has been fully integrated into the Group and is developing meaningful business and opportunities within Francophone territories. Our new French operation joins our existing German subsidiary, which is also developing a number of sizeable business opportunities, in providing us with a European footprint. Whilst Westminster is not likely to be materially affected by Brexit, having European operating companies will be beneficial.

In June 2019, we announced we will be forming a joint venture, in Saudi Arabia, under the name Westminster Arabia. Our JV partners are Hazar International who, under their impressive Chairman, Sheikh Salman Bin Mohammed Bin Khalid Bin Hethlain, are strong and influential partners.

An experienced business development team is now in place within the country and is already involved in several large-scale project opportunities in the Kingdom. One of several projects already being pursued in the Kingdom is Saudi ports and in 2019 at the request of the authorities we conducted detailed operational and vulnerability assessments at certain ports following which, the Westminster team met with the port authorities in February 2020 for more detailed discussions regarding port security solutions. The follow up activity from these meetings and discussions have been delayed due to the COVID-19 effects and the travel restrictions in the Kingdom however these will resume once restrictions are lifted. The business opportunities for Westminster's products and services within Saudi Arabia are substantial and the formation of Westminster Arabia represents an important strategic development for the Group.

Westminster's international reputation and expertise in the field of aviation security continues to grow and, in addition to our direct contracts with airports and governmental bodies around the world, and the opening of the training centre in the UK in 2019, we have entered into two important Strategic Alliances. In July 2019, we announced we had signed a strategic alliance agreement with the Gulf Aviation Academy ('GAA'), a leading provider of professional aviation training in Bahrain and the wider Middle East and North Africa ('MENA') region. This alliance has already produced tens of thousands USD in new business and in January 2020 GAA secured an important new contract with the Bahrain Airport Company ('BAC'), the operator and managing body of Bahrain International Airport ('BIA') to provide civil aviation security training to hundreds of airport-stationed Ministry of Interior ('MOI') personnel each year and which will involve Westminster in the delivery of this service.

In November 2019, Euro Ops entered into a strategic alliance with the Tunisian Academy for Civil Aviation Safety and Security Training ('AFSAC'). From its impressive training centre in Tunisia AFSAC provides certified aviation security training workshops on behalf of the International Civil Aviation Organization (ICAO) and is an AACO Approved Training Centre (Organization of Arab Air Carriers) and an AFRAA Approved Training Centre (African Airlines Associations). This strategic alliance is a major step forward in the delivery of aviation security training and will allow each party to offer, collaborate, market and deliver an expanded certified training program.

In December 2019, we finalised the sale of the Sierra Queen which had a book value of GBP170,000. The vessel has been sold. As at December total consideration was $643,000 over 36 instalments and subsequently after the year end the consideration was significantly improved to $676,500 over 38 instalments. Under the sale agreement the Company agreed to ship the vessel at its own cost to the purchaser in Greece and the vessel left Sierra Leone waters in February 2020 and was delivered to the purchasers on 6 March 2020. The vessel will be secured by a mortgage charge over the vessel until final payment has been received.

Keyguard U.K Ltd, the UK based security and risk management company we acquired in November 2018, was fully integrated into the Group during 2019 and is now operating from our corporate HQ in Oxfordshire. Whilst Keyguard performed below budget during the year the integration into the Group has opened up a number of new business opportunities which will lead to improved performance and higher margins particularly within the aviation and critical infrastructure market where we now have joint marketing and sales activities with other parts of the business underway.

In 2019 our Technology Division supplied a wide a diverse range of products and services to numerous clients in 66 countries around the world, including in the UK, Middle East, Africa, Europe, Asia, the Americas and the Caribbean. By way of example of the diverse range of contracts secured by the Group in 2019 we delivered Westminster's unique diver communication system for Middle Eastern navy, vehicle screening solutions to a customs organisation in the Caribbean, bomb disposal equipment in Europe, body scanners to a prison service in Latin America, advanced screening equipment to an Iconic building in the UK. Explosive and Narcotic Detection solutions saw an increase in sales across various geographies. As in previous years we continued to supply security equipment and services to Government facilities across the UK.

On a wider front we continue to progress various existing and new large-scale managed services project opportunities around the world. No two opportunities are the same and each can have their own idiosyncrasies and challenges. As we have previously advised, project opportunities of this size and nature, particularly in emerging markets, are not only time-consuming and involve complex negotiations with numerous commercial and political bodies but discussions can ebb and flow over many months, with periods of intense activity which can be followed by long periods of inactivity. It is however precisely because of such challenges that competition is limited and the opportunities offer transformational growth opportunities.

We operate in a market that requires strict confidentiality and we are not able to provide detailed updates or explanations for delays which, if made public, may cause issues with our clients and be prejudicial to discussions. However, whilst there is never certainty as to timing or outcome of the many project opportunities we are pursuing, we are making progress on a number of fronts and we will provide market updates on material developments when appropriate and in line with our regulatory responsibilities.

In summary, 2019 was a busy year and a year of growth during which we have made significant strides forward.

Strategy

Our vision is to build a global business with strong brand recognition delivering advanced security solutions and long-term managed services to high growth and emerging markets around the world, with a particular focus on building multiple revenue streams, many of which involve long term recurring revenue ^ business, from diverse sources in varying parts of the world, providing a degree of resilience to external events and enhancing shareholder value. The value of this strategy has been demonstrated during the COVID-19 pandemic where Westminster is able to maintain and grow certain revenues mitigating reductions in its airport business.

To deliver on this vision the Company has in place a 5-year Strategic Growth Plan which is reviewed annually, and which includes a number of strategies to be pursued to achieve our goals. As part of that strategy for growth we continue to improve and enhance our board and senior management team and have made a number of key appointments broadening our range of experience and expertise. If we are to maximise the substantial growth opportunities we are developing, particularly with our airport security operations, it is essential we have the right strategies, people, processes and systems in place to successfully deliver such growth.

We have a growing number of companies within the Group as we expand our international operations and offices around the world which together with recent acquisitions such as Keyguard and Euro Ops, both of which are now consolidated into our Group operations, means we are operating under a range of business identities and with a number of different websites etc.

A key strategy for commenced in 2019 and running into 2020 is redefining our diverse businesses in line with our "One Company, One Vision" approach. This will involve rebranding parts of our business to better reflect the Westminster brand and regardless of what company or division or what product or service is involved it will be undertaken and recognised as Westminster. As part of this exercise we are undertaking a complete overhaul of our extensive web presence bringing all our various websites into a new and expanded Westminster Group website. Our extensive portfolio of products and services will all be brought together into one large but easily navigable site and categorised in three key focus sectors - Land, Sea and Air.

Whilst we continue to pursue our many organic growth opportunities the expansion strategy, we commenced in 2019 of targeted acquisitions and strategic joint ventures (JVs) in key markets and regions continues and we believe this strategy will enable the Company to expand its sphere of operations in a controlled and effective way.

We entered 2020 with our business in a stronger position than it has been for some time and with renewed optimism for the future and as part of our growth strategy the Board has set 10 priority goals to be delivered although we accept the unpredictability of the present COVID-19 pandemic and the uncertainty of its duration may impact the delivery of some of these goals:

1. Improve ratio of enquiries received/quotations issued by number and quotations issued/orders received by value;

   2.   Increase product portfolio and sales achieved; 
   3.   Secure at least one more long-term managed services contract; 
   4.   Enter into at least one more strategic alliance/joint venture in key markets; 
   5.   Deliver another year of double-digit revenue growth; 
   6.   Deliver another year of significant recurring revenue ^ growth; 
   7.   Deliver a material improvement in profitability; 
   8.   Deliver a sustained and material improvement in our share price; 
   9.   Instigate an Investors in People programme; 

10. Deliver a companywide 'One Vision, One Company' ethos and our new website focussed on Land, Sea and Air business activities.

Performance Indicators

The Group constantly monitors various key performance indicators for factors affecting the overall performance. At Group level, the revenues and gross margin are monitored to give a constant view of the Group's operational performance. A key focus for the Group is in building its recurring revenue ^ base from contracted income relating to its managed services projects, our maintenance and guarding contracts and this is a key metric being monitored. As employment costs are the single largest cost base for the Group the number of employees and employee costs are also monitored to ensure best use of resources. Days sales outstanding is used to measure as to the cash conversion of revenue and identifies debtor aging issues.

The Managed Services division measures its performance in the four key areas of its deliverables - passengers served in its airport operations, vehicles and containers served in its port and border operations, the number of days training delivered by our training businesses and the number of guarding hours delivered by our guarding businesses.

The Technology division measures its sales activity by reference to the number of enquiries received per month and the number of orders received. The number of countries and number of return customers are monitored to give a view on the performance of the Division .

 
 Group                                  2019        2018 
 Revenue                            GBP10.9m     GBP6.7m 
                                  ----------  ---------- 
 Gross Margin                            41%         55% 
                                  ----------  ---------- 
 Recurring Revenues ^                GBP5.6m     GBP3.8m 
                                  ----------  ---------- 
 Days Sales Outstanding                   38          41 
                                  ----------  ---------- 
 Number of Employees                     261         233 
                                  ----------  ---------- 
 Average Employee Cost Per Head    GBP16,843   GBP14,738 
                                  ----------  ---------- 
 
 
 Managed Services                       2019    2018 
 Passengers Served ('000)                121     113 
                                     -------  ------ 
 Vehicles/Containers Served ('000)       309       - 
                                     -------  ------ 
 Training Hours Delivered              4,040   3,808 
                                     -------  ------ 
 Guarding Hours Delivered             70,671   9,081 
                                     -------  ------ 
 
 
 Technology Division                                   2019   2018 
 Average Enquiries Per Month                            185    174 
                                      ---------------------  ----- 
 Average Number of Orders Per Month                      41     37 
                                      ---------------------  ----- 
 Number of Countries Supplied                            66     53 
                                      ---------------------  ----- 
 Number of Return Customers                              96     71 
                                      ---------------------  ----- 
 

Current Trading & Business Outlook

The Coronavirus (COVID-19) outbreak was declared a Public Health Emergency of international Concern on 30 January 2020 and on the 11 March 2020 the World Health Organisation (WHO) elevated the outbreak to a global pandemic. In just a few weeks the COVID-19 virus had spread from a single city in China right across the globe, creating a worldwide healthcare crisis with millions of citizens infected and a tragic toll of life. Governments around the world reacted in various ways with many closing borders, some putting large parts of their populations on lockdown and imposed travel restrictions. This has had a profound impact on the global economy and businesses across the globe, the like of which has not been experienced in a generation.

At the time of writing, the duration and full extent of the impact on the global economy cannot be determined with any accuracy although there are green shoots of optimism with some countries appearing to be over the worst of the disruption and some, including the UK, easing lockdowns. The expectation is that the global economy will begin to recover from the second half of 2020 although it is suspected the virus will be with us for some time and that some countries may yet face renewed outbreaks.

In the current business climate COVID-19 pandemic does therefore create some uncertainty and has impacted our business in varying ways, as explained more fully below.

We are a business which operates internationally with staff around the world and we are heavily involved in international travel. We therefore carefully monitor global events for anything that could be a threat to, or an opportunity for, our business. We identified the COVID-19 as one such event and began to take early action in January before the WHO had declared it a Public Health Emergency. We undertook risk assessments of our various operations and prepared plans for repatriation of overseas staff if necessary. We increased our stocks of fever screening and safety equipment and began to look for alternative sources of supply in case of supply chain issues, as well as new products we could add to our portfolio of safety equipment. We also instigated a marketing campaign, increased the prominence of our fever screening capabilities on our website and used our international network and reach to begin promoting ways in which we could assist governments and organisations protect against the pandemic.

We have been closely monitoring the situation and as the outbreak developed, we continued to update our risk assessments and began implementing logistical and organisational changes. We reduced costs and put planned capital expenditure on hold. We worked with our loan note holders to defer the planed redemption programme and extend the maturity date to May 2021. We worked with our suppliers and supply chains to ensure we can continue to supply our clients and the early action we had taken in this respect has proved invaluable. We instigated safe working practices including social distancing, provision of Personal Protective Equipment (PPE) and home working for a number of staff.

We have put in place new procedures for deliveries and despatch of goods and we have reorganised our engineering teams so that they have no direct personal contact with each other to limit any disruption should any of them develop the virus. These measures and others, including utilisation of governmental support schemes, has meant that our business has so far managed to maintain operations, keep our employees safe and successfully trade through this global crisis.

Westminster is fortunate in that the business model we have been developing is based on multiple revenue streams, many of which are from long term or recurring contracts, from diverse sources in varying parts of the world. As such Westminster is in a better position than many companies to weather the impact of the crisis. Whist the COVID-19 crisis is likely have an impact on our airport security operations for some months our sales of screening and safety equipment have risen significantly. In this respect in Q1 2020 we saw over $2.1m USD of online product orders of which $1.7m USD were in March 2020 and over $1.2m USD of that was the last two weeks of March demonstrating the benefit of multiple revenue streams, mitigating the reductions elsewhere in our airport business. We have seen no reduction in demand for our services in this respect and we believe that the significant increase in our fever detection and safety equipment will continue for quite some time yet and is a real opportunity for the business. We are already seeing businesses and organisations planning to introduce more permanent screening systems into their operations and the aviation industry, which has been hard hit by the global restrictions on air travel, are now looking at introducing fever screening and testing as a means to get air travel operational, with Westminster's experience in the aviation screening sector and our market reach we believe this represents a significant opportunity for our business.

The impact of COVID-19 on the aviation industry is expected to last for some time and will almost certainly lead to changes in the way air travel is conducted however we believe airports in emerging markets, which is where we are focussed, are likely return to more normal passenger volumes much quicker due to the essential nature of air travel in such regions.

As reported, passenger numbers for our West Africa airport operations were at record levels for 2019 and this trend had continued into 2020 with passenger numbers continuing at the highest levels since we commenced operations until the COVID-19 impact caused the government to suspend flights for a period of 90 days commencing 22 March 2020. the government is currently still working to reopen the airport towards the end of June. Whilst this will have an inevitable impact on our revenues from this part of our business for much of the remainder of 2020 providing the contagion is under control. We therefore expect that passenger numbers will begin to recover in the second half of the year regaining more normal levels by year end. We are carrying out regular local risk assessments and have put in place social distancing and procedural processes to protect staff and others using the airport. We do however believe it is important that we also support our staff and the local community through these challenging times for the country, as we did during the Ebola epidemic a few years ago. In this respect we are maintaining employment of our local staff to preserve security at the airport and will be using time between flights to undertake additional training for staff and to carry out comprehensive servicing and maintenance of all equipment. This is not only the right and moral thing to do but it will enable us to ramp up operations at very short notice once flights recommence.

Our aviation training business has been adversely affected by COVID-19 and currently all planned courses have been put on hold due to social distancing and travel bans. We expect our training business to begin to recover as airports recommence operations and travel restrictions are eased. One of our important governmental framework agreements relating to international aviation training programmes we run around the world has now been extended and is due to run to September 2021 with a provision to extend for a further year.

Container volumes and revenues relating to our container screening operations in Ghana continued to increase into 2020 with the daily averages in Q1 2020 being a 56% increase on the 2019 daily average. We did see a slight reduction in volume during the 3-week lockdown period in Ghana which ended on 20 April 2020 but volumes since then have risen back to the 2020 daily averages and whilst we may yet see further disruption during the COVID-19 crisis, we expect volumes overall to increase further during 2020 as the port continues to expand and new berths become operational.

Our Managed Services division not only has more large-scale project opportunities under discussions than ever before but we are also securing an increasing number of smaller contracts to assist airport authorities around the world with their equipment and security needs, and this enhances our future prospects for our large scale, long term airport opportunities post COVID-19 and are hopeful of securing at least one more major contract in the year.

Our guarding business has been affected by some site closures during the COVID-19 shutdowns although there is a likelihood that some guarding requirements may increase during site closures to ensure sites remain secure and in this respect we have secured an important new guarding contract since the COVID-19 shutdown occurred.

Our operations in Saudi Arabia have been restricted whilst the country is on COVID-19 lockdown and curfew, but we anticipate this will resume after Ramadan towards the end of May and we are excited by the prospects from this venture.

We have achieved impressive year on year revenue growth over the past few years and we expect this to continue albeit impacted in the short term depending on how long the COVID-19 pandemic lasts. Both our Managed Services and Technology divisions continue to have a healthy and active enquiry bank and given on our expected annual recurring revenue ^ base and our current order book, together with the improvement in our airport passenger numbers and our run rate business, we expect 2020 to be another successful year.

In view of the COVID-19 crisis we continued to investigate new opportunities to expand our online and non-contact sales opportunities. We believe that there will now be a growing demand for more permanent fever screening systems to be installed not just at major facilities such as airports, ports, stadiums and shopping malls etc. but we are seeing increasing demand for such systems from factories, offices, mines and other commercial organisations and we believe this is likely to be a growing part of our business in the future.

One such development is an extension of our COVID-19 PPE sales through medical vending machines. We have recently secured exclusive rights to specialised medical vending machines for use in the UK to be used for dispensing packs of face coverings, sanitiser and other safety equipment for deployment at key locations around the and transport hubs country and we are already in discussions with major transport organisations. With the drive to now have the travelling public wear protective face covering on public transport etc this initiative could greatly increase our distribution of PPE and safety equipment.

Our overriding priority however is and has been the safety and wellbeing of our people around the world and to continue to provide a valuable service to our customers. To those ends we put in place various precautionary measures, including cost reduction and are undertaking regular risk assessments for all areas of our business.

Notwithstanding the impact of COVID-19, trading for 2020 has started on a positive note, building on the success of 2019 with both order intake and revenues ahead of budget. Q1 delivered revenues of over GBP4.5m, an increase of more than 22% over the same period in 2019 (Q1 2019: GBP3.7m), and I am pleased to report we made a healthy profit in the quarter both before and after tax as we begin to benefit from new contracts and the investment we have been making in our business and we have a healthy order book going forward.

We are also fortunate in that much of our revenues are generated from long-term and recurring revenue ^ contracts (we entered 2020 with visibility of over GBP8m of annual recurring revenue^ for the year f rom long term managed services, guarding and maintenance contracts ) and because of the nature of our long term contracts, where we have experienced reductions in such revenue streams during the COVID-19 disruption these are expected to resume quickly once the pandemic passes.

Over the next few months and years, we have an opportunity to achieve unprecedented growth from the prospects we are pursuing, and the Board and I remain committed to delivering on this potential.

Peter Fowler

Chief Executive Officer

Chief Financial Officer's Report

Revenue

Revenues of GBP10.9m were 63% higher than the GBP6.7m reported in 2018.

Managed Services has moved forward strongly in the year to GBP5.5m (2018: GBP3.7m) an increase of 50%. This is primarily a combination of three factors, record passenger numbers at our West African Airport, a full year of Keyguard and initial revenues from our new Tema Port Ghana operation.

We have also reported on Euro-Ops for the first time. Further information on this is contained in Note 30.

Technology revenues increased by 80% to GBP5.4m (2018: GBP3.0m). This is continuing a focus on, and success at, obtaining larger sized contracts such as the $3.48m USD contract for the provision of advanced container screening solutions to two separate ports in an Asian country mentioned in the Chief Executive Officer's statement.

Gross Margin

A significant amount of the increase in turnover was from the increase in lower margin Technology Solutions sales; typically, at about 15%. Because of this mix effect the headline Gross Margin decreased to 42% (2018: 55%).

Operating Cost Base

Demonstrating how operationally geared the Group is, despite a 63% increase in sales, Group administrative costs only rose by 12% to GBP5.3m (2018: GBP4.7m) in total. However, excluding share-based payments (increasing due to accounting for warrants issued) and discontinued items, the costs only rose by 3%. This is was primarily due to inflation.

Exceptional Items

The exceptional item of GBP0.1m (2018: GBP0.4) is the pre contract costs on a Middle East airport project. This project was fully shelved in the first half of 2019. The costs relate to the period up to 30 June 2019.

Operational EBITDA^ from underlying continuing and discontinued operations

The Group loss from operations was GBP0.8m (2018 Restated: GBP1.0m). When adjusted for the exceptional and non-cash items set out below and depreciation and amortisation, the Group recorded an EBITDA^ profit from underlying continuing and discontinued operations of GBP0.1m (2018: GBP0.4m loss restated).

 
 Reconciliation to EBITDA^ from underlying          2019   2018 restated 
  continuing and discontinued operations 
                                                 GBP'000         GBP'000 
 Loss from operations                              (823)         (1,035) 
 Depreciation, amortisation and impairment 
  charges                                            215             169 
 Write back of impairment of the Sierra Queen          -           (170) 
                                                --------  -------------- 
 Reported EBITDA                                   (608)         (1,036) 
 Share based expense                                 556             281 
 Exceptional items                                   106             401 
 EBITDA^ profit / (loss) from underlying 
  continuing and discontinued operations              54           (354) 
                                                ========  ============== 
 

This is a significant improvement on 2018 and prior years.

Finance Costs

Total finance costs of GBP0.6m (2018: GBP0.3m) increased from the prior year as the coupon on the Secured Convertible Loan Note (SCLN) rose from 12% to 15%. Plus, a calculated interest adjustment following the extension of the SCLN. There was an underlying cash charge of GBP0.5m (2018: GBP0.4m).

Restatement of 2018 Accounts

The 2018 comparative figures have been restated to take into account the application of the new accounting standard on Leases - IFRS 16. There are further details in Note 2 and the financial effect of introducing this standard is demonstrated in Note 12.

Result for the Year

The Group loss before taxation was GBP1.4m (2018 Restated: GBP1.4m) and the loss per share was 1.02p (2018 Restated: 0.39p). The main reason for the difference in earnings per share was that in 2018 a deferred tax credit of GBP0.9m was recognised, but in 2019 this was only GBP0.02m.

Statement of Financial Position

Total Group assets amounted to GBP7.0m at 31 December 2019 compared with GBP8.8m (restated) at 31 December 2018. The main movement was a reduction in debtors at the year end.

Net Group current assets amounted to GBP0.7m at 31 December 2019 compared to Net Group current liabilities of GBP0.2m (restated) at 31 December 2018.

The Group trade and other receivables balance as at 31 December 2019 was GBP2.6m (2018: GBP4.6m). Average days sales outstanding at the year-end were 38 (2018: 41). The 2018 figure had a significant amount for the Middle East contract in progress at that time. This also explains a drop in contract liabilities.

Cash and cash equivalents of GBP0.6m at 31 December 2019 compared with GBP0.3m at 31 December 2018.

Assets of disposal groups classified as held for sale were GBP0.17m (2018: GBP0.17m) this is the Sierra Queen, see Note 29 and Note 32

Trade and other payables were GBP2.5m (2018 Restated: GBP2.6m) and average creditor days were 66 (2018: 27). The year-end increase in creditor days was influenced by the Asia Port contract.

A deferred tax asset of GBP0.91m (2018: GBP0.89m) was held at the year end.

Total equity at 31 December 2018 stood at a surplus of GBP1.9m (2018 restated: GBP1.1m).

Key Performance Indicators

The Key Performance Indicators by which we measure performance of our business are set out in the Chief Executive Officer's Report.

Convertible Loan Notes (CLN) and Convertible Unsecured Loan Notes (CULN)

 
 Summary of movements                        2019           2019                2019         2018         2018    2018 
  in loan notes at principal 
  value GBP'000 
                                             CULN            CLN               Total         CULN          CLN   Total 
 At 1 January                                 171          2,245               2,416            -       2,245    2,245 
 New issue                                      -              -                   -          171            -     171 
 At 31 December                               171          2,245               2,416          171        2,245   2,416 
                              ===================  =============  ==================  ===========  ===========  ====== 
 

At 31 December 2019, the secured CLN carried a coupon of 15% payable quarterly in arrears, had a conversion price of 12.5p (10p from 1 January 2020) and, following an extension after the year end, matures on 1 May 2021

At 31 December 2019, the unsecured CLN carried a coupon of 5% payable quarterly in arrears, had a conversion price of 10p and matures on 31 July 2021.

Equity Issues

 
                                            Price      Funds 
                              Number    per share     Raised 
 Equity Issues             of Shares          (p)    GBP'000 
-----------------------  -----------  -----------  --------- 
 Allotment 8 February 
  2019                     5,000,000         10.0        500 
 Allotment 25 July 
  2019                    10,000,000         10.0      1,000 
 Allotment 19 December 
  2019                       375,000         12.5         47 
                          15,375,000                   1,547 
                         ===========               ========= 
 

Summary of Warrants

 
  Number             Holder and             Strike     Life (years)      Vesting Criteria 
                     Description           Price (p) 
  589,330    Yaron Bull, February 2016      20.15           4         At grant: - detachable 
            ---------------------------  -----------  -------------  ----------------------- 
 1 70,455     S P Angel , January 2018      22. 00          5                At grant 
            ---------------------------  -----------  -------------  ----------------------- 
 9,625,000   Various Holders, July 2019     12.50           2         At grant: - detachable 
            ---------------------------  -----------  -------------  ----------------------- 
 

The S P Angel Warrants were inadvertently omitted from the 2018 accounts but have been accounted for in 2019. The omission of a charge of GBP27,000 from the 2018 accounts was not material.

In July 2019 10,000,000 warrants were issued to various holders alongside the equity issue. On 19 December 2019 375,000 of these warrants were converted to ordinary shares.

Cash Flow Statement

During the year, the Group had an operating cash outflow of GBP0.4m (2018: outflow GBP1.2m) which arose primarily from an unfavourable working capital movement of GBP0.6m (2018: GBP0.2m) offset by the GBP0.1m EBITDA^ from underlying continuing and discontinued operations result.

During the year, the Group raised GBP1.55m gross from the issue of new equity. In 2018, GBP1.34m was raised from new equity, with a further GBP0.2m of proceeds from the issue of convertible loan notes.

 
 Reconciliation from EBITDA^ from underlying continuing       2019   2018 Restated 
  and discontinued operations to normalised operating 
  cash flow 
                                                           GBP'000         GBP'000 
 EBITDA^ from underlying continuing and discontinued 
  operations                                                    54           (354) 
 (Loss) / profit on asset disposal                             (9)               2 
 Net changes in working capital                            ( 552 )           (192) 
 Movement on tax                                              (26)           (872) 
 Net cash used in underlying operating activities          ( 533 )         (1,416) 
                                                          ========  ============== 
 

Net cash used in underlying operating activities is presented excluding exceptional items, share options expense, and depreciation and amortisation.

Mark L W Hughes

Chief Financial Officer

Westminster Group PLC

Consolidated Statement of Comprehensive Income for the year ended 31 December 2019

 
 
                       Note          2019                    2019      2019          2018           2018          2018 
                               Continuing            Discontinued     Total    Continuing   Discontinued         Total 
                               Operations              Operations              Operations     Operations    (Restated) 
                                                                               (Restated) 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
                                  GBP'000                 GBP'000   GBP'000       GBP'000        GBP'000       GBP'000 
 REVENUE                  3        10,889                       -    10,889         6,668              -         6,668 
                                  (6, 444                               (6, 
 Cost of sales                          )                       -     444 )       (3,020)              -       (3,020) 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 GROSS PROFIT                      4, 445                       -    4, 445         3,648              -         3,648 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 Administrative 
  expenses                        (5,296)                      28   (5,268)       (4,832)            149       (4,683) 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 (LOSS) / PROFIT 
  FROM 
  OPERATIONS              6         (851)                      28     (823)       (1,184)            149       (1,035) 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 
 Analysis of 
 operating 
 loss 
 Profit from 
  operations                        (851)                      28     (823)       (1,184)            149       (1,035) 
 Add back 
  amortisation           11            43                       -        43            33              -            33 
 Add back 
  depreciation           12           172                       -       172           136              -           136 
 Reversal of 
  impairment             29             -                       -         -             -          (170)         (170) 
 Add back 
  share-based 
  expense                             556                       -       556           281              -           281 
 Add back 
  exceptional 
  items                   4           106                       -       106           380             21           401 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 EBITDA(^) 
  Profit/(loss) 
  from underlying 
  operations                           26                      28        54         (354)              -         (354) 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 
 Finance costs            5         (620)                       -     (620)         (333)              -         (333) 
 
 (LOSS) / PROFIT 
  BEFORE 
  TAXATION                        (1,471)                      28   (1,443)       (1,517)            149       (1,368) 
                      -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 Taxation                 7            26                       -        26           872              -           872 
                      -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 
 (LOSS) / PROFIT AND 
  TOTAL 
  COMPREHENSIVE 
  EXPENSE FOR THE 
  YEAR                            (1,445)                      28   (1,417)         (645)            149         (496) 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 
 (LOSS) / PROFIT AND TOTAL 
  COMPREHENSIVE (LOSS) 
  / INCOME ATTRIBUTABLE 
  TO: 
  OWNERS OF THE 
   PARENT                         (1,426)                      28   (1,398)         (499)            149         (350) 
 
  NON-CONTROLLING 
   INTEREST                          (19)                       -      (19)         (146)              -         (146) 
 
  (LOSS) / PROFIT 
   AND TOTAL 
   COMPREHENSIVE 
   (LOSS) / INCOME                (1,445)                      28   (1,417)         (645)            149         (496) 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 
 LOSS PER SHARE           9       (1.04p)                   0.02p   (1.02p)       (0.50p)          0.11p       (0.39p) 
--------------------  -----  ------------  ----------------------  --------  ------------  -------------  ------------ 
 

The accompanying notes form part of these financial statements.

 
 
 
   Westminster Group PLC 
   Consolidated and Company Statements of Financial Position 
   As at 31 December 2019 
------------------------------------------------------------------------------  --------- 
                                                           Restated              Restated 
                                                   Group      Group    Company    Company 
                                                    2019       2018       2019       2018 
                                         Note    GBP'000    GBP'000    GBP'000    GBP'000 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 
 Goodwill                                  10        614        596          -          - 
 Other intangible assets                   11        129        100        128        100 
 Property, plant and equipment             12      1,979      2,112      1,079      1,094 
 Investment in subsidiaries                14          -          -      6,252      6,906 
 Deferred tax asset                        17        907        889          -          - 
                                                          ---------  --------- 
 TOTAL NON-CURRENT ASSETS                          3,629      3,697      7,459      8,100 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 Inventories                               18         47         74          -          - 
 Trade and other receivables               19      2,566      4,616         70         27 
 Cash and cash equivalents                 20        557        290         28         29 
--------------------------------------  -----                        ---------  --------- 
 TOTAL CURRENT ASSETS                              3,170      4,980         98         56 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 Assets of disposal groups classified 
  as held for sale                         29        170        170          -          - 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 TOTAL ASSETS                                      6,969      8,847      7,557      8,156 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 Called up share capital                   21     14,540     13,003     14,540     13,003 
 Share premium account                             9,577      9,568      9,577      9,568 
 Merger relief reserve                               300        300        300        300 
 Share based payment reserve                       1,166        858      1,166        858 
 Equity reserve on convertible 
  loan note                                          423        222         12         21 
 Revaluation reserve                                 133        133        133        133 
 Retained earnings: 
 At 1 January                                   (22,594)   (22,258)   (16,149)   (14,228) 
 Loss for the year                               (1,398)      (349)    (2,652)    (1,921) 
 Other changes in retained earnings                  148         13        148          - 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 At 31 December                                 (23,844)   (22,594)   (18,653)   (16,149) 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 (DEFICIT)/EQUITY ATTRIBUTABLE 
  TO: 
  OWNERS OF THE COMPANY                            2,295      1,490      7,075      7,734 
  NON-CONTROLLING INTEREST                         (365)      (346)          -          - 
--------------------------------------  -----                        ---------  --------- 
 TOTAL EQUITY                                      1,930      1,144      7,075      7,734 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 Borrowings                                23      2,510      2,545        212        223 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 TOTAL NON-CURRENT LIABILITIES                     2,510      2,545        212        223 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 Contractual liabilities                   24         73      2,438          -          - 
 Trade and other payables                  24      2,456      2,569        270        199 
--------------------------------------  -----             ---------  ---------  --------- 
 TOTAL CURRENT LIABILITIES                         2,529      5,007        270        199 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 Liabilities of disposal group 
  classified as held for sale              29          -        151          -          - 
--------------------------------------  -----             ---------  ---------  --------- 
 TOTAL LIABILITIES                                 5,039      7,703        482        422 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 TOTAL LIABILITIES AND SHAREHOLDERS' 
  EQUITY                                           6,969      8,847      7,557      8,156 
--------------------------------------  -----  ---------  ---------  ---------  --------- 
 

The accompanying notes form part of these financial statements. The Group and Company financial statements were approved by the Board and authorised for issue on 13 May 2020 and signed on its behalf by:

Peter Fowler Mark L W Hughes

Director Director

Westminster Group PLC

Consolidated Statement of Changes in Equity

For the year ended 31 December 2019

 
                       Called           Share           Merger            Share          Revaluation              Equity   Retained     Total   Non-controlling     Total 
                     up share         premium           relief            based              reserve             reserve   earnings                    interest 
                      capital         account          reserve          payment                           on convertible 
                                                                        reserve                                loan note 
 
 
                      GBP'000         GBP'000          GBP'000          GBP'000              GBP'000             GBP'000    GBP'000   GBP'000           GBP'000   GBP'000 
 
 AS AT 1 
  JANUARY 2019         13,003           9,568              300              858                  133                 222   (22,594)     1,490             (346)     1,144 
---------------  ------------  --------------  ---------------  ---------------  -------------------  ------------------  ---------  --------  ----------------  -------- 
 Shares issued 
  for cash              1,500               -                -                -                    -                   -          -     1,500                 -     1,500 
 Cost of share 
  issues                    -               -                -                -                    -                   -      (100)     (100)                 -     (100) 
 Share based 
  payment 
  charge                    -               -                -              556                    -                   -          -       556                 -       556 
 Exercise of 
  warrants and 
  share options            37               9                -                -                    -                   -          -        46                 -        46 
 Lapse of Share 
  Options                                                                  (44)                                                  44         -                 -         - 
 Lapse of 
  Warrants                  -               -                -            (204)                    -                   -        204         -                 -         - 
 CLN movement               -               -                -                -                    -                 201          -       201                 -        83 
---------------  ------------  --------------  ---------------  ---------------  -------------------  ------------------  ---------  --------  ----------------  -------- 
 TRANSACTIONS 
  WITH OWNERS           1,537               9                -              308                    -                 201        148     2,203                 -     2,203 
---------------  ------------  --------------  ---------------  ---------------  -------------------  ------------------  ---------  --------  ----------------  -------- 
 
 Total 
  comprehensive 
  expense 
  for the year              -               -                -                -                    -                   -    (1,398)   (1,398)              (19)   (1,417) 
 
 AS AT 31 
  DECEMBER 2019        14,540           9,577              300            1,166                  133                 423   (23,844)     2,295             (365)     1,930 
---------------  ------------  --------------  ---------------  ---------------  -------------------  ------------------  ---------  --------  ----------------  -------- 
 

Westminster Group PLC

Consolidated Statement of Changes in Equity

For the year ended 31 December 2018 (restated)

 
                   Called     Share    Merger     Share   Revaluation        Equity   Retained     Total   Non-controlling     Total 
                       up   premium    relief     based       reserve       reserve   earnings                    interest 
                    share   account   reserve   payment                          on 
                  capital                       reserve                 convertible 
                                                                          loan note 
 
                  GBP'000   GBP'000   GBP'000   GBP'000       GBP'000       GBP'000    GBP'000   GBP'000           GBP'000   GBP'000 
 
 AS AT 1 
  JANUARY 2018     12,074     9,226       300       621           133           186   (22,256)       284             (200)        84 
 Restatement 
  for IFRS 16           -         -         -         -             -             -        (2)       (2)                 -       (2) 
---------------  --------  --------  --------  --------  ------------  ------------  ---------  --------  ----------------  -------- 
 AS AT 1 
  JANUARY 2018 
  (RESTATED)       12,074     9,226       300       621           133           186   (22,258)       282             (200)        80 
---------------  --------  --------  --------  --------  ------------  ------------  ---------  --------  ----------------  -------- 
 
 Shares issued 
  for cash            841       409         -         -             -             -          -     1,250                 -     1,250 
 Cost of share 
  issues                -      (67)         -         -             -             -          -      (67)                 -      (67) 
 Share based 
  payment 
  charge                -         -         -       237             -             -          -       237                 -       237 
 Exercise of 
  warrants and 
  share options        88         -         -         -             -             -          -        88                 -        88 
 Other 
  movements in 
  equity                -         -         -         -             -             -         13        13                 -        13 
 CLN movement           -         -         -         -             -            36          -        36                 -        36 
---------------  --------  --------  --------  --------  ------------  ------------  ---------  --------  ----------------  -------- 
 TRANSACTIONS 
  WITH OWNERS         929       342         -       237             -            36         13     1,557                 -     1,557 
---------------  --------  --------  --------  --------  ------------  ------------  ---------  --------  ----------------  -------- 
 
 Total 
  comprehensive 
  expense 
  for the year          -         -         -         -             -             -      (349)     (349)             (146)     (495) 
---------------  --------  --------  --------  --------  ------------  ------------  ---------            ----------------  -------- 
 
 AS AT 31 
  DECEMBER 2018    13,003     9,568       300       858           133           222   (22,594)     1,490             (346)     1,144 
---------------  --------  --------  --------  --------  ------------  ------------  ---------  --------  ----------------  -------- 
 

Westminster Group PLC

Company Statement of Changes in Equity

For the year ended 31 December 2019

 
                                                              Share                      Equity 
                    Called up        Share       Merger       based                  reserve on 
                        share      premium       relief     payment   Revaluation   convertible     Retained 
                      capital      account      reserve     reserve       reserve     loan note     earnings     Total 
                      GBP'000      GBP'000      GBP'000     GBP'000       GBP'000       GBP'000      GBP'000   GBP'000 
 
   AS AT 1 
    JANUARY 2019     13,003       9,568         300          858          133           21         (16,149)      7,734 
   Shares issued 
    for cash          1,500         -            -            -            -             -            -          1,500 
   Cost of share 
    issues              -           -            -            -            -             -          (100)        (100) 
   Share based 
    payment 
    charge              -           -            -           556           -             -            -            556 
   Exercise of 
    warrant            37           9            -            -            -             -            -             46 
   Recognition of 
    equity 
    component of 
    convertible 
    loan notes 
    (CLN)               -           -            -            -            -            (9)           -            (9) 
   Lapse of Share 
    Options                                                 (44)                                      44             - 
   Lapse of 
    Warrants            -           -            -          (204)          -             -           204             - 
    TRANSACTIONS 
     WITH OWNERS      1,537         9            -           308           -            (9)          148         1,993 
-----------------  ----------  -----------  -----------  ----------  ------------  ------------  -----------  -------- 
 
   Total 
    comprehensive 
    expense for 
    the year            -           -            -            -            -             -         (2,652)     (2,652) 
-----------------  ----------  -----------  -----------  ----------  ------------  ------------  -----------  -------- 
 
      AS AT 31 
    DECEMBER 2019    14,540       9,577         300         1,166         133           12         (18,653)      7,075 
-----------------  ----------  -----------  -----------  ----------  ------------  ------------  -----------  -------- 
 
   AS AT 1 
    JANUARY 2018     12,074       9,226         300          621          133            -         (14,227)      8,127 
   Restatement 
    for IFRS 16         -           -            -            -            -             -               (1)       (1) 
-----------------  ----------  -----------  -----------  ----------  ------------  ------------  -----------  -------- 
   AS AT 1 
    JANUARY 2018 
    RESTATED         12,074       9,226         300          621          133            -         (14,228)      8,126 
-----------------  ----------  -----------  -----------  ----------  ------------  ------------  -----------  -------- 
   Shares issued 
    for cash           841         409           -            -            -             -            -          1,250 
   Cost of share 
    issues              -          (67)          -            -            -             -            -           (67) 
   Share based 
    payment 
    charge              -           -            -           237           -             -            -            237 
   Exercise of 
    warrant            88           -            -            -            -             -            -             88 
   Recognition of 
    equity 
    component of 
    convertible 
    loan notes 
    (CLN)               -           -            -            -            -            21            -             21 
-----------------  ----------  -----------  -----------  ----------  ------------  ------------  -----------  -------- 
   TRANSACTIONS 
    WITH OWNERS        929         342           -           237           -            21            -          1,529 
-----------------  ----------  -----------  -----------  ----------  ------------  ------------  -----------  -------- 
 
   Total 
    comprehensive 
    expense for 
    the year                -            -            -           -             -             -      (1,921)   (1,921) 
 
      AS AT 31 
    DECEMBER 2018    13,003       9,568         300          858          133           21         (16,149)      7,734 
-----------------  ----------  -----------  -----------  ----------  ------------  ------------  -----------  -------- 
 

Westminster Group PLC

Consolidated Cash Flow Statement

For the year ended 31 December 2019

 
                                                                                                Restated 
                                      2019                       2019      2019          2018           2018      2018 
                                Continuing               Discontinued     Total    Continuing   Discontinued     Total 
                                Operations                 Operations              Operations     Operations 
                        Note       GBP'000                    GBP'000   GBP'000       GBP'000        GBP'000   GBP'000 
--------------------  ------  ------------  -------------------------  --------  ------------  -------------  -------- 
 (LOSS) / PROFIT 
  AFTER TAX                        (1,445)                         28   (1,417)         (645)            149     (496) 
 Taxation debit 
  / (credit)                          (26)                          -      (26)         (872)              -     (872) 
--------------------  ------  ------------  -------------------------  --------  ------------  -------------  -------- 
 (LOSS) / PROFIT 
  BEFORE TAX                       (1,471)                         28   (1,443)       (1,517)            149   (1,368) 
 Non-cash 
  adjustments             25         1,412                          -     1,412           491          (170)       321 
 Net changes in 
  working capital         25         (401)                      (151)     (552)         (192)              -     (192) 
 NET CASH USED 
  IN OPERATING 
  ACTIVITIES                         (460)                      (123)     (583)       (1,218)           (21)   (1,239) 
--------------------  ------  ------------  -------------------------  --------  ------------  -------------  -------- 
 INVESTING 
 ACTIVITIES: 
 Purchase of 
  property, 
  plant and 
  equipment                           (70)                          -      (70)          (58)              -      (58) 
 Purchase of 
  intangible 
  assets                              (72)                          -      (72)             -              -         - 
 Acquisition of 
  subsidiary              30          (18)                          -      (18)             -              -         - 
 Cash inflow on 
  acquisition                            -                          -         -           104              -       104 
 CASH (OUTFLOW) 
  / INFLOW FROM 
  INVESTING 
  ACTIVITIES                         (160)                          -     (160)            46              -        46 
--------------------  ------  ------------  -------------------------  --------  ------------  -------------  -------- 
 CASHFLOWS FROM 
 FINANCING 
 ACTIVITIES: 
 Gross proceeds 
  from the issues 
  of ordinary shares 
  and exercise 
  of warrants                        1,547                          -     1,547         1,338              -     1,338 
 Costs of share 
  issues                             (100)                          -     (100)          (68)              -      (68) 
 CULN debt raised                        -                          -         -           176              -       176 
 Reduction in 
  Finance Lease 
  Debt                                (60)                          -      (60)             -              -         - 
 Finance cost 
  on lease 
  liabilities                         (54)                          -      (54)           (4)                      (4) 
 Interest paid                       (323)                          -     (323)         (351)              -     (351) 
 CASH INFLOW FROM 
  FINANCING 
  ACTIVITIES                         1,010                          -     1,010         1,091              -     1,091 
--------------------  ------  ------------  -------------------------  --------  ------------  -------------  -------- 
 Net change in 
  cash and cash 
  equivalents                          390                      (123)       267          (81)           (21)     (102) 
--------------------  ------  ------------  -------------------------  --------  ------------  -------------  -------- 
 CASH AND 
  EQUIVALENTS 
  AT BEGINNING 
  OF YEAR                                                                   290                                    392 
--------------------  ------  ------------  -------------------------  --------  ------------  -------------  -------- 
 
 CASH AND 
  EQUIVALENTS 
  AT OF YEAR                                                            557                                    290 
--------------------  ------  ------------  -------------------------  --------  ------------  -------------  -------- 
 

Company Cash Flow Statement

For the year ended 31 December 2019

 
                                                    Company   Company 
                                                       2019      2018 
                                             Note   GBP'000   GBP'000 
-----------------------------------------  ------  --------  -------- 
 (LOSS)/PROFIT AFTER TAX                            (2,652)   (1,921) 
 Non-cash adjustments                          25     1,104        82 
 Net changes in working capital                25        28        99 
                                           ------ 
 NET CASH USED IN OPERATING ACTIVITIES              (1,520)   (1,740) 
-----------------------------------------  ------  --------  -------- 
 INVESTING ACTIVITIES: 
 Purchase of property, plant and 
  equipment                                            (26)      (33) 
 Purchase of intangible assets                         (71)         - 
 Advances to subsidiaries                    14        (11)         - 
 Cash inflow from intercompany 
  loans                                      14         557       622 
 CASH OUTFLOW FROM INVESTING ACTIVITIES                 499       589 
-----------------------------------------  ------  --------  -------- 
 CASHFLOWS FROM FINANCING ACTIVITIES: 
 Gross proceeds from the issues 
  of ordinary shares                                  1,547     1,338 
 Costs of share issues                                (100)      (68) 
 Net proceeds from the issue of 
  convertible loan notes                                  -       177 
 Finance cost on lease liabilities                     (47)      (42) 
 Interest paid                                        (330)     (303) 
 CASH INFLOW FROM FINANCING ACTIVITIES                1,070     1,102 
-----------------------------------------  ------  --------  -------- 
 Net change in cash and cash equivalents                (1)      (49) 
-----------------------------------------  ------  --------  -------- 
 CASH AND EQUIVALENTS AT BEGINNING 
  OF YEAR                                                29        78 
-----------------------------------------  ------  --------  -------- 
 CASH AND EQUIVALENTS AT OF 
  YEAR                                                   28        29 
-----------------------------------------  ------  --------  -------- 
 

The accompanying notes form part of these financial statements.

Notes to the Financial Statements

   1.            General information and nature of operations 

Westminster Group plc ("the Company") was incorporated on 7 April 2000 and is domiciled and incorporated in the United Kingdom and quoted on AIM. The Group's financial statements for the year ended 31 December 2019 consolidate the individual financial statements of the Company and its subsidiaries. The Group design, supply and provide on-going advanced technology solutions and services to governmental and non-governmental organisations on a global basis.

   2.             Summary of significant accounting policies 

Basis of preparation

The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The Parent Company has elected to prepare its financial statements in accordance with IFRS.

The financial information is presented in the Company's functional currency, which is British pounds sterling ('GBP') since that is the currency in which the majority of the Group's transactions are denominated.

Basis of measurement

The financial statements have been prepared under the historical cost convention with the exception of certain items which are measured at fair value as disclosed in the accounting policies below.

Consolidation

(i) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries for the year ended 31 December 2019.

(ii) Subsidiaries

Where the company has control over an investee, it is classified as a subsidiary, The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

De-facto control exists in situations where tile company has tile practical ability to direct tile relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists tile company considers au relevant facts and circumstances, including:

-- The size of the company's voting rights relative to both the size and dispersion of other parties

   --      who hold voting rights 
   --      Substantive potential voting rights held by the company and by other parties 
   --      Other contractual arrangements 
   --      Historic patterns in voting attendance. 

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. lntercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

(iii) Transactions eliminated on consolidation

Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions are eliminated in preparing the consolidated financial statements.

(iv) Company financial statements

Investments in subsidiaries are carried at cost less provision for any impairment. Dividend income is recognised when the right to receive payment is established.

Going concern

The Group made a loss during the period of GBP1,417,000 (2018: Restated loss of GBP496,000). The cash outflow from operating activities during the year was GBP460,000 (2018: Outflow GBP1,218,000), which was partly financed through raising new equity.

The financial statements are prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, management have taken into account all relevant available information about the current and future position of the Group, including new long-term contracts. As part of its assessment, management have taken into account the profit and cash forecasts, the continued support of the shareholders and loan note holders and the Directors' and management's ability to affect costs and revenues. Management regularly forecast results, the financial position and cash flows for the Group.

The Directors acknowledge that the COVID-19 pandemic in 2020 is having a profound impact on the global economy and businesses across the globe, the like of which has not been experienced in a generation. At the time of writing, the duration and full extent of the impact on the global economy cannot be determined with any accuracy although there are green shoots of optimism with some countries appearing to be over the worst of the disruption and some, including the UK, easing lockdowns. The expectation is that the global economy will begin to recover in the second half of 2020 although it is suspected the virus will be with us for some time and that some countries may yet face renewed outbreaks.

The Directors have stress tested the revenue and utilisation assumptions included in the Group's cash projections for a period of 12 months from the date of approval of these financial statements. The Directors believe the measures and mitigation strategies they have put in place together with its various revenue ongoing streams, means the Group will therefore generate sufficient working capital and cash flows to continue in operational existence and in addition to utilisation of governmental support schemes it will continue to have the support of lenders and shareholders, if required. Thus, they continue to adopt the going concern basis of accounting in the preparing the financial statements.

The Directors therefore took timely action implementing logistical and organisational changes to consolidate the Group's resilience to COVID-19, including a reduction in costs, risk assessments, safe working practices and various other measures, including utilisation of governmental support schemes. The Directors also took action to expand the Group's range of fever screening and safety equipment, expanding its supply base and instigating targeted marketing campaigns which has seen a significant rise in product sales revenues mitigating reductions elsewhere in the business. The Directors continue to monitor the situation and to update its risk assessments and contingency planning as necessary.

Further details on measures being taken to address the challenges and opportunities presented by COVID-19 can be found in the Chief Executive Office's report.

The Directors equally acknowledge that, at the current time, the COVID-19 does create areas of uncertainty for the business, particularly its aviation security and training operations, although the restrictions on travel and disruptions to supply chains and logistics may also present a challenge as to when travel restrictions will be lifted and how long it will take for air travel and the aviation industry to recover. This will likely have an impact, for some months on certain areas of the business, in particular the airport security and training operations.

Since the year end a GBP3m Mezzanine Loan Facility repayable over 18 months together with a GBP1.75m Equity Placing and Sharing Agreement has been entered in to with RiverFort Global Opportunities PCC and YA II PN Ltd (the "Financing Facility"). The proceeds from the initial tranche of the Financing Facility have been used to commence paying down the Group's Convertible Secured Loan Notes (CLN). On 30 March 2020 the outstanding CLN balance of GBP1.68m was extended in agreement with noteholders to 1 May 2021 to help mitigate any adverse impact of the COVID-19 pandemic. The balance of the Riverfort Facility will be used, if required, to repay any CLN balance.

These events or conditions emanating from COVID-19 indicate that a material uncertainty exists which may cast significant doubt on the Group's ability to continue as a going concern and therefore its ability to settle it debts and realise its assets in the normal course of business.

The financial statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate.

Business combinations

The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree's financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition date fair values.

Foreign currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates - 'the functional currency'. The functional and presentation currency in these financial statements is the Great British Pounds (GBP).

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year-end exchange rates are recognised in profit or loss. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction and not subsequently retranslated.

Foreign exchange gains and losses are recognised in arriving at profit before interest and taxation (see Note 6).

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief decision-maker. The chief decision-maker has been identified as the Executive Board, at which level strategic decisions are made.

An operating segment is a component of the Group;

-- That engages in business activities from which it may earn revenues and incur expenses,

-- Whose operating results are regularly reviewed by the entity's chief operating decisions maker to make decisions about resources to be allocated to the segment and assess its performance, and

   --              For which discrete financial information is available. 

Revenue

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes:

Supply of products

Revenue in respect of supply of product is recognised at a point in time when products are delivered, and legal title is transferred to the customer.

Supply and installation contracts and supply of services

Where the outcome can be estimated reliably in respect of long-term contracts and contracts for on-going services, revenue is recognised over the time and represents the value of work done in the period, including estimates of amounts not invoiced. Revenue in respect of long-term contracts and contracts for on-going services is recognised by reference to the stage of completion, where the stage of completion can be assessed with reasonable accuracy. This is assessed by reference to the estimated project costs incurred to date compared to the total estimated project costs. Revenue is recognised only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved Where a contract is loss making, the full loss is recognised immediately. Managed services income is recognised over time and is based on the volume of the passenger processed and freight scanned.

When the outcome of long-term contracts cannot be estimated reliability, contract revenues are recognised to the extent of contract costs incurred where it is probable those costs will be recovered

Maintenance Income

The revenue in relation to supply of maintenance contract is recognised over time on a straight-line basis. The unrecognised portion of maintenance contract is included within trade and other payables as Contract Obligation.

Training courses

The revenue on training course is recognised at a point in time after the course has been conducted i.e. performance obligation in relation to the course are fulfilled.

Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Expenditure for warranties is recognised and charged against the associated provision when the related revenue is recognised. Certain items have been disclosed as operating exceptional due to their size and nature and their separate disclosure should enable better understanding of the financial dynamics.

Interest income and expenses

Interest income and expenses are reported on an accruals basis using the effective interest method.

Goodwill

Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognised amount of any non-controlling interest in the acquiree

and c) acquisition date fair value of any existing equity interest in the acquiree, over the acquisition date fair value of identifiable net assets. If the fair value of identifiable net assets exceeds the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. Goodwill is carried at cost less accumulated impairment losses.

Property, plant and equipment (continued)

Plant and equipment, office equipment, fixtures and fittings and motor vehicles are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets to their residual value over their estimated useful lives, using the straight-line method, typically at the following rates. Where certain assets are specific for a long-term contract and the customer has an obligation to purchase the asset at the end of the contract they are depreciated in accordance with the expected disposal / residual value.

 
                               Rate 
----------------------------  ----------- 
 Freehold buildings            2% 
 Plant and equipment           7% to 25% 
 Office equipment, fixtures 
  & fittings                   20% to 33% 
 Motor vehicles                20% 
----------------------------  ----------- 
 

Freehold land is not depreciated

Leases

All leases that fall under IFRS 16 will be recorded on the balance sheet as liabilities, at the present value of the future lease payments, along with an asset reflecting the right to use the asset over the lease term. Rentals payable under operating leases exempt from IFRS 16 are charged to income on a straight-line basis over the term of the relevant lease.

IFRS 16 also changes the definition of a "lease" and the manner of assessing whether a contract contains a lease. At inception of a contract, the Group assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group recognises a right-of-use asset and a corresponding lease liability at the lease commencement date. The lease liability is initially measured at the present value of the following lease payments:

   -               fixed payments 
   -               variable payments that are based on index or rate 

- the exercise price of any extension or purchase option if reasonably certain it can be exercised; and

   -               penalties for terminating the lease, if relevant 

The lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate.

The right-of-use assets are initially measured based on initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs. The right-of-use assets are depreciated over the period of the lease term using the straight-line method. The lease term includes periods covered by the option to extend, if the group is reasonably certain to exercise that option. In addition, right-of -use assets may during the lease term be reduced by any impairment losses, if any, or adjusted for certain remeasurements of the lease liability.

Impairment on non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

Financial instruments

Financial assets

The Group's financial assets include cash and cash equivalents and loans and other receivables. All financial assets are recognised when the Group becomes party to the contractual provisions of the instrument. All financial assets are initially recognised at fair value, plus transaction costs. They are subsequently measured at amortised cost using the effective interest method, less any impairment losses. Any changes in carrying value are recognised in the Statement of

Comprehensive Income. Interest and other cash flows resulting from holding financial assets are recognised in the Statement of Cash Flows when received, regardless of how the related carrying amount of financial assets is measured.

The Group recognises a loss allowance for expected losses on financial assets that are measured at amortised cost including trade receivables and contract assets. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.

Cash and cash equivalents comprise cash at bank and deposits and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities unless a legally enforceable right to offset exists.

Financial liabilities

The Group's financial liabilities comprise trade and other payables and borrowings. All financial liabilities are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. Financial liabilities are derecognised when they are extinguished, discharged, cancelled or expire.

Convertible loan notes with an option that leads to a potentially variable number of shares, have been accounted for as a host debt with an embedded derivative. The embedded derivative is accounted for at fair value through profit and loss at each reporting date. The host debt is recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.

Convertible loan notes which can be converted to share capital at the option of the holder, and where the number of shares to be issued does not vary with changes in fair value, are considered to be a compound instrument.

The liability component of a compound instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound instrument and fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components.

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Investments in subsidiaries

Subsidiary fixed asset investments are valued at cost less provision for impairment. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all investment in subsidiaries.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Costs principally comprise of materials and bringing them to their present location. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are recognised as an expense or income in profit or loss, except in respect of items dealt with through equity, in which case the tax is also dealt with through equity.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on material differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit not the accounting profit.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities unless a legally enforceable right to offset exists.

Equity, reserves and dividend payments

Share capital represents the nominal value of shares that have been issued.

Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Merger relief reserve includes any premiums on issue of share capital as part or all of the consideration in a business combination.

The share-based payment reserve represents equity-settled share-based employee remuneration until such share options are exercised or lapse.

The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant and equipment.

Retained earnings include all current and prior period retained profits and losses.

Dividend distributions payable to equity shareholders are included in liabilities when the dividends have been approved in a general meeting prior to the reporting date.

The Group operates a defined contribution pension scheme for employees in the UK and is operating under auto enrolment. Local labour in Africa benefit from a termination payment on leaving employment. The expected value of this is accrued on a monthly basis.

Share-based compensation (Employee Based Benefits)

The Group operates an equity-settled share-based compensation plan. The fair value of the employee services received in exchange for the grant of options is recognised as an expense over the vesting period, based on the Group's estimate of awards that will eventually vest, with a corresponding increase in equity as a share-based payment reserve. For plans that include market-based vesting conditions, the fair value at the date of grant reflects these conditions and are not subsequently revisited.

Fair value is determined using Black-Scholes option pricing models. Non-market based vesting conditions are included in assumptions about the number of options that are expected to vest. At each reporting date, the number of options that are expected to vest is estimated. The impact of any revision of original estimates, if any, is recognised in profit or loss, with a corresponding adjustment to equity, over the remaining vesting period.

The proceeds received when vested options are exercised, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event which it is probable will result in an outflow of economic benefits that can be reliably estimated.

SIGNIFICANT MANAGEMENT JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements.

Items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The board has judged that because the group is mainly situated in the UK, most of the Groups costs and a substantial part of its sales

Goodwill

Goodwill has been tested for impairment by considering its net present value for the expected income stream in perpetuity at both a discount rate judge to be 5% based on the normal lending rate we are offered leases at and to establish what is the discount rate (18%) at which no impairment is needed. The income is assumed to be flat and stable for the purpose of this test

Deferred tax asset

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The directors have prepared projections for the next five years based on the best available evidence and have concluded that this deferred tax asset will be utilised in the future.

SIGNIFICANT MANAGEMENT ESTIMATES IN APPLYING ACCOUNTING POLICIES

The following are significant management estimates in applying the accounting policies of the Group that have the most significant effect on the financial statements.

Revalued freehold property

The freehold property is stated at fair value. A full revaluation exercise was carried out in May 2017. The fair value is based on market value, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

New standards, amendments and interpretations

The following new standards have been adopted and where required the prior year's figures have been restated.

   --      IFRS 16          Leases (effective date 1 January 2019) 
   --      IFRIC 23        Uncertain tax treatments (effective date 1 January 2019) 

IFRS 16 'Leases'; effective for periods beginning on or after January 1, 2019. Under IFRS 16, a contract is, or contains a lease if the contact conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The new standard eliminates the classification of leases by lessees as either finance leases or operating leases and instead introduces an integrated lessee accounting model. Applying this model, lessees are required to recognise a lease liability reflecting the obligation to make future lease payments and a 'right-of-use' asset for virtually all lease contracts.

IFRS 16 includes an optional exemption for certain short-term leases and leases of low-value assets. The Group has assessed the impact of the new standard which is not material to the Group's operations.

The Group has elected to apply IFRS 16 fully retrospectively with the cumulative effect of initially applying IFRS 16 recognised at 1 January 2018. Consequently, comparatives for the year ended 31 December 2018 has been restated. Right of use assets are measured at the amount of the lease liability, thus on the adoption of IFRS 16, the Group recognised right of use asset and lease liability each amounting to GBP214,000 (2018: GBP29,000) and GBP216,000 (2018: GBP30,000) respectively. The effect of applying this standard is shown in note 12.

Effective from 1 January 2019, IFRIC 23 explains how to recognize and measure deferred and current income tax assets and liabilities if there is uncertainty over a tax treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that approach will be accepted by the tax authority.

Standards in issue not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early. The most significant of these are as follows, which are all effective for the period beginning 1 January 2020:

-- IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

   --      IFRS 3 Business Combinations (Amendment - Definition of Business) 
   --      Revised Conceptual Framework for Financial Reporting 

Amendments to IAS 1 and IAS 8 Definition of material

The amendments are intended to make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS Standards. The concept of 'obscuring' material information with immaterial information has been included as part of the new definition.

The threshold for materiality influencing users has been changed from 'could influence' to 'could reasonably be expected to influence'.

Standards in issue not yet effective (continued)

The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. In addition, the IASB amended other Standards and the Conceptual Framework that contain a definition of material or refer to the term 'material' to ensure consistency.

The amendments are applied prospectively for annual periods beginning on or after 1 January 2020, with earlier application permitted.

Amendments to References to the Conceptual Framework in IFRS Standards

Together with the revised Conceptual Framework, which became effective upon publication on 29 March 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32.

Not all amendments, however, update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the Framework they are referencing to (the IASC Framework adopted by the IASB in 2001, the IASB Framework of 2010, or the new revised Framework of 2018) or to indicate that definitions in the Standard have not been updated with the new definitions developed in the revised Conceptual Framework.

The amendments, where they actually are updates, are effective for annual periods beginning on or after 1 January 2020, with early application permitted.

Amendments to IFRS 3 Definition of a business

The amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business. To be considered a business an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs.

Additional guidance is provided that helps to determine whether a substantive process has been acquired.

The amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. Under the optional concentration test, the acquired set of activities and assets is not a business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets.

The amendments are applied prospectively to all business combinations and asset acquisitions for which the acquisition date is on or after the first annual reporting period beginning on or after 1 January 2020, with early application permitted.

Alternative performance measures (APM)

In the reporting of financial information, the Directors have adopted the APM ' EBITDA profit from underlying continuing and discontinued operations (APMs were previously termed 'Non-GAAP measures'), which is not defined or specified under International Financial Reporting Standards (IFRS).

The directors also look at recurring revenue as a key performance indicator. This is revenue arising from multi-year contracts.

This measure is not defined by IFRS and therefore may not be directly comparable with other companies' APMs, including those in the Group's industry.

APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.

Purpose

The Directors believe that this APM assists in providing additional useful information on the underlying trends, performance and position of the Group. This APM is also used to enhance the comparability of information between reporting periods and business units, by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid the user in understanding the Group's performance.

Consequently, APMs are used by the Directors and management for performance analysis, planning, reporting and incentive setting purposes and this remains consistent with the prior year.

The key APM that the Group has focused on is as follows: EBITDA profit from underlying continuing and discontinued operations' : This is the headline measure used by management to measure the Group's performance and is based on operating profit before the impact of financing costs, share based payment charges, depreciation, amortisation, impairment charges and exceptional items. Exceptional items relate to certain costs that derive from events or transactions that fall within the normal activities of the Group but which, individually or, if of a similar type, in aggregate, are excluded by virtue of their size and nature in order to reflect management's view of the performance of the Group.

   3.             Segment reporting 

Operating segments

The Board considers the Group on a Business Unit basis. Reports by Business Unit are used by the chief decision-makers in the Group. The Business Units operating during the year are the two operating divisions; Managed Services and Technology. This split of business segments is based on the products and services each offer.

 
                                        Managed           Technology             Group     Group 
                                       Services                            and Central     Total 
                          2019          GBP'000              GBP'000           GBP'000   GBP'000 
 Supply of products                           -                1,598                 -     1,598 
 Supply and installation 
  contracts                                   -                3,468                 -     3,468 
 Maintenance and services                 5,291                  298                 -     5,589 
 Training courses                           234                    -                 -       234 
 Revenue                                  5,525                5,364                 -    10,889 
                                ---------------  -------------------                    -------- 
 
 Segmental underlying 
  EBITDA^ from underlying 
  continuing and discontinued 
  operations                              1,084                  525           (1,555)        54 
 Share based payments                         -                    -             (556)     (556) 
 Exceptional items (note 
  4)                                      (105)                    -               (1)     (106) 
 Depreciation & amortisation               (72)                 (30)             (113)     (215) 
------------------------------  ---------------  -------------------  ---------------- 
 Segment operating result                   907                  495           (2,225)     (823) 
 Finance cost                               (1)                  (3)             (616)     (620) 
------------------------------  ---------------  -------------------  ---------------- 
 Profit/ (loss) before 
  tax                                       906                  492           (2,841)   (1,443) 
 Income tax charge                           18                    -                 8        26 
 Profit/(loss) for the 
  financial year                            924                  492           (2,833)   (1,417) 
------------------------------  ---------------  -------------------  ---------------- 
 
 Segment assets                           2,949                2,023             1,997     6,969 
------------------------------  ---------------  -------------------  ---------------- 
 Segment liabilities                      1,072                1,433             2,534     5,039 
------------------------------  ---------------  -------------------  ---------------- 
 Capital expenditure                         48                    4                18        70 
------------------------------  ---------------  -------------------  ---------------- 
 
 
                                        Managed           Technology             Group     Group 
                                       Services                            and Central     Total 
                                       Aviation 
                                        GBP'000              GBP'000           GBP'000   GBP'000 
 2018 (Restated) 
 Supply of products                           -                1,216                 -     1,216 
 Supply and installation 
  contracts                                   -                1,420                 -     1,420 
 Maintenance and services                 3,471                  342                 -     3,813 
 Training courses                           219                    -                 -       219 
 Revenue                                  3,690                2,978                 -     6,668 
------------------------------  ---------------  -------------------  ---------------- 
 
 Segmental underlying 
  EBITDA^ from underlying 
  continuing and discontinued 
  operations                                829                (272)             (911)     (354) 
 Share option expense                         -                    -             (281)     (281) 
 Exceptional items (note 
  4)                                      (401)                    -                 -     (401) 
 Impairments                                170                    -                 -       170 
 Depreciation & amortisation              (158)                 (11)                 -     (169) 
 Segment operating result                   440                (283)           (1,192)   (1,035) 
------------------------------  ---------------  -------------------                    -------- 
 Finance cost                               (4)                    1             (330)     (333) 
 Income tax credit                          492                  380                 -       872 
 Profit/(Loss) for the 
  financial year                            929                   98           (1,522)     (496) 
------------------------------  ---------------  ------------------- 
 
 Segment assets                           5,033                1,960             1,854     8,847 
------------------------------  ---------------  -------------------  ---------------- 
 Segment liabilities                      1,129                3,336             3,238     7,703 
------------------------------  ---------------  -------------------  ---------------- 
 Capital expenditure                         23                    -                35        58 
------------------------------  ---------------  -------------------  ---------------- 
 

Geographical areas

The Group's international business is conducted on a global scale, with agents present in all major continents. The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods/services.

 
                           2019          2018 
                        GBP'000       GBP'000 
 UK and Europe            1,957           171 
 Africa                   4,899         3,884 
 Middle East              2,397         1,878 
 Rest of World            1,636           735 
 
 Total                   10,889         6,668 
                 ==============  ============ 
 

Some of the Group's assets are located outside the United Kingdom where they are being put to operational use on specific contracts.

Information about major customers

Included in revenues arising from the Technology Solutions in the Middle East are revenues of approximately GBP2,230,000 (2018: GBP1,414,000) which arose from a sale to the Group's largest customer in 2019. There was also a sale of GBP1,236,000 for the provision of advanced screening of containers at ports in Asia (2018: Nil). Approximately 34% (2018: 50%) of the Group's revenues are derived from the contract with the Sierra Leone Airport Authority. This contract contains many individual customers. No other single customer contributed more than 10% of the Group revenue in either 2019 or 2018.

   4.         Exceptional Items 
 
                                              2019      2018 
                                           GBP'000   GBP'000 
 Middle East airport pre-contract costs        105       294 
 Ferry closure costs                             1        21 
 Other                                           -        86 
                                               106       401 
                                          ========  ======== 
 

The project signed in 2018 for a long-term security support service in a Middle East airport pre-contract costs ceased during 2019 when the project was permanently put on hold.

   5.         Finance costs 
 
                                                        Group   Group Restated 
                                                         2019             2018 
                                                      GBP'000          GBP'000 
 Interest received                                          -                1 
 Finance cost on lease liabilities                       (54)              (4) 
 Interest payable on bank and other borrowings            (1)             (37) 
 Interest paid on convertible loan notes 
  (Note 16)                                             (375)            (293) 
 Other financing costs                                  (190)                - 
 Total finance costs                                    (620)            (333) 
                                                 ============  =============== 
 
   6.             Loss from operations 

The following items have been included in arriving at the loss for the financial year

 
                                                     Group     Group 
                                                      2019      2018 
                                                   GBP'000   GBP'000 
 Staff costs (see Note 8)                            4,396     3,434 
 Depreciation of property, plant and equipment         172       136 
 Amortisation of intangible assets                      43        33 
 Lease rentals payable 
    Short term leases                                   85        66 
 Foreign exchange (gain) / loss                      (166)         3 
 

Auditor's remuneration

Amounts payable in both years relate to BDO LLP in respect of audit and other services. The local Audit in Sierra Leone is performed by Moore Sierra Leone.

 
 Audit services 
                                                                         Group     Group 
                                                                          2019      2018 
                                                                       GBP'000   GBP'000 
 Statutory audit of parent and consolidated financial statements            57        30 
 
        *    Review of interim results                                       2         2 
 
        *    Statutory audit of subsidiaries of the Company 
             pursuant to legislation                                        21        21 
 Taxation services including research and development tax credits           18        12 
                                                                      --------  -------- 
 Total payable to BDO                                                       98        65 
 Local audit in Sierra Leone - Moore Sierra Leone                           20        17 
 Total fees                                                                118        82 
                                                                      --------  -------- 
 
 
   7.             Taxation 

Analysis of credit in year

Changes to the UK corporation tax rates were substantively enacted as part of the Finance Bill 2015 (on 26 October 2015) and Finance Bill 2016 (on 7 September 2017) and was to have reduced to 17% from 1 April 2020. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.

 
                                                   Group           Group 
                                                    2019            2018 
                                                 GBP'000         GBP'000 
 Current year 
 UK corporation tax on profits                         -               - 
  in the year 
 Potential foreign corporation 
  tax on profits in the year                           -              17 
 Deferred Tax 
 Foreign entity deferred tax                        (18)               - 
 Review of expected utilisation 
  of losses                                          (8)           (889) 
                                                    (26)           (872) 
 
                                                   Group           Group 
                                                                Restated 
                                                    2019            2018 
                                                 GBP'000         GBP'000 
 Reconciliation of effective tax 
  rate 
 Loss on ordinary activities before 
  tax                                            (1,443)         (1,368) 
                                          ==============  ============== 
 
 Loss on ordinary activities multiplied 
  by the standard rate of corporation 
  tax in the UK of 19% (2018: 19%)                 (274)           (260) 
 Effects of: 
 Expenses not deductible for tax 
  purposes                                           106              57 
 Deferred tax previously not recognised                -           (669) 
 Unrecognised losses carried forward                 142               - 
 Total tax - credit                                 (26)           (872) 
                                          ==============  ============== 
 
   8.             Employee costs 

Employee costs for the Group during the year

Group

 
                                        2019      2018 
                                     GBP'000   GBP'000 
 Wages and salaries                    3,854     2,922 
 Pension contributions                    44        21 
 Social security costs                   266       210 
                                       4,164     3,153 
 Share based payments     Note 22        232       281 
                                       4,396     3,434 
                                    ========  ======== 
 

The Group operates a stakeholder pension scheme. The Group made pension contributions totalling GBP44,000 during the year (2018: GBP21,000), and pension contributions totalling GBP8,000 were outstanding at the year-end (2018: GBP4,000).

Details of the Directors' remuneration are included in the Remuneration Committee Report. Key management within the business are considered to be the Board of Directors. The total Directors' remuneration during the year was GBP582,000 (2018: GBP922,000) and the highest paid director received remuneration totalling GBP201,000 (2018: GBP310,000).

Average monthly number of people (including Executive Directors) employed

 
 Group                            2019                                 2018 
                                 Number                               Number 
                    Continuing   Discontinued   Total    Continuing   Discontinued   Total 
                    Operations     Operations            Operations     Operations 
 By function: 
 Sales                       3              -       3             3              -       3 
 Operations                224              3     227           199              3     202 
 Administration             25              -      25            23              -      23 
 Management                  6              -       6             5              -       5 
                           258              3     261           230              3     233 
                  ============  =============  ======  ============  =============  ====== 
 
   9.             Loss per share 

Earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. Only those outstanding options that have an exercise price below the average market share price in the year have been included.

The weighted average number of ordinary shares is calculated as follows:

 
                                                                             2019               2018 
                                                                             '000               '000 
 Issued ordinary shares 
 Start of year                                                            130,028            120,743 
 Effect of shares issued during the year                                    8,834              5,409 
                                                                -----------------  ----------------- 
 Weighted average basic and diluted number of shares for year             138,862            126,152 
                                                                =================  ================= 
 
 
                                               2019      2018 
                                            GBP'000   GBP'000 
 Earnings 
 Profit / (loss) and total comprehensive 
  expense (continuing)                      (1,445)     (645) 
 Profit / (loss) and total comprehensive 
  expense (discontinued)                         28       149 
                                           --------  -------- 
 Profit / (loss) and total comprehensive 
  expense total                             (1,417)     (496) 
                                           ========  ======== 
 

For the year ended 31 December 2019 and 2018 the issue of additional shares on exercise of outstanding share options, convertible loans and warrants would decrease the basic loss per share and there is therefore no dilutive effect. Loss per share was 1.02p (2018 Loss 0.39p).

   10.          Goodwill 
 
 Group 
                                           Note          2019      2018 
                                                      GBP'000   GBP'000 
 
 Gross carrying amount at 1 January                     1,359     1,160 
 Acquisition in year                          30           18       199 
                                                     --------  -------- 
                                                        1,377     1,359 
                                                     --------  -------- 
 
 Accumulated impairment at 1 January                    (763)     (763) 
 Impairment charge for the year                             -         - 
                                                     --------  -------- 
 Accumulated impairment at 31 December                  (763)     (763) 
                                                     --------  -------- 
 
 Carrying amount at 1 January                             596       397 
 
 Carrying amount at 31 December                           614       596 
 
 

The goodwill balance relates to the acquisition of Longmoor Security Limited, Keyguard U.K Limited in 2018 and Euro-Ops SARL in 2019.

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill may be impaired. The recoverable amounts of the cash-generating unit are determined from value in use calculations. The key assumptions are discount rate (5%) future revenues (assumed as flat) derived from the most recent 2020 financial budgets approved by management. The projection assumes that the companies are held in perpetuity. A discount rate of 18% would not result in any impairment based on management's latest forecast.

No reasonably possible change in any of the estimates and assumptions used in the impairment test would give rise to a material impairment.

   11.          Other intangible assets 
 
                                  Group Website         Company 
                                   and Software         Website 
                                                   and Software 
 
 2019 
                                        GBP'000         GBP'000 
 Cost 
 At 1 January 2019                          225             215 
 Additions                                   72              71 
 At 31 December 2019                        297             286 
                                 ==============  ============== 
 
 Accumulated amortisation 
  and impairment 
 At 1 January 2019                          125             115 
 Charge for the year                         43              43 
 At 31 December 2019                        168             158 
                                 ==============  ============== 
 
 Net book value at 31 December 
  2019                                      129             128 
 
 2018 
                                        GBP'000         GBP'000 
 Cost 
 At 1 January 2018                          193             224 
 Disposals                                 (12)            (12) 
 Adjustment                                  40             (1) 
 Transfers                                    4               4 
 At 31 December 2018                        225             215 
                                 ==============  ============== 
 
 Accumulated amortisation 
  and impairment 
 At 1 January 2018                           64              96 
 Charge for the year                         33              33 
 Disposals                                 (12)            (12) 
 Adjustment                                  40             (2) 
 At 31 December 2018                        125             115 
                                 ==============  ============== 
 
 Net book value at 31 December 
  2018                                      100             100 
 
   12.          Property, plant and equipment 
 
 Group                   Freehold        Plant           Office         Motor      Right of      Total 
                          property    and equipment     equipment      vehicles    use assets 
                                                         fixtures 
                                                       and fittings 
 
 2019                      GBP'000          GBP'000         GBP'000     GBP'000       GBP'000   GBP'000 
 Cost or valuation 
 At 1 January 2019           1,031              471           1,194         159           260     3,115 
 Additions                       8               32              25           5             -        70 
 Disposals                       -                -            (63)           -             -      (63) 
 Transfer                        -              224           (158)           -             -        66 
 At 31 December 2019         1,039              727             998         164           260     3,188 
                        ==========  ===============  ==============  ==========  ============  ======== 
 
 Accumulated depreciation and 
  impairment 
 At 1 January 2019              17              236             553         151            46     1,003 
 Charge for the year            21               38              43           9            61       172 
 Disposals                       -                -            (34)           -             -      (34) 
 Transfer                        -              202           (134)           -             -        68 
 At 31 December 2019            38              476             428         160           107     1,209 
                        ==========  ===============  ==============  ==========  ============  ======== 
 
 Net book value at 31 
  December 2019              1,001              251             570           4           153     1,979 
                        ==========  ===============  ==============  ==========  ============  ======== 
 
 2018 (Restated)           GBP'000          GBP'000         GBP'000     GBP'000       GBP'000   GBP'000 
 Cost or valuation 
 At 1 January 2018           1,014              727           1,123          99            33     2,996 
 Additions                      17                -              41           -           131       189 
 Disposals                       -             (79)           (102)        (20)             -     (201) 
 On acquisition                  -                -               -          80            96       176 
 Transfer                        -            (177)             132           -             -      (45) 
 At 31 December 2018         1,031              471           1,194         159           260     3,115 
                        ==========  ===============  ==============  ==========  ============  ======== 
 
 Accumulated depreciation and 
  impairment 
 At 1 January 2018               -              434             488          89             4     1,015 
 Charge for the year            17               31              57          10            21       136 
 Disposals                       -             (79)           (102)        (20)             -     (201) 
 Transfer                        -            (150)             110           -             -      (40) 
 Acquisition                     -                -               -          72            21        93 
 At 31 December 2018            17              236             553         151            46     1,003 
                        ==========  ===============  ==============  ==========  ============  ======== 
 Check 
 Net book value at 31 
  December 2018              1,014              235             641           8           214     2,112 
 

Right of use assets (motor vehicles) above have been created in accordance with IFRS 16. These numbers demonstrate the effect of implementing the standard on the Group. Motor vehicles are leases for certain employees for lease terms ranging between 3-5 years with fixed payments. The Group does not purchase or guarantee the future value of lease vehicles

 
 Company            Freehold            Plant              Office              Motor              Right              Total 
                     property        and equipment        equipment,          vehicles            of use 
                                                           fixtures                               assets 
                                                         and fittings 
 
 2019                    GBP'000            GBP'000             GBP'000            GBP'000            GBP'000           GBP'000 
 Cost or 
 valuation 
 At 1 January 
  2019                     1,031                 15                 185                  -                 76             1,307 
 Additions                     8                  -                  10                  -                  8                26 
 At 31 
  December 
  2019                     1,039                 15                 195                  -                 84             1,333 
                ----------------  -----------------  ------------------  -----------------  -----------------  ---------------- 
 
 Accumulated 
 depreciation 
 and 
 impairment 
 At 1 January 
  2019                        17                 15                 174                  -                  7               213 
 Charge for 
  the year                    21                  -                   7                  -                 19                47 
 Adjustment                    -                  -                 (6)                  -                  -               (6) 
 At 31 
  December 
  2019                        38                 15                 175                  -                 26               254 
                ================  =================  ==================  =================  =================  ================ 
 
 Net book 
  value at 31 
  December 
  2019                     1,001                  -                  20                  -                 58             1,079 
                ================  =================  ==================  =================  =================  ================ 
 
 2018                    GBP'000            GBP'000             GBP'000            GBP'000            GBP'000           GBP'000 
 Cost or 
 valuation 
 At 1 January 
  2018                     1,014                 14                 216                  -                  -             1,244 
 Additions                    17                  1                  15                  -                 76               109 
 Disposals                     -                  -                (38)                  -                  -              (38) 
 Adjustment                    -                  -                 (8)                  -                  -               (8) 
 At 31 
  December 
  2018                     1,031                 15                 185                  -                 76             1,307 
                ================  =================  ==================  =================  =================  ================ 
 
 Accumulated 
 depreciation 
 and 
 impairment 
 At 1 January 
  2018                         -                 13                 203                  -                  -               216 
 Charge for 
  the year                    17                  1                   6                  -                  7                31 
 Disposals                     -                  -                (38)                  -                  -              (38) 
 Adjustment                    -                  1                   3                  -                  -                 4 
 At 31 
  December 
  2018                        17                 15                 174                  -                  7               213 
                ================  =================  ==================  =================  =================  ================ 
 
      Net book 
   value at 31 
      December 
          2018             1,014                  -                  11                  -                 69             1,094 
                ----------------  -----------------  ------------------  -----------------  -----------------  ---------------- 
 

The freehold property was valued professionally by Brown and Co, Chartered Surveyors, on 16 May 2017, which provided a valuation of GBP1,014,000. The valuation was made on the basis of recent market transactions on arm's length terms and on an alternative use basis. The Revaluation Reserve is not available for distribution to shareholders. The Directors are of the opinion that the valuation has not moved materially since the last valuation was performed. The valuation was not materially different to the value the asset is recorded at the balance sheet date.

No depreciation has been charged on the freehold land only building additions have been depreciated. The difference between the net book value of the total freehold property if depreciation, at 2%, had been charged as shown in the financial statements is not materially different to the value the asset is recorded at the balance sheet date.

The freehold property is stated at valuation, the comparable historic cost and depreciation values are as follows: This depreciation is charged on historical cost only

 
                                         2019       2018 
                                      GBP'000    GBP'000 
----------------------------------  ---------  --------- 
 Historical cost                          722        714 
 
 Accumulated depreciation 
 At 1 January                             279        265 
 Charge for the year                       14         14 
----------------------------------  ---------  --------- 
 At 31 December                           293        279 
----------------------------------  ---------  --------- 
 
 Net book value as at 31 December         429        435 
----------------------------------  ---------  --------- 
 
   13.          Lease commitments 

The Group has moved to accounting for operating leases under IFRS 16. There are some leases of small value or less than one-year duration which have been charged to expenses as incurred, but the aggregate commitment of these leases is immaterial.

Right to use assets

 
                                            2019   2018 
 At 1 January 2019                           216     30 
 Additions                                     -    112 
 On acquisition                                -     96 
 Movement in the year                       (58)   (22) 
 As at 31 December                           158    216 
                           ---------------------  ----- 
 
 Of which 
 Current lease 0-1 years                      60     58 
 Non-current lease 2-5 
  years                                       98    158 
 As at 31 December                           158    216 
                           ---------------------  ----- 
 
   14.          Investment in subsidiaries 
 
 Company                                 2019      2019      2019              2018      2018      2018 
                                  Investments     Loans     Total       Investments     Loans     Total 
 Cost                                 GBP'000   GBP'000   GBP'000           GBP'000   GBP'000   GBP'000 
 At 1 January 2019                        378    15,458    15,836               378    16,080    16,458 
 Movement in Year                          11     (557)     (546)                 -     (622)     (622) 
 At 31 December                           389    14,901    15,290               378    15,458    15,836 
                          ===================  ========  ========  ================  ========  ======== 
 
 Accumulated impairment 
 At 1 January 2019                      (378)   (8,552)   (8,930)             (378)   (8,964)   (9,342) 
 Movement in Year                        (11)      (97)     (108)                 -       412       412 
 At 31 December                         (389)   (8,649)   (9,038)             (378)   (8,552)   (8,930) 
                          ===================  ========  ========  ================  ========  ======== 
 
 Investment in 
  subsidiaries                              -     6,252     6,252                 -     6,906     6,906 
 

All loans relate to cash movements between Group companies and are repayable on demand. Expected credit losses assume that repayment of the loan is demanded at the reporting date. If the subsidiary has sufficient accessible highly liquid assets to repay the loan if demanded at the reporting date, the expected credit loss is likely to be immaterial. If the subsidiary could not repay the loan if demanded at the reporting date, the Group consider the expected manner of recovery to measure expected credit losses. This is a 'repay over time' strategy (that allows the subsidiary time to pay), Non-trading subsidiaries will not be able to repay loans or investments over time and are therefore deemed to be impaired.

      15.          Subsidiary undertakings 

The subsidiary undertakings at 31 December 2019 were as follows :

 
 Name                          Country of incorporation    Principal activity            % of nominal ordinary share 
                                                                                          capital and voting rights 
                                                                                                    held 
----------------------------  --------------------------  ----------------------------  ---------------------------- 
 
                                                           Advanced security 
 Westminster International                                  technology, (Technology 
  Limited                               England             division)                                100 
 
                                                           Close protection training 
                                                            and provision of security 
                                                            services (Managed 
 Longmoor Security Limited              England             Services)                                100 
 
 
                                                           Managed services of airport 
                                                            security under long term 
 Westminster Aviation                                       contracts. (Managed 
  Security Services Limited             England             Services)                                100 
 
 Sovereign Ferries Limited              England            Dormant                                   100 
 
 
                                                           Special purpose vehicle 
                                                            which exists solely for 
                                                            listing the 2013 CLN on 
                                                            the CISX. Year end 
                                                            31 October. Only 
 Westminster Operating                                      transactions are intra 
  Limited                               England             group                                    100 
 
                                                           Security and risk 
                                                            management including 
                                                            manned guarding, mobile 
                                                            patrols, risk management 
                                                            and 
 Keyguard U.K Limited                   England             K9 services.                             100 
 
                                                           Security and terminal 
 Longmoor (SL) Limited               Sierra Leone           guarding                                 100 
 
 Facilities Operations 
  Management Limited                 Sierra Leone          Infrastructure management                 90 
 
 Westminster Sierra Leone                                  Local infrastructure for 
  Limited **                         Sierra Leone           airport operations                       49 
 
 Westminster Group GMBH                 Germany            Dormant                                   100 
 
 GLIS Gesellschaft für 
  Luftfahrt- und 
  Infrastruktur-Sicherheit 
  GmbH                                  Germany            Managed Services                          85 
 
 Westminster Sicherheit GMBH            Germany            Dormant                                   85 
 
                                                           Managed Services 
 Euro Ops SARL                          France              infrastructure                           100 
 
 Westminster Managed 
  Services Limited (formerly 
  Westminster Facilities 
  Management Limited)                   England            Dormant                                   100 
 
 CTAC Limited                           England            Dormant                                   100 
 
 Westminster Aviation 
  Security Services (ME) 
  Limited                               England            Dormant                                   100 
 
 
 Westminster International (Ghana) Limited *    Ghana    Managed Services    90 
 

Subsidiary company registered addresses:

England Westminster House, Blacklocks Hill, Banbury, Oxfordshire, OX17 2BS, United Kingdom.

   Sierra Leone        60 Wellington Street, Freetown, Sierra Leone. 
   Germany               Chiemseestrasse 25, 83233 Bernau am Chiemsee, Germany. 
   France                   17 Route de Sundhoffen, 68280 Andolsheim. France 
   Ghana                    2nd Floor, Emerald House, Gowa Lane, Roman Ridge, Accra 
   *              Formed 21 October 2019 

** Consolidated due to de facto control. These results do not have a material effect on the financial statements.

   16.          Financial instruments 

Categories of financial assets and liabilities

The carrying amounts presented in the Consolidated and Company statement of financial position relate to the following categories of assets and liabilities:

 
                                                     Group      Group restated             Company    Company restated 
                                                      2019                2018                2019                2018 
                                                   GBP'000             GBP'000             GBP'000             GBP'000 
 Financial assets 
 Trade and other receivables (note 19)               2,320               4,556                   -                   - 
 Cash and cash equivalents (note 20)                   557                 290                  28                  29 
                                                     2,877               4,846                  28                  29 
                                        ------------------  ------------------  ------------------  ------------------ 
 Financial liabilities 
 Financial liabilities measured at 
 amortised cost 
 Borrowings (note 23)                                2,510               2,545                 212                 223 
 Trade and other payables (note 24)                  2,405               2,440                 254                 184 
 Liabilities held for sale (note 28)                     -                 151                   -                   - 
                                                     4,915               5,136                 466                 407 
                                        ------------------  ------------------  ------------------  ------------------ 
 

See note 2 for a description of the accounting policies for each category of financial instruments. The fair values are presented in this note and are the same as the carrying value. A description of the Group's risk management and objectives for financial instruments is given in note 27.

Convertible Loan Notes

The Group had the following convertible loan notes outstanding during the year the key details of which are set out below:

 
                         Secured Convertible Loan Notes ("CLN") 
 Amount              GBP2.245m 
                    ================================================ 
 Conversion Price    25p until 22 May 2019 15p per share until 30 
                      September 2019, 12.5p per share from 1 October 
                      2019 until 31 December 2019 and thereafter 
                      10p 
                    ================================================ 
 Security            Secured fixed and floating 
                    ================================================ 
 Redemption Date     30 June 2020. (Extended to 1 May 2021 after 
                      the year-end) 
                    ================================================ 
 Management Fee      GBP25,000 per annum 
                    ================================================ 
 Coupon              12 % until 31 March 2019 then15% paid quarterly 
                      in arrears. Listed on the CISX 
                    ================================================ 
 Conversion Detail   Company can force conversion if the share price 
                      is > 65p for 15 working days after 19 June 
                      2016. This condition was not met in the year. 
                      Company can make repayment without penalty 
                      at any time. The holder can convert at any 
                      time. 
                    ================================================ 
 
 
                                       2019    2019    2019   2018    2018    2018 
 GBP'000                               CULN     CLN   Total   CULN     CLN   Total 
 At 1 January                           171   2,216   2,387      -   2,184   2,184 
 Fair value of new loans issued           -       -       -    165       -     165 
 Amortised finance cost                  18     357     375      8     351     359 
 Interest paid                         (10)   (312)   (322)    (2)   (253)   (255) 
 Fair value adjustment on extension       -    (28)    (28)      -    (66)    (66) 
 At 31 December                         179   2,233   2,412    171   2,216   2,387 
                                      =====  ======  ======  =====  ======  ====== 
 

Analysis of movement in debt at principal value (excluding IFRS impacts), memorandum only

 
                   2019    2019    2019   2018    2018    2018 
 GBP'000           CULN     CLN   Total   CULN     CLN   Total 
 At 1 January       171   2,245   2,416      -   2,245   2,245 
 New issue            -       -       -    171       -     171 
 At 31 December     171   2,245   2,416    171   2,245   2,416 
                  =====  ======  ======  =====  ======  ====== 
 

The convertible loan notes have been separated into two components, the Host Debt Instrument and the Embedded Derivative on initial recognition. The value of the Host Debt Instrument will increase to the principal sum amount by the date of maturity.

The effective interest cost of the Notes is the sum of that increasing value in the period and the interest paid to Noteholders.

Secured convertible loan notes (CLN) are compound financial instruments that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in fair value.

On 24 May 2018 the Company extended the term of the CLN resulting in an increase of coupon to 12% from 24 May 2018 and conversion price decreased from 35p to 25p.

On 21 May 2019 the Convertible Loan Notes were extended to 30 June 2020. Under the terms of the CLN extension the conversion price on any unredeemed or unconverted CLN will be 15p per share until 30 September 2019, 12.5p per share from 1 October 2019 until 31 December 2019 and thereafter 10p per share from 1 January 2020 until the new maturity date of 30 June 2020. The coupon payable on any unredeemed or unconverted CLN amount will be 15% pa from 1 April 2019 until 30 June 2020. The Company may redeem the whole or any part of the CLN holding at any time without restriction or penalty.

Like convertible unsecured loan notes (CULN), this instrument is determined to have a liability and equity component. The liability component is initially recognised at fair value of a similar liability without a conversion option. The equity component is recognised initially as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. It is not subsequently remeasured. The liability component is measured at amortised cost using the effective interest method.

See also Note 32 Subsequent events.

   17.          Deferred tax assets and liabilities 

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The Group's projections show the expectation of future profits, hence in 2018 a deferred tax asset was recognised. A review has been performed this year which has confirmed those expectations.

The tax losses against which this deferred tax asset is being recognised are in the group's holding company and its principle UK based subsidiaries. Evidence, both positive and negative, primarily the group's projections of future profits have been considered. The critical judgement has been the timing of new contracts. The deferred tax asset is expected to be used in the period up to the end of 2022.

The Group believes it has a total potential deferred tax asset of GBP1,904,000 (2018: GBP1,795,000). It has recognised a deferred tax asset of GBP907,000 (2018: GBP889,000) due to budgeted future profits of the business beyond 2020. There remains GBP991,000 (2018: GBP896,000) of unrecognised deferred tax asset.

Deferred tax assets and liabilities have been calculated using the expected future tax rate of 17% (2018: 17%). Any changes in the future would affect these amounts proportionately. On 17 March 2020, the change to 17% was reversed, such that the 19% was substantively enacted to continue to apply from 1 April 2020.

 
                                  2019                      2018 
                               GBP'000                   GBP'000 
 Opening balance as at 1           889                         - 
  January 
 Credit to income statement         18                       889 
 Deferred tax asset as at 
  31 December                      907                       889 
                              --------  ------------------------ 
 
   18.          Inventories 
 
                      Group     Group   Company   Company 
                       2019      2018      2019      2018 
                    GBP'000   GBP'000   GBP'000   GBP'000 
 Finished goods          47        74         -         - 
                         47        74         -         - 
                   ========  ========  ========  ======== 
 

The cost of inventories recognised as an expense within cost of sales amounted to GBP 3,210,000 (2018: GBP1,309,000). No reversal of previous write-downs was recognised as a reduction of expense in 2019 or 2018.

   19.          Trade and other receivables 
 
                                       Group     Group   Company   Company 
                                        2019      2018      2019      2018 
                                     GBP'000   GBP'000   GBP'000   GBP'000 
 Amounts falling due within one 
  year: 
 Trade receivables, gross                851       701         1         2 
 Allowance for credit losses           (116)     (127)       (1)       (2) 
 Trade receivables                       735       574         -         - 
 Amounts recoverable on contracts      1,430     1,909         -         - 
 Other receivables                       155     2,073         -         - 
 Financial assets                      2,320     4,556         -         - 
                                    --------  --------  --------  -------- 
 Prepayments                             246        60        70        27 
 Non-financial assets                    246        60        70        27 
                                    --------  --------  --------  -------- 
 Trade and other receivables           2,566     4,616        70        27 
                                    ========  ========  ========  ======== 
 

The average credit period taken on sale of goods in 2019 was 38 days (2018: 41 days). An allowance has been made for estimated credit losses of GBP116,000 (2018: GBP127,000). This allowance has been based on the knowledge of receivables at the reporting date together with forecasts of future economic impacts and their collectability. There are no expected credit losses on amounts recoverable on contracts.

The following table provides an analysis of trade and other receivables at 31 December. The Group believes that the balances are ultimately recoverable based upon a review of past payment history and the current financial status of the customers.

 
                                                      2019      2018 
                                                   GBP'000   GBP'000 
 Current                                               474       306 
 Not more than 3 months                                197       219 
 More than 3 months but less than 6 months             180       176 
                                                       851       701 
                                             =============  ======== 
 
 Allowances for Credit Losses                         2019      2018 
                                                   GBP'000   GBP'000 
 Opening balance at 1 January                          127        52 
 Amounts written off                                 (113)         - 
 Amounts provided                                      102        75 
 Closing balance at 31 December                        116       127 
                                             -------------  -------- 
 

There are no significant expected credit losses from financial assets that are neither past due nor impaired. At 31 December 2019 GBP510,000 (2018: GBP3,708,000) of receivables were denominated in US dollars. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

   20.          Cash and cash equivalents 
 
                                Group     Group         Company         Company 
                                 2019      2018            2019            2018 
                              GBP'000   GBP'000         GBP'000         GBP'000 
 
 Cash at bank and in hand         605       292              28              29 
 Bank overdraft                  (48)       (2)               -               - 
 Cash and cash equivalents        557       290              28              29 
                             ========  ========  ==============  ============== 
 

All the bank accounts of the Group are set against each other where a right of offset exists in establishing the cash position of the Group. The bank overdrafts do not therefore represent bank borrowings, which is why they are presented as above for the purposes of the cash flow statement and the statement of financial position.

   21.          Called up share capital 

Group and Company

The total amount of issued and fully paid shares is as follows:

 
 Ordinary Share Capital                         2019                    2018 
                                              Number   GBP'000        Number   GBP'000 
 At 1 January                            130,027,511    13,003   120,743,420    12,074 
 Arising on exercise of share options 
  and warrants                               375,000        37       875,000        88 
 Other issues for cash                    15,000,000     1,500     8,409,091       841 
 
 At 31 December                          145,402,511    14,540   130,027,511    13,003 
                                        ============  ========  ============  ======== 
 

During the year, the following equity issues took place

 
 Date                Comment                 Shares Issued   Issue price 
 08 February 2019    Equity placing              5,000,000      10.0p 
 25 July 2019        Equity placing             10,000,000      10.0p 
 19 December 2019    Exercise of warrants          375,000      12.5p 
 
   22.          Share options 

The Company adopted the 2007 Share Option Scheme on 3 April 2007 that provides for the granting of both Enterprise Management Incentives and unapproved share options (Westminster Group Individual Share Option Agreements). The main terms of the option scheme are as follows:

-- Although no special conditions apply to the options granted in 2007, the model form agreement allows the Company to adopt special conditions to tailor an option for any particular employee.

-- The scheme is open to all full-time employees and Directors except those who have a material interest in the Company.

-- For the purposes of this definition, a material interest is either beneficial ownership of, or the ability to control directly, or indirectly, more than 30% of the ordinary share capital of the Company.

-- The Board determines the exercise price of options before they are granted. It is provided in the scheme rules that options must be granted at the prevailing market price in the case of EMI options and must not be granted at an exercise price that is less than the nominal value of a share.

-- There is a limit that options over unissued shares granted under the scheme and any discretionary share option scheme or other option agreement adopted or entered into by the Company must not exceed 10% of the issued share capital.

-- Options can be exercised on the second anniversary of the date of grant and may be exercised up to the 10th anniversary of granting. Options will remain exercisable for a period of 40 days if the participant is a good leaver

The Company adopted the 2017 Share Option Scheme on 21 September 2017 that provides for the granting of both Enterprise Management Incentives and unapproved share options (Westminster Group Individual Share Option Agreements). The main terms of the option scheme are as follows:

-- Although no special conditions apply to the options granted in 2017, the model form agreement allows the Company to adopt special conditions to tailor an option for any particular employee.

-- The scheme is open to all full-time employees and Directors except those who have a material interest in the Company.

-- For the purposes of this definition, a material interest is either beneficial ownership of, or the ability to control directly, or indirectly, more than 30% of the ordinary share capital of the Company.

-- The Board determines the exercise price of options before they are granted. It is provided in the scheme rules that options must be granted at the prevailing market price in the case of EMI options and must not be granted at an exercise price that is less than the nominal value of a share.

-- There is a limit that options over unissued shares granted under the scheme and any discretionary share option scheme or other option agreement adopted or entered into by the Company must not exceed 10% of the issued share capital.

-- Options can be exercised on the second anniversary of the date of grant and may be exercised up to the 10th anniversary of granting. Options will remain exercisable for a period of 40 days if the participant is a "good leaver".

Options have subsequently been granted on this basis.

These options are valued by the use of the Black-Scholes model using a volatility of 70%, interest free rate of 0.5% and a life of 5 years.

The Company has the following share options outstanding to its employees (including those on good leaver terms). The weighted average exercise price at the reporting date was 18.1p (2018: 18.2p). The average life of the unexpired share options was 7.1 years (2018: 8.4 years).

 
                                    31 December          31 December          31 December    31 December 
                                           2019                 2019                 2018           2018 
 Grant Date       Exercise   Number Outstanding              Average   Number Outstanding   Average Life 
                     Price                          Life Outstanding                         Outstanding 
                                                             (Years)                             (Years) 
 25 September 
  2009            GBP0.345                    -                    -               56,000       0.7 
 28 June 2012     GBP0.365              225,000                  2.5              295,000       3.5 
 1 July 2014      GBP0.510              225,000                  4.5              245,000       5.5 
 10 December 
  2014            GBP0.285            2,281,250                  4.9            2,281,250       5.9 
 9 October 
  2015            GBP0.140               40,000                  5.8               40,000       6.8 
 1 June 2018      GBP0.130            6,150,000                  8.4            6,500,000       9.4 
 1 November 
  2018            GBP0.130              750,000                  8.8              750,000       9.8 
--------------  ----------  -------------------  -------------------  -------------------  ------------- 
                                      9,671,250                  7.1           10,167,250       8.4 
 -------------------------  -------------------  -------------------  -------------------  ------------- 
 

During the year, no employee options were granted (2018: 8,250,000), none were exercised (2018: none) and 496,000 lapsed (2018: 1,740,750). The weighted average price of the options lapsed in the year was 20.3p (2018: 19.9p).

The weighted average exercise price of exercisable options at the end of 2019 was 18.1p (2018 18.2p)

The Black-Scholes option-pricing model is used to determine the fair value of share options at grant date. The assumptions used to determine the fair values of share options at grant dates were as follows:

For share options granted post IPO the expected share price volatility was determined taking account of the historic daily share price movements. Since 2009, the standard deviation of the share price over the past 3 years has been used to calculate volatility.

The average expected term to exercise used in the models is based on management's best estimate for the effects of non- transferability, exercise restrictions and behavioural conditions, forfeiture and historical experience. The risk-free rate has been determined from market yields for government gilts with outstanding terms equal to the average expected term to exercise for each relevant grant.

The amount recognised in profit or loss in respect of employee share-based payments made in 2018 but expensed over a 12-month period was GBP232,000 (2018: GBP237,000).

Warrants

The Company has historically issued the following warrants which are still in force at the balance sheet date:

-- On 22 February 2016 (GBP0.475m CULN) 589,330 warrants with a life of 3 years (extended to 4 years) and an exercise price of 20.15p per share

-- On 31 January 2018 (Placing Commission) 170,455 warrants with an exercise price of 22.0p and a life of 5 years

-- On 25 July 2019 (GBP1m Share Issue) 10m warrants with an exercise price of 12.5p and a life of 2 years

The S P Angel Warrants were inadvertently omitted from the 2018 accounts but have been accounted for in 2019. The omission of a charge of GBP27,000 from the 2018 accounts was not material.

On 25 July 2019 the Company announced a placing of 10,000,000 Ordinary Shares to various holders. For every share one detachable warrant was issued, each warrant having a life of two years and an exercise price of 12.5p per share. Warrants are valued by the use of the Black-Scholes model, using volatility based on the previous three years varying between 50-70% and a relevant risk-free rate as noted above. Warrants are recorded at fair value at inception and are not remeasured.

The fair value of GBP324,000 (2018: Nil) for the issue of both of these warrants was recognised in the year as part of the share-based payments.

   23.          Borrowings 
 
                                                Group          Group             Company        Company 
                                                 2019  2018 restated                2019  2018 restated 
                                              GBP'000        GBP'000             GBP'000        GBP'000 
Non-current 
Convertible loan note (note 16)                 2,233          2,216                   -              - 
Convertible unsecured loan note (Note 16)         179            171                 179            171 
Non-current lease debt                             98            158                  33             52 
Total borrowings                                2,510          2,545                 212            223 
 
   24.          Trade and other payables 
 
Current                           Group      Group   Company     Company 
                                          Restated              Restated 
                                   2019       2018      2019        2018 
                                GBP'000    GBP'000   GBP'000     GBP'000 
 
Trade payables                    1,385      1,484        99          54 
Accruals and other creditors        960        898       137         112 
Finance lease creditor 
 (IFRS 16)                           60         58        18          18 
Financial liabilities             2,405      2,440       254         184 
Other taxes and social 
 security payable                    51        129        16          15 
Contractual liabilities              73      2,438         -           - 
Non-financial liabilities           124      2,567        16          15 
Total current trade and 
 other payables                   2,529      5,007       270         199 
                                                              ========== 
 
Shown on the balance sheet 
 as: 
Contractual liabilities              73      2,438         -           - 
Trade and other payables          2,456      2,727       545         199 
                                  2,529      5,007       545         199 
                                                              ========== 
 

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs, as well as payments received in advance on contracts. The average credit period taken for trade purchases in 2019 was 66 days (2018: 27 days). The Directors consider that the carrying value of trade payables approximates to their fair value.

Contractual liabilities relate to amounts received from customers at year-end but not yet earned.

At 31 December 2019 GBP1,243,000 (2018: GBP1,393,000) of payables were denominated in US dollars, GBP16,000 (2018: Nil) were denominated in Euros and GBP22,000 (2018: Nil) were denominated in Sierra Leone Leones.

   25.          Cash flow adjustments and changes in working capital 

The following non-cash flow adjustments and adjustments for changes in working capital have been made to loss before taxation to arrive at operating cash flow:

 
Group                                      2019          2019     2019         2018          2018     2018 
                                     Continuing  Discontinued    Total   Continuing  Discontinued    Total 
                                     Operations    Operations            Operations    Operations 
                                        GBP'000       GBP'000  GBP'000      GBP'000       GBP'000  GBP'000 
Adjustments: 
Depreciation, amortisation 
and impairment of non-financial 
assets                                      215             -      215          150         (170)     (20) 
Effect of assets / 
 liabilities acquired                         2             -        2        (303)             -    (303) 
Net finance costs                           620             -      620          330             -      330 
Disposal & adjustment 
 of fixed assets                              2             -        2            -             -        - 
Loss on disposal of 
 non-financial assets                         -             -        -            2             -        2 
Non-cash accounting 
 for CLN & CULN                              35             -       35           75             -       75 
Increase in deferred 
 tax asset                                 (18)             -     (18)            -             -        - 
Share-based payment 
 expenses                                   556             -      556          273             -      273 
Total adjustments                         1,412             -    1,412          491         (170)      321 
 
 
 
 
                                       2019  2019 Discontinued     2019         2018           2018     2018 
                                 Continuing         Operations    Total   Continuing   Discontinued    Total 
                                 Operations                               Operations     Operations 
                                    GBP'000            GBP'000  GBP'000      GBP'000        GBP'000  GBP'000 
Net changes in working 
 capital: 
Decrease / (increase) 
 in inventories                          27                  -       27         (35)              -     (35) 
Decrease / (increase) 
 in trade and other 
 receivables                          2,050                  -    2,050      (3,923)              -  (3,923) 
(Decrease) / increase 
 in contract liabilities            (2,365)                  -  (2,365)        2,438              -    2,438 
(Decrease) / increase 
 in trade and other 
 payables                             (113)                  -    (113)        1,328              -    1,328 
Decrease in liabilities 
 of disposal group classified 
 as held for sale                         -              (151)    (151)            -              -        - 
Total changes in working 
 capital                              (401)              (151)    (552)        (192)              -    (192) 
 
 
Company                                                               Company  Company 
                                                                         2019     2018 
                                                                      GBP'000  GBP'000 
Adjustments: 
Depreciation, amortisation and impairment of non-financial assets          90       67 
Finance costs                                                             458      296 
Non-cash accounting for CULN                                             (90)     (31) 
Share-based payment expenses                                              556      237 
Non-cash movement in intercompany balances                                108    (412) 
Other non-cash items                                                     (18)     (75) 
Total adjustments                                                       1,104       82 
 
 
Company                                                  Company  Company 
Net changes in working capital:                             2019     2018 
                                                         GBP'000  GBP'000 
(Increase) / decrease in trade and other receivables        (43)       15 
Increase in trade and other payables                          71       84 
Total changes in working capital                            (28)       99 
 
   26.          Contingent assets and contingent liabilities 

There are no material contingent assets and contingent liabilities (2018: Nil).

   27.          Financial risk management 

The Group is exposed to various risks in relation to financial assets and liabilities. The main types of risk are foreign currency risk, interest rate risk, credit risk and liquidity risk.

The Group's risk management is closely controlled by the Board and focuses on actively securing the Group's short to medium term cash flows by minimising the exposure to financial markets. The Group does not actively trade in financial assets for speculative purposes nor does it write options. The most significant financial risks are currency risk and interest rate risk.

Foreign currency sensitivity

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro and US dollar. The Group's policy is to match the currency of the order with the principal currency of the supply of the equipment. Where it is not possible to match those foreign currencies, the Group might consider hedging exchange risk through a variety of hedging instruments such as forward rate agreements, although no such transactions have ever been entered into.

 
Group                   Short-term  Short-term  Short-term 
                          exposure    exposure    exposure 
                               USD         EUR         SLL 
                           GBP'000     GBP'000     GBP'000 
31 December 2019 
Financial assets               510           -           - 
Financial liabilities      (1,243)        (16)        (22) 
 
Total exposure               (733)        (16)        (22) 
 
31 December 2018 
Financial assets             3,708           -           - 
Financial liabilities      (1,393)           -           - 
Total exposure               2,315           -           - 
 

If the US dollar were to depreciate by 10% relative to its year end rate, this would cause a gain of profits in 2019 of GBP81,000 (2018: GBP376,000 Loss). Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group's exposure to currency risk. Foreign currency denominated financial assets and liabilities are immaterial for the Company.

Interest rate sensitivity

The main borrowings of the Group are the convertible loans and are detailed in note 16. All have fixed interest rates. Interest on the cash holdings of the Group and "other" loans noted in note 23 is not material and therefore no calculation of interest rate sensitivity have been undertaken.

Credit risk analysis

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and where possible working on a "cash with order".

The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. In the case of material sales transactions, the Group usually demands an initial deposit from customers and generally seeks to ensure that the balance of funds is secured by way of a letter of credit or similar instruments.

None of the Group's financial assets are secured by collateral or other credit enhancements. Details of allowance for credit losses are shown in note 19 of these financial statements.

The Company has investments in and amounts owing from subsidiary companies. The amounts owing are held at fair value. For loans that are repayable on demand, expected credit losses are based on the assumption that repayment of the loan is demanded at the reporting date. If the subsidiary has sufficient accessible highly liquid assets in order to repay the loan if demanded at the reporting date, the expected credit loss is likely to be immaterial. If it does not, then an impairment will be considered.

Liquidity risk analysis

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages its liquidity needs by monitoring scheduled debt repayments for long term financial liabilities as well as forecast cash flows due in day to day business. Net cash requirements are compared to borrowing facilities in order to determine headroom or any shortfalls. This analysis shows if available borrowing facilities are expected to be sufficient over the outlook period.

As at 31 December 2019, the Group's financial liabilities have contractual maturities (including interest payments where

applicable) as summarised below:

 
                                    2019                             2018 (Restated) 
Group                Current       6 to     Non-Current     Current       6 to     Non-Current 
                      (within    12 months   (1-5 years)     (within    12 months   (1-5 years) 
                     6 months)                              6 months) 
Convertible loans       -         2,233         179            -         2,216         171 
Trade and other 
 payables             2,456         -            -           2,569         -            - 
Total                 2,456       2,233         179          2,569       2,216         171 
 
Company              Current       6 to     Non-Current     Current       6 to     Non-Current 
                      (within    12 months   (1-5 years)     (within    12 months   (1-5 years) 
                     6 months)                              6 months) 
Convertible loans       -           -           179            -           -           171 
   Trade and other 
          payables     270          -            -            199          -            - 
Total                  270          -           179           199          -           171 
 
 
   28.          Discontinued operations 

At 30 September 2017 the Group took the decision to dispose of its ferry operation in Sierra Leone, from this date the operation together with the related finance obligations was being actively marketed for sale, and therefore has been reclassified as a disposal group held for sale within the financial statements.

A discontinued operation is a component of the Group's activities that is distinguishable by reference to geographical area or line of business that is held for sale, has been disposed of or discontinued, or is a subsidiary acquired exclusively with a view to resale. When an operation is classified as discontinued, the comparative statement of comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative period.

 
Profit / (loss) for the year from 
 discontinued operations: 
                                                             2019            2018 
                                                          GBP'000         GBP'000 
Revenue                                                         -               - 
Cost of sales                                                   -               - 
Gross profit                                                    -               - 
Administration expenses                                        28             149 
Operating loss from discontinued activities 
 before taxation                                               28             149 
Income tax expense                                              -               - 
Loss from discontinued ordinary activities 
 after taxation                                                28             149 
 
Earnings per share relating to the discontinued 
 operations                                                 0.02p           0.11p 
 
  Cash flows relating to the discontinued 
  operation are as follows: 
Operating cash flows                                           28             149 
 
 
   29.          Disposal groups held for sale 

At 30 September 2017 the Group took the decision to dispose of its ferry operation in Sierra Leone, from this date the operation together with the related finance obligations was being actively marketed for sale, and therefore has been reclassified as a disposal group held for sale within the financial statements. On this date the Group impaired the assets of the disposal group to nil. Details of the assets and liabilities held for sale are as follows:

 
                                                             2019     2018 
Assets held for sale:                                     GBP'000  GBP'000 
Tangible fixed assets at cost                               2,820    2,820 
Accumulated depreciation                                  (2,650)  (2,650) 
Intangible assets at cost                                       -       32 
Accumulated amortisation                                        -     (32) 
Assets held for sale                                          170      170 
Related liabilities: 
Accruals                                                        -    (148) 
Trade payables                                                  -      (3) 
Liabilities directly associated with assets 
 classified as held for sale                                    -    (151) 
 

The accounting estimates made at the end of 2017 proved to be too prudent, in 2018 therefore it was estimated that the net realisable amount was likely to be around GBP170,000. This decision was reviewed again at the end of 2019 and in the light of the sale, which was accounted for in February 2020, GBP170,000 was considered to remain the fair value of the Sierra Queen however because commitments such as repair and surrender of the terminals was completed in the year, these were utilised.

   30.   Acquisition of subsidiary 

On 30 April 2019 Westminster Group plc acquired 100% of the shares of Euro Ops SRL along with the business and assets of Euro Ops International SRL. Euro Ops is a French based aviation security and support services company which, through its sister company, Euro Ops International (also trading as ICare), provides aviation support services such as Airport Security, Aircrew Management, Humanitarian Logistics, Operations & Dispatch, Ground Handling etc. The business operates primarily in emerging markets particularly in Francophone Africa providing humanitarian assignments and is responsible for sending teams all over the world to assist the UN and NGO's.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed

 
Purchase of shares in Euro-Ops SRL                  GBP'000 
Financial assets                                          - 
Inventory                                                 - 
Property, plant and equipment                             - 
Identifiable tangible assets                              - 
Financial liabilities                                   (2) 
Contingent liability                                      - 
Total identifiable assets                               (2) 
Goodwill                                                  9 
Total consideration                                       7 
 
Satisfied by: 
Cash                                                      7 
Total consideration                                       7 
 
Net cash inflow arising on Acquisition 
Cash consideration                                      (7) 
Cash outflow on acquisition                             (7) 
 
Purchase of business & assets of Euro-Ops 
 International SRL                                  GBP'000 
Financial assets                                          - 
Inventory                                                 - 
Property, plant and equipment                             - 
Identifiable tangible assets                              - 
Financial liabilities                                     - 
Contingent liability                                      - 
Total identifiable assets                                 - 
Goodwill                                                  9 
Total consideration                                       9 
 
Satisfied by: 
Cash                                                      9 
Total consideration                                       9 
 
Net cash inflow arising on Acquisition 
Cash consideration                                      (9) 
Cash outflow on acquisition                             (9) 
 

The fair value of the financial assets includes receivables - Trade Debtors was nil.

Acquisition-related costs (including administrative expenses) amounted to GBP10,000.

Euro Ops contributed GBP139,000 revenue and a loss of GBP21,000 to the Group's profit for the period between the date of acquisition and the balance sheet date.

If the acquisition of Euro Ops had been completed on the first day of the financial year, Group revenues for the year would have been GBP11,098,000 and the Group loss would have been (GBP1,438,000).

31. Related Party Transactions

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

In the year to 31 December 2019 fees and expenses of GBP16,180 plus VAT were accrued to Cattaneo LLP a Limited Liability Partnership under the control of Charles Cattaneo. On the 31 December 2019 Cattaneo LLP was owed GBP1,600 including VAT.

Certain members of the Fowler family, other than directors, have been employed by the Group on normal arms-length terms for between 10 and 22 years. Their remuneration, in aggregate, for the year ended 31 December 2019 was GBP171,659 (2018: GBP166,250)

In 2019, up to his resignation from the board Mr James Sutcliff was paid no consultancy fees and expenses through his service company JSS Consultants Limited. (2018: GBP23,119).

In the year to 31 December 2018, prior to his being appointed as a director, Mr Mark L W Hughes received consultancy fees and expenses through his service company MLWH Limited. A total of GBP17,901 was paid to this company. There were no such fees in 2019.

32. Events after the Reporting Period

On 22 January 2020 the Company has entered into a GBP3.0m Mezzanine Loan Facility and issued GBP1.75m (14m shares at 12 1/2 p) Equity Placing and Sharing Agreement (together the "Financing Facility") with RiverFort Global Opportunities PCC and YA II PN Ltd. (together the "Investor") which is being used to repay its existing GBP2.245m Convertible Secured Loan Notes and to provide additional financing if required.

The Financing Facility will provide the Company with a GBP3m Mezzanine Loan Facility which may be drawn down in tranches, each repayable over 18 months, together with monthly cash inflows under the Equity Placing and Sharing Agreement, based on the Company's share price performance, which will go towards the monthly repayment costs of the loan. GBP1.5m was drawn down on 22 January 2019. The Company has the right, at its sole discretion, to draw down up to a further GBP1.5m at any time in the following 24 months, subject to certain conditions.

Separately under the Equity Placing and Sharing Agreement ("EPSA") the Investor subscribed GBP1.75m ("Subscription Amount") for ordinary shares in the Company at a price of 12 1/2 p per ordinary share ("Subscription Shares") on deferred payment terms. The Investor will have the right to sell the Subscription Shares, subject to certain volume restrictions, over a 12-month period, extendable to 24 months at the Investor's discretion. Under the EPSA the Investor and its affiliates are prohibited from holding any short position in or to forward or short sell Westminster shares. The Investor may elect to convert the balance, if any, of the remaining Mezzanine Loan into ordinary shares of 14.54p once all the Subscription Shares have been sold. The Investor has also agreed that Subscription Shares may be sold to any third party introduced by Westminster, individually or as part of a future fundraising.

The Company has also agreed to issue to the Investor 3,499,222 warrants at 14.54p, being a premium of 34% to the closing price of 10.85p on 21 January 2020, that can be exercised between 6 and 48 months from issue.

On 22 January 2020 the Group announced that it had commenced a staged redemption programme of the Company's existing GBP2.245m Convertible Secured Loan Notes ("CSLNs"). The CLSNs, initially issued on 19 June 2013, were amended as outlined in our announcement on 22 May 2019 and carry a 15% coupon and from 31 December 2019 holders may elect to convert their CSLNs at 10p per share in place of cash redemption. The May 2019 amendments also allow the Company to redeem the CSLNs in whole or in part at any time before the maturity date without restriction or penalty.

On 22 February 2020 the Group reduced in its debt position and reduction in financing costs by repaying or converting GBP561,250 worth of its Convertible Secured Loan Notes ("CSLN"). The Convertible Loan Notes holders to the value of GBP6,250 elected to convert into 62,500 shares, GBP555,000 were redeemed for cash.

In February 2020 the Group shipped the Sierra Queen and was able to recognise the sale under IFRS 15 in that month.

On 30 March 2020 the Group extended the maturity date for the Convertible Secured Loan Notes, noted above, to 1 May 2021. The Company may redeem the whole or any part of the CLN holding at any time without restriction or penalty.

As detailed in the Chief Executive Officer's Report, the Group has been affected the ongoing COVID-19 pandemic. The duration of the outbreak and its impact to global trade cannot be accurately determined at the current date. COVID-19 may impact the Group in varying ways and could lead to downward pressure on the level of revenues recognised. The Group has implemented logistical and organisational changes to consolidate the Group's resilience to COVID-19, with the key focus on product sales, which have seen a marked increase since the outbreak of the pandemic.

As at the Balance Sheet date of 31 December 2019, the enacted corporation tax rate to apply from 1 April 2020 was 17%, so that rate has been applied to the deferred tax asset on losses. On 17 March 2020, the change to 17% was reversed, such that the 19% was substantively enacted to continue to apply from 1 April 2020.

^ This is an Alternative Performance Measure refer to Note 2 for further details

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR AJMRTMTMBBJM

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May 14, 2020 02:00 ET (06:00 GMT)

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