REG - Westminster Group - Final Results
06/11/2024 10:30
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RNS Number : 1868L Westminster Group PLC 06 November 2024
06 November 2024
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PUBLIC DOMAIN
Westminster Group Plc
('Westminster', the 'Group' or the 'Company')
Final Results for 18 months to 30 June 2024
Westminster Group Plc (AIM: WSG), a leading supplier of managed services and
technology-based security solutions worldwide, announces Final Results for the
18 months ending 30 June 2024.
Highlights:
Operational:
· 10+ year DRC Contract finalised and signed in April 2024
worth circa $10m pa.
· Strong performance by Services Division increasing
recurring revenue base.
· West Africa Airport project performed to expectations -
and collaboration with Summa is working well.
· $1.7m project to upgrade security at two airports
in Southeast Africa well underway with one completed.
· Our guarding business is going from strength to
strength with a like for like increase of 48% in guarding hours.
· Training business delivered training at a major UK
airport and continued to secure contracts globally.
· Supplied products and solutions to 68 countries
across the world.
· Scanport issue resolved and recompense received
for early termination.
· Martyn's Law undergoing Parliamentary scrutiny and
expected to receive Royal Assent in the near future.
· In June 2024 Westminster were a main sponsor and
exhibitor at the counter terrorism exhibition in London, CTX
Financial:
· Revenues of £9.1m of which £7.2m was from our
Services Division and £1.9m from our Technology Division
· Cost cutting exercise implemented to counter
rising costs etc.
· Tidied up balance sheet
· June 2024 secured a £1.5m convertible loan note
facility from a strategic investor
Post period end:
· October 2024 secured contracts with a value of
over $1.2m, including circa £650,000 of recurring revenue
· Current order book of circa £1m
· Current annual recurring revenues now circa
£14.3m (including DRC estimates)
· Westminster honoured with the prestigious "Best
Global Aviation Security Provider 2024" award during the London Political
Summit & Awards presented in the UK Parliament on October 2024.
· Enquiry levels buoyant from potential customers
around the world
· Training & Guarding businesses performing
well.
· £500k equity raise at 2.4p per share being the
current mid-market price and issue of 500k warrants at 10p being four times
the current mid-market price demonstrating the investor's confidence in the
future growth of the business.
Commenting on the results and prospects, Peter Fowler, Chief Executive said:
"We continue to battle against probably one of the worst world economic and
political backgrounds in recent times and the period in question has been a
time of both challenges and achievements.
"Challenges due to global instability, largely as a result of the Russian
invasion of Ukraine and conflict in the Middle East, and the resulting global
economic turmoil and financial uncertainty, which continues to impact
governments and businesses spending plans.
"In terms of achievements one of the main highlights for the period was the
finalisation of the long-anticipated contract for DRC airports. Whilst no
revenues from this contract are reflected in the reporting period, the 10+
year contract is expected to generate revenues of circa US$10m in the first 12
months of operation alone, with significant scope for growth. This, together
with existing and new contracts provides a solid foundation for significant
revenue and earnings growth for 2025 and beyond.
"We are focussed on building a resilient business based on multiple revenue
streams, many of which are from long-term recurring revenue contracts, from
multiple customers, in multiple jurisdictions, which is and will continue to
be a key growing strength of our business. The strong performance of our
various services revenue streams demonstrates our strategy in this respect, is
on track.
"Despite the global uncertainty and economic challenges, in the period we
delivered revenues of £9.1m. Our Services Division has performed well,
delivering revenues of £7.2m, whilst our Technology Division revenues were
impacted, delivering revenues of £1.9m. Gross margin increased to 60%.
"We have a current order book of circa £1m and annual recurring revenues of
circa £14.3m (including DRC estimates) with the potential to materially
increase this through additional new contracts in the year ahead.
"Whilst remaining mindful global events can still impact business outlook and
despite the global challenges and setbacks we have experienced, the recovery
and growth we are seeing in our various businesses, together with our business
model and the opportunities we have been developing and investing in over the
years underpin our confidence for the future long-term growth and success of
our business."
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
to be held on 18 December 2024) will be posted to shareholders on or before 19
November 2024.
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
Richard Johnson
Zeus Capital Limited (Broker) 020 3829 5000
Louisa Waddell
Simon Johnson
Walbrook (Investor Relations)
Tom Cooper 020 7933 8780
Joe Walker
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, 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
Whilst the world market continues to be difficult and challenging, I am
pleased to report that, as laid out in the Chief Executive Officer's Strategic
Report, we have managed to successfully navigate through the numerous
challenges and with important new contracts, such as the airport security
project in the Democratic Republic of Congo ("DRC"), now in place we have
reached an important inflection point. Whilst the significant long-term
recurring revenues from the DRC contract and others recently secured, are not
reflected in the current period revenue results of £9.1m the tremendous
amount of work and effort required to secure these contracts should be
recognised.
We have now reached a point in our growth strategy where going forward we will
see profitable trading and a significant increase in recurring revenues from
multiple customers in numerous locations, all from existing contracts and a
framework to build on this success.
Westminster Group PLC has changed its accounting reference date and financial
year end from 31 December to 30 June. These accounts are for 18-months to 30
June 2024 whereas the comparatives are for the 12-months to 31 December 2022,
therefore the amounts presented in the financial statements are not entirely
comparable.
The reason for the change of accounting reference date is to, inter alia,
better align the Group's reporting periods with the financial dynamics of the
long-term contracts signed within the managed services business over recent
times, along with targeted further growth in this particular division.
Like many companies we have also had to deal with increasing costs of energy,
manpower and equipment, which we have done with careful cash management and
cost reduction programmes.
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 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 important
that we maintain the highest standards of corporate conduct. The Corporate
Governance Report in this annual 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.
Corporate and Social Responsibility
As a Group, we take our corporate and social responsibilities very seriously,
particularly as we operate in emerging markets and in some cases in areas of
poverty and deprivation. As highlighted in the CEO Report we are building on
our environment, social and governance strategies. 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 reductions and are undertaking regular risk assessments for all
areas of our business.
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
5 November 2024
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 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
Focusing 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
We continue to battle against probably one of the worst world economic and
political backgrounds in recent times and the period in question has been a
time of both challenges and achievements.
Challenges due to global instability, largely as a result of the Russian
invasion of Ukraine and conflict in the Middle East, and the resulting global
economic turmoil and financial uncertainty, which continues to impact
governments and businesses spending plans with the inevitable knock-on delays
on contract awards. Like many companies we have also had to deal with
increasing costs which we have navigated with careful cash management and cost
reduction programmes.
In terms of achievements one of the main highlights for the period was the
finalisation of the long-anticipated contract for DRC airports which was
signed at a formal ceremony in April 2024. Despite the transitional period
taking longer than anticipated due to the country's internal procedures and
bureaucratic processes and no revenues from this contract being reflected in
the reporting period, the 10+ year contract is expected to generate revenues
of circa US$10m in the first 12 months of operation alone, with significant
scope for growth. This, together with existing and new contracts provides a
solid foundation for significant revenue and earnings growth for 2025 and
beyond.
In view of the above I am pleased to report therefore that, despite the global
uncertainty and economic challenges, our Services Division has performed well
whilst our Technology Division revenues were impacted and down on the prior
period. However, the strong performance of our various services revenue
streams demonstrates our strategy of building a business built on a diverse
base of recurring revenue streams from multiple customers in different parts
of the world, is on track and underpins our confidence in our future growth
and performance. Accordingly, we have decided to take a prudent look at our
balance sheet and the carrying values of certain assets such as the Sierra
Queen and RiverFort debt etc. and mark these down to market and take
provisions in this period. We do however expect to recognise values from such
assets in future years. Further information on this can be found in notes 18
and 28.
Accordingly, in the period we delivered revenues of £9.1m of which £7.2m was
from our Services Division and £1.9m from our Technology Division. Gross
margin increased to 60%. Exceptional write downs amounted to £2.28m. The
Group's loss from operations was £1.93m. When adjusted for the exceptional
and non-cash items, depreciation and amortisation, the Group
recorded an EBITDA^ loss from underlying operations of £1.47m of which
£1.30m are costs related to project development, legal costs and project
start-up expenses.
In summary, despite reduced technology sales in the period, we secured
important new contracts significantly increasing our annualised recurring
revenue streams, we continued to see important return customers demonstrating
brand loyalty, we continued to develop our pipeline of new large-scale
opportunities including some exciting new large-scale, long-term prospects, we
resolved a number of outstanding issues including a prudent balance sheet
review and we invested in our business and new projects establishing a
platform for profitable future growth in the year and years ahead, as detailed
in our Divisional Review below.
Divisional Review
Services Division
Our Services Division and the growing recurring revenue base we are building
is a key element to our future growth. The period in question delivered
revenues of circa £7.2m and these together with new contracts coming on
stream will provide significant growth, both in terms of revenues and
earnings, for 2025 and beyond, underpinning the strategy we have been
following.
Our aviation security business continues to perform to expectations, and we
are encouraged not only by the performance of our current operations but also
with the various new opportunities we have and are developing, for which much
credit is due to our operational and business development teams operating
around the world.
A key development and expansion of our aviation security business is the
ratification of the long-awaited contract for the Democratic Republic of Congo
("DRC") airports which was signed at a formal ceremony in Kinshasa, DRC on 11
April 2024 during the UK - DRC Trade and Investment Mission, by board
representatives of both Westminster and the airport authority, La Regie Des
Voies Aeriennes ('RVA'), in the presence of various government officials and
dignitaries including Lord Popat, the UK Prime Minister's Trade Envoy; John
Humphrey, His Majesty's Trade Commissioner for Africa; HE Alyson King OBE, HM
Ambassador to the DRC; and HE Ndolamb Ngokwey, Ambassador of the DRC to the
United Kingdom.
The contract, which is for an initial period of 10 years, with a five-year
renewal, thereafter, is to provide comprehensive ground security operations,
initially at four international airports and one national airport in the DRC.
Despite the transitional period taking longer than anticipated due to the
country's internal procedures and bureaucratic processes we are active on the
ground undertaking various activities and based on current international
embarking passenger levels, the contract is expected to generate revenues of
circa US$10m in the first 12 months of operation alone. In addition, there is
an opportunity under the contract for further revenues, in due course, from
domestic traffic and cargo screening operations.
Westminster is providing the investment and expertise required to upgrade
security at the airports. This not only includes the provision of advanced
detection, surveillance, and screening equipment, but also the maintenance,
training and various support services required to ensure DRC's airport
security is run to the highest international standards. This enhancement in
airport security will assist the authorities in DRC in developing and
maintaining world-class airport security services, opening up the potential
for growth in air traffic by attracting new international carriers and
commercial enterprises to the region.
DRC is a key addition to our international aviation security services, and we
believe the country has exciting growth potential. With a surface area
equivalent to that of Western Europe it is, by area, the largest country in
sub-Saharan Africa, the second largest in all of Africa, and the 11th-largest
in the world. It is also the most-populous Francophone country in the world.
Air travel is therefore an important and a necessary requirement within this
vast country. The country is extremely rich in natural resources and has the
potential for sizeable economic growth. I look forward to Westminster having a
long-term presence in the country and in playing our part in the successful
growth and security of the country's numerous airports.
Our West African airport operation and collaboration with Summa is working
well and has been a positive development. With potential new airlines opening
up new routes including a new direct flight to the UK once again we expect
this contract to continue to be a valuable part of our business.
During the period we continued to provide post pandemic aviation security
(AVSEC) training to staff at a major UK airport and have secured contracts for
AVSEC training in other airports around the world, expanding our network of
potential managed services opportunities for the future.
Our $1.7million project to upgrade security at two airports in Southeast
Africa, funded by the European Investment Bank (EIB), is now well underway
with one airport completed and the other well advanced. We are now in
discussions with the relevant authorities regarding moving to a long-term
managed services contract for these two airports, under a new agreement, once
the current installation works have been completed.
I am pleased to report we have made significant strides forward with several
of the large-scale, long-term managed services airports and ports
opportunities each of which, as and when secured, would provide
multi-million-pound step changes in annual revenues. It is always difficult to
accurately predict timing for such projects, which are complex and can involve
various bodies in bureaucratic processes however we hope to finalise one such
opportunity before the end of 2024 or early in 2025.
Our guarding business is going from strength to strength with a like for like
increase of 48% in guarding hours and the new contract to provide
comprehensive security concierge services announced in October 2024 will
significantly enhance this activity.
As previously reported, we have been waiting for our client to resolve the
land issues for the construction of the new container port storage and
inspection complex in West Africa, for which Westminster have been contracted
to provide the screening operations under a contract, signed in June 2021.
However, this land issue is still unresolved and the project remains in
abeyance.
We announced in November 2022 that the relationship with our local partners,
Scanport, regarding our Ghana port project had become increasingly strained
and that we were looking to resolve matters through mediation to include
accelerated receipt in recompense for early termination, which would free up
resources for the new large-scale projects. This has now been fully resolved
and dealt with in discontinued items in the accounts
Technology Division
The Technology Division delivered revenues of circa £1.9m in the period down
from the previous period, largely as a result of the global uncertainty. The
ongoing global economic situation continues to create challenges, not just
with increasing costs but significantly with some economies suffering
substantial currency devaluation, in turn leading to currency restrictions and
in some places civil unrest. This has understandably led to some order delays,
particularly with larger capital-intensive projects. Not-with-standing these
challenges during the period we delivered products and services to 68
countries around the world. I am now happy to report the situation is
improving with visibility over a growing pipeline and we fully expect some if
not all of the delayed orders and backlog to eventually be secured.
In addition to building our international operations and to provide some
resilience against world events, we have been undertaking a strategy of
developing a significant UK presence with an enviable blue-chip client base,
such as the Palace of Westminster, Scottish Parliament, Tower of London, UK
Border Force, UK Prisons, to name but a few, all of which are performing well
and which provide resilient recurring revenue streams. I am pleased to report
we are discussing expanded operations with such customers.
We have previously reported on the opportunities for our business that we
anticipate could arise from the long-expected Martyn's Law legislation.
Martyn's Law is named after Martyn Hett, who at 29 years was killed in the
Manchester Arena terrorist attack in May 2017. Martyn's mother, Figen Murray,
has been a tireless campaigner and the force behind Martyn's Law legislation
that will require many businesses giving access to the general public, to
formally assess and take measures to address terrorism risks for the first
time. Martyn's Law is set to have a profound and lasting effect on security
provision in the UK - encompassing Publicly Accessible Locations (PALs) and
requiring them to actively protect visitors and staff with appropriate levels
of security. The Home Office estimates that 650,000 UK businesses could be
affected by Martyn's Law, and this offers substantial business opportunities
for Westminster's extensive portfolio of products and services. Whilst this
was originally included in the Kings Speech on 7 November 2023 the change of
government delayed progress. We are pleased to see the Bill was reintroduced
following the Kings speech on 17 July 2024 and is currently undergoing
Parliamentary scrutiny with cross party support and the expectation is it will
receive Royal Assent in the near future.
We have already assisted a number of key-customers and landmark buildings with
equipment and solutions to prepare for the forthcoming legislation and we are
active in developing further opportunities and to be recognised as a leading
provider of solutions under the legislation.
Our German subsidiary, GLIS, situated to the Southeast 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 continues to secure a number of important new clients and is
developing substantial business opportunities in the region.
Our French business, Euro Ops, continues to be a valuable strategic addition
to the Group. The company provides aviation focussed services such as
humanitarian flights and logistics, emergency flights, flight operations,
charter and storage management. 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.
In June 2024 Westminster were a main sponsor and exhibitor at the counter
terrorism exhibition in London, CTX, Throughout the expo, we showcased our
latest innovations in security solutions, aimed at enhancing public safety and
counter-terrorism efforts worldwide. Westminster brought together leading
suppliers of advanced security technology including Rohde & Schwarz,
Linev, Apstec, Evolv, Detectachem, and many others creating a unique stand for
visitors from around the world to see and experience a range of leading
security solutions. The event created a lot of interest in our solutions, and
we are currently in discussions with a number of high-profile organisations as
a direct result of that expo.
We have also once again begun hosting various governmental and corporate
clients at our demonstration grounds and facilities in the UK. This is
something we did regularly pre-covid and which was an excellent way to build
customer relationships and secure meaningful business. During covid this
activity ceased for obvious reasons, and I am encouraged to see various
delegations once again visiting our operations in the UK and would expect to
see meaningful business being secured accordingly.
Summary
We are making good progress on delivering our strategy of building a resilient
business based on multiple revenue streams, many of which are from long-term
recurring revenue contracts, from multiple customers, in multiple
jurisdictions.
On a wider front, despite the challenges we have continued to progress various
existing and new transformational large-scale managed services project
opportunities around the world which can and will provide step changes in
growth should they be 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. 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,
however due to the nature of the projects and the numerous bodies involved it
is notoriously difficult to forecast timing of any contract award. I know this
can be frustrating at times but the upside of securing such contracts with
long-term, high margin recurring revenues is worth the efforts. We obviously
cannot provide regular updates or details on contract negotiations, but we
will provide market updates on material developments when appropriate and in
line with our regulatory responsibilities.
In summary, despite the various challenges and in some cases because of them,
Westminster continues to move forward.
Strategy
Our vision is to build a global business with strong brand recognition
delivering advanced security solutions and long-term managed services, on
Land, at Sea and in the Air, primarily 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 Board considers strategy at each regular Board Meeting and has from time
to time 'off-site' strategy days to review the Company's rolling five-year
Strategic Growth Plan and to consider new short-, medium- and long-term
strategies that could be implemented to achieve our goals and to deal with
changing global and economic issues.
As part of our strategy for growth, we will also continue to improve and
enhance our Board and senior management team broadening our range of
experience and expertise. If we are to maximise the substantial growth
opportunities we are developing, particularly with our managed services
operations, it is essential we have the right strategies, people, processes
and systems in place to successfully deliver such growth.
Whilst we still believe that the opportunities we have been developing,
primarily in emerging and high growth markets, are what will deliver
exponential growth over the next few years, these can and do take time to
develop and as we have seen, can be disproportionately impacted by global,
regional and local events. Accordingly, one of the strategies we are now
developing is to balance some of that risk by building more core business in
the UK and developed world areas.
We are also looking to expand our global footprint through the development of
our agent network and through strategic joint ventures (JVs) in key markets
and regions, and we believe that this strategy will enable the Company to
expand its sphere of operations in a controlled and cost-effective way.
Due to the Company's share-price concerns, the perceived current lack of
liquidity, the cost of capital and ongoing listing costs; concerns which are
shared by many listed companies of various sizes, the Board is undertaking a
strategic review on how to improve shareholder value. The results of this
review will be communicated to shareholders in due course.
Our risk strategies are developed from our Risk Committee who hold regular
meetings and report to the Audit Committee. Mitigation and risk strategies are
then developed to address potential risks, as we successfully did during the
Covid pandemic. Covid is of course not the first and will not be the last
external challenge for which we need to have strategies in place to deal with.
In 2014, the world experienced the West African Ebola outbreak which caused
huge problems for the region, and now the Russian invasion of Ukraine has
world-wide implications. I am confident the strategies we have now and will
further put in place, together with our diverse business model, will help us
not only manage the challenges but seek new opportunities from them.
Environment, Social, and Governance (ESG) Strategy
The Westminster Group takes its corporate and social responsibilities very
seriously and recognises that sustainability across our various business
sectors is important to us and our future growth, important to our
shareholders and wider stakeholders. The various ways in which we currently
monitor and undertake governance, including environmental and social
responsibilities of our business, are laid out in the Corporate Governance
Report.
We take our social responsibilities very seriously including supporting the
communities in which we operate and, in this respect, have our own registered
charity - the Westminster Group Foundation - see here www.wg-foundation.org
(http://www.wg-foundation.org) . Since 2007, the Westminster Group has
assisted and been involved with community work in Sierra Leone. This includes
building new schools, extending existing schools, providing school uniforms,
implementing water harvesting systems and solar panels, and through the Ebola
and COVID pandemics providing essential food supplies. The latest school was
completed September 2023 and is located at Kono Town. In recognition of the
support given by the Westminster Group, it is named "Westminster Community
Secondary School". In July 2024, we also became a Corporate Member of Rotary
in Banbury, enabling our staff to volunteer to help Rotary in our community
Our work on ESG includes activities such as preparing detailed social
environmental impact reports for each airport in our new project in DRC. We
take our environmental responsibilities seriously and look to minimise our
carbon footprint, for example by use of electric vehicles where possible. As
an international business, travel has always featured heavily in our business
activities. One thing the recent pandemic lockdowns have demonstrated is that
some of this travel can be replaced by remote meetings and conference by
systems such as Microsoft Teams and Zoom, which has now become commonplace and
far more accepted across the world. Accordingly, we intend to focus, where
possible, on reducing travel by continuing with remote meetings. Where
international travel is still necessary, we are investigating carbon offset
programmes. We are also working towards ISO 14001 Environmental Management
(EMS).
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, maintenance and
guarding contracts, and this is a key metric being monitored. Employment is
the single largest cost base for the Group, the costs are strictly monitored
to ensure best use of resources. Days Sales Outstanding is used to measure 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, 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 served and number of return customers are monitored to give a
view on the performance of the division. The material increases in guarding
hours delivered is an indicator of the strong growth by this part of our
business
Group 30 June 2024 31 Dec 2022
Revenue £9.1m £8.5m
Gross Margin 60% 54%
Recurring Revenues as a % of revenues 78% 58%
Days Sales Outstanding 53 30
Number of Employees 236 256
Average Employee Cost Per Head annualised £18,661 £17,016
Services Division 30 June 2024 31 Dec 2022
Passengers Served ('000) 188 124
Training Hours Delivered 6,808 5,906
Guarding Hours Delivered 85,408 38,508
Technology Division 30 June 2024 31 Dec 2022
Average Enquiries Per Month 205 168
Average Number of Orders Per Month 42 44
Number of Countries Supplied 68 60
Number of Return Customers 536 370
Current Trading & Business Outlook
The business outlook is encouraging. Despite the challenges of recent years
and the ongoing global instability and the resulting global economic turmoil
and financial uncertainty we have built a solid foundation for our business
and we will enter 2025 with greatly increased revenues from contracts already
secured.
Our work on the DRC contract is progressing well as is the Southeast Africa
airport project bringing 5 more airports into our portfolio and significant
ongoing revenues for future years to come.
Our West African airport operations and collaboration with Summa is working
well and has been a positive development. With potential new airlines opening
up new routes including a new direct flight to the UK once again, we expect
this contract to continue to be a valuable part of our business.
We continue to invest in our worldwide business development programmes in
order to deliver on our growth potential, particularly in our long-term major
managed services projects. We believe that we will secure one more long-term
managed services contract in the near future and have every expectation of at
least one more in 2025, each producing a multi-million dollar step change in
revenues.
Our training business continues to secure new contracts around the world and
our guarding business is going from strength to strength.
As mentioned in the Divisional Review above we believe the forthcoming
Martyn's Law legislation will become law in the near future which we believe
is a significant opportunity for our business and we look to build on the work
we have done preparing for this and the successful contracts already secured
which will place us in a strong position to secure more meaningful business in
2025 and beyond.
We continue to have healthy enquiry levels for our products and services from
customers around the world and are currently seeing an improvement in our
technology business. We traditionally secured one or two large-scale
multi-million USD Technology solution sales projects each year although this
has proved more challenging over the past couple of years due to customer
spending constraints. However, we do have several potential projects in the
pipeline, which despite ongoing global turbulence, we have good reason to
believe one or more may materialise in 2025.
In June 2024 we secured a £1.5m convertible loan note facility from a
strategic investor to aid growth, £1m of which has been drawn down in the
period together with a post period equity raise of £500k at 2.4p per share
being the current mid-market price and issue of 500k warrants at 10p being a
400% premium to the current mid-market price from the same investor
demonstrating their confidence in the future growth of the business.
In October 2024 we announced that we had secured several contracts with a
combined value of over $1.2 million, including a contract to provide
comprehensive security concierge services on an annual basis across a number
of prominent sites in the United Kingdom starting at circa £650,000 per annum
in the first year. The Company is additionally in discussions regarding
security solutions for some of the Customer's sites elsewhere in the world,
which we hope will result in additional contracts.
In October 2024 Westminster was also honoured with the prestigious "Best
Global Aviation Security Provider 2024" award during the London Political
Summit & Awards in recognition of the contribution made by Westminster to
aviation security around the world. The award was presented in the UK
Parliament, House of Commons by Her Excellency Fatima Maada Bio, First Lady of
Sierra Leone, who also served as a special guest speaker at the event. This
three-day summit brought together influential political and business leaders
from across Africa and the UK and has already led to interest in Westminster's
services from a number of the attendees.
We are focussed on building a resilient business based on multiple revenue
streams, many of which are from long-term recurring revenue contracts, from
multiple customers, in multiple jurisdictions, which is and will continue to
be a key growing strength of our business. We have a current order book of
circa £1m and annual recurring revenues of circa £14.3m (including DRC
estimates) with the potential to materially increase this through additional
new contracts in the year ahead.
Whilst remaining mindful global events can still impact business outlook and
despite the global challenges and setbacks we have experienced, the foregoing
outlining the recovery and growth we are seeing in our various businesses,
together with our business model and the opportunities we have been developing
and investing in over the years underpin our confidence for the future
long-term growth and success of our business.
Peter Fowler
Chief Executive Officer
5 November 2024
Chief Financial Officer's
Report
Revenue
30 June 2024 18 month revenues of approximately £9.1m (12 months to 31 Dec
2022 restated: £8.5m) are down due to a reduction in technology sales in the
period due to global instability and the resulting global economic turmoil and
financial uncertainty, causing governments and businesses to delay
capital-intensive spending. It is particularly noticeable that large projects
continued to be delayed awaiting confidence that the world is returning back
to more normal times. 2022 has been restated to take into account discontinued
activities refer note 28.
Services revenues for the period was strong at £7.2m (31 Dec 2022 restated:
£5.3m). Services particularly those relating to recurring revenue is a key
element to our future growth. Guarding revenues continued to be robust as new
jobs came on stream.
Westminster's Technology Division revenues were down to £1.9m (31 Dec 2022:
£3.2m) largely due to lack of larger value solution sales although there are
a number of potential projects in the pipeline that may benefit future
trading.
Gross Margin
Gross Margin Percent rose to 60% (31 Dec 2022: 54%). This was primarily due
to a mix effect as higher margin Services increased against the decline in
lower margin (10% to 15%) Technology sales.
Operating Cost Base
When you take into account that 2024 is an 18-month period as opposed to 2022
which was 12 months the run rate of group administrative costs reduced by
11%. The actual number for 18 months was £7.4m (31 Dec 2022 (12 months):
£5.5m) in total. Strong cost reduction and tight control overcame the general
inflationary background.
Operational EBITDA^ from underlying operations
The Group's loss from operations was £1.9m (31 Dec 2022: £0.3m). When
adjusted for the exceptional and non-cash items and depreciation and
amortisation, as set out below, the Group recorded an EBITDA^ loss from
underlying operations of £1.5m (31 Dec 2022: £0.1m loss).
Reconciliation to EBITDA^ from underlying operations before discontinued 30 June 2024 31 Dec 2022
operations
£'000 £'000
Loss from operations (1,929) (735)
Depreciation, amortisation and impairment charges 389 252
Reported EBITDA (1,540) (483)
Share based expense 67 -
Exceptional items - -
EBITDA^ from operations (1,473) (483)
^ This is an Alternative Performance Measure refer to Note 2 for further
details
Finance Costs
Total finance costs for 30 June 2024 £0.2m (31 Dec 2022: £0.0m). There was
an underlying cash charge of £0.2m (31 Dec 2022: £0.0m).
Earnings Results for the Period
The Group total loss before taxation including discontinued activities was
£4.4m (31 Dec 2022: £0.4m). The Group loss after tax was £4.4m (31 Dec
2022: £0.0m loss) and the loss per share was 1.32p (31 Dec 2022: 0.00p).
Having reviewed a number of longstanding issues we have decided for the
purpose of the accounts write off or mark to market as appropriate. We still
believe that in the fullness of time the assets will recover to close to their
current true levels. However, we feel with no concrete way of demonstrating
that, we have taken a sensible prudent approach at this time. Further
information can be found in notes 18 & 28.
Statement of Financial Position
The Group's gross assets amounted to £7.4m on 30 June 2024 compared with
£10.0m on 31 December 2022. The main movement was funding the losses.
The Group's current assets amounted to £3.8m on 30 June 2024 (31 Dec 2022:
£5.6m) for the same reasons as the change in total Group assets.
The Group's trade and other receivables balance as at 30 June 2024 was £2.2m
(31 Dec 2022: £4.8m). Average days sales outstanding at the period-end were
53 (31 Dec 2022: 30). The 2022 debtor days were improved by the large
solution sale close to the period end. 2024 should be compared to the
similar level of 57 days at the end of 2021.
Cash and cash equivalents were £1.0m at 30 June 2024 compared with £0.3m at
31 December 31 Dec 2022. Following the raising of a loan just before the
year end.
Trade and other payables were £2.0m (31 Dec 2022: £2.5m) and average
creditor days were 106 (31 Dec 2022: 51).
A deferred tax asset of £1.2m (31 Dec 2022: £1.3m) was held at the period
end.
Total equity on 30 June 2024 stood at a surplus of £3.1m (31 Dec 2022:
£7.4m).
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.
Equity Issues and Share Options
There were no equity issues in the period to 30 June 2024 (31 Dec 2022: Nil).
The Company has granted a total of 16,700,000 share options over ordinary
shares of 0.1p each ("Ordinary Shares") in the Company with an exercise price
of 1.95p pence per Ordinary Share (being the closing middle market price of an
Ordinary Share on 12 January 2023). The new share options have been awarded
under the Company's 2017 Share Option Scheme to the Directors plus certain UK
based and overseas employees. As at 30 June 2024, 1,100,000 of these options
had already lapsed leaving 15,600,000 outstanding.
Summary of Warrants
As at 30 June 2024 there were no warrants outstanding. The 170,455 warrants
held by S P Angel lapsed on 31 January 2023 and the 3,499,222 warrants held by
RiverFort lapsed on 21 January 2024.
Cash Flow Statement
During the period, the Group had an operating cash outflow of £0.9m (31 Dec
2022: outflow £0.7m) which arose from the loss and a favourable working
capital movement of £0.6m (31 Dec 2022: £0.6m adverse) primarily due to
write offs in discontinued operations offset by the loss.
During the period, the Group raised nothing from the issue of new equity (31
Dec 2022: Nil).
Reconciliation from adjusted EBITDA^ to normalised operating cash flow 30 June 2024 31 Dec 2022
£'000 £'000
Adjusted EBITDA^ (1,473) (483)
Loss on asset disposal - (4)
Net changes in working capital 2,846 (569)
Movement on tax 41 354
Net cash generated / (used) in underlying operating activities 1,414 (702)
Net cash generated / (used) in underlying operating activities is presented
excluding exceptional items, share options expense, and depreciation and
amortisation.
Principal risks and uncertainties
The principal risk and uncertainties facing the Group are outlined in the
accounts.
Going Concern
The assessment of Going Concern is summarised in the Directors' Report.
Events after the Reporting Period
These are fully set out in note 29.
Mark L W Hughes
Chief Financial Officer
5 November 2024
^ This is an Alternative Performance Measure refer to Note 2 for further
details
Westminster Group PLC
Consolidated Statement of Comprehensive Income for the eighteen months ended
30 June 2024
Eighteen months to 30 June 2024 Restated Twelve months to 31 December 2022
Continuing operations £'000 £'000
REVENUE 3 9,051 8,579
Cost of sales (3,660) (3,936)
Gross profit 5,391 4,643
Operating expenses (7,320) (5,378)
(LOSS) / PROFIT FROM OPERATIONS (1,929) (735)
Analysis of operating loss
Profit from operations (1,929) (735)
Add back amortisation 10 72 56
Add back depreciation 11 317 196
Add back share-based expense 67 -
Add back exceptional - -
items
EBITDA^ Profit/(loss) from underlying operations (1,473) (483)
Other income / (losses) 18 (1,013) -
Finance costs - net 4 (209) (40)
Loss before tax (3,151) (775)
Tax 6 41 354
Loss for the period/year from continuing operations (3,110) (421)
Discontinued operations loss after tax for the year from discontinued 28 (1,263) 410
operations
LOSS FOR THE PERIOD (4,373) (11)
LOSS AND TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO:
Members of the parent entity (4,249) 121
Non-controlling interests (124) (132)
LOSS FOR THE PERIOD (4,373) (11)
OTHER COMPREHENSIVE INCOME
Revaluation of freehold property 205 -
Deferred tax on revaluation (51) -
TOTAL COMPREHENSIVE INCOME 154 -
LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (4,219) (11)
LOSS AND TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO:
Members of the parent entity (4,095) 121
Non-controlling interests (124) (132)
LOSS AND TOTAL COMPREHENSIVE LOSS (4,219) (11)
Basic and diluted loss per share from operations 8 (1.32p) 0.00p
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 30 June 2024
Group Group Company Company
30/06/2024 31/12/2022 30/06/2024 31/12/2022
Note £'000 £'000 £'000 £'000
Goodwill 9 614 615 - -
Other intangible assets 10 26 106 17 84
Property, plant and equipment 11 1,867 1,825 1,222 1,087
Investment in subsidiaries 13 - - - -
Deferred tax asset 16 1,304 1,308 - -
TOTAL NON-CURRENT ASSETS 3,811 3,854 1,239 1,171
Inventories 17 655 485 - -
Trade and other receivables 18 2,160 4,808 9,694 10,683
Cash and cash equivalents 19 977 289 780 (59)
TOTAL CURRENT ASSETS 3,792 5,582 10,474 10,624
Non-current receivable 18 - 593 - -
TOTAL ASSETS 7,603 10,029 11,713 11,795
Called up share capital 20 331 331 331 331
Share based payment reserve 851 964 851 964
Revaluation reserve 293 139 293 139
Equity reserve on convertible 22 - 22 -
Retained earnings:
At 1 January 6,503 6,340 9,362 9,307
(Loss)/profit for the year (4,249) 121 (1,712) (23)
Other changes in retained earnings 239 42 180 78
At 31 December 2,493 6,503 7,830 9,362
(DEFICIT)/EQUITY ATTRIBUTABLE TO:
OWNERS OF THE COMPANY 3,990 7,937 9,327 10,796
NON-CONTROLLING INTEREST (646) (522) - -
TOTAL EQUITY 3,344 7,415 9,327 10,796
Borrowings 22 1,098 27 978 -
Deferred tax liability - - 51 -
TOTAL NON-CURRENT LIABILITIES 1,098 27 1,029 -
Borrowings 22 994 195 - -
Contractual liabilities 23 120 80 - -
Trade and other payables 23 2,047 2,312 1,357 999
TOTAL CURRENT LIABILITIES 3,161 2,587 1,357 999
TOTAL LIABILITIES 4,259 2,614 2,386 999
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 7,603 10,029 11,713 11,795
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 £1,712,000 in 30 June 2024, (31 Dec 2022: £24,000 loss). The Group and
Company financial statements were approved by the Board and authorised for
issue on 5 November 2024 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 eighteen months ended 30 June 2024
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 2023 as previously stated 331 - - 964 139 - 6,503 7,937 (522) 7,415
Convertible loan note issued - - - - - 22 - 22 - 22
Share based payment charge - - - 67 - - - 67 - 67
Lapse of share options - - - (66) - - 66 - - -
Lapse of warrants - - - (114) - - 114 - - -
Other movements in equity (mainly FX) - - - - - - 59 59 - 59
TRANSACTIONS WITH OWNERS - - - (113) - 22 239 148 - 148
Total comprehensive expense - - - - - - (4,249) (4,249) (124) (4,373)
Revaluation of group property - - - - 205 - - 205 - 205
Deferred tax impact on reserves - - - - (51) - - (51) - (51)
Total other comprehensive income - - - - 154 - - 154 - 154
Total comprehensive income / (loss) - - - - 154 - (4,249) (4,095) (124) (4,219)
AS AT 30 JUNE 2024 331 - - 851 293 22 2,493 3,990 (646) 3,344
Westminster Group PLC
Consolidated Statement of Changes in Equity
For the twelve months ended 31 December 2022
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 2022 331 - - 1,043 139 - 6,340 7,853 (390) 7,463
Lapse of share options - - - (79) - - 79 - - -
Other movements in equity - - - - - - (37) (37) - (37)
TRANSACTIONS WITH OWNERS - - - (79) - - 42 (37) - (37)
Total comprehensive expense for the year - - - - - - 121 121 (132) (11)
AS AT 31 DECEMBER 2022 331 - - 964 139 - 6,503 7,937 (522) 7,415
Westminster Group PLC
Company Statement of Changes in Equity
For the eighteen months ended 30 June 2024
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 2023 331 - - 964 139 - 9,362 10,796
Convertible loan note issued - - - - - 22 - 22
Share based payment charge - - - 67 - - - 67
Lapse of Share Options - - - (66) - - 66 -
Lapse of Warrants - - - (114) - - 114 -
TRANSACTIONS WITH OWNERS - - - (113) - 22 180 294
Total comprehensive expense - - - - - - (1,712) (1,712)
Revaluation of group property - - - - 205 - - 205
Deferred tax impact on reserves - - - - (51) - - (51)
Total other comprehensive income - - - - 154 - - 154
Total comprehensive income/ (loss) - - - - 154 - (1,712) (1,558)
AS AT 30 JUNE 2024 331 - - 851 293 22 7,830 9,327
AS AT 1 JANUARY 2022 331 - - 1,043 139 - 9,307 10,820
Lapse of Share Options - - - (79) - - 79 -
TRANSACTIONS WITH OWNERS - - - (79) - - 79 -
Total comprehensive expense for the year - - - - - - (24) (24)
AS AT 31 DECEMBER 2022 331 - - 964 139 - 9,362 10,796
Consolidated Cash Flow Statement
For the eighteen months ended 30 June 2024
Eighteen months to 30 June 2024 Twelve months to 31 December 2022
Total Total
Note £'000 £'000
PROFIT / (LOSS) AFTER TAX (4,373) (11)
Taxation (41) (354)
PROFIT / (LOSS) BEFORE TAX (4,414) (365)
Non-cash adjustments 24 2,975 252
Net changes in working capital 24 574 (569)
NET CASH USED IN OPERATING ACTIVITIES (865) (682)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment 11 (27) (111)
Purchase of intangible assets 10 - (12)
CASH INFLOW FROM INVESTING ACTIVITIES (27) (123)
CASHFLOWS FROM FINANCING ACTIVITIES:
Convertible loan note issued 1,000 -
Loan drawdown 1,225 200
Finance cost (195) (40)
Other loan repayments (450) (10)
CASH INFLOW FROM FINANCING ACTIVITIES 1,580 150
Net change in cash and cash equivalents 688 (655)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 289 944
CASH AND EQUIVALENTS AT END OF PERIOD 19 977 289
Company Cash Flow Statement
For the eighteen months ended 30 June 2024
Company Company
Eighteen months to 30 June 2024 Twelve months to 31 December 2024
Note £'000 £'000
(LOSS)/PROFIT AFTER TAX (1,712) (23)
Other Non-cash adjustments 24 222 121
Net changes in working capital 24 1,348 (493)
NET CASH (USED IN) /FROM OPERATING ACTIVITIES (142) (395)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment 11 (18) (26)
Purchase of intangible assets 10 - (13)
CASH OUTFLOW FROM INVESTING ACTIVITIES (18) (39)
CASHFLOWS FROM FINANCING ACTIVITIES:
Convertible loan note issued 15 1,000 -
Change in lease debt - (5)
Interest paid (1) -
CASH INFLOW / (USED) FROM FINANCING ACTIVITIES 999 (5)
Net change in cash and cash equivalents 839 (439)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD (59) 380
CASH AND EQUIVALENTS AT END OF PERIOD 780 (59)
The accompanying notes form part of these financial statements.
Notes to the Financial Statements
1. General information and nature of operations
Westminster Group PLC ("the Company") was incorporated on 7 April 2000 and is
domiciled and incorporated in the United Kingdom and quoted on AIM. The
Group's financial statements for the eighteen months ended 30 June 2024
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 UK-adopted IAS. The Parent Company has elected to
prepare its financial statements in accordance with UK-adopted IAS. 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 eighteen months ended 30 June 2024.
(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 £4.4m (31 Dec 2022: Nil) of which
continuing operations were a loss of £3.1m (31 Dec 2022: £0.5m loss), The
cash outflow from operating activities during the eighteen months was £0.9m
(31 Dec 2022: £0.7m).
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.
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 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 period-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 5).
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 decision 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. Freehold property is held at valuation.
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.
The RiverFort sundry debtor is classified at fair value through profit or loss
and is re-measured to fair value at the end of each reporting period. Gains
and losses arising from re-measurement are taken to profit or loss, as are
transaction costs incurred. Management review at each reporting date the
significant observable inputs and valuation adjustments with respect to the
fair value measurement of the RiverFort debtor. The value of the Group's
shares is observable in an active market as quoted prices are available hence
valuation is within level 1 of the fair value hierarchy under IFRS 13, Fair
value measurement. The valuation technique has been changed to mark-to-market.
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 eighteen months.
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.
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.
The equity reserve on the convertible loan notes is the embedded derivative
accounted for at fair value.
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 9) 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 42% (31 Dec 2022: 20%) 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 16) 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.
Subsidiary intercompany balances
Intercompany balances are stated at full value if the subsidiary is continuing
to trade, and a reasonable projection indicates that the subsidiary will be
able to repay the balance at some time in the future. Dormant subsidiaries
owing money to the group are therefore fully impaired. The Group will
support subsidiaries to meet their obligations as and when they fall due.
Debtors and Accrued Income
The collectability of debtor balances, which include amounts due from various
projects including Ghana, have been reviewed in depth by management and the
collectability of each debt has been considered carefully. The outcome of
these reviews, as well as a more general exercise, is that the carrying value
of the debtors is stated at the amount owed less a realistic provision for
those debtors considered to be uncollectable or needing impairment. The
collectability of the debt in relation to Ghana revolves around agreement with
the counterparty over the quantum and the payment terms due under the contract
for services rendered and early termination. Management have taken a prudent
approach to ensure the carrying value of the amount owed is collectable. The
accrued income has been estimated based solely on the volume of containers
passing through the screening systems. Management believes the final income
figure could be in excess of the amount disclosed in the financial statements.
Sundry Debtors
The collectability of sundry debtor balances has been reviewed and considered
by the executive team. The carrying value of the sundry debtor in particular
RiverFort has been tested and it is considered to be fairly stated.
The judgements involved in determining the appropriate classification of the
receivable being a financial asset held at fair value through profit or loss
include the asset not being held for trading investment in an equity
instrument that is designated at fair value through other comprehensive income
at initial recognition. The contractual terms of the sundry debt does not give
rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding. The RiverFort sundry debtor
balance is therefore measured at fair value and any gains and losses
recognised in the profit and loss as they arise.
Revalued freehold property
The freehold property is stated at fair value. A full revaluation exercise was
carried out as at 30 June 2024. 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 as appropriate and where
required the prior period's figures have been restated.
IAS 1 Presentation of Financial Statements
IAS 1 "Presentation of Financial Statements" sets out the overall requirements
for financial statements, including how they should be structured, the minimum
requirements for their content and overriding concepts such as going concern,
the accrual basis of accounting and the current/non-current distinction. The
standard requires a complete set of financial statements to comprise a
statement of financial position, a statement of profit or loss and other
comprehensive income, a statement of changes in equity and a statement of cash
flows. The amendments are effective for annual periods beginning on or after
January 1, 2023.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
This standard is applied in selecting and applying accounting policies,
accounting for changes in estimates and reflecting corrections of prior period
errors. The standard requires compliance with any specific IFRS applying to a
transaction, event or condition, and provides guidance on developing
accounting policies for other items that result in relevant and reliable
information. Changes in accounting policies and corrections of errors are
generally retrospectively accounted for, whereas changes in accounting
estimates are generally accounted for on a prospective basis. The amendments
are effective for annual periods beginning on or after January 1, 2023.
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)
IFRS 3 "Business Combinations" outlines the accounting when an acquirer
obtains control of a business (e.g. an acquisition or merger). Such business
combinations are accounted for using the 'acquisition method', which generally
requires assets acquired and liabilities assumed to be measured at their fair
values at the acquisition date. 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. This will apply for annual reporting
periods beginning on or after 1 January 2023.
Deferred Tax Related to Assets and Liabilities Arising from a Single
Transaction - Amendments to IAS 12
Targeted amendments to IAS 12 Income Taxes clarify how companies should
account for deferred tax on certain transactions - e.g. leases and
decommissioning provisions. The amendments narrow the scope of the initial
recognition exemption (IRE) so that it does not apply to transactions that
give rise to equal and offsetting temporary differences. As a result,
companies will need to recognise a deferred tax asset and a deferred tax
liability for temporary differences arising on initial recognition of a lease
and a decommissioning provision. This will apply for annual reporting periods
beginning on or after 1 January 2023.
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)
Application of the exception and disclosure Effective 23 May 2023. This
relates to Top up Tax and is not applicable to the Group.
Standards amendments and interpretations in issue not yet effective
Non-current Liabilities with Covenants - Amendments to IAS 1 and
Classification of Liabilities as Current or Non-current - Amendments to IAS 1.
Under existing IAS 1 requirements, companies classify a liability as current
when they do not have an unconditional right to defer settlement for at least
12 months after the reporting date. The International Accounting Standards
Board (IASB) has removed the requirement for a right to be unconditional and
instead now requires that a right to defer settlement must exist at the
reporting date and have substance. This will apply for annual reporting
periods beginning on or after 1 January 2024.
Lease Liability in a Sale and Leaseback - Amendments to IFRS 16.
This will impact how a seller-lessee accounts for variable lease payments that
arise in a sale-and-leaseback transaction. The amendments introduce a new
accounting model for variable payments and will require seller-lessees to
reassess and potentially restate sale-and-leaseback transactions entered into
since 2019. It is not applicable to the group at present. This will apply
for annual reporting periods beginning on or after 1 January 2024.
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7.
The amendments introduce two new disclosure objectives - one in IAS 7 and
another in IFRS 7 - for a company to provide information about its supplier
finance arrangements that would enable users (investors) to assess the effects
of these arrangements on the company's liabilities and cash flows, and the
company's exposure to liquidity risk. This will apply for annual reporting
periods beginning on or after 1 January 2024.
IFRS S1 General Requirements for Disclosure of Sustainability-related
Financial Information and IFRS S2 Climate-related Disclosures.
IFRS S1 is for sustainability-related financial disclosures and IFRS S2 is for
climate-related disclosures. The two standards are designed to be applied
together. The standards are voluntary unless adopted into national
legislation. The UK is strongly considering adopting the standards into the UK
Sustainability Disclosure Standards (UK SDS), currently being developed and
due to be announced in July 2024. If adopted by the UK The standards are
voluntary unless adopted into national legislation. The UK is strongly
considering adopting the standards into the UK Sustainability Disclosure
Standards (UK SDS), currently being developed and due to be announced in July
2024.
Lack of Exchangeability - Amendments to IAS 21:
Under IAS 21 The Effects of Changes in Foreign Exchange Rates, a company uses
a spot exchange rate when translating a foreign currency transaction.
However, in rare cases, it is possible that one currency cannot be exchanged
into another. This lack of exchangeability might arise when a government
imposes controls on capital imports and exports, for example, or when it
provides an official exchange rate but limits the volume of foreign currency
transactions that can be undertaken at that rate. Consequently, market
participants are unable to buy and sell currency to meet their needs at the
official exchange rate and turn instead to unofficial, parallel markets. This
amendment clarifies when a currency is exchangeable into another currency; and
how a company estimates a spot rate when a currency lacks exchangeability.
This will apply for annual reporting periods beginning on or after 1 January
2025.
IFRS 18 Presentation and Disclosure in Financial Statements.
IFRS 18 promotes a more structured income statement. In particular, it
introduces a newly defined 'operating profit' subtotal and a requirement for
all income and expenses to be allocated between three new distinct categories
based on a company's main business activities. IFRS 18 will replace IAS 1
Presentation of Financial Statements. This will apply for annual reporting
periods beginning on or after 1 January 2027.
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.
These measures are not defined by UK-adopted IAS 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, UK-adopted IAS measurements.
Purpose
The Directors believe that the adjusted EBITDA 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 UK-adopted IAS 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 eighteen months 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
30/06/2024 £'000 £'000 £'000 £'000
Supply of products - 1,224 - 1,224
Supply and installation contracts - 16 - 16
Maintenance and services 6,725 497 - 7,222
Training courses 520 69 - 589
Revenue 7,245 1,806 - 9,051
Segmental underlying adjusted EBITDA^ * 904 (892) (1,434) (1,473)
Share option expense - - (67) (67)
Other Income Losses - - (1,013) (1,013)
Discontinued operations (1,263) (1,263)
Depreciation & amortisation (208) (32) (149) (389)
Segment operating result 696 (924) (3,926) (4,205)
Finance cost - - (209) (209)
Profit/ (loss) before tax 696 (924) (4,135) (4,414)
Income tax benefit / (charge) (10) - - (10)
Profit/(loss) for the financial year 686 (924) (4,135) (4,424)
Segment assets 3,755 1,101 2,747 7,603
Segment liabilities 1,581 1,386 1,292 4,259
Capital expenditure 133 1 18 152
*Adjusted for discontinued operations refer note 28.
^This is an Alternative Performance Measure refer to Note 2 for further
details
Managed Services Technology Group and Central Group Total
31 December 2022 £'000 £'000 £'000 £'000
Supply of products - 1,815 - 1,815
Supply and installation contracts - 1,080 - 1,080
Maintenance and services 4,905 338 - 5,243
Training courses 419 22 - 441
Revenue 5,324 3,255 - 8,579
Segmental underlying EBITDA^ 2,046 81 (2,609) (483)
Depreciation & amortisation (108) (22) (122) (252)
Segment operating result 1,937 59 (2,731) (735)
Finance cost - - (40) (40)
Profit/ (loss) before tax 1,937 59 (2,771) (775)
Income tax benefit / (charge) 40 - 314 354
Continuing Profit/(loss) for the financial period 1,977 59 (2,457) (421)
Discontinued operations 353 57 410
Profit/(loss) for the financial period 2,330 59 (2,400) (11)
Segment assets 4,886 2,543 2,600 10,029
Segment liabilities 878 1,388 348 2,614
Capital expenditure 113 1 39 153
^ This is an Alternative Performance Measure refer to Note 2 for further
details
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.
30 June 2024 31 Dec 2022
£'000 £'000
UK and Europe 3,569 2,520
Africa 5,202 5,755
Middle East 232 68
Rest of World 48 236
Total 9,051 8,579
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
No single customer contributed more than 10% of the Group revenue in 30 June
2024.
4. Finance costs
Group Group
30 June 2024 31 Dec 2022
£'000 £'000
Finance cost on lease liabilities (14) (6)
Interest payable on bank and other borrowings (195) (34)
Total finance costs (209) (40)
5. Loss from operations
The following items have been included in arriving at the loss for the
financial period
Group Group
30 June 2024 31 Dec 2022
£'000 £'000
Staff costs (see Note 7) 6,606 4,356
Depreciation of property, plant and equipment 317 196
Amortisation of intangible assets 72 56
Operating lease rentals payable
Short term Leases 196 158
Foreign exchange loss/(gain) 265 344
Auditor's remuneration
Amounts payable in 30 June 2024 relate to PKF Littlejohn LLP in respect of
audit and other services. The local Audit in Sierra Leone is performed by
Moore Sierra Leone.
Audit services Group Group
30 June 2024 31 Dec 2022
£'000 £'000
Statutory audit of parent and consolidated financial statements 110 62
Review of Interim Results - 2
- Statutory audit of subsidiaries of the company pursuant to 20 20
legislation
Total payable to PKF Littlejohn UK 130 84
Local audit in Sierra Leone - Moore Sierra Leone 19 19
Total fees 149 103
6. Taxation
Analysis of tax charge / (credit) in eighteen months
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 25% tax rate and reflected in these financial
statements.
£'000 £'000
30 June 2024 31 Dec 2022
Current period £'000 £'000
UK Corporation tax on profits in the period - -
Potential foreign corporation tax on profits in the period 5 -
Deferred Tax (Note 16)
Foreign entity deferred tax (46) (40)
Review of expected utilisation of Losses - (314)
Tax on losses (41) (354)
Deferred tax on property revaluation 51 -
Tax on losses and other comprehensive income 10 (354)
Group Group
30 June 2024 31 Dec 2022
£'000 £'000
Reconciliation of effective tax rate
Loss on ordinary activities before tax (4,414) (365)
Loss on ordinary activities multiplied by the standard rate of corporation tax (1,059) (69)
in the UK of 24% (31 Dec 2022: 19%)
Effects of:
Expenses not deductible for tax purposes 424 94
Deferred tax movement (Note 16) 55 (355)
Release of losses - (24)
Unrecognised losses carried forward 590 -
Total tax - credit 10 (354)
For further details on Tax refer to Note 16.
7. Employee costs
Employee costs for the Group during the period
Group
30 June 2024 31 Dec 2022
£'000 £'000
Wages and salaries 5,819 3,822
Pension contributions 82 73
Social security costs 638 461
6,539 4,356
Share based payments 67 -
Net Cost 6,606 4,356
The Group operates a stakeholder pension scheme. The Group made pension
contributions totalling £82,000 during the eighteen months (31 Dec 2022:
£73,000), and pension contributions totalling £23,000 were outstanding at
the period-end (31 Dec 2022: £83,000).
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 eighteen
months was £940,000 (31 Dec 2022 twelve months: £635,000) and the highest
paid director received in the eighteen months remuneration totalling £315,000
(31 Dec 2022 twelve months: £206,000) before any share-based payments.
Average monthly number of people (including Executive Directors) employed
Group 30 June 2024 31 Dec 2022
By function:
Sales 7 8
Operations 201 212
Administration 17 24
Management 11 12
236 256
8. Loss per share
Earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the eighteen months.
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 eighteen months have been included.
The weighted average number of ordinary shares is calculated as follows:
30 June 2024 31 Dec 2022
'000 '000
Issued ordinary shares
Start of period 330,515 330,515
Effect of shares issued during the period - -
Weighted average basic and diluted number of shares for period 330,515 330,515
30/06/2024 30/06/2024 30/06/2024 31/12/2022
Continuing Operations Discontinued Operations Total Total
Earnings
Loss and total comprehensive expense (3,110) (1,263) (4,373) (11)
Loss per share (pence) (0.94p) (0.38p) (1.32p) 0.00p
For the eighteen months ended 30 June 2024 and twelve months ended 31 Dec 2022
the issue of additional shares on exercise of outstanding share options,
convertible loans and warrants would decrease the basic loss per share and
there is therefore no dilutive effect. Loss per share was 1.32p (31 Dec 2022:
0.00p).
9. Goodwill
Group 30 June 2024 31 Dec 2022
£'000 £'000
Gross carrying amount at start of period 1,378 1,377
Exchange rate movement (1) 1
Gross carrying amount at end of period 1,377 1,378
Accumulated impairment at start of period (763) (763)
Impairment charge for the period - -
Accumulated impairment at end of period (763) (763)
Carrying amount at start of period 615 614
Carrying amount at end of period 614 615
The goodwill balance relates to the acquisition of Longmoor Security Limited,
Keyguard U.K Limited and Euro-Ops SARL. The movement is because of an
exchange rate movement on Euro Ops where the goodwill is in Euros.
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 30 June 2024 financial budgets approved by management.
The projection assumes that the companies are held in perpetuity. A discount
rate of 42% (31 Dec 2022: 20%) 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.
10. Other intangible assets
Group Website and Software Company Website and Software
As at 30 June 2024
£'000 £'000
Cost
At 1 January 2023 412 377
Disposals (8) (8)
At 30 June 2024 404 369
Accumulated amortisation and impairment
At 1 January 2023 306 293
Charge for the period 72 59
At 30 June 2024 378 352
Net book value at 30 June 2024 26 17
As at 31 Dec 2022
£'000 £'000
Cost
At 1 January 2022 400 364
Additions 12 13
At 31 December 2022 412 377
Accumulated amortisation and impairment
At 1 January 2022 250 244
Charge for the year 56 49
At 31 December 2022 306 293
Net book value at 31 December 2022 106 84
11. Property, plant and equipment
Group Freehold property Plant and equipment Office equipment, fixtures and fittings Motor vehicles Right of use assets Total
30 June 2024 £'000 £'000 £'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2023 1,131 783 1,078 72 165 3,229
Additions 7 2 3 15 125 152
Disposals - - (1) - (40) (41)
Revaluation 205 - - - - 205
At 30 June 2024 1,343 785 1,080 87 250 3,545
Accumulated depreciation and impairment
At 1 January 2023 105 606 555 50 88 1,404
Charge for the period 38 72 115 20 72 317
Disposals - - (3) - (40) (43)
At 30 June 2024 143 678 667 70 120 1,678
Net book value at 30 June 2024 1,200 107 413 17 130 1,867
31 Dec 2022 £'000 £'000 £'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2022 1,126 768 1,058 109 173 3,234
Additions 5 15 20 - 101 141
Disposals - - - (37) (109) (146)
At 31 December 2022 1,131 783 1,078 72 165 3,229
Accumulated depreciation and impairment
At 1 January 2022 81 557 496 77 128 1,339
Charge for the period 24 49 59 11 53 196
Disposals - - - (38) (93) (131)
At 31 December 2022 105 606 555 50 88 1,404
Net book value at 31 December 2022 1,026 177 523 22 77 1,825
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 30 June 2024, which provided a valuation of £1,200,000
(previous valuation £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
30 June 2024 £'000 £'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2023 1,130 23 259 24 1,436
Additions 8 - - 10 18
Revaluation 205 - - - 205
At 30 June 2024 1,343 23 259 34 1,659
Accumulated depreciation and impairment
At 1 January 2023 105 19 207 18 349
Charge for the period 38 3 31 16 88
At 30 June 2024 143 22 238 34 437
Net book value at 30 June 2024 1,200 1 21 - 1,222
31 Dec 2022 £'000 £'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2022 1,126 23 237 100 1,486
Additions 4 - 22 - 26
Disposals - - - (76) (76)
At 31 December 2022 1,130 23 259 24 1,436
Accumulated depreciation and impairment
At 1 January 2022 81 18 184 70 353
Charge for the period 24 1 23 24 72
Disposals - - - (76) (76)
At 31 December 2022 105 19 207 18 349
Net book value at 31 December 2022 1,025 4 52 6 1,087
The freehold property was valued professionally by White Commercial, Chartered
Surveyors, as at 30 June 2024, which provided a valuation of £1,200,000
(previous valuation £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.
30 June 2024 31 Dec 2022
£'000 £'000
Historical cost 815 808
Accumulated depreciation
At start of period 340 324
Charge for the period 16 16
At period end 356 340
Net book value as at end of period 459 468
12. 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
30 June 2024 31 Dec 2022
At start of period 89 106
Additions 126 30
Expensed in the period (62) (47)
As at end of period 153 89
Of which
Current Lease 33 62
Non-Current 120 27
153 89
13. Investment in subsidiaries
All loans relate to cash movements between Group companies and are repayable
on demand. Loans and other intercompany accounts are 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.
Company 30 June 2024 31 Dec 2022
Investments Investments
Cost £'000 £'000
At 1 January 389 389
Movement in Period - -
At 31 December 389 389
Accumulated impairment
At 1 January (389) (389)
Movement in Period - -
At 31 December (389) (389)
Investment in subsidiaries - -
A sum of £9,587,000 (31 Dec 2022: £9,244,000) has been recognised in
receivables as intercompany; as well as £1,085,000 (31 Dec 2022: £630,000)
which has been recognised in payables as intercompany.
14. Subsidiary undertakings
The subsidiary undertakings at 30 June 2024 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 Services 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 100
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 Maritime Services Limited # England Dormant 100
CTAC Limited England Dormant 100
Longmoor Security Services Limited (formerly Westminster Aviation Security England Dormant 100
Services (ME) Limited)
Westminster Aviation Security Services RDC SARLU DRC Managed services of airport security under long term contracts. (Managed 100
Services)
Westminster Liberia LLC Liberia Managed services of port security under long term contracts. (Managed 100
Services)
Subsidiary company registered addresses:
England
Westminster House, Blacklocks Hill, Banbury, Oxfordshire, OX17 2BS, United
Kingdom.
Sierra Leone 49 Waterloo Street, Freetown, Sierra Leone.
Germany Chiemseestrasse 25, 83233 Bernau am
Chiemsee, Germany.
France 17 Route de Sundhoffen, 68280
Andolsheim. France.
DRC Cabinet Lohayo Ngola Patrick,
Immeuble Mirlandsis. au No34 du Boulevard Sendwe, Kinshasa DRC.
Liberia Gbaintor Law Firm, Wroto Town.
Sinkor, Airfield, Monrovia, Liberia.
* Consolidated due to de facto control. These
results do not have a material effect on the financial statements.
# Westminster Maritime Services Limited was formerly
known as Westminster Facilities Management Limited & Westminster Managed
Services Limited.
15. Financial instruments
Categories of financial assets and liabilities.
The fair value of 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
30 June 2024 31 Dec 2022 30 June 2024 31 Dec 2022
£'000 £'000 £'000 £'000
Financial assets
Trade and other receivables (note 18) 2,121 5,354 9,694 10,672
Cash and cash equivalents (note 19) 977 289 780 (59)
3,098 5,643 10,474 10,613
Financial liabilities
Borrowings (note 22) 2,092 222 978 -
Trade and other payables (note 23) 4,139 2,312 2,335 999
6,231 2,534 3,313 999
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 26.
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 £1m
Conversion Price 3p per share
Security Secured fixed and floating
Redemption Date 26 June 2027
Coupon 10%
Conversion Detail The holder can convert at any time after 26 June 2025.
Group Group Company Company
30/06/2024 31/12/2022 30/06/2024 31/12/2022
At Start of Period - - - -
Fair value of new loans issued 978 - 978 -
Amortised finance cost - - - -
Interest paid - - - -
At End of Period 978 - 978 -
Analysis of movement in debt at principal value (excluding IFRS impacts),
memorandum only
Group Group Company Company
30/06/2024 31/12/2022 30/06/2024 31/12/2022
At Start of Period - - - -
New issue 1,000 - 1,000 -
At End of Period 1,000 - 1,000 -
The convertible loan notes have been separated into two components, the Host
Debt Instrument and the Embedded Derivative on initial recognition. The value
of the Host Debt Instrument will increase to the principal sum amount by the
date of maturity.
The effective interest cost of the Notes is the sum of that increasing value
in the period and the interest paid to Noteholders.
Secured convertible loan notes (CLN) are compound financial instruments that
can be converted to share capital at the option of the holder, and the number
of shares to be issued does not vary with changes in fair value.
16. 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 30 June 2024, 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 2026.
The Group believes it has a total potential deferred tax asset of £4,254,000
(31 Dec 2022: £4,047,000). It has recognised a deferred tax asset of
£1,304,000 (31 Dec 2022: £1,308,000) due to budgeted future profits of the
business beyond 30 June 2024 and the expected tax rate. There remains
£3,073,000 (31 Dec 2022: £2,739,000) of unrecognised deferred tax asset.
Deferred tax assets and liabilities have been calculated using the expected
future tax rate of 25% (31 Dec 2022: 25%). Any changes in the future would
affect these amounts proportionately.
30 June 2024 31 Dec 2022
£'000 £'000
Opening balance as at start of period 1,308 953
Deferred tax movement (4) 355
Deferred tax asset as at end of period 1,304 1,308
17. Inventories
Group Group Company Company
30 June 2024 31 Dec 2022 30 June 2024 31 Dec 2022
£'000 £'000 £'000 £'000
Finished goods 655 485 - -
655 485 - -
The cost of inventories recognised as an expense within cost of sales amounted
to £992,000 (31 Dec 2022: £2,153,000). No reversal of previous write-downs
was recognised as a reduction of expense in 30 June 2024 or 31 December 2022.
18. Trade and other receivables
Group Group Company Company
30 June 2024 31 Dec 2022 30 June 2024 31 Dec 2022
£'000 £'000 £'000 £'000
Trade receivables, gross 770 1,827 - -
Allowance for credit losses (19) (26) - -
Trade receivables 751 1,801 - -
Amounts recoverable on contracts 69 750 - -
Intercompany receivables - - 9,587 9,244
Other receivables 1,301 2,211 107 1,428
Financial assets 2,121 4,762 9,694 10,672
Other taxes and social security 9 15 - -
Prepayments 30 31 - 11
Non-financial assets 39 46 - 11
Trade and other receivables 2,160 4,808 9,694 10,683
Non-Current Receivable - 593 - -
The average credit period taken on sale of goods in 30 June 2024 was 53 days
(31 Dec 2022: 30 days). An allowance has been made for estimated credit losses
of £19,000 (31 Dec 2022: £26,000). 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.
Other receivables include a sum of £105,000 (31 Dec 2022: £1,118,000) due
from the RiverFort Equity Placing and Sharing Agreement. It is expected that
it will be recovered from the sale of shares currently still held by
RiverFort. The reduction from 2022 of £1,013,000 included in other income /
losses follows from the shares being marked to market. No share sales have
been made in 18 months to 30 June 2024. Other receivables also includes
£1,053,000 (31 Dec 2022: £845,000) of pre-contract expenditure on managed
services contracts.
The following table provides an analysis of trade receivables at the period
end. 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.
30 June 2024 31 Dec 2022
£'000 £'000
Current 384 410
Not more than 3 months 342 1,166
More than 3 months 44 251
770 1,827
30 June 2024 31 Dec 2022
Allowances for Credit Losses
£'000 £'000
Opening balance at 1 January 26 56
Amounts written off (17) (37)
Amounts provided 10 17
Currency movement - 1
Written back (no longer required) - (11)
Closing balance at 31 December 19 26
There are no significant expected credit losses from financial assets that are
neither past due nor impaired.
At 30 June 2024
· £332,000 (31 Dec 2022: £1,313,000) of receivables were
denominated in US dollars,
· £6,000 (31 Dec 2022: £11,000) of receivables were denominated
in Euros,
· £1,000 (31 December 2022: Nil) of receivables were denominated
in Sierra Leone New Leone and
· nil (31 Dec 2022: £71,000) were denominated in Ghanaian Cedi.
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
19. Cash and cash equivalents
Group Group Company Company
30 June 2024 31 Dec 2022 30 June 2024 31 Dec 2022
£'000 £'000 £'000 £'000
Cash at bank and in hand 977 289 780 (59)
Bank overdraft - - - -
Cash and cash equivalents 977 289 780 (59)
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.
20. Called up share capital
Group and Company
The total amount of issued and fully paid shares is as follows:
Ordinary Share Capital 30 June 2024 31 Dec 2022
Number £'000 Number £'000
At the start of the period 330,514,660 331 330,514,660 331
At the period end 330,514,660 331 330,514,660 331
Total Share Capital 30 June 2024 31 Dec 2022
Number £'000 Number £'000
Ordinary Share Capital 330,514,660 331 330,514,660 331
Deferred share capital - - - -
330,514,660 331 330,514,660 331
There were no equity issues in the period.
21. Share options and Warrants
Options outstanding
Options outstanding as at 1 January 2023 8,692,500
Options awarded 16,700,000
Options waived (6,781,250)
Lapsed during the period (1,546,250)
Options outstanding as at 30 June 2024 17,065,000
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.
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 2.9p (31 Dec 2022: 17.6p). The average life of the
unexpired share options was 8.1 years (31 Dec 2022: 4.5 years).
As At 30 June 2024 31 December 2022
Grant date Exercise price £ Number outstanding Average life outstanding (years) 31 Dec 2022 number outstanding 31 Dec 2022 average life outstanding (years)
01 July 2014 0.510 - - 150,000 1.5
10 December 2014 0.285 - - 2,187,500 1.9
09 October 2015 0.140 - - 40,000 2.8
01 June 2018 0.130 1,465,000 3.9 5,565,000 5.4
08 November 2018 0.130 - - 750,000 5.8
12 January 2024 0.020 15,600,000 8.5 - -
17,065,000 8.1 8,692,500 4.5
During the period, 16,700,000 employee options were granted (31 Dec 2022:
Nil), none were exercised (31 Dec 2022: none), 6,781,250 were waived (31 Dec
2022: none) and 1,546,250 lapsed (31 Dec 2022: 785,0000). The weighted average
price of the options lapsed in the period was 10.5p (31 Dec 2022: 23.4p).
The weighted average exercise price of exercisable options at the end of 30
June 2024 was 2.9p (31 Dec 2022 17.6p).
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. The
standard deviation of the share price over the last year has been used to
calculate volatility. The volatility is 65%, interest risk free rate of 3.5%,
dividend of 0% and a life of 5 years.
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
There are no warrants which are still in force at the balance sheet date:
Movement in Warrants
As at 1/1/23 Lapsed As at 30/06/24
Placing Commission 170,455 (170,455) -
RiverFort EPSA 3,499,222 (3,499,222) -
3,669,677 (3,669,677) -
22. Borrowings
Group Group Company Company
30/06/2024 31/12/2022 30/06/2024 31/12/2022
£'000 £'000 £'000 £'000
Non-current
Borrowings 1,098 27 978 -
Current
Borrowings 994 195 - -
Total borrowings 2,092 222 978 -
Non-current lease debt
As described in Note 12, 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.
23. Trade and other payables
Group Group Company Company
30 June 2024 31 Dec 2022 30 June 2024 31 Dec 2022
£'000 £'000 £'000 £'000
Trade payables 590 556 58 104
Accruals and other creditors 1,458 1,757 214 260
Intercompany payables - - 1,085 630
Other loans 1,938 159 978 -
Finance lease creditor (IFRS 16) 153 62 - 5
Financial liabilities 4,139 2,534 2,335 999
Other taxes and social security payable - - - -
Contractual liabilities 120 80 - -
Non-financial liabilities 120 80 - -
Total trade and other payables 4,259 2,614 2,335 999
Shown on the balance sheet as:
Long Term Borrowings 1,098 27 978 -
Short Term Borrowings 994 195 - -
Contractual liabilities 120 80 - -
Trade and other payables 2,047 2,312 1,357 999
4,259 2,614 2,335 999
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 30 June 2024
was 106 days (31 Dec 2022: 51 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
period-end but not yet earned.
At 30 June 2024 £364,000 (31 Dec 2022: £194,000) of payables were
denominated in US dollars, £8,000 (31 Dec 2022: £85,000) were denominated in
Euros, Nil (31 Dec 2022: £4,000) were denominated in Ghanaian Cedi and
£1,000 (31 Dec 2022: £39,000) were denominated in Sierra Leone Leones.
24. 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 30/06/2024 31/12/2022
Total Total
£'000 £'000
Adjustments:
Depreciation, amortisation and impairment of non-financial assets 389 252
Finance costs 209 40
(Profit) / loss on disposal of non-financial assets (6) (4)
(Increase)/decrease in Deferred Tax Asset 4 -
Share-based payment expenses 67 -
Non-cash transactions 2,312 (36)
Total adjustments 2,975 252
Net changes in working capital: 30/06/2024 31/12/2022
Total Total
£'000 £'000
(Increase)/decrease in inventories (170) 196
Decrease/(increase) in trade and other receivables 372 (485)
Decrease/(increase) in long term receivables 593 (169)
Increase / (decrease) in contract liabilities 40 (7)
(Decrease)/(increase) in trade and other payables (261) 558
Discontinued operations - (662)
Total changes in working capital 574 (569)
Company Company Company
30/06/2024 31/12/2022
£'000 £'000
Adjustments:
Depreciation, amortisation and impairment of non-financial assets 147 121
Disposal of fixed Assets 8 -
Share-based payment expenses 67 -
Total adjustments 222 121
Net changes in working capital:
Decrease / (Increase) in trade and other receivables 989 (853)
Increase in trade and other payables 359 360
Total changes in working capital 1,348 (493)
25. Contingent assets and contingent liabilities
In February 2022, 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.
26. 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 New Leone (SLE). 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
30 June 2024
Financial assets 332 6 1 -
Financial liabilities (364) (8) 1 -
Total exposure (32) (2) 2 -
31 December 2022
Financial assets 1,313 11 - 71
Financial liabilities (194) (85) (39) (4)
Total exposure 1,119 (74) (39) 67
If the US dollar were to depreciate by 10% relative to its period end rate,
this would cause a gain in profits to 30 June 2024 of £4,000 (31 Dec 2022:
£124,000 Loss).
If the Euro were to depreciate by 10% relative to its period end rate, this
would cause a gain in profits to 30 June 2024 of an immaterial amount (31 Dec
2022: £8,000 Gain).
If the Sierra Leonean Leone were to depreciate by 10% relative to its period
end rate, this would cause a loss in profits to 30 June 2024 of an immaterial
amount (31 Dec 2022: £4,000 Gain).
If the Ghanaian Cedi were to depreciate by 10% relative to its period end
rate, this would cause no change in profits to 30 June 2024 (31 Dec 2022:
£7,000 Loss).
Exposures to foreign exchange rates vary during the period depending on the
volume of overseas transactions. Nonetheless, the analysis above is considered
to be representative of the Group's exposure to currency risk. Net foreign
currency denominated financial assets and liabilities are immaterial for the
Company.
Interest rate sensitivity
The interest rate on the borrowings is fixed for the term of the loan.
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 18 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 30 June 2024, the Group's financial liabilities have contractual
maturities (including interest payments, where
applicable) as summarised below:
30 June 2024 31 Dec 2022
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
Trade and other payables 2,047 - - 2,587 - -
Total 2,047 - - 2,587 - -
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
Trade and other payables 1,357 - - 999 - -
Total 1,357 - - 999 - -
27. Related Party Transactions
Balance at 31 December Movement in Year Balance at 31 December Movement in 18-month period Balance at 30 June 2024
2021 2022 2022 2024 2024
Group Loan (97) (97)
Westminster International Limited 127 (713) (586) (456) (1,042)
Westminster Services Limited (formerly Longmoor Security Limited) - 62 62 80 142
Westminster Aviation Security Services Limited 4,762 (1,432) 3,330 (2,544) 786
Sovereign Ferries Limited 548 (2) 546 (546) -
Westminster Operating Limited (174) 2,075 1,901 3,200 5,101
Keyguard U.K Limited 332 (10) 322 42 364
Longmoor (SL) Limited (24) 2 (22) 1 (21)
Facilities Operations Management Limited 1,499 24 1,523 (2) 1,521
Westminster Sierra Leone Limited * - - - - -
Westminster Group GMBH 1,188 133 1,321 100 1,421
GLIS Gesellschaft für Luftfahrt- und Infrastruktur-Sicherheit GmbH - - - - -
Westminster Sicherheit GMBH - - - - -
Euro Ops SARL 187 51 238 83 321
Westminster Maritime Services Limited (21) - (21) - (21)
Longmoor Security Services Limited (formerly Westminster Aviation Security - - - - -
Services (ME) Limited)
WASS DRC - - - 27 27
8,424 190 8,614 (112) 8,502
Balances and transactions between the Company and its subsidiaries, which are
related parties, are listed below:
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 period to 30 June 2024 fees and expenses of nil (31 Dec 2022: £2,640)
plus VAT were accrued to Graham Binns Consulting Limited, a Limited Liability
Partnership under the control of Major General (Rtd) Graham Binns. On the 30
June 2024 Graham Binns Consulting Limited was owed £nil (31 Dec 2022: £nil).
Certain members of the Fowler family, other than directors, have been employed
by the Group on normal arms-length terms for between 1 and 26 years. Their
remuneration, in aggregate, for the eighteen months ended 30 June 2024 was
£286,878 (31 Dec 2022 twelve months: £176,718)
28. Discontinued operations
At 30 September 2017 the Group took the decision to dispose of its ferry
operation in Sierra Leone. The last vessel, the Sierra Queen, was sold in
February 2020 on extended terms. The Covid 19 pandemic and subsequent issues
with the boat has meant that despite having reservation of title, personal and
cross guarantees from the purchaser, it is looking increasingly probable that
all or part of the remaining debt may be uncollectable. Prudently the group
has reserved £561,000 against all of the remaining debt.
We announced in November 2022 that the relationship with our local partners,
Scanport, regarding our Ghana port project had become increasingly strained
and that we were looking to resolve matters through mediation to include
accelerated receipt in recompense for early termination, which would free up
resources for new large-scale projects expected in 2023. This was finally
resolved in December 2023 and remaining balances associated with the Ghana
project amounting to £702.000 have been written off.
Consolidated income 30/06/2024 31/12/2022
£'000 £'000
REVENUE - 949
Cost of sales - (457)
Gross profit - 492
Operating expenses - (139)
PROFIT FROM OPERATIONS - 354
Other income / (losses) (1,263) -
Discontinued operations loss after tax for the year from discontinued (1,263) 354
operations
Financial Position
Trade and other receivables - 872
Non-current Receivable - 479
Cash Flow
PROFIT / (LOSS) (1,263) 354
Movement on fixed assets - (66)
Net changes in working capital 1,263 (541)
Changes in intercompany balances - (55)
NET CASH USED IN OPERATING ACTIVITIES - (309)
Opening cash - 309
Closing cash - -
Cash outflow - (309)
29. Events after the Reporting Period
On 1 November the group announced that Pantheon A Family Office Limited were
subscribing for 20,833,333 new ordinary shares of 0.01p each ('Subscription
Shares') at 2.4p. with 500,000 warrants exercisable at 10p per share, valid
for 3 years from the date of issue.
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