REG - Westminster Group - Final Results & Investor Presentation
30/04/2021 07:00
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RNS Number : 1440X Westminster Group PLC 30 April 2021
Westminster Group Plc
('Westminster', the 'Group' or the 'Company')
Final Results for 12 months to 31 December 2020
& Investor Presentation
Westminster Group Plc (AIM: WSG), a leading supplier of managed services and
technology-based security solutions worldwide, announces Final Results for the
12 months ending 31 December 2020.
Highlights
Operational:
· Successfully navigated Covid-19 largely due to the Company's
multiple revenue stream business model and early action by management. Both
Technology and Services Divisions, delivered a robust performance.
· Strong and profitable H1 performance delivering 24% increase over
H1 2019, although H2 was more challenging due to travel restrictions.
· Travel restrictions and airport closures materially affected our
airport managed services, training and guarding business but was offset by
growth in product sales and port services.
· Supplied products and solutions to 78 (2019:66) countries across
the world.
· Successfully completed a $665,000 contract to supply screening and
safety equipment to a global investment management company's 85 offices in 37
countries around the world.
· Secured a £1.5 million, 5-year contract to provide security
screening equipment and other services to the Palace of Westminster
(informally known as the UK Houses of Parliament).
· Secured £750,000 3-year guarding contract for one of the UK's
leading housebuilders.
· Successfully completed a contract at short notice to repatriate
80 NGO staff stranded in Africa.
· Signed strategic alliance with JP International Training.
· Launched new group wide website.
· Launched new on-line training catalogue.
· Launched a UK focussed TV 'Get Back to Work Safely' advertising
campaign.
· Westminster's aviation security training operations was graded as
'Outstanding' in all areas audited by UK Civil Aviation Authority (CAA).
· Implemented new working practices to keep all our employees safe
during Covid-19 and maintained full employment utilising the furlough scheme
where appropriate.
· Recognised by the London Stock Exchange as one of the select 1000
Companies to Inspire Britain.
Financial:
· Despite material impact from Covid-19 still achieved revenues of
£10.0m (2019: £10.9m).
· Loss after tax improves to £0.7m (2019: loss of £1.3m*).
· Repaid both Convertible Loan Notes and RiverFort Loan out of £5m
placing undertaken in December 2020.
· Total Equity / Net Assets grows from £1.9m in 2019 to £7.1m in
2020.
Post period End:
· Commenced year debt free.
· Despite continued disruption from Covid-19 encouraging start to
the year.
· Recovery of West African Airport operations ahead of
expectations.
· Port operations performing well.
· New training contracts indicating recovery in training business.
· Commenced work on Palace of Westminster project (delayed from
2020).
· All large-scale project opportunities remain live, including African
airport projects, despite timing delays due to travel restrictions and other
disruption.
· Enquiry levels remain healthy.
· Outstanding achievement in international trade recognised by a
Queen's Award for Enterprise for International Trade.
* restated refer Chief Financial Officer's Report and note 31
Commenting, Peter Fowler, Chief Executive of Westminster, said:
"The outlook for 2021 is looking positive. We entered the year debt free,
other than minor operating leases. There are encouraging signs the Covid-19
disruptions and travel restrictions, which have continued to create delays and
challenges for the first few months of the year, are at last easing and we
expect to return to revenue growth levels that we were experiencing pre-covid.
Revenues from existing contracts, including long-term managed services, and
the revenue slippage from 2020 together with the anticipated recovery in our
guarding, training and West African Airport operations provide the basis for
our optimism, although we recognise that the global outlook remains uncertain
and subject to change with the potential to further delay closure and delivery
of projects.
"We are encouraged to see an on-going improvement in passenger numbers at our
airport operations in West Africa with the first quarter numbers being 13.84%
ahead of expectations and currently running at around 57% of pre-covid levels,
which is far better than many other parts of the world. We expect to see a
continuing improvement throughout the year returning to full pre-covid numbers
in 2022.
"Our Ghana port security operations continue to remain largely unaffected by
Covid and continue to generate healthy revenues, which demonstrates the value
of this long-term managed services contract. In 2020 the project generated
circa $2.6 million USD of revenues for Westminster, and we expect this to
continue to rise as the port expands capacity and the fourth berth comes on
stream later in 2021.
"We continue to have healthy levels of enquiries and in the first few months
of the year have supplied a wide range of products and solutions to clients
worldwide. With lockdown restrictions beginning to ease we can also look
forward to progressing with some of the delayed projects and opportunities
that slipped from 2020, such as the Palace of Westminster contract which we
secured in September 2020 and which commenced operations in April 2021.
"As Covid restrictions are easing we can also complete the formation and
licencing of Westminster Arabia and we look forward to the business being an
important part of our growth through 2021 and beyond. The Kingdom of Saudi
Arabia is a potentially significant market for Westminster particularly given
the Crown Prince's 2030 vision which offers opportunities for several of our
Group services.
"We have recently entered into an exclusive service agreement with a company
about to launch an innovative and verified Covid testing service with UK
government approval, under which Westminster will provide a range of
specialist services. Whilst too early to assess the likely scale or success of
the project, this initiative could potentially lead to interesting business
developments in what could be an important new service in helping to open up
the leisure and entertainment sector. We are closely monitoring geo-political
events with regards to the US and Iran regarding the JCPOA agreement. As
reported in our 2018 Annual Report and our 2019 interim Report we previously
signed a 15 year, €24 million per annum contract for airport security, with
the full support on the British Government, which was put on hold when
President Trump unilaterally withdrew from JCPOA. Should circumstances change
and US and international sanctions, including banking, be lifted, there
remains an opportunity for our German office to revisit this prospect.
"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. At the time of our recent fundraising in December
2020 we listed out some of the larger project opportunities we are pursuing,
which remain in play, and we also announced that we were in the advanced
stages of securing a long-term contract with the Government of an African
country for the provision of airport security managed services relating to
five airports in the country. Whilst in the current climate we have,
frustratingly, experienced delays in travelling and finalising matters we
remain excited by this near-term prospect although there can never be absolute
certainty of outcome or timing.
"I am proud of our achievements in recent years as we continue to build our
business, particularly in 2020 against a backdrop of the global pandemic,
which is a testament to the hard work and dedication of all our staff. I am
therefore delighted that in April 2021 Westminster was selected for a Queen's
Award for Enterprise for International Trade in recognition of its outstanding
growth in overseas sales and is one of just 205 organisations nationally to be
awarded the prestigious Queen's Award for Enterprise. To have been selected
for this distinguished award is an honour, not just for the Company but for
all our employees around the world who have contributed to this success.
"The award will be formally presented by the Lord Lieutenant for
Northamptonshire on behalf of Her Majesty the Queen, at a ceremony on Friday,
30 July 2021
"The business model and opportunities we have been developing over the years
underpin our confidence for the future growth of our business. Notwithstanding
the continued disruption and delays in the first few months of 2021 we remain
optimistic that with restrictions beginning to be eased we can once again
return to double-digit revenue growth and whilst there is still uncertainty in
the world, we currently still expect to meet 2021 financial year market
expectations both at the revenue and PBT level."
Investor Presentation: 14.00 on Wednesday 12 May 2021
The presentation will be hosted through the digital platform Investor Meet
Company at 14.00 on Wednesday 12 May 2021. Investors can sign up to Investor
Meet Company for free and add to meet Westminster Group plc via the following
link -
https://www.investormeetcompany.com/westminster-group-plc/register-investor
(https://www.investormeetcompany.com/westminster-group-plc/register-investor)
. Investors who have already registered and added to meet the Company will
automatically be invited.
Peter Fowler, Chief Executive Officer, and Mark Hughes, Chief Financial
Officer, will review the results for 2020 and update on prospects for the
Group.
Questions can be submitted pre-event to westminster@walbrookpr.com
(mailto:westminster@walbrookpr.com) , or in real time during the presentation
via the "Ask a Question" function.
Annual Report and Accounts - The final results announcement can be downloaded
from the Company's website (www.wsg-corporate.com). Copies of the Annual
Report and Accounts (in addition to the notice of the Annual General Meeting)
will be sent to shareholders on or before 1 June 2021 for approval at the
Annual General Meeting to be held on 24 June 2021.
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
Strand Hanson Limited (Financial & Nominated Adviser)
James Harris 020 7409 3494
Ritchie Balmer
Arden Partners plc (Broker)
Richard Johnson (Corporate) 020 7614 5900
Tim Dainton/Simon Johnson (Broking)
Walbrook (Investor Relations)
Tom Cooper 020 7933 8780
Paul Vann
Nick Rome Westminster@walbrookpr.com (mailto: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 is part of the Group's Corporate Social
Responsibility activities. www.wg-foundation.org
(http://www.wg-foundation.org)
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 2020 in which the Group has delivered a reasonably strong
performance despite the challenges of the Covid-19 pandemic.
2020 has been dominated by Covid-19 which was declared a global pandemic in
March 2020 creating a worldwide healthcare crisis with tens of millions of
citizens infected and a tragic loss 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 seen in a generation.
We are a business which operates internationally with staff around the world,
and we are heavily involved in international travel, as such we are not immune
to the impact of the global disruption caused by the pandemic. I am therefore
proud of the way in which we have successfully navigated the crisis which is
due in no small part to the agility and foresight of our management team in
taking early action, together with the strength of our multi-revenue stream
business model.
I am pleased to report therefore that despite all of the challenges we have
delivered a good trading result with circa £10m in revenues and a
substantially improved loss after tax of £0.7m (2019: £1.3m).
At the time of writing Covid-19 is still impacting the global economy and many
travel restrictions remain in place and therefore there is still uncertainty
and challenges for businesses as we enter 2021. However, with vaccination
programmes being successfully rolled out around the world and new cases of the
virus declining there is cause for optimism. In addition, due to the
successful £5m fundraise that we completed in December 2020, we enter 2021
debt free, having repaid all our Loan Notes and the RiverFort debt, and so are
now in a much stronger financial position to deal with the challenges and to
fund our current and anticipated contracts.
I am proud of our achievements for 2020, particularly against a backdrop of
the global pandemic, which is a testament to the hard work and dedication of
all our staff and I am therefore delighted that our achievements have been
recognised by a Queen's Award for Enterprise for International Trade. This
prestigious award is recognised worldwide and is an indication of the growth
and momentum we are achieving with our world-wide 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
business 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 (http://www.wg-foundation.org) .
Employees and Board
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 and have put in place processes and safe working
practices, with a number of employees working from home. We also utilised the
UK furlough scheme where appropriate.
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 2020 and the way in which they have risen to the challenges and
opportunities presented by Covid-19.
We have not made any changes to the Board in 2020.
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; Services and Technology; both primarily focused on
international business as follows:
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 Services Division. This reduces both
supplier exposure and cost and provides us with increasing purchasing power.
Our 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.
Overview
A defining aspect of 2020 has been the global impact of Covid-19 and I am
pleased to report that, despite parts of our business being adversely impacted
by lockdowns and travel restrictions, the strength of our business model, with
multiple revenue streams from multiple sources around the world, together with
our global footprint has meant that we were better placed than many companies
to deal with the numerous challenges created by the Pandemic.
We commenced 2020 on a positive note, with visibility over circa £8m of
annual recurring revenues from our long-term managed services, guarding and
maintenance contracts. Our managed services contracts were running at record
levels, we had a healthy backlog of work in hand, our product sales, guarding
and training businesses were all operating successfully, and we had positive
momentum with a number of our major business development activities. In short,
we were on course to continue our year-on-year revenue growth and to deliver
healthy post tax profits.
However, as an international business we regularly monitor global activities
for issues that may affect our business and in early January we had identified
the potential threats and opportunities from the Covid-19 outbreak, long
before it was declared a pandemic. We took early steps accordingly to mitigate
any adverse impact and to maximise opportunities including restructuring our
operations to maintain services and keep our people safe, increased targeted
marketing and significantly increasing our stockholding of products such as
fever screening equipment, in order to deal with expected demand. These
measures were to prove invaluable as the Covid-19 crisis unfolded and
logistics became challenging.
Given the worldwide impact of Covid-19, 2020 has been a challenging year but a
year in which we have still achieved a number of successes to move our
business forward and I am proud of how our staff have pulled together and how
we have managed to navigate the crisis.
We have kept our people safe, employed and maintained our global operations,
albeit some on reduced levels. We have continued to deliver on business
opportunities and in 2020 we have supplied goods and service to 78 countries
around the world, including some notable contract wins despite the challenges
from Covid-19. We have continued 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. Despite the
challenges and impact of Covid-19 and travel restrictions resulting in a
material loss of revenue in our Services business as well as much of our H2
order intake moving to 2021 we have still delivered a result largely in line
with expectations with circa £10m in revenues and substantially improved loss
after tax of £0.7m (2019: £1.3m).
I am delighted therefore that all our hard work, efforts and achievements have
not only resulted in Westminster being recognised by the London Stock Exchange
in November 2020 as one of the select 1000 Companies to Inspire Britain but
more importantly, as announced on 29 April 2021, Her Majesty The Queen
approved the Prime Minister's recommendation that Westminster should receive a
Queen's Award for Enterprise for International Trade, which is a huge accolade
for our business.
Business Review
Despite the challenges presented by Covid-19 in 2020 both of our divisions,
Technology and Services, delivered a robust performance. The Technology
Division increased revenues by 4% to £5.6m (2019: £5.4m) mainly due to
strong product sales. The Services Division still delivered revenues of £4.4m
(2019: £5.5m) despite the fact our training, guarding and airport operations
were heavily impacted by Covid-19 travel restrictions and lockdowns. It was
however a year of two halves.
H1 2020 was very successful, delivering a 24% increase over H1 2019 revenues,
continuing our four years of double-digit % revenue growth, and resulting in a
pre-tax profit of circa £230k. This, in part, was due to record revenues from
our West African airport operations for the first two months of the year, the
delivery of the 2nd Asian port scanner (secured in 2019), a successful
campaign around Covid-19 sales resulting in a surge of product sales, a
significant contract for a global financial institution worth $665k supplying
fever screening to their 85 offices in 37 countries and of course an
increasing contribution from Ghana.
H2 2020 was a more challenging period due to the prolonged impact of Covid-19
lockdowns and travel restrictions. Our West African airport operations were
completely closed for several months, reopening at the end of July 2020 with
significantly reduced traffic volumes, even lower than we experienced during
the height of the Ebola crisis. I am pleased to report however that we have
seen a steady and sustained improvement in passenger numbers towards the end
of the year, which is encouraging for 2021. Our training and guarding
operations were heavily impacted throughout H2 and the spike in Covid-19
related sales we saw in H1 dwindled as companies retrenched and reduced
spending due to uncertainty. Ghana continued to show increasing revenues
making a healthy contribution.
2020 was a busy year. In addition to dealing with the many challenges caused
by the Covid-19 pandemic we still managed to expand our operations, instigate
new strategies to grow and protect our business, and to secure important new
business, supplying goods and services to 78 countries around the world,
including some notable contract wins.
An example of just some of the many activities and initiatives we undertook
throughout the year are as follows:
In January 2020 we entered into and announced a £3.0m Mezzanine Loan Facility
with RiverFort Global Opportunities PCC and YA II PN Ltd. of which we drew
down £1.5m for the purposes of commencing repayment of our existing £2.245m
Convertible Secured Loan Notes (CSLNs) and to provide additional financing if
required. We duly commenced the staged redemption of the CSLNs in February
2020 repaying the first 25%). However, given the growing global impact of
Covid-19 we subsequently decided to conserve funds to deal with the
uncertainties arising from the pandemic and in March 2020 agreed with
noteholders to extend the CSLNs redemption date until May 2021 (these were
subsequently repaid in full in December 2020).
In February 2020 just before travel restrictions were imposed, we manged to
deliver and subsequently receive payment for the final container screening
equipment unit to a second port in Asia as part of the $3.4 million USD
contract secured in 2019. Installation of the unit and collection of the
installation fee of USD $0.18 million will be finalised once we are able to
travel and gain access to the country.
In March 2020 we announced the main contract relating to the container
screening project at the $1.5 billion container port expansion project in Tema
Port, Ghana, which Westminster has been operating since July 2019, was finally
signed between Meridian Port Services and Scanport, confirming Westminster as
the Technical Partner for the duration of the 5-year renewable contract term.
It is pleasing to report that the operation has largely been unaffected by
Covid-19 and continued to generate healthy revenues throughout the year, even
during the country's lockdown period, which demonstrates the value of this
long-term managed services contract. Under contract, Westminster and our local
partners, Scanport, are responsible for the screening of containers passing
through the port, with Westminster responsible for technical management and
operations and Scanport being responsible for local management, costs and
employment. Revenues are generated by a container screening fee which is
shared between the port operator, Scanport and Westminster.
In 2020 the project has generated $2.57 million USD revenues for Westminster,
and we expect this to continue to rise as the fourth berth comes on stream
later in 2021. The project therefore has significant growth potential as the
port builds capacity.
In May 2020 we secured a contract to provide a leading global investment
management corporation with a range of fever screening and safety equipment
for deployment to its worldwide offices as part of its 'Return to Work'
programme. The contract, valued at c.US$665,000, includes the provision of a
range of fever screening systems covering different applications together with
sanitisation stations to 85 offices in 37 countries around the world. Given
the logistical issues around deployment and shipping caused by Covid-19 I am
pleased to report we successfully completed this project on time and to
budget.
In June 2020 our training business, which earlier in the year had been graded
as 'Outstanding' in all areas by UK Civil Aviation Authority (CAA), signed a
new strategic alliance agreement with JP International Training Limited, a
leading aviation, maritime, and commercial training organisation, extending
our e-Learning platforms and further enhancing our e-product services.
Non-contact distance learning is now a growing sector and has been accelerated
by the current pandemic and this alliance will provide clients with access to
industry-leading distance training, delivered at our clients' own pace and
tailored to enhance their employee's knowledge, skills and ability, so they
may carry out their roles effectively.
In June we also announced that we had conducted a successful trial of our
fever screening solutions in association with Menzies Aviation and their
client, Air France, at Stockholm Arlanda Airport. Both Menzies and their
clients were impressed with the versatility of the system, adapting to
different challenges and processes within the airport environment and it was
expected that this would result in joint business opportunities with Menzies
Aviation offering the Westminster solution to their global clients as part of
their wider commercial package. The continued travel restrictions and
challenges facing airports has meant this potential roll out is yet to happen
although airports are now more likely to focus on sanitisation systems, which
Westminster offer, rather than fever screening. The joint initiative with
Menzies Aviation however has now led to other potential and sizeable business
opportunities we are jointly pursuing.
In July 2020, operations at our West African Airport once again opened up for
commercial flights having been closed to all but essential traffic since March
2020 due to Covid-19 travel restrictions. Initial traffic volumes on
re-opening were heavily impacted, worse than at the height of the Ebola,
crisis but I am pleased to report that numbers slowly returned over the latter
part of the year and we expect the recovery to continue throughout 2021 but to
not fully return to pre-covid levels until 2022. I am proud to report that
during the closed period we continued to maintain security of the airport,
kept all of our local staff employed and safe, utilising the time to enhance
their training. Maintaining the livelihoods of our local staff and their
families during these challenging times is important given the lack of any
social safety net. In addition to ensuring all our staff remained safe and
well during these challenging times we also, through the Westminster Group
Foundation, supported the local community with much needed aid including a
large quantity of stable commodities such as rice, sugar and water to the poor
and disabled community in the Lungi area of Sierra Leone who were suffering
financially through the closure of the airport and services.
In August 2020 we announced the launch of our online training catalogue as
part of our initiative to expand non-contact sales through Computer Based
Training platforms, for which demand is growing and we expect this trend to
continue in the wake of the current pandemic and associated travel
restrictions. Westminster has been providing training solutions to various
sectors, including aviation and security, around the world for over 10 years,
increasing its capabilities through various acquisitions and joint ventures.
The recent strategic alliance agreement with JP International Training Limited
further expands our capabilities in this respect. Our training business
continues to be an important part of our growth strategy and the quality of
our training services is widely respected. An example of this is that in a
recent audit of training companies by the UK Civil Aviation Authority,
Westminster was graded as 'Outstanding' in all areas audited, quite an
accolade.
In September 2020 we were awarded a long-term contract to replace and maintain
the security screening equipment at the Palace of Westminster, informally
known as the Houses of Parliament, together with the provision of other
confidential ancillary services. The £1.8 million contract is for an initial
period of 5 years, although this may be extended. This contract was awarded
after a lengthy tender process under which Westminster was rated highest out
of all bidders, both technically and commercially. Securing this latest
high-profile contract is a testament to our agility, expertise and
professionalism.
In October 2020 as part of our One Company, One Vision programme and to
improve internal communication with our staff and operations around the world,
we launched a new group wide newsletter - the 'Westminster Wire' which will be
a quarterly publication to inform all our staff, agents and partners about
important or exciting news, both business and social, from around the world.
During October we also successfully delivered and installed a sanitisation
tunnel to our West African Airport operation to help keep staff and passengers
safe. Sanitisation is one of the key elements in the fight to reduce the
transmission of Covid-19. The tunnel has been greatly received and will help
increase stakeholder and passenger confidence that FNA is a Covid-19 secure
environment thereby encouraging larger passenger numbers through the airport.
The Director General of the Airport's Civil Aviation Authority described the
provision of the sanitisation tunnel as 'A promise made, a promise delivered',
further strengthening Westminster's relationship with the airport and local
government.
In November 2020 we were proud to have been recognised by the London Stock
Exchange as one of the select 1000 Companies across all sectors to Inspire
Britain 2020, especially in a challenging year so affected by Covid-19. 2020
has been a difficult year for everyone but our team continued to work hard and
helped to make Westminster stand out. There are approximately 4 million
companies registered in UK, with some 500,000 new incorporations each year, so
to be highlighted in the 1,000 most inspirational in UK is a great accolade
and a testament to the hard work and dedication of all our staff.
In December 2020 we appointed Strand Hanson Limited as our Financial and
Nominated Adviser and Arden Partners plc as our Broker and with them undertook
an investor roadshow, culminating in an oversubscribed £5m fundraise, which
included a number of new institutional holders. The £5m capital raise has
enabled the Company to repay its Convertible Loan Notes and the outstanding
RiverFort loan, saving some £300k annual costs, so that we entered 2021 debt
free, other than operating leases, and with the capital reserves to deal with
the current global uncertainties and to undertake current and anticipated new
projects. The placing and a share capital reorganisation were approved by
shareholders as announced on 21 December 2020.
All of this is in addition to a diverse range of products and solutions,
including Covid-19 related products such as fever detection cameras,
sanitising equipment and PPE, which we successfully delivered to a wide range
of customers in 78 countries across 6 continents including National
Governments, Sports Stadia, Educational Facilities, Conference/Exhibition
Centres, Shopping Malls, Financial Institutions, Hospitality Sector and
Medical Centres etc.
On a more general note our guarding business was adversely impacted during
2020 due to the closure of businesses and sites where we had guarding
operations around the country as a result of Covid-19. Encouragingly however,
we also secured new contracts in the year such as the £1 billion Stanton
Cross development project in Northamptonshire and in December 2020 we secured
a contract with one of the UK's leading home builders, valued at over
£750,000 over three years commencing 1 January 2021, for the provision of
static and mobile guarding and security services at one of their many sites in
the UK. HS2, which was given go ahead in February 2020, is another opportunity
for our guarding business which we identified some time ago and have already
become a registered security provider to the main contractors. With the UKs
vaccination programme advancing well and the end of lockdowns hopefully in
sight we anticipate a continued recovery and increase in guarding revenues.
Our French business, Euro Ops which we acquired in May 2019, is proving to be
a valuable strategic addition to the Group. The company provides aviation
focussed services such as humanitarian flights & logistics, emergency
flights, flight operations, charter and storage management. An example of our
ability to provide emergency services in challenging locations is that in July
2020 we successfully completed the emergency repatriation of 80 stranded NGO
staff, at short notice, from Mali, West Africa. The Company has not only
brought new skills, services and revenues to the Group but provides greatly
improved access to Francophone countries for the wider Group services, with
some interesting project opportunities being pursued. One large scale
opportunity in particular was developed to advanced stages during 2020
although travel restrictions have been a frustration and whilst there is never
certainty of timing or outcome, we are extremely optimistic on this
large-scale prospect.
As previously announced, we have entered into a strategic joint venture with
an influential company in Saudi Arabia Hazar International, and had formed
Westminster Arabia, registered in Saudi Arabia. The Kingdom is a huge
potential market for Westminster particularly given the Crown Prince's 2030
vision which offers opportunities for several of our Group services. Whilst
the final legalisation of documents for the company were delayed by several
months due to the closure of governments and embassy offices, I am pleased to
report this process has at last been completed and we look forward to
Westminster Arabia being an important part of our growth through 2021 and
beyond.
An experienced business development team is in place within the Kingdom and
has been pursuing several large-scale project opportunities whilst waiting for
the formation to be completed and various licences to be put in place. One of
several project opportunities being pursued in the Kingdom is Saudi ports for
which we conducted detailed operational and vulnerability assessments and have
been appointed as an approved contractor. Progress on such projects has been
hampered by Covid-19 travel restrictions in the Kingdom however we anticipate
these will ease in the near future.
Our German subsidiary, situated to the south east of Munich, is focussed on
supplying security technology and solutions to the European market. Post
Brexit the business is particularly well positioned to serve the Group's EU
clients. The team also has a specific focus on developing the Group's managed
service contracts in frontier markets, including large projects in south west
Africa and west Asia. In 2020 our German office supplied and installed
advanced scanning solutions to an army garrison in Stuttgart, as well as
technology products to organisations in the Baltic Regions.
The Technology opportunity pipeline is substantial and growing as the business
develops partnerships with a number of larger businesses across Europe. The
Services side of the business is expected to gain momentum in the coming year,
particularly as the aviation industry opens up again.
A key strategy for 2020 has been to redefine our diverse businesses in line
with our 'One Company, One Vision' approach which involved rebranding parts of
our business to better reflect the global Westminster brand. To those ends we
have implemented several new initiatives.
In June 2020 we launched the first phase of the new Westminster website. The
website has been designed to ensure the visitor journey throughout the site is
an informative interaction with the Westminster Group and its strong and
trusted brand. With this upgrade we operate one of the world's largest
security websites which is still a work in progress with more content and
applications constantly being added. The other Group websites are in the
process of being migrated. The new website brings better focus on the Group's
vast range of LAND, SEA & AIR products and solutions, and will in due
course encompass a sophisticated e-commerce section and enlarged customer and
investor engagement areas.
In addition to the new website, a re-branding exercise was completed with the
Westminster Group logo being modernised and aligned with tones and formats of
the new website.
During the summer of 2020 we launched a UK focussed TV advertising campaign
across a variety of channels, with the theme 'Get Back to Work Safely'.
Whilst this is principally targeted at generating sales, it is equally
designed to enhance brand awareness and the expansion our UK client base. We
have also expanded our product base to not only include all levels of fever
and detection and associated equipment but also a range of sanitisation
products and systems to assist businesses maintain compliance with social
distancing requirements.
In view of the continued and prolonged impact of the Covid-19 pandemic we
continued to look for new opportunities and initiatives that would be more
resilient to lockdowns and travel restrictions such as expanding our online
and non-contact sales opportunities. One such initiative was the extension of
our Covid-19 PPE sales through medical vending machines. We 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 country. Whilst we initially had
success with this initiative, we surprisingly experienced some reluctance from
transport companies about implementing PPE vending and this together with the
significant roll out of PPE masks etc., both good and bad, being sold
everywhere meant this initiative has not yet produced any material revenues,
although we continue to receive enquiries for such systems. With face covering
likely to be an ongoing requirement for some time this initiative may yet bear
fruit.
On a wider front, despite all the challenges we have faced this year, we have
continued to progress various existing and new large-scale managed services
project opportunities around the world which can and will provide step changes
in growth when secured. 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. This has been particularly the case in 2020 with the
added disruption of the Covid-19 pandemic. It is however precisely because of
such challenges that competition is limited and the opportunities offer
transformational growth opportunities.
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, despite the challenges created by Covid-19, in in some case
because of it, 2020 was a busy year and a year in which, due to our early
action and multiple revenue stream business model, we managed to not only
navigate the crisis, maintain our operations and keep our people safe but we
continued to make progress on a number of fronts. The 2020 results, although
encouraging given the pandemic would have been an even better If it were not
for the travel restrictions and lockdown periods in the year which delayed the
signing of some anticipated contracts and the delivery of some already signed,
such as the Palace of Westminster. However, these delayed opportunities and
revenues whilst lost from 2020 will now likely benefit 2021.
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 2020 has been to redefine our diverse businesses in line
with our 'One Company, One Vision' approach which involved rebranding parts of
our business to better reflect the global Westminster brand. Much of this was
completed in 2020 including the launch of a major new group wide website and
marketing material reflecting the Westminster brand.
Whilst we continue to pursue our many organic growth opportunities the
expansion strategy, we continue to identify potential 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. As part of our growth
strategy the Board set out its priority goals to be delivered during the year,
although we did indicate the unpredictability of the Covid-19 pandemic and the
uncertainty of its duration may impact the delivery of some of these goals. In
the event this proved to be the case and the global uncertainty and travel
restrictions together with distractions governments and companies experienced
in dealing with the challenges did impact the delivery of some of those goals,
although the business did meet many of its goals and continued to make
progress on a number of fronts.
Accordingly, the Board have set its key goals for 2021 as:
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. Deliver a year of double-digit revenue growth;
5. Deliver another year of significant recurring revenue growth;
6. Deliver a material improvement in profitability;
7. Deliver a sustained and material improvement in our share price; and
8. Instigate an Investors in People programme.
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 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 2020 2019
Revenue £10.0m £10.9m
Gross Margin 40% 41%
Recurring Revenues £4.5m £5.6m
Days Sales Outstanding 19 38
Number of Employees 239 261
Average Employee Cost Per Head £16,264 £16,843
Services Division 2020 2019
Passengers Served ('000) 51 121
Vehicles/Containers Served ('000) 1,003 309
Training Hours Delivered 1,520 4,040
Guarding Hours Delivered 38,962 70,671
Technology Division 2020 2019
Average Enquiries Per Month 356 185
Average Number of Orders Per Month 54 41
Number of Countries Supplied 78 66
Number of Return Customers 70 96
Current Trading & Business Outlook
The outlook for 2021 is looking positive. We entered the year debt free, other
than minor operating leases. There are encouraging signs the Covid-19
disruptions and travel restrictions, which have continued to create delays and
challenges for the first few months of the year, are at last easing and we
expect to return to revenue growth levels that we were experiencing pre-covid.
Revenues from existing contracts, including long-term managed services, and
the revenue slippage from 2020 together with the anticipated recovery in our
guarding, training and West African Airport operations provide the basis for
our optimism, although we recognise that the global outlook remains uncertain
and subject to change with the potential to further delay closure and delivery
of projects.
We are encouraged to see an on-going improvement in passenger numbers at our
airport operations in West Africa with the first quarter numbers being 13.84%
ahead of expectations and currently running at around 57% of pre-covid levels,
which is far better than many other parts of the world. We expect to see a
continuing improvement throughout the year returning to full pre-covid numbers
in 2022.
Our Ghana port security operations continue to remain largely unaffected by
Covid and continue to generate healthy revenues, which demonstrates the value
of this long-term managed services contract. In 2020 the project generated
circa $2.6 million USD of revenues for Westminster, and we expect this to
continue to rise as the port expands capacity and the fourth berth comes on
stream later in 2021.
We continue to have healthy levels of enquiries and in the first few months of
the year have supplied a wide range of products and solutions to clients
worldwide. With lockdown restrictions beginning to ease we can also look
forward to progressing with some of the delayed projects and opportunities
that slipped from 2020, such as the Palace of Westminster contract which we
secured in September 2020 and which commenced operations in April 2021.
As Covid restrictions are easing we can also complete the formation and
licencing of Westminster Arabia and we look forward to the business being an
important part of our growth through 2021 and beyond. The Kingdom of Saudi
Arabia is a potentially significant market for Westminster particularly given
the Crown Prince's 2030 vision which offers opportunities for several of our
Group services.
We have recently entered into an exclusive service agreement with a company
about to launch an innovative and verified Covid testing service with UK
government approval, under which Westminster will provide a range of
specialist services. Whilst too early to assess the likely scale or success of
the project, this initiative could potentially lead to interesting business
developments in what could be an important new service in helping to open up
the leisure and entertainment sector. We are closely monitoring geo-political
events with regards to the US and Iran regarding the JCPOA agreement. As
reported in our 2018 Annual Report and our 2019 interim Report we previously
signed a 15 year, €24 million per annum contract for airport security, with
the full support on the British Government, which was put on hold when
President Trump unilaterally withdrew from JCPOA. Should circumstances change
and US and international sanctions, including banking, be lifted, there
remains an opportunity for our German office to revisit this prospect.
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. At the time of our recent fundraising in December
2020 we listed out some of the larger project opportunities we are pursuing,
which remain in play, and we also announced that we were in the advanced
stages of securing a long-term contract with the Government of an African
country for the provision of airport security managed services relating to
five airports in the country. Whilst in the current climate we have,
frustratingly, experienced delays in travelling and finalising matters we
remain excited by this near-term prospect although there can never be absolute
certainty of outcome or timing.
I am proud of our achievements in recent years as we continue to build our
business, particularly in 2020 against a backdrop of the global pandemic,
which is a testament to the hard work and dedication of all our staff. I am
therefore delighted that in April 2021 Westminster was selected for a Queen's
Award for Enterprise for International Trade in recognition of its outstanding
growth in overseas sales and is one of just 205 organisations nationally to be
awarded the prestigious Queen's Award for Enterprise. To have been selected
for this distinguished award is an honour, not just for the Company but for
all our employees around the world who have contributed to this success.
The award will be formally presented by the Lord Lieutenant for
Northamptonshire on behalf of Her Majesty the Queen, at a ceremony on Friday,
30 July 2021
The business model and opportunities we have been developing over the years
underpin our confidence for the future growth of our business. Notwithstanding
the continued disruption and delays in the first few months of 2021 we remain
optimistic that with restrictions beginning to be eased we can once again
return to double-digit revenue growth and whilst there is still uncertainty in
the world, we currently still expect to meet 2021 financial year market
expectations both at the revenue and PBT level.
Peter Fowler
Chief Executive Officer
Chief Financial Officer's Report
Revenue
Revenues of c£10.0m (2019 £10.9m) held up well considering the unprecedented
challenges of the Covid-19 pandemic.
Services was resilient at £4.4m (2019: £5.5m). This drop is primarily a
combination of two factors. Firstly, the effect of the Covid-19 pandemic
(see also below), primarily the closure and slow recovery of passenger numbers
at our West African Airport, reduction in guarding due to lockdown in Keyguard
and being unable to run training courses in this period; all of these will
gradually come back to normal levels as the pandemic recedes. However,
secondly, this reduction was offset by strong growth of our Tema Port Ghana
operation which screened over 1 million containers in 2020, its first full
year, over 3 times the number in 2019.
Technology revenues increased by 4% to £5.6m (2019: £5.4m). This is
primarily because strong fever detection sales at the start of the pandemic
offsetting a decline in large solution sales and other product sales as a
result of the uncertainty the pandemic caused.
Gross Margin
Despite a reduction in in the higher margin Services Division, overall better
margin in the Technology Division helped to maintain our Gross Margin at 40%
(2019: 41%). Part of the reason for the increase in the technology gross
margin is the lack of large solutions sales which are typically at 15%.
Thus, we had a better margin mix.
Operating Cost Base
Group administrative costs dropped by 11% to £4.7m (2018: £5.3m) in total.
When the pandemic began the group made redundancies and other cost cuts. We
have taken advantage of the UK Government furlough scheme, receiving
£214,000 in 2020 (2019: Nil), to keep employing key staff such as trainers
who, whilst there is no work for them due to lockdowns and other restrictions
imposed Having these employees will be key to our success in the recovery.
Exceptional Items
There is no exceptional item this year (2019: £0.1m). The 2019 exceptional
item is the pre contract costs on a Middle East airport project. This project
was fully shelved in the first half of 2019. Those costs relate to the period
up to 30 June 2019.
Effect of Covid-19
Whilst Westminster has done better than many in the COVID-19 epidemic due to
its multi revenue stream business model and early action taken by management
to plan for the crisis, there is no doubt that Covid-19 did have a significant
impact on the business and the performance in 2020 would have been
substantially better had the pandemic never happened.
For the Services Division, the closure of our West African Airport, training
being halted, guarding curtailed because part of it related to hospitality
venues and there was a general decline of economic activity all had their
effect. We also would have expected to gain at least one large managed
services contract, had we been able to travel freely in the period.
The Technology Division performed much better largely due to the surge in
product sales, not least around safety and screening equipment, however the
pandemic and associated travel restriction not only delayed the closure of a
number of sizeable contracts but also prevented the installation and
deployment of those contracts already signed - an example of which is the
significant £1.8m Palace of Westminster contract which was due to be
awarded in May 2020 and largely installed that year but which finally got
awarded in September 2020 but could not be started until April 2021.
Operational EBITDA^ from underlying continuing and discontinued operations
The Group loss from operations was £0.7m (2019: £0.7m). When adjusted for
the exceptional and non-cash items set out below and depreciation and
amortisation, the Group recorded an EBITDA^ loss from underlying continuing
and discontinued operations of £0.52m (2019: £0.01m profit).
Reconciliation to EBITDA^ from underlying continuing and discontinued 2020 Restated 2019
operations
£'000 £'000
Loss from operations (744) (676)
Depreciation, amortisation and impairment charges 225 215
Reported EBITDA (519) (461)
Share based expense - 368
Exceptional items - 106
EBITDA^ profit / (loss) from underlying continuing and discontinued operations (519) 13
Finance Costs
Total finance costs of £0m (2019: £0.6m) decreased from the prior year as
the coupon on the Convertible Loan Notes (CLN) was offset by the calculated
adjustment following the repayment of the CLN. There was an underlying cash
charge of £0.3m (2019: £0.3m).
Result for the Year
The Group loss before taxation improved to £0.7m (2019 Restated: Loss before
tax of £1.3m) and the loss per share was 0.45p (2019 Restated: Loss per share
of 0.91p).
Restatement of 2019 Accounts
A prior year adjustment has been made in respect of investor warrants and
certain other matters. The overall effect of this is that the 2019 loss was
reduced by £147,000 from £1,398,000 to £1,251,000. See note 31 for further
details.
The disclosure of investment in subsidiaries and intercompany loans has been
altered see note 14 for further details.
Statement of Financial Position
Total Group assets amounted to £9.5m on 31 December 2020 compared with £6.9m
on 31 December 2019. The main movement was an increase in cash at the
year-end following the December 2020 placing and after the repayment of
debt.
Net Group current assets amounted to £5.4m on 31 December 2020 (2019:
£3.1m). Again, this is primarily an increase in cash.
The Group trade and other receivables balance as at 31 December 2020 was
£2.4m (2019: £2.5m). Average days sales outstanding at the year-end were 19
(2019: 38). The 2019 balance had a large solutions debt which was paid in
2020 distorting the overall calculation.
Cash and cash equivalents of £2.1m at 31 December 2020 compared with £0.6m
at 31 December 2019. In December 2020 we raised equity of £5m which was
used to remove all the remaining long-term debts with the exception of the
IFRS16 debt element of operating leases.
Assets of disposal groups classified as held for sale were £Nil (2019:
£0.17m). This reduction follows the disposal of the Sierra Queen in 2020.
Trade and other payables were £2.3m (2019: £2.5m) and average creditor days
were 50 (2019: 66).
A deferred tax asset of £1.0m (2019: £0.9m) was held at the year end.
Total equity on 31 December 2020 stood at a surplus of £7.1m (2019: £1.9m).
^ This is an Alternative Performance Measure refer to Note 2 for further
details
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 in loan notes at principal value £'000 2020 2020 2020 2019 2019 2019
CULN CLN Total CULN CLN Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 171 2,245 2,416 171 2,245 2,416
Fair Value adjustment on Conversion/ Repayment 19 - 19 - - -
Conversion - (213) (213) - - -
Repaid (190) (2,032) (2,222) - - -
At 31 December - - - 171 2,245 2,416
On 31 December 2019, the secured CLN carried a coupon of 15% payable quarterly
in arrears, had a conversion price of 10p from 1 January 2020 to maturity on 1
May 2021. During 2020 the Group first paid down or converted 25% of the CLN in
February 2020. There were some conversions in the year and in December 2020
the group paid the remaining capital owed. The secured CLN was fully repaid as
at 31 December 2020 and the security has been released.
On 31 December 2019, the unsecured CLN carried a coupon of 5% payable
quarterly in arrears, had a conversion price of 10p and matured on 31 July
2021. The unsecured CLN's capital was fully repaid on 22 December 2020.
Equity Issues
Date Type Number of Shares Price per share Funds Raised
p £'000
23 January 2020 Equity placing 14,000,000 12.5 1,750
01 April 2020 Conversion of Loan Note 62,500 10 6
02 June 2020 Conversion of Loan Note 937,500 10 94
02 October 2020 Conversion of Loan Note 937,500 10 94
07 October 2020 Conversion of Loan Note 187,500 10 19
22 December 2020 Equity placing 125,000,000 4 5,000
141,125,000 6,963
Summary of Warrants
As at 31 December 2020 the warrants outstanding were:
Number Holder Strike Price (p) Issued Life Vesting Criteria
170,455 S P Angel 22.0 31 January 2018 5 At grant
9,625,000 Various Holders 12.5 25 July 2019 2 At grant: - detachable
3,499,222 RiverFort 5.2 21 January 2020 4 6 months after grant: - detachable
25,000,000 Various Holders 7.0 22 December 2020 2 At grant: - detachable
589,330 warrants with a strike price of 20.15p issued on 1 February 2016
lapsed during 2020.
For further details on warrants refer to Note 22.
Cash Flow Statement
During the year, the Group had an operating cash outflow of £1.6m (2019
Restated: outflow £0.6m) which arose primarily from an unfavourable working
capital movement of £0.8m (2019 Restated: £0.5m).
During the year, the Group raised £6.96m gross from the issue of new equity
(2019: £1.55m).
Reconciliation from adjusted EBITDA^ to normalised operating cash flow 2020 Restated 2019
£'000 £'000
Adjusted EBITDA (519) 13
Loss on asset disposal - (9)
Net changes in working capital (1,033) (511)
Movement on tax 31 (26)
Net Cash used in underlying operating activities (1,521) (533)
^ This is an Alternative Performance Measure refer to Note 2 for further
details
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
2020
Note 2020 2020 2020 Restated 2019 2019 Restated 2019
Continuing Operations Discontinued Operations Total Continuing Operations Discontinued Operations Total
£'000 £'000 £'000 £'000 £'000 £'000
REVENUE 3 9,945 - 9,945 10,889 - 10,889
Cost of sales (5,974) - (5,974) (6,444) - (6,444)
GROSS PROFIT 3,971 - 3,971 4,445 - 4,445
Administrative expenses (4,715) - (4,715) (5,149) 28 (5,121)
(LOSS) / PROFIT FROM OPERATIONS 6 (744) - (744) (704) 28 (676)
Analysis of operating loss
Profit from operations (744) - (744) (704) 28 (676)
Add back amortisation 11 63 - 63 43 - 43
Add back depreciation 12 162 - 162 172 - 172
Add back share based expense - - - 368 - 3
Add back exceptional 4 - - - 106 - 106
items
EBITDA^ (Loss)/Profit from underlying operations (519) - (519) (15) 28 13
Finance costs 5 (17) - (17) (620) - (620)
LOSS BEFORE TAXATION (761) - (761) (1,324) 28 (1,296)
Taxation 7 31 - 31 26 - 26
LOSS AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR (730) - (730) (1,298) 28 (1,270)
LOSS AND TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
OWNERS OF THE PARENT (560) - (560) (1,279) 28 (1,251)
NON-CONTROLLING INTEREST (170) - (170) (19) - (19)
LOSS AND TOTAL COMPREHENSIVE INCOME
(730) - (730) (1,298) 28 (1,270)
EARNINGS PER SHARE 9 (0.45p) - (0.45p) (0.93p) 0.02p (0.91p)
The accompanying notes form part of these financial statements.
^ This is an Alternative Performance Measure refer to Note 2 for further
details
Westminster Group PLC
Consolidated and Company Statements of Financial Position
As at 31 December 2020
Group Group Company Company
Restated Restated
2020 2019 2020 2019
Note £'000 £'000 £'000 £'000
Goodwill 10 614 614 - -
Other intangible assets 11 187 129 187 128
Property, plant and equipment 12 1,901 1,979 1,088 1,079
Investment in subsidiaries 14 - - - -
Deferred tax asset 17 956 907 - -
TOTAL NON-CURRENT ASSETS 3,658 3,629 1,275 1,207
Inventories 18 773 47 - -
Trade and other receivables 19 2,438 2,525 9,147 8,720
Cash and cash equivalents 20 2,143 557 1,716 28
TOTAL CURRENT ASSETS 5,354 3,129 10,863 8,748
Assets of disposal groups classified as held for sale 29 - 170 - -
Non-current receivable 19 484 - - -
TOTAL ASSETS 9,496 6,928 12,138 9,955
Called up share capital 21 16,278 14,540 16,278 14,540
Share premium account 14,069 9,577 14,069 9,577
Merger relief reserve 300 300 300 300
Share based payment reserve 1,050 978 1,050 978
Equity reserve on convertible loan note - 423 - 12
Revaluation reserve 139 133 139 133
Retained earnings:
At 1 January (23,697) (22,594) (18,468) (16,149)
(Loss)/profit for the year (560) (1,251) (2,504) (2,467)
Other changes in retained earnings 15 148 15 148
At 31 December (24,242) (23,697) (20,957) (18,468)
(DEFICIT)/EQUITY ATTRIBUTABLE TO:
OWNERS OF THE COMPANY 7,594 2,254 10,879 7,072
NON CONTROLLING INTEREST (535) (365) - -
TOTAL (DEFICIT)/EQUITY 7,059 1,889 10,879 7,072
Borrowings 23 29 2,510 13 212
TOTAL NON-CURRENT LIABILITIES 29 2,510 13 212
Contractual liabilities 24 100 73 - -
Trade and other payables 24 2,308 2,456 1,246 2,671
TOTAL CURRENT LIABILITIES 2,408 2,529 1,246 2,671
TOTAL LIABILITIES 2,437 5,039 1,259 2,883
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 9,469 6,928 12,138 9,955
The accompanying notes form part of these financial statements. The Company
has taken advantage of the exemption under Section 408 of the Companies Act
2006 from presenting its own profit and loss account. The Company made a loss
of £2,504,000 in 2020, (2019: £2,467,000 loss). The Group and Company
financial statements were approved by the Board and authorised for issue on 29
April 2021 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 2020
Called up share capital Share premium account Merger relief reserve Share based payment reserve Revaluation reserve Equity reserve on convertible loan note Retained earnings Total Non-controlling interest Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
AS AT 1 JANUARY 2020 as previously stated 14,540 9,577 300 1,166 133 423 (23,844) 2,295 (365) 1,930
Prior year adjustment (Note 31) - - - (188) - - 147 (41) - (41)
AS AT 1 JANUARY 2020 14,540 9,577 300 978 133 423 (23,697) 2,254 (365) 1,889
Shares issued for cash 1,525 5,225 - - - - - 6,750 - 6,750
Cost of share issues - (433) - - - - - (733) - (733)
Share based payment charge - - - 87 - - - 87 - 87
Lapse of share options - - - (15) - - - (15) - (15)
Exercise of warrants and share options 213 - - - - - - 213 - 213
Revaluation of freehold property - - - - 6 - - 6 - 6
Other movements in equity - - - - - - 15 15 - 15
CLN Movement - - - - - (423) - (423) - (423)
TRANSACTIONS WITH OWNERS 1,738 4,492 - 72 6 (423) 15 5,900 - 5,900
Total comprehensive expense for the year - - - - - - (560) (560) (170) (730)
AS AT 31 DECEMBER 2020 16,278 14,069 300 1,050 139 - (24,242) 7,594 (535) 7,059
Westminster Group PLC
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Called up share capital Share premium account Merger relief reserve Share based payment reserve Revaluation reserve Equity Reserve on Convertible Loan Note Retained earnings Total Non-controlling interest Total
Restated £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'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 - - - 368 - - - 368 - 368
Lapse of Share Options - - - (44) - - 44 - - -
Lapse of Warrants - - - (204) - - 204 - - -
Exercise of warrants and share options 37 9 - - - - - 46 - 46
CLN movement - - - - - 201 - 201 - 201
TRANSACTIONS WITH OWNERS 1,537 9 - 120 - 201 148 2,015 - 2,015
Total comprehensive expense for the year - - - - - - (1,251) (1,251) (19) (1,270)
AS AT 31 DECEMBER 2019 14,540 9,577 300 978 133 423 (23,697) 2,254 (365) 1,889
Westminster Group PLC
Company Statement of Changes in Equity
For the year ended 31 December 2020
Called up share capital Share premium account Merger relief reserve Share based payment reserve Revaluation reserve Equity reserve on convertible loan note Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
AS AT 1 JANUARY 2020 as previously stated 14,540 9,577 300 1,166 133 12 (18,653) 7,075
Prior year adjustment (Note 31) - - - (188) - - 185 (3)
AS AT 1 JANUARY 2020 14,540 9,577 300 978 133 12 (18,468) 7,072
Shares issued for cash 1,525 5,225 - - - - - 6,750
Cost of share issues - (733) - - - - - (733)
Share based payment charge - - - 87 - - - 87
Lapse of share options - - - (15) - - - (15)
Exercise of warrants & share options 213 - - - - - - 213
Revaluation of freehold property - - - - 6 - - 6
CLN Movement - - - - - (12) - (12)
Other movements in Equity - - - - - - 15 15
TRANSACTIONS WITH OWNERS 1,738 4,492 - 72 6 (12) 15 6,311
Total comprehensive expense for the year (2,504) (2,504)
AS AT 31 DECEMBER 2020 16,278 14,069 300 1,050 139 - (20,957) 10,879
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 - - - 368 - - - 368
Lapse of Share Options - - - (44) - - 44 -
Lapse of Warrants - - - (204) - - 204 -
Exercise of warrants and share options 37 9 - - - - - 46
Recognition of equity component of convertible loan notes (CLN) - - - - - (9) - (9)
TRANSACTIONS WITH OWNERS 1,537 9 - 120 - (9) 148 1,805
Total comprehensive expense for the year - - - - - - (2,467) (2,467)
AS AT 31 DECEMBER 2019 14,540 9,577 300 978 133 12 (18,468) 7,072
Consolidated Cash Flow Statement
For the year ended 31 December 2020
2020 2020 2020 2019 2019 2019
Continuing Operations Discontinued Operations Total Continuing Operations Discontinued Operations Total
Note £'000 £'000 £'000 £'000 £'000 £'000
(LOSS) / PROFIT AFTER TAX (730) - (730) (1,298) 28 (1,270)
Taxation (31) - (31) (26) - (26)
(LOSS) / PROFIT BEFORE TAX (761) - (761) (1,324) 28 (1,296)
Non-cash adjustments 25 (59) - (59) 1,224 - 1,224
Net changes in working capital 25 (1,203) 170 1,033) (360) (151) (511)
NET CASH USED IN OPERATING ACTIVITIES (2,023) 170 (1,853) (460) (123) (583)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment 12 (111) - (111) (70) - (70)
Purchase of intangible assets 11 (121) - (121) (72) - (72)
Acquisition of a subsidiary - - - (18) - (18)
CASH OUTFLOW FROM INVESTING ACTIVITIES (232) - (232) (160) - (160)
CASHFLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from the issues of ordinary shares 6,963 - 6,963 1,547 - 1,547
Costs of share issues (733) - (733) (100) - (100)
Repayment of convertible loan note 16 (2,222) - (2,222) - - -
Reduction in finance lease debt (69) - (69) (60) - (60)
Finance cost on lease liabilities (5) - (5) (54) (54)
CLN and other interest paid (262) - (262) (323) - (323)
Other loan repayments, including interest (1) - (1) - - -
CASH INFLOW FROM FINANCING ACTIVITIES 3,671 - 3,671 1,010 - 1,010
Net change in cash and cash equivalents 1,416 170 1,586 390 (123) 267
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 557 290
CASH AND EQUIVALENTS AT END OF YEAR 20 2,143 557
Company Cash Flow Statement
For the year ended 31 December 2020
Company Company
2020 2019
Note £'000 £'000
(LOSS)/PROFIT AFTER TAX (2,504) (2,467)
Other Non-cash adjustments 25 583 929
Net changes in working capital 25 (1,852) 564
NET CASH USED IN OPERATING ACTIVITIES (3,773) (974)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment 12 (62) (26)
Purchase of intangible assets 11 (121) (71)
CASH OUTFLOW FROM INVESTING ACTIVITIES (183) (97)
CASHFLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from the issues of ordinary shares 6,963 1,547
Costs of share issues (733) (100)
Repayment of convertible loan note (190) -
Change in lease debt (20) -
Finance cost on lease liabilities (2) (47)
Interest paid (374) (330)
CASH INFLOW FROM FINANCING ACTIVITIES 5,644 1,070
Net change in cash and cash equivalents 1,688 (1)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 28 29
CASH AND EQUIVALENTS AT END OF YEAR 20 1,716 28
The accompanying notes form part of these financial statements.
Notes to the Accounts:
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 2020 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 Accounting Standards in conformity
with the requirements of the Companies Act 2006. The Parent Company has
elected to prepare its financial statements in accordance with IFRS. The
Company has taken advantage of the exemption under Section 408 of the
Companies Act 2006 from presenting its own profit and loss account.
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 2020.
(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 the company has the practical
ability to direct the relevant activities of the investee without holding the
majority of the voting rights. In determining whether de-facto control exists
the company considers all 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.
Intercompany 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 £730,000 (2019: £1,270,000), The
cash outflow from operating activities during the year was £2,023,000 (2019:
Outflow £460,000), 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 the Directors' and management's
ability to affect costs and revenues. Management regularly forecast results,
the financial position and cash flows for the Group.
In 2020, the Directors 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 have reviewed the Group's resources at the date of approving the
financial statements, and their projections for future trading, which due to
winning incremental new business give a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future, which for the avoidance of doubt is at least 12 months
from the date of signing the financial statements. Thus, they continue to
adopt the going concern basis of accounting in the preparing the financial
statements.
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 represents income derived from contracts for the provision of goods
and services, over time or at a point in time, by the Group to customers in
exchange for consideration in the ordinary course of the Group's activities.
Performance Obligations
Upon approval by the parties to a contract, the contract is assessed to
identify each promise to transfer either a distinct good or service or a
series of distinct goods or services that are substantially the same and have
the same pattern of transfer to the customer. Goods and services are distinct
and accounted for as separate performance obligations in the contract if the
customer can benefit from them either on their own or together with other
resources that are readily available to the customer and they are separately
identifiable in the contract.
Transaction price
At the start of the contract, the total transaction price is estimated as the
amount of consideration to which the Group expects to be entitled in exchange
for transferring the promised goods and services to the customer, excluding
sales taxes. Variable consideration, such as price escalation, is included
based on the expected value or most likely amount only to the extent that it
is highly probable that there will not be a reversal in the amount of the
cumulative revenue recognised. The transaction price does not include
estimates of consideration resulting from contract modifications, such as
change orders, until they have been approved by parties to the contract. The
total transaction price is allocated to the performance obligations identified
in the contract in proportion to their relative stand-alone selling prices.
Given the nature of many of the Group's products and services, which are
designed and/or manufactured under contract to customers' individual
specifications, there are typically no observable stand-alone selling prices.
Instead, stand-alone selling prices are typically estimated based on expected
costs plus contract margin consistent with the Group's pricing principles.
Whilst payment terms vary from contract to contract, an element of the
transaction price may be received in advance of delivery. The Group may
therefore have contract liabilities depending on the contracts in existence at
a period end. The Group's contracts are not considered to include significant
financing components on the basis that there is no difference between the
consideration and the cash selling price.
Revenue recognition
Revenue is recognised as performance obligations are satisfied as control of
the goods and services is transferred to the customer.
For each performance obligation within a contract the Group determines whether
it is satisfied over time or at a point in time. Performance obligations are
satisfied over time if one of the following criteria is satisfied:
· The customer simultaneously receives and consumes the benefits
provided by the Group's performance as it performs;
· The Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced; or
· The Group's performance does not create an asset with an
alternative use to the Group and it has an enforceable right to payment for
performance completed to date.
The Group has determined that most of its contacts satisfy the overtime
criteria, either because the customer simultaneously receives and consumes the
benefits provided by the Group's performance as it performs, or the Group's
performance does not create an asset with an alternative use to the Group and
it has an enforceable right to payment for performance completed to date.
For each performance obligation recognised over time, the Group recognises
revenue using an input method, based on costs incurred in the period. Revenue
and attributable margin are calculated by reference to reliable estimates of
transaction price and total expected costs, after making suitable allowances
or technical and other risks. Revenue and associated margin are therefore
recognised progressively as costs are incurred, and as risks have been
mitigated or retired. The Group has determined that this method appropriately
depicts the Group's performance in transferring control of the goods and
services to the customer.
If the overtime criteria for revenue recognition is not met, revenue is
recognised at the point in time that control is transferred to the customer
which is usually when legal title passes to the customer and the business has
the right to payment.
When it is expected that total contract costs will exceed total contract
revenue, the expected loss is recognised immediately as an expense.
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
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. 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 for that type of asset.
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 and loans 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 and loans 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. It also includes
the equity settled items such as warrants for services rendered accounted for
in accordance with IFRS 2.
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.
Pensions
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.
Share-based payments
The Group has two types of share based payments other than employee
compensation.
Warrants issued for services rendered which are accounted for in accordance
with IFRS 2 recognising either the cost of the service if it can be reliably
measured or the fair value of the warrant (using Black-Scholes option pricing
models).
Warrants issued as part of Share Issues have been determined as equity
instruments under IAS 32. Since the fair value of the shares issued at the
same time is equal to the price paid, these warrants, by deduction, are
considered to have been issued at nil value.
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 most of the Group's costs and a substantial part of its sales are
situated in the UK.
Goodwill
Goodwill (note 10) has been tested for impairment by considering its net
present value for the expected income stream in perpetuity at a discount rate
judged to be 5% based on the normal lending rate we are offered leases at,
which management consider is a good surrogate for cost of capital. It was also
established that 20% (2019:18%) is the discount rate at which no impairment
still would be needed. The income is assumed to be flat and stable for the
purpose of this test. Goodwill which does not show a net present value
higher than its carrying cost will be impaired.
Deferred tax asset
Deferred tax assets (note 17) 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 December 2020. 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.
Amendments to IAS 1, Presentation of financial statements' on classification
of liabilities
These narrow-scope amendments to IAS 1, 'Presentation of financial
statements', clarify that liabilities are classified as either current or
non-current, depending on the rights that exist at the end of the reporting
period. Classification is unaffected by the expectations of the entity or
events after the reporting date (for example, the receipt of a waiver or a
breach of covenant). The amendment also clarifies what IAS 1 means when it
refers to the 'settlement' of a liability
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.
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.
New standards, amendments and interpretations
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'.
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.
Other Standards not applicable
The following new standards or amendments are not applicable to the Group
· Amendment to IFRS 16, 'Leases' - Covid-19 related rent
concessions
· Amendments to IFRS 17 and IFRS 4, 'Insurance contracts', deferral
of IFRS 9
· Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark
reform
Standards amendments and interpretations in issue not yet effective
IFRS 17 Insurance Contracts
IFRS 17 requires insurance liabilities to be measured at a current fulfilment
value and provides a more uniform measurement and presentation approach for
all insurance contracts. These requirements are designed to achieve the goal
of a consistent, principle-based accounting for insurance contracts. IFRS 17
supersedes IFRS 4 Insurance Contracts as of 1 January 2023. This is not
applicable to the Group.
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
The amendments aim to promote consistency in applying the requirements by
helping companies determine whether, in the statement of financial position,
debt and other liabilities with an uncertain settlement date should be
classified as current (due or potentially due to be settled within one year)
or non-current. If endorsed this will apply for annual reporting periods
beginning on or after 1 January 2023.
Reference to the Conceptual Framework (Amendments to IFRS 3)
The amendments update an outdated reference to the Conceptual Framework in
IFRS 3 without significantly changing the requirements in the standard. If
endorsed this will apply for annual reporting periods beginning on or after 1
January 2022.
Property, Plant and Equipment - Proceeds before Intended Use (Amendments to
IAS 16)
The amendments prohibit deducting from the cost of an item of property, plant
and equipment any proceeds from selling items produced while bringing that
asset to the location and condition necessary for it to be capable of
operating in the manner intended by management. Instead, an entity recognises
the proceeds from selling such items, and the cost of producing those items,
in profit or loss. If endorsed this will apply for annual reporting periods
beginning on or after 1 January 2022.
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
The amendments specify that the 'cost of fulfilling' a contract comprises the
'costs that relate directly to the contract'. Costs that relate directly to a
contract can either be incremental costs of fulfilling that contract (examples
would be direct labour, materials) or an allocation of other costs that relate
directly to fulfilling contracts (an example would be the allocation of the
depreciation charge for an item of property, plant and equipment used in
fulfilling the contract). If endorsed this will apply for annual reporting
periods beginning on or after 1 January 2022.
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; Services and
Technology. This split of business segments is based on the products and
services each offer.
Managed Services Technology Group and Central Group Total
2020 £'000 £'000 £'000 £'000
Supply of products - 4,237 - 4,237
Supply and installation contracts - 1,039 - 1,039
Maintenance and services 4,259 312 - 4,571
Training courses 98 - - 98
Revenue 4,357 5,588 - 9,945
Segmental underlying EBITDA^ 655 781 (1,955) (519)
Exceptional items (note 4) - - - -
Depreciation & amortisation (136) (9) (80) (225)
Segment operating result 519 772 (2,035) (744)
Finance cost (1) - (16) (17)
Profit/ (loss) before tax 518 772 (2,051) (761)
Income tax charge 51 (2) (18) 31
Profit/(loss) for the financial year 569 770 (2,069) (730)
Segment assets 5,255 1,392 2,849 9,496
Segment liabilities 912 694 831 2,437
Capital expenditure 39 10 134 183
^ This is an Alternative Performance Measure refer to Note 2 for further
details
Managed Services Technology Group and Central Group Total
2019 (Restated) £'000 £'000 £'000 £'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 1,084 525 (1,596) 13
operations
Share based payments - - (368) (368)
Exceptional items (note 4) (105) - (1) (106)
Depreciation & amortisation (72) (30) (113) (215)
Segment operating result 907 495 (2,078) (676)
Finance cost (1) (3) (616) (620)
Profit/ (loss) before tax 906 492 (2,694) (1,296)
Income tax charge 18 - 8 26
Profit/(loss) for the financial year 924 492 (2,686) (1,270)
Segment assets 2,949 2,023 1,956 6,928
Segment liabilities 1,072 1,433 2,534 5,039
Capital expenditure 48 4 18 70
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.
2020 2019
£'000 £'000
UK and Europe 2,056 1,957
Africa 4,172 4,899
Middle East 508 2,397
Rest of World 3,209 1,636
Total 9,945 10,889
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 "Rest of
World" are revenues of approximately £1,284,000 (2019: £1,236,000) for the
provision of advanced screening of containers at ports in Asia. This was the
Group's largest customer in 2020. No other single customer contributed more
than 10% of the Group revenue in either 2020 or 2019.
^ This is an Alternative Performance Measure refer to Note 2 for further
details
4. Exceptional Items
2020 2019
£'000 £'000
Middle East airport pre-contract costs - 105
Ferry closure costs - 1
- 106
The 2019 exceptional relates to 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
2020 2019
£'000 £'000
Finance cost on lease liabilities (5) (54)
Interest payable on bank and other borrowings (1) (1)
Interest paid on convertible loan notes (Note 16) (262) (375)
Other movement on convertible loan notes 251 (190)
Total finance benefit / (costs) (17) (620)
6. Loss from operations
The following items have been included in arriving at the loss for the
financial year
Group Group
2020 2019
£'000 £'000
Staff costs (see Note 8) 3,887 4,396
Depreciation of property, plant and equipment (see Note 12) 162 172
Amortisation of intangible assets (see Note 11) 63 43
Operating lease rentals payable
Short term Leases 96 85
Foreign exchange loss/(gain) (43) (166)
Auditor's remuneration
Amounts payable in 2020 years relate to PKF in respect of audit and other
services (2019: BDO were the Company's auditors). The local Audit in Sierra
Leone is performed by Moore Sierra Leone (both years). The local audit in
Ghana is performed by PKF Ghana.
Audit services Group Group
2020 2019
£'000 £'000
Statutory audit of parent and consolidated financial statements 46 57
Review of Interim Results 2 2
- Statutory audit of subsidiaries of the company pursuant to 20 21
legislation
Taxation services including research and development tax credits - 18
Total payable to PKF Littlejohn UK (2019: BDO) 68 98
Local audit in Sierra Leone - Moore Sierra Leone 18 20
Local audit in Ghana - PKF Ghana 1 -
Total fees 87 118
7. Taxation
Analysis of tax charge / (credit) in year
The Finance Act 2020 set the Corporation Tax main rate at 19% for the
financial year beginning 1 April 2020. Deferred taxes at the balance sheet
date have been measured using a 19% tax rate and reflected in these financial
statements.
£'000 £'000
2020 2019
Current year £'000 £'000
UK Corporation tax on profits in the year - -
Potential foreign corporation tax on profits in the year 18 -
Deferred Tax (Note 17)
Foreign entity deferred tax (49) (18)
Review of expected utilisation of Losses - (8)
(31) (26)
Group Group
2020 2019
£'000 £'000
Reconciliation of effective tax rate
Loss on ordinary activities before tax (761) (1,296)
Loss on ordinary activities multiplied by the standard rate of corporation tax (145) (246)
in the UK of 19% (2019: 19%)
Effects of:
Expenses not deductible for tax purposes (158) 106
Foreign entity deferred tax movement (Note 17) (49) -
Unrecognised losses carried forward 320 114
Total tax - credit (31) (26)
8. Employee costs
Employee costs for the Group during the year
Group
2020 2019
£'000 £'000
Wages and salaries 3,757 3,854
Pension contributions 60 44
Social security costs 284 266
4,101 4,164
Share based payments - 232
4,101 4,396
Job retention support (214) -
Net Cost 3,887 4,396
The Group operates a stakeholder pension scheme. The Group made pension
contributions totalling £60,000 during the year (2019: £44,000), and pension
contributions totalling £13,000 were outstanding at the year-end (2019:
£8,000).
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
£614,000 (2019: £582,000) and the highest paid director received
remuneration totalling £196,000 (2019: £201,000).
Average monthly number of people (including Executive Directors) employed
Group 2020 2019
Number Number
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
By function:
Sales 7 - 7 3 - 3
Operations 197 1 198 224 3 227
Administration 24 - 24 25 - 25
Management 10 - 10 6 - 6
238 1 239 258 3 261
9. Earnings 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:
2020 2019
'000 '000
Issued ordinary shares
Start of year 145,403 130,028
Effect of shares issued during the year 17,245 8,834
Weighted average basic and diluted number of shares for year 162,648 138,862
2020 2019
£'000 £'000
Earnings
(Loss) / Profit and total comprehensive expense (continuing) (730) (1,298)
(Loss) / Profit and total comprehensive expense (discontinued) - 28
(Loss) / Profit and total comprehensive expense total (730) (1,270)
For the year ended 31 December 2020 and 2019 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 0.45p (2019 Loss 0.91p).
10. Goodwill
Group 2020 2019
£'000 £'000
Gross carrying amount at 1 January 1,377 1,359
Acquisition in year - 18
1,377 1,377
Accumulated impairment at 1 January (763) (763)
Impairment charge for the year - -
Accumulated impairment at 31 December (763) (763)
Carrying amount at 1 January 614 596
Carrying amount at 31 December 614 614
The goodwill balance relates to the acquisition of Longmoor Security Limited,
Keyguard U.K Limited and Euro-Ops SARL.
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 20% (2019:18%) 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 and Software Company Website and Software
2020
£'000 £'000
Cost
At 1 January 2020 297 286
Additions 121 121
Disposals (3) (3)
At 31 December 2020 415 404
Accumulated amortisation and impairment
At 1 January 2020 168 158
Charge for the year 63 62
Disposals (3) (3)
At 31 December 2020 228 217
Net book value at 31 December 2020 187 187
2019
£'000 £'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
12. Property, plant and equipment
Group Freehold property Plant and equipment Office equipment, fixtures and fittings Motor vehicles Right of use assets Total
2020 £'000 £'000 £'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2020 1,039 727 998 164 260 3,188
Additions 34 40 37 - - 111
Disposals - (1) (17) (86) (96) (200)
Revaluation 6 - - - - 6
At 31 December 2020 1,079 766 1,018 78 164 3,105
Accumulated depreciation and impairment
At 1 January 2020 38 476 428 160 107 1,209
Charge for the year 21 44 41 1 55 162
Disposals - (1) (18) (86) (62) (167)
At 31 December 2020 59 519 451 75 100 1,204
Net book value at 31 December 2020 1,020 247 567 3 64 1,901
2019 £'000 £'000 £'000 £'000 £'000 £'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)
Historical adjustment - 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)
Adjustment - 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
Right of use assets (motor vehicles) above have been created in accordance
with IFRS 16. Motor vehicles are leased 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.
The freehold property was valued professionally by White Commercial, Chartered
Surveyors, as at 31 December 2020, which provided a valuation of £1,020,000.
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.
Company Freehold property Plant and equipment Office equipment, fixtures and fittings Right of use assets Total
2020 £'000 £'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2020 1,039 15 195 84 1,333
Additions 34 3 25 - 62
Disposals - - (18) (8) (26)
Revaluation 6 - - - 6
At 31 December 2020 1,079 18 202 76 1,375
Accumulated depreciation and impairment
At 1 January 2020 38 15 175 26 254
Charge for the year 21 1 10 19 51
Disposals - - (18) - (18)
At 31 December 2020 59 16 167 45 287
Net book value at 31 December 2020 1,020 2 35 31 1,088
2019 £'000 £'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2019 1,031 15 185 76 1,307
Additions 8 - 10 8 26
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
The freehold property was valued professionally by White Commercial, Chartered
Surveyors, as at 31 December 2020, which provided a valuation of £1,020,000.
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.
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.
2020 2019
£'000 £'000
Historical cost 756 722
Accumulated depreciation
At 1 January 293 279
Charge for the year 15 14
At 31 December 308 293
Net book value as at 31 December 448 429
13. Lease commitments
The Group accounts 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
2020 2019
At 1 January 2020 158 216
Expensed in the year (91) (58)
As at 31 December 67 158
Of which
Current lease 38 60
Non-current 29 98
67 158
14. Investment in subsidiaries
The Group has reviewed its disclosure on investments in subsidiaries.
All loans relate to cash movements between Group companies and are repayable
on demand. It has been decided that loans and other intercompany accounts
will, going forward, be included in the Company's respective current payables
or receivables. This is because they are more in the nature of current
assets and current liabilities than longer term investments. Therefore this
note now deals solely with investments:
Company 2020 2019 Restated
Investments Investments
Cost £'000 £'000
At 1 January 2019 389 378
Movement in Year - 11
At 31 December 389 389
Accumulated impairment
At 1 January 2019 (389) (378)
Movement in Year - (11)
At 31 December (389) (389)
Investment in subsidiaries - -
A sum of £7,915,000 (2019: £8,650,000) has been recognised in receivables;
and £735,000 (2019: £2,398,000) has been recognised in payables.
Had the Company continued to report as in prior years, this would have been
the result:
Company 2020 2020 2020 2019 2019 2019
Investments Loans Total Investments Loans Total
Cost £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2019 389 14,901 15,290 378 15,458 15,836
Movement in Year - (114) (114) 11 (557) (546)
At 31 December 389 14,787 15,176 389 14,901 15,290
Accumulated impairment
At 1 January 2019 (389) (8,649) (9,038) (378) (8,552) (8,930)
Movement in Year - 1,042 1,042 (11) (97) (108)
At 31 December (389) (7,607) (7,996) (389) (8,649) (9,038)
Investment in subsidiaries - 7,180 7,180 - 6,252 6,252
15. Subsidiary undertakings
The subsidiary undertakings at 31 December 2020 were as follows:
Name Country of incorporation Principal activity % of nominal ordinary share capital and voting rights held
Westminster International Limited England Advanced security technology, (Technology Division) 100
Westminster Security Limited (formerly Longmoor Security Limited) England Close protection training and provision of security services (Managed 100
Services)
Westminster Aviation Security Services Limited England Managed services of airport security under long term contracts. (Managed 100
Services)
Sovereign Ferries Limited England Dormant 100
Westminster Operating Limited England Special purpose vehicle which exists solely for listing the 2013 CLN on the 100
CISX. Year end 31 October. Only transactions are intra group
Keyguard U.K Limited England Security and risk management including manned guarding, mobile patrols, risk 100
management and K9 services.
Longmoor (SL) Limited Sierra Leone Security and terminal guarding 100
Facilities Operations Management Limited Sierra Leone Infrastructure management 90
Westminster Sierra Leone Limited * Sierra Leone Local infrastructure for 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
Euro Ops SARL France Managed Services infrastructure 100
Westminster Managed Services Limited (formerly Westminster Facilities England Dormant 100
Management Limited)
CTAC Limited England Dormant 100
Longmoor Security Services Limited (formerly Westminster Aviation Security England Dormant 100
Services (ME) Limited)
Westminster International (Ghana) Limited Ghana Dormant 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 No.10, Adomi Street (formerly 3rd
Close), Airport Residential Area, Accra
* 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 Company Company
2020 2019 2020 2019
£'000 £'000 £'000 £'000
Financial assets
Financial assets measured at amortised cost
Trade and other receivables (note 19) 2,647 2,279 9,059 8,650
Cash and cash equivalents (note 20) 2,143 557 1,716 28
4,790 2,836 10,775 8,678
Financial liabilities
Financial liabilities measured at amortised cost
Borrowings (note 23) 29 2,510 13 212
Trade and other payables (note 24) 2,308 2,405 1,246 2,652
2,337 4,915 1,259 2,864
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 £2.245m repaid or converted during 2020.
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 released at the end of the year.
Redemption Date 1 May 2021 however all repaid or converted in 2020.
Management Fee £25,000 per annum.
Coupon 12 % until 31 March 2019 then 15% paid quarterly in arrears. Listed on the
CISX during the year; but delisted once all were repaid or converted.
Conversion Detail Company could make repayment without penalty at any time. The holder could
convert at any time.
These were either converted or repaid during 2020 with the process being
completed on 31 December 2020. See also Note 23.
2020 2020 2020 2019 2019 2019
£'000 CULN CLN Total CULN CLN Total
At 1 January 179 2,233 2,412 171 2,216 2,387
Amortised finance cost 20 265 285 18 357 375
Interest paid (9) (253) (262) (10) (312) (322)
Fair Value adjustment on Extension - - - - (28) (28)
Repaid in the year (190) (2,032) (2,222) - - -
Converted in the year - (213) (213) - - -
At 31 December - - - 179 2,233 2,412
Analysis of movement in debt at principal value (excluding IFRS impacts),
memorandum only
2020 2020 2020 2019 2019 2019
£'000 CULN CLN Total CULN CLN Total
At 1 January 171 2,245 2,416 171 2,245 2,416
Fair value adjustment on conversion / repayment 19 - 19 - - -
Conversion - (213) (213) - - -
Repaid (190) (2,032) (2,222) - - -
At 31 December - - - 171 2,245 2,416
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. Reviews
performed since then, including as at 31 December 2020, confirmed those
expectations.
The tax losses against which this deferred tax asset is being recognised are
in the group's holding company and its principal 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 £2,557,000
(2019: £1,904,000). It has recognised a deferred tax asset of £956,000
(2019: £907,000) due to budgeted future profits of the business beyond 2021.
There remains £1,601,000 (2019: £991,000) of unrecognised deferred tax
asset.
Deferred tax assets and liabilities have been calculated using the expected
future tax rate of 19% (2019: 17%). Any changes in the future would affect
these amounts proportionately.
2020 2019
£'000 £'000
Opening balance as at 1 January 907 889
Credit / (debit) to income statement 49 18
Deferred tax asset as at 31 December 956 907
18. Inventories
Group Group Company Company
2020 2019 2020 2019
£'000 £'000 £'000 £'000
Finished goods 773 47 - -
773 47 - -
The cost of inventories recognised as an expense within cost of sales amounted
to £2,782,000 (2019: £3,210,000). No reversal of previous write-downs was
recognised as a reduction of expense in 2020 or 2019.
19. Trade and other receivables
Group Group Company Company
2020 2019 2020 2019
£'000 £'000 £'000 £'000
Amounts falling due within one year:
Trade receivables, gross 759 851 1 1
Allowance for credit losses (52) (116) (1) (1)
Trade receivables 707 735 - -
Amounts recoverable on contracts 135 1,430 - -
Intercompany receivables - - 7,915 8,650
Other receivables 1,321 114 1,144 -
Financial assets 2,163 2,279 9,059 8,650
Other taxes and social security 211 - 63 -
Prepayments 64 246 25 70
Non-financial assets 275 246 88 70
Trade and other receivables 2,438 2,525 9,147 8,720
Non-current receivable (financial asset) 484 - - -
The average credit period taken on sale of goods in 2020 was 19 days (2019: 38
days). An allowance has been made for estimated credit losses of £52,000
(2019: £116,000). 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.
Expected credit losses on intercompany receivables 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 over time and are
therefore deemed to be impaired. A loan to Sovereign Ferries (SL) Limited
which was fully impaired was written off in the period.
Other receivables include a sum of £1,130,000 due from the RiverFort Equity
Placing and Sharing Agreement detailed in note 23. It is expected that it
will be recovered from the sale of shares currently still held by RiverFort.
However, refer also note 26 on Contingent Liabilities.
The following table provides an analysis of trade 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.
2020 2019
£'000 £'000
Current 463 474
Not more than 3 months 130 197
More than 3 months 166 180
759 851
Allowances for Credit Losses 2020 2019
£'000 £'000
Opening balance at 1 January 116 127
Amounts written off (48) (113)
Amounts provided 46 102
Written back (no longer required) (62) -
Closing balance at 31 December 52 116
There are no significant expected credit losses from financial assets that are
neither past due nor impaired.
At 31 December 2020 £307,000 (2019: £510,000) of receivables were
denominated in US dollars and £167,000 (2019: £ Nil) were denominated in
Ghanaian Cedi. 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
2020 2019 2020 2019
£'000 £'000 £'000 £'000
Cash at bank and in hand 2,143 605 1,716 28
Bank overdraft - (48) - -
Cash and cash equivalents 2,143 557 1,716 28
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 2020 2019
Number £'000 Number £'000
At 1 January 145,402,511 14,540 130,027,511 13,003
Arising on exercise of share options and warrants 2,125,000 213 375,000 37
Issued under the RiverFort EPSA 14,000,000 1,400 - -
Share capital reorganisation to create deferred shares - (15,991) - -
Other issue for cash 125,000,000 125 15,000,000 1,500
At 31 December 286,527,511 287 145,402,511 14,540
Deferred share capital 2020 2019
Number £'000 Number £'000
At 1 January - - - -
Share capital reorganisation to create deferred shares 161,527,511 15,991 - -
At 31 December 161,527,511 15,991 - -
Total Share Capital 2020 2019
Number £'000 Number £'000
Ordinary Share Capital 286,527,511 287 145,402,511 14,540
Deferred share capital 161,527,511 15,991 - -
448,055,022 16,278 145,402,511 14,540
During the year, the following equity issues took place
Date Comment Shares Issued Issue price
23 January 2020 Equity placing 14,000,000 12.5p
01 April 2020 Conversion of Loan Note 62,500 10p
02 June 2020 Conversion of Loan Note 937,500 10p
02 October 2020 Conversion of Loan Note 937,500 10p
07 October 2020 Conversion of Loan Note 187,500 10p
22 December 2020 Equity placing 125,000,000 4p
Share Capital Reorganisation
During the year the company undertook a share capital reorganisation in order
to facilitate a placing of shares. As at 3 December 2020 the Company's
Existing Ordinary Shares were trading at around 6.3 pence and had a nominal
value of 10 pence. Under the Companies Act 2006 the Company is not permitted
to issue shares with an issue price which is below their nominal value. In
order to enable the Company to issue shares pursuant to the placing at 4 pence
per share and also going forwards in the future at an issue price which
exceeds their nominal value, the Company undertook a reorganisation of its
ordinary share capital. Under the share capital reorganisation each of the
Existing Ordinary Shares that were in issue were subdivided into 1 new
ordinary share of 0.1 pence each and 1 deferred share of 9.9 pence each.
After the Share Capital Reorganisation had taken place and before the placing,
there were the same number of New Ordinary Shares in issue as there were
Existing Ordinary Shares in issue. There were 161,527,511 Existing Ordinary
Shares in issue as at 3 December 2020. Immediately following the share capital
reorganisation and before completion of the placing, 161,527,511 New Ordinary
Shares and 161,527,511 Deferred Shares were issued, and the Existing Ordinary
Shares cancelled.
The New Ordinary Shares have the same rights as those currently accruing to
the Existing Ordinary Shares currently in issue under the articles of
association of the Company, including those relating to voting and entitlement
to dividends.
Holders of options or warrants over Existing Ordinary Shares maintained the
same rights as currently accruing to them.
The Deferred Shares will have no substantive rights attached to them and,
accordingly, will not carry the right to vote or to participate in any
distribution of surplus assets. Furthermore, they were not admitted to trading
on AIM. The Deferred Shares effectively carry no value.
The holders of the Deferred Shares shall be deemed to have conferred an
irrevocable authority on the Company at any time to: (i) appoint any person,
for and on behalf of such holder, to, inter alia, transfer some or all of the
Deferred Shares (without making any payment therefor) to such person(s) as the
Company may determine (including without limitation the Company itself); and
(ii) repurchase or cancel such Deferred Shares without obtaining the consent
of the holders thereof. In addition, the Company may repurchase all of the
Deferred Shares, at a price not exceeding 1 penny in aggregate.
As part of this process, the Company's articles of association were amended to
set out the rights and restrictions attaching to the Deferred Shares.
22. Share options and Warrants
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 (2019: 18.2p). The average life of the unexpired
share options was 7.1 years (2019: 8.4 years).
As At 31 December 2020 31 December 2019
Grant date Exercise price £ Number outstanding Average life outstanding (years) 2019 number outstanding 2019 average life outstanding (years)
28 June 2012 0.365 225,000 1.5 225,000 2.5
01 July 2014 0.510 225,000 3.5 225,000 4.5
10 December 2014 0.285 2,187,500 3.9 2,281,250 4.9
09 October 2015 0.140 40,000 4.8 40,000 5.8
01 June 2018 0.130 6,150,000 7.4 6,150,000 8.4
01 November 2018 0.130 750,000 7.8 750,000 8.8
9,577,500 6.4 9,671,250 7.1
During the year, no employee options were granted (2019: Nil), none were
exercised (2019: none) and 93,750 lapsed (2019: 496,000). The weighted average
price of the options lapsed in the year was 28.5p (2019: 20.3p). The weighted
average exercise price of exercisable options at the end of 2020 was 18.0p
(2019 18.1p).
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.
Warrants
The Company has historically issued the following warrants, which are still in
force at the balance sheet date:
Date issued Reason for issue Number of warrants Exercise price pence per share Life in years
31 January 2018 Placing Commission 170,455 22.0 5
25 July 2019 £1m Share Issue 9,625,000 12.5 2
22 January 2020 RiverFort EPSA 3,499,222 5.2 4
22 December 2020 £5m Share Issue 25,000,000 7.0 2
On 23 January 2020, the Company announced that it had agreed to issue to the
RiverFort Global Opportunities PCC and YA II PN Ltd as part of the RiverFort
Equity Placing and Sharing Agreement (EPSA) 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 December 2020
following the placing of the 125,000,000 New Ordinary Shares referred to in
Note 21 and below; the strike price was adjusted under the terms of the EPSA
to 5.2p.
On 3 December 2020, the Company announced a placing of 125,000,000 New
Ordinary Shares to various holders. These were admitted to AIM on 22 December
2020. Subscribers in the Placing were granted warrants to subscribe for New
Ordinary Shares on a 1 warrant for each 5 Placing Shares basis. These Placing
Warrants are exercisable at 7p per New Ordinary Share for a period of 24
months from Admission. The Placing Warrants were not admitted to trading on
AIM or any other stock market and are not transferable.
The Warrants issued on 31 January 2018 and 22 January 2020 are valued in
accordance with IFRS 2 that is for equity‑settled share‑based payment
transactions, the Company measures the goods or services received, and the
corresponding increase in equity, directly, at the fair value of the goods or
services received, unless that fair value cannot be estimated reliably.
Warrants are recorded at fair value at inception and are not remeasured.
The fair value of £88,000 (2019 restated: £27,000) for the issue of these
warrants was recognised in the year.
The Warrants issued with Share Issues on 25 July 2019 and 22 December 2020
have been determined as equity instruments under IAS 32. Since the fair
value of the shares issued at the same time is equal to the price paid, these
warrants, by deduction, are considered to have been issued at nil value.
23. Borrowings
Group Group Company Company
2020 2019 2020 2019
£'000 £'000 £'000 £'000
Non-current
Convertible loan note (note 16) - 2,233 - -
Convertible redeemable unsecured loan notes (Note 16) - 179 - 179
Non-current lease debt 29 98 13 33
Total borrowings 29 2,510 13 212
RiverFort Loan Facility
On 22 January as part of the RiverFort Equity Placing and Sharing Agreement
(EPSA) the Company entered into a £3.0m Mezzanine Loan Facility with the
RiverFort Global Opportunities PCC and YA II PN Ltd. (together the "Investor")
and elected to drawdown an initial £1.5m to fund the commencement of the
staged Convertible Loan Notes (CLN) redemption programme and provide
additional working capital. The Company has the right, at its sole discretion,
to draw down up to a further £1.5m at any time in the following 24 months,
subject to certain conditions.
The Mezzanine Loan Facility is subject to a 0.75% Commitment Fee and each
drawdown had a term of 18 months at a 6.5% rate of interest and a 5% drawdown
fee. Repayments commenced 3 months after drawdown and were to be followed by
15 equal monthly payments. The Company could if it wishes, elect to convert
any of its monthly payments or amounts due by issuing the Investor with a
convertible note giving conversion rights equal to the amount concerned, in
which case the Investor will have 12 months to convert the note into ordinary
shares of the Company at the lower of 14.54p or the 90% 5 day volume weighted
average price immediately preceding the date of such notice. The Company may
also elect to make early repayment of any outstanding amount subject to a 5%
early redemption premium.
On 22 December 2020 following the equity placing the company elected to repay
the remaining amount due on the Mezzanine Loan. As such there was no balance
outstanding at 31 December 2020 (2019 £Nil).
Convertible Loan Notes
For full details of these notes see note 16.
From 31 December 2019 holders were able elect to convert their CLNs at 10p per
share in place of cash redemption. From May 2019 the Group was allowed to
redeem the CLNs in whole or in part at any time before the maturity date (1
May 2021) without restriction or penalty.
On 22 January the Group commenced a staged redemption programme of the
Company's existing £2.245m Convertible Loan Notes with an offer to convert or
redeem 25% of the outstanding balance.
In February 2020 CLNs to the value of £555,000 were redeemed and £6,250 were
converted to Ordinary Shares. In March, June and October CLNs to the value
of a further £212,500 in total were converted. Finally, in December 2020
the remaining £1,471,250 of CLNs were redeemed.
Convertible redeemable unsecured loan notes
On 31 December 2019, the convertible redeemable unsecured loan notes carried a
coupon of 5% payable quarterly in arrears, had a conversion price of 10p and
matured on 31 July 2021. On 22 December 2020, this note was fully redeemed
for a value of USD $250,000.
Non-current lease debt
As described in Note 13, all leases that fall under IFRS 16 are 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. The non-current lease debt is the part of that debt which falls
due after 12 months.
24. Trade and other payables
Current Group Group Company Company
2020 2019 2020 2019
£'000 £'000 £'000 £'000
Trade payables 688 1,385 125 99
Accruals and other creditors 1,582 960 366 140
Intercompany payables - - 735 2,398
Finance lease creditor (IFRS 16) 38 60 20 18
Financial liabilities 2,308 2,405 1,246 2,655
Other taxes and social security payable - 51 - 16
Contractual liabilities 100 73 - -
Non-financial liabilities 100 124 - 16
Total current trade and other payables 2,408 2,529 1,246 2,671
Shown on the balance sheet as:
Contractual liabilities 100 73 - -
Trade and other payables 2,308 2,456 1,246 2,671
2,408 2,529 1,246 2,671
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 2020 was 50
days (2019: 66 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 2020 £438,000 (2019: £1,243,000) of payables were denominated
in US dollars, £2,000 (2019: £16,000) were denominated in Euros, £1,000
(2019: Nil) were denominated in Ghanaian Cedi and Nil (2019: £22,000) 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 2020 2020 2020 2019 2019 2019
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
£'000 £'000 £'000 £'000 £'000 £'000
Adjustments:
Depreciation, amortisation and impairment of non-financial assets 225 - 225 215 - 215
Effect of assets / liabilities acquired - - - 2 - 2
Finance costs (17) - (17) 620 - 620
Revaluation of fixed assets (6) - (6) 2 - 2
Loss on disposal of non-financial assets 33 - 33 - - -
Non-cash accounting for CLN & CULN (119) - (119) 35 - 35
Conversion of CLN (213) - (213) - - -
Increase in Deferred Tax Asset (49) - (49) (18) - (18)
Share-based payment expenses 87 - 87 368 - 368
Total adjustments (59) - (59) 1,224 - 1,224
Net changes in working capital: 2020 2020 2020 Restated Restated Restated
2019 2019 2019
Continuing Operations Discontinued Operations Total Continuing Operations Discontinued Operations Total
£'000 £'000 £'000 £'000 £'000 £'000
(Increase)/Decrease in inventories (726) - (726) 27 - 27
Decrease in trade and other receivables 128 - 128 2,091 - 2,091
Increase in long term receivables (484) - (484) - - -
Increase/(decrease) in contract liabilities 27 - 27 (2,365) - (2,365)
Decrease in trade and other payables (148) - (148) (113) - (113)
Decrease in assets of disposal group classified as held for sale - 170 170 - - -
Decrease in liabilities of disposal group classified as held for sale - - - - (151) (151)
Total changes in working capital (1,203) 170 (1,033) (360) (151) (511)
Company Company Company
2020 Restated 2019
£'000 £'000
Adjustments:
Depreciation, amortisation and impairment of non-financial assets 113 90
Finance costs 376 458
Revaluation of fixed assets (6) -
(Profit) / loss on disposal of non-financial assets 8 -
Non-cash accounting for CLN (1) (90)
Share-based payment expenses 87 368
Other non-cash items 6 103
Total adjustments 583 929
Net changes in working capital:
Increase in trade and other receivables (427) 623
Decrease in trade and other payables (1,425) (59)
Increase in asset held for sale - -
Total changes in working capital (1,852) 564
26. Contingent assets and contingent liabilities
The RiverFort EPSA has already been described in Notes 21, 22 and 23. In
summary, the company issued 14m ordinary shares and received a £1.5m
mezzanine loan. At the same time under the EPSA the company issued 14m shares
and booked a sundry debt of £1.75m. The loan was to be repaid and the sundry
debt settled by selling down the shares. As disclosed in note 23 the
mezzanine loan was fully repaid in December 2020. As at the 31 December 2020
there remained shares still to be sold and a residual sundry debt for those
shares. Because of the low share price caused primarily by the market reaction
to Covid-19, had the remaining shares been sold at the end of 2020 there would
have been a loss of £936,000 on this debt. However, the shares do not have
to be fully sold until at least 31 December 2021 and there is reason to
believe that it will be at a price higher during 2021 than the 31 December
2020 price level and enough to recoup the losses.
There were no material contingent assets and contingent liabilities in 2019.
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
(EUR) and US dollar (USD) but also the Sierra Leone Leone (SLL) and Ghanaian
Cedi (GHS). 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 exposure USD Short-term exposure EUR Short-term exposure SLL Short-term exposure GHS
£'000 £'000 £'000 £'000
31 December 2020
Financial assets 307 - - 167
Financial liabilities (438) (2) - (1)
Total exposure (131) (2) - 166
31 December 2019
Financial assets 510 - - -
Financial liabilities (1,243) (16) (22) -
Total exposure (733) (16) (22) -
If the US dollar were to depreciate by 10% relative to its year end rate, this
would cause a gain of profits in 2020 of £15,000 (2019: £81,000 Gain).
If the Ghanaian Cedi were to depreciate by 10% relative to its year end rate,
this would cause a loss of profits in 2020 of £18,000 (2019: £ Nil).
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 were the convertible loans and the RiverFort
EPSA. These are detailed in note 16. All had fixed interest rates.
Interest on the cash holdings of the Group and "other" loans noted in note 23
is both not material and also has fixed interest rates. Therefore no
calculation of interest rate sensitivity has 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 2020, the Group's financial liabilities have contractual
maturities (including interest payments, where
applicable) as summarised below:
2020 2019
Group Current (within 6 months) 6 to 12 months Non-current (1-5 years) Current (within 6 months) 6 to 12 months Non-current (1-5 years)
£'000 £'000 £'000 £'000 £'000 £'000
Convertible loans - - - - 2,233 179
Trade and other payables 2,308 - - 2,456 - -
Total 2,308 - - 2,456 2,233 179
Company Current (within 6 months) 6 to 12 months Non-current (1-5 years) Current (within 6 months) 6 to 12 months Non-current (1-5 years)
£'000 £'000 £'000 £'000 £'000 £'000
Convertible loans - - - - - 179
Trade and other payables 1,246 - - 2,668 - -
Total 1,246 - - 2,668 - 179
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.
2020 2019
£'000 £'000
Revenue - -
Cost of sales - -
Gross Profit - -
Administration expenses - 28
Operating loss from discontinued activities before taxation - 28
Income tax expense - -
Loss from discontinued ordinary activities after taxation - 28
Earnings per share relating to the discontinued operations - 0.02p
Cash flows relating to the discontinued operation are as follows:
Operating cash flows - 28
Investing cash flows - -
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:
2020 2019
Assets held for sale: £'000 £'000
Tangible fixed assets at cost - 2,820
Accumulated depreciation - (2,650)
Assets held for sale - 170
The Sierra Queen was sold in February 2020.
30. Related Party Transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties, are listed below:
Balance at 31 December Movement in Year Balance at 31 December Movement in Year Balance at 31 December
2018 2019 2019 2020 2020
Westminster International Limited 2,265 64 2,329 (1,483) 846
Westminster Security Limited (formerly Longmoor Security Limited) - - - 10 10
Westminster Aviation Security Services Limited 5,466 (1,487) 3,979 6 3,985
Sovereign Ferries Limited - 45 45 503 548
Westminster Operating Limited (2,381) (17) (2,398) 2,156 (242)
Keyguard U.K Limited 31 (31) - 68 68
Longmoor (SL) Limited (29) 29 - - -
Facilities Operations Management Limited 959 (767) 192 (6) 186
Westminster Sierra Leone Limited * 23 (23) - (60) (60)
Westminster Group GMBH 2 793 795 63 858
GLIS Gesellschaft für Luftfahrt- und Infrastruktur-Sicherheit GmbH - - - (50) (50)
Westminster Sicherheit GMBH 593 (593) - - -
Euro Ops SARL - - - 104 104
Westminster Managed Services Limited (formerly Westminster Facilities (22) 1,332 1,310 - 1,310
Management Limited)
Longmoor Security Services Limited (formerly Westminster Aviation Security - - - - -
Services (ME) Limited)
Westminster International (Ghana) Limited - - - (383) (383)
6,907 (655) 6,252 928 7,180
The remuneration of the Directors, who are the key management personnel of the
Group is set out in the Remuneration Committee report as are details of
pension contributions for Directors.
In the year to 31 December 2020 fees and expenses of £18,619 (2019: £16,180)
plus VAT were accrued to Cattaneo LLP a Limited Liability Partnership under
the control of Charles Cattaneo. On the 31 December 2020 Cattaneo LLP was owed
£1,600 including VAT (2019: £1,600).
Certain members of the Fowler family, other than directors, have been employed
by the Group on normal arms-length terms for between 11 and 23 years. Their
remuneration, in aggregate, for the year ended 31 December 2020 was £182,830
(2019: £171,659)
31. Prior year adjustment
Changes to the way investments and loans in subsidiaries have been displayed
are reported in note 14.
The 2019 statement of profit and loss, other comprehensive income and
financial position has been restated to account for net gains amounting to
£147,000 (Company: £184,000) that were not recognised in the prior year
accounts following reviews of policies and reconciliations during 2020. No
third balance sheet is presented as the error occurred solely in the prior
period and effects that year only.
Statement of profit or loss and other comprehensive income (extract)
Year ended
Note 31 December 2019
Group Company
Loss per signed accounts 2019 (1,398) (2,652)
Review of accounting for Share based payments i) (110) (110)
Correction of error in accounting for Warrants ii) 298 298
Write off of uncollectable VAT balance iii) (41) -
Other immaterial difference iv) - (3)
Restated loss for 2019 (1,251) (2,467)
As a result of the prior year adjustments, the Earnings per Share have been
recalculated as follows:
Earnings per Share Signed accounts as at Restated as at
31 December 2019 Adjustment 31 December 2019
Per-share amount pence Per-share amount pence
Basic and diluted EPS (1.02p) (0.91p)
Group statement of financial position (extract) Signed accounts as at Restated as at
31 December 2019 Adjustment 31 December 2019
Share based payment reserve i) & ii) 1,166 (188) 978
Trade and other receivables iii) 2,566 (41) 2,525
(Loss)/profit for the year i), ii) & iii) (1,398) 147 (1,251)
Company statement of financial position (extract) Signed accounts as at Restated as at
31 December 2019 Adjustment 31 December 2019
Share based payment reserve i) & ii) 1,166 (188) 978
Trade and other payables iv) 2,668 3 2,671
(Loss)/profit for the year i), ii) & iv) (2,652) 185 (2,467)
i. Following a review by the Group of the reserve for share
based payments going back to first principles, it was determined that this
reserve had been under stated by £110,000.
ii. In discussion with the new auditors, PKF, a more appropriate
treatment of warrants issued as part of a placing was determined. To be
consistent £298,000 charged in 2019 has been written back.
iii. An accounting error left an unrecoverable balance of £41,000
on the VAT account. This is written off.
iv. There was a sundry immaterial rounding difference on the
Company's P&L account which has now been corrected.
32. Events after the Reporting Period
In February 2021, Clydesdale Bank PLC trading as Yorkshire Bank offered the
Group an overdraft and other banking facilities. As a condition of these
facilities the Company entered into a multilateral charge and guarantee in
respect of bank overdrafts and other facilities of all companies within the
Group.
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