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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