REG - Westminster Group - Interim Results <Origin Href="QuoteRef">WSG.L</Origin>

WestminsterAnnouncement

30/09/2015 07:01

RNS Number : 6072A
Westminster Group PLC
30 September 2015
30 September 2015
Westminster Group Plc: 
Interim Results for the six months to 30 June 2015
Westminster Group Plc ('Westminster', the 'Company' or the 'Group'), the AIM listed supplier of managed services and technology based security solutions to governments and government agencies, non-governmental organisations (NGO's) and blue chip commercial organisations worldwide, is pleased to announce its Interim Results for the six months ended 30 June 2015.
Key Points:
 Considerable improvement in the Ebola crisis in West Africa. Airport contract generating positive EBITDA on a monthly basis since February 2015
 Operational leverage should allow further improvements in airport volumes to be serviced largely by existing resources
 Improved performance in the Technology Division arising from larger value sales in the first quarter
 Average gross margin improved to 51% (2014: 41%)
 Cost reductions of 18% compared to the comparative period -effected by the end of the period
 Operating loss can be wholly attributable to impact of Ebola - without Ebola the Group would have been operationally profitable 
 Revenues fell by 0.3m to 1.93m after the impact of the Ebola crisis on passenger volumes of approximately 0.9m
 Loss per share reduced to 1.83p (2014: 1.95p)
 Major investment in ferry project with1.6m spent on the vessel, equipment and setup costs
 Deferred income rose to 2.03m (2014: negligible) arising from work to be delivered on the US bridge contract and Americas consulting 
 2.0m net raised by issue of convertible loan notes
 Cash balance 0.41m (2014: 0.16m)
 Shareholders' Equity 1.87m (2014: 1.77m)
Commenting on the results and current trading Peter Fowler, Chief Executive of Westminster Group, said:
"The first half of 2015 has thrown up unprecedented challenges in our principal projects however our staff have dealt with these commendably. 
"We are looking forward to launching our ferry service and maximising the mutual benefit that this new transport link and the established airport traffic will achieve when working in tandem. The prop shaft is now repaired and will be transported back in-country on the first available governmental flight which is scheduled to leave on 6 October.
"Our internal calculations demonstrate that the revenues from these two operations alone will allow the Group to operate on a monthly cash flow positive basis within the next 12 months presuming the recovery in airport traffic continues at this pace to its pre Ebola levels.
"In addition to the two principal operations in West Africa we continue to advance a considerable number of opportunities which offer significant upside potential."
For further information please contact:
Westminster Group plc.
Tel: 01295 756 300
Peter Fowler (Chief Executive)
Ian Selby (Chief Financial Officer)
S. P. Angel Corporate Finance LLP (NOMAD + Broker)
Tel: 020 3470 0470 
Stuart Gledhill
Walbrook PR (Financial PR)
Tel: 020 7933 8780
Tom Cooper/Paul Vann
0797 122 1972
tom.cooper@walbrookpr.com
Notes:
Westminster Group plc is a leader in the supply of system solutions and products to the security, defence, fire protection and safety markets worldwide.
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 ferry services, 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. For further information please visit www.wsg-corporate.com
Chief Executive Officer's Review
Overview
The markets in which we operate present various challenges and can at times be frustrating with delays and bureaucracy yet, precisely because of these issues, they offer significant opportunities. The first six months of 2015 are a good demonstration of both the challenges and opportunities we face in our chosen markets. We are aware from the experiences of other businesses operating in these territories that these delays and frustrations are not unique to Westminster. 
During the first half of the year we have been focussed primarily on two key issues; firstly, dealing with the continuing but, I am pleased to say, greatly reduced effects of the Ebola Crisis on our airport security operations in West Africa; and secondly, the implementation of the new long term managed services ferry project. Both of these projects have presented us with a number of challenges, which we have successfully addressed and overcome. However, the strategic importance of these two long term projects and the measures we have been putting in place to ensure the operations are efficiently and professionally run will be apparent as the business moves forward.
The ferry project, when up and running, together with the existing airport security operations, based on conservative passenger numbers and a steady recovery to pre Ebola levels over the next 12 months, provides an opportunity for the Group to be cash positive on a monthly basis even without any significant new business. It is for this reason that these two complementary projects have been our primary focus. Once running in tandem, the financial underpin that these operations will provide creates a stable platform for the Group and its ability to pursue the additional opportunities open to it.
Whilst our primary focus has been on the key contracts above and our internal budgets for Group cash generation have deliberately only included the revenues from these two operations, we have certainly not lost focus on building the business and we have continued to pursue and grow our opportunities and expand the business in both our Managed Services and Technology divisions.
It is important to note that new contract wins and additional revenue both from the Managed Services and the Technology divisions will obviously augment such cash flows and provide considerable upside potential over and above our internal budgets based on the revenues from the two complementary West African projects as they reach key milestones and revenue generation. These opportunities include further long term managed services contracts such as airport security contracts which have the financial dynamics to be transformative for the Group. The Divisional Review expands on the current ongoing client engagements. 
Given the sensitive nature of the negotiations behind these security proposals we are not able to give frequent updates on the progress of these opportunities. The confidentiality from both a client and commercial standpoint cannot be compromised. We will however be providing updates as key milestones are met and as required by our regulatory responsibilities. 
As previously announced, we have been restructuring the business and our reduced overheads for the first six months of 2015 are around 18% lower than the comparable period of 2014. Encouragingly, the financial results as shown in the Financial Review below show that the Group as a whole would have been operationally profitable had it not been for the effect of the Ebola Crisis. 
Divisional Review
Managed Services Division
The Managed Services Division is focussed on providing long term recurring revenue, managed services contracts and the provision of manned services, consultancy, training and other similar supporting services. In our Annual Report issued on 21 May 2015 we announced that we had an increasing number of airport security project opportunities around the world and provided a breakdown of numbers by regions indicating the extent of our opportunities. In our AGM statement we mentioned that our priority prospects had increased significantly since 2014. Furthermore I am pleased to report that whilst some opportunities have stalled others have accelerated and we hope to provide further updates on developments in due course. Both the East African and Asian opportunities under MOU remain live and we continue to progress these potential contracts with the relevant local authorities.
West African Airport Project
The airport contract in West Africa is once again generating contribution after the ravages of Ebola in the latter half of 2014 and its knock on into 2015. It has generated a positive EBITDA every month since February 2015 and revenues are continuing to improve as passenger numbers recover. The Ebola situation within the country has now improved considerably and it is hoped that within the next few weeks the country will be declared Ebola free. Airlines who previously serviced the airport are returning and existing operators are increasing flights; consequently passenger numbers are returning. Currently passenger traffic is about 60% of its pre-crisis levels and we are getting reports of further carriers looking to commence or recommence services. During the crisis we reduced our expatriate related costs (although not our local employees) and I am pleased to report that we now have local team members moving into senior management roles and I am proud of their attitude and professionalism. We do not expect to significantly increase our cost base in order to deliver services at pre Ebola passenger volumes. 
Ferry Service
A key focus this year has been around the implementation of the 21 year ferry contract in West Africa. This project, once delivered, is expected to have very strong financial dynamics. It is closely integrated with our existing airport operation and we expect this to generate substantial long term revenues and is a major part of our strategy to make the business cash positive on recurring revenues alone. Whilst our airport operations generate fees on embarking passengers alone, our ferry services will generate fees on both outbound and return legs. Against this opportunity we have made an investment of 1.6m to the end of June (and have carried on with investment in the third quarter) in getting this project live. There have been unexpected costs and delays as certain repairs and alterations have been made to the vessel following arrival in country and which have taken far longer than anticipated due a range of challenges in country and lack of available infrastructure. An example of which has been the minor repairs to the prop shaft which had to be returned to the UK for repair as facilities were not available in country. The logistics of removing and shipping the shaft, which is over 7m in length and would not fit commercial aircraft flying there, presented quite a challenge. The prop shaft is now repaired and will be transported back in-country on the first available governmental flight which is scheduled to leave on 6 October 2015. We are in the process of developing our own maintenance and repair facilities and it is unfortunate these works were required prior to our own facilities being completed.
The effect of this however has had a double impact, firstly costs of repairs and secondly there has been a very significant opportunity cost in terms of lost revenue which we estimate could be up to $1.2m. Frustrating as this is, these are short term issues and typical of the challenges we can face and have to overcome. I am pleased to report that these issues have largely now been resolved and that the vessel will shortly be operational. We have a strengthened team of locals and experienced expats in situ and we look forward to providing a long term safe and secure transport. The presence of a fully qualified and certified operation and our long leases on terminals will provide a defensible revenue profile. 
Technology Division 
The Technology Division is focussed on providing advanced technology led security solutions encompassing a wide range of surveillance, detection, tracking and interception technologies primarily to governments and major corporations across the world.
It is disappointing that the Division has not secured more large scale projects during the first half of 2015 however the Division has several large and advanced sales prospects underway although as ever timing when dealing with governments can be difficult to determine with accuracy. Nevertheless they are real opportunities which can provide substantial cash flows when they are won. The business provides essential technical resources to the Managed Services Division, again highlighting the vertical integration that exists in our business. 
In April 2015 the Division won a substantial contract to design and supply a specialist detection system for an iconic bridge in the US. This was a strategic and important contract win for the Division. The project is now underway and initial payments received. We expect this to benefit the remainder of this year and early 2016. 
The Division also secured numerous smaller (sub 100k) orders and contracts for a wide range of equipment and services from around the world. 
The $4.4m consultancy agreement signed with a government in the Americas has produced some initial cash flows and some work has been done. It has been recently delayed pending the receipt of further cash flows which has been impacted by national elections and we expect this to be recognised between now and the end of 2016. This excellent opportunity, which has cross party support, has the potential to lead to significant managed services business. 
The $2.6m Asian Border Security project has been subject to protracted governmental delays and at this point timing of future progress is difficult to predict. The customer informs us that they are still committed to the project but we are now excluding this from our forward planning. 
Our Mexican Franchise operation is pursuing a number of sizeable project opportunities including some large scale long term potential projects worth tens of millions USD with structured funding support being provided jointly by UK Export Financing and HSBC bank. 
We continue to progress pipeline security opportunities in various parts of the world including with the major petrochemical company in the Americas which, following trials, has approved Westminster as their preferred supplier for this solution. The substantial drop in the oil price has however caused some of the potential project opportunities we were exploring to be put on hold.
In June we signed an agreement with a senior figure within the Middle East to set up a joint venture operation for the provision of security to Royal Palaces (where we already have a proven record) and other major infrastructure in the region. We are excited by the potential this agreement offers. 
I am pleased to report we continue to receive strong British Government support through UKTI and numerous British Embassies and High Commissions around the world and this includes organising and attending meetings in the UK and overseas as well as lobbying on our behalf.
CTAC Litigation
In our AGM Statement released on 30 June 2015 we announced that we had reached agreement in principle with the vendors of CTAC and that we expected final resolution in July. I am pleased to report that a final settlement regarding the CTAC litigation was achieved in July and we have received the initial settlement. This will be reflected in the results of the second half of the year. A final payment which is secured against certain assets is due to be made before May 2018. 
Board Changes
Matt Wood resigned from the Board at the end of August due to other commitments and we would again to thank him for his support over the past few years. Whilst we are sorry to lose Matt his departure does provide an opportunity to expand the experience and knowledge base of the Company and the Board is currently reviewing several options and will update the market in due course.
Financial Review
The Group's financial performance for the first six months of the year was outlined in the AGM statement released on 30 June 2015 and this results analysis gives further detail.
Revenues and Gross Margin
Revenues fell by 14% to 1.93m (2014: 2.24m). This was fully attributable to the reduction in passenger volumes and therefore security fees due to the Ebola crisis in West Africa. This reversed the volume growth experienced in 2014. The Technology Division produced an improved performance due to larger value sales in the first quarter and these were at an improved gross margin compared to the prior period. Revenues did not include the US bridge project (won in April 2015) and these were deferred at the balance sheet date and are expected to be largely reflected in the second half of the year. Average gross margin improved from 41% to 51%.
Operating Costs
Headline administrative costs fell by 13% compared to the previous year as a result of cost cutting. When adjusted for non-cash depreciation and share option costs they fell by just over 15%. They reduced between the first and second quarters of the year as the benefit of certain measures flowed through after April with an 18% reduction achieved by the end of the second quarter. 
Operating Result
Our headline operating loss increased marginally to just over 1.0m. When adjusted for the impact of the non-cash items referred to above the loss was circa 0.93m which was mainly attributable to the fall in passenger numbers as a result of Ebola. This shows that the Group, had it not been for the impact of Ebola would have been operationally profitable. Share option charges (using Black Scholes) were 0.08m (2014: 0.03m) largely arising from the issue of warrants to holders of the unsecured convertible loan note issued in April 2015. 
Balance Sheet
Fixed Assets
As described in the Overview and Divisional Review above a major focus of the Group has been setting up the 21 year ferry contract. This has entailed major capital expenditure involving the purchase of the vessel, its shipping to West Africa and the setting up of infrastructure and associated costs pre commencement. In aggregate between plant and equipment and assets in the course of construction there has been an investment so far of circa 1.6m. Amortisation and depreciation of these costs will commence once the multi-year project moves into revenue generation. 
Net Current Assets
An increase in debtors was largely offset by a matching increase in deferred revenues when adjusted for deferred items). The increase was primarily due to certain Managed Services revenues which were subsequently collected in July. Deferred revenues were largely comprised of deferred consultancy on the Americas project and the US bridge project. These are expected to benefit the second half of this year and 2016. When adjusted for these items debtor days were 50 (2014: 67).
Convertible Loan Notes
The Group had two loan notes outstanding at the end of the period and the full details of these were set out in the announcement of 22 April 2015. These were:
 Convertible Secured Loan Note. This instrument has a coupon of 10% payable quarterly in arrears, has a conversion price of 35p and is repayable in June 2018. At the balance sheet date it had a principal of 1.245m outstanding, and as required under IFRS it is carried at an amortised cost balance of 1.06m.
 Zero Coupon Convertible Unsecured Loan Notes ("CULN"). The Company issued a further 1,650,000 (gross) CULN to Darwin Strategic Limited. The CULN is unsecured, has a zero coupon attached and is divided into 66 individual notes with a par value of 25,000 each ("Par Value"). Westminster received 90% of the par value (1.485m) on drawdown. On 8 June 2015 250,000 was converted into equity at 18.45 pence and consequently 1,355,245 ordinary shares of 10p each were issued. At the balance sheet date 1.40m was outstanding. Under IFRS this has been split between the embedded derivative which was carried at 0.27m (again using Black Scholes) and the remainder was carried at an amortised cost of 0.8m. It remains the Group's intention to make repayments (which can be done at any time without penalty) when prudent to do so. 
 
Cash Flow Statement
The Group recorded operating cash outflows of 1.13m (2014: 0.82m outflow). This was primarily due to trading losses arising from the impact of Ebola, and an adverse working capital movement of circa 0.4m as a result of certain delayed receipts in Managed Services outlined previously and the payment of certain creditors and provisions. Investment cash outflows of 1.6m largely arose from setting up the ferry contract in West Africa. 
The Group issued two convertible loan notes during the period. A secured loan note was issued raising 0.67m and an unsecured zero coupon loan notes was issued raising 1.485m. The latter carries a redemption premium and therefore carries a gross value of 1.65m. Costs of 0.16m arose from legal fees and commissions. Cash balances at 30 June 2015 were 0.41m (2014: 0.62m).
At the balance sheet date shareholders' funds stood at 1.87m (2014: 1.77m).
Current Trading and Outlook 
The three month period since our AGM has been a busy time for the Group, In addition to dealing with the various issues surrounding getting the ferry project operational and running our existing projects, we have commenced initial works on the USA Bridge contract and secured orders and contracts for a wide range of products and solutions from around the world including Saudi Arabia, South Africa, New Zealand, China, Canada, Vietnam, Belgium, Mexico, UAE, Qatar and Greece. Our business development teams have been and continue to pursue a number of large scale opportunities both in the Technology and Managed Services Divisions.
However our focus of ensuring that the Group can prosper on its core operations is a deliberate move to demonstrate that the business is not dependant on, nor entirely focussed on, grander and distant targets. 
That said, Westminster remains one of a very limited number of internationally focussed companies that has the expertise, experience and presence to assist developing nations improve their critical infrastructure security and encouraging the prosperity that these improvements allow. This is recognised worldwide and continues to be the driver for the enquiries that we receive. We are comfortable that we have the foundations to continue developing these considerable opportunities without losing sight of the core business. 
We look forward to launching the ferry service and developing the passenger flow that the ferry and the airport services can deliver for their mutual benefit. Conditions are improving in-country and the carriers, and in turn the passengers, are returning to the region. We anticipate that we will see this number reach pre-Ebola crisis levels before too long. We see both these projects and a lower overhead level as a key strategy in getting to cash positive in 2016.
The Board laid out its targets at the Annual General Meeting in June. It remains committed to delivering these targets and will be updating the market at the appropriate time. 
Peter Fowler
Chief Executive Officer
Condensed consolidated statement of comprehensive income 
for the six months ended 30 June 2015
6 months
6 months
Year
to 30 June
to 30 June
to 31 Dec 
2015
2014
2013
Note
Unaudited
Unaudited
Audited
'000
'000
'000
Revenues
1,933
2,236
3,489
Cost of sales 
(952)
(929)
(1,533)
Gross profit - Continuing Operations
981
(929)
1,956
GROSS PROFIT 
981
1,307
1,956
Administrative expenses
(1,988)
(2,292)
(4,360)
LOSS FROM OPERATIONS
(1,007)
(985)
(2,404)
Analysis of Operating Result
Depreciation & Amortisation
(78)
(82)
(167)
Highlighted Costs including Impact of Ebola
(946)
(174)
(681)
Proforma Operating EBITDA (Loss) from ongoing operations
17
(728)
(1,556)
Financing gains / (charges)
(8)
46
(37)
LOSS BEFORE TAXATION
(1,015)
(939)
(2,441)
Taxation
-
9
9
LOSS AND TOTAL COMPRENSIVE INCOME ATTRIBUATBLE TO EQUITY SHAREHOLDERS
(1,015)
(930)
(2,432)
LOSS PER SHARE (pence)
(1.83)
(1.95)
(4.94)
Condensed consolidated statement of financial position 
at 30 June 2015
6 months
6 months
Year
to 30 June
to 30 June
to 31 Dec 
2015
2014
2014
Unaudited
Unaudited
Audited
Note
'000
'000
'000
Goodwill
397
397
397
Assets in the Course of Construction
282
-
-
Other intangible assets
9
13
11
Property, plant and equipment
3,137
1,820
1,898
TOTAL NON-CURRENT ASSETS
3,825
2,230
2,306
Inventories
96
82
72
Trade and other receivables
2,856
1,108
2,044
Cash and cash equivalents
414
161
1,180
TOTAL CURRENT ASSETS
3,366
1,351
3,296
TOTAL ASSETS
7,191
3,581
5,602
Share capital
5,650
4,817
5,515
Share premium
9,153
7,607
9,039
Merger relief reserve
299
299
299
Share based payment reserve
220
117
141
Equity Reserve on CLN
181
47
47
Revaluation reserve
134
134
134
Retained earnings
(13,772)
(11,255)
(12,757)
TOTAL SHAREHOLDERS' EQUITY
1,865
1,766
2,418
Embedded Derivative
269
-
-
Borrowings
1,859
527
538
Deferred tax liabilities
53
53
53
TOTAL NON-CURRENT LIABILITIES
2,181
580
591
Deferred Income
2,037
-
1,475
Trade and other payables
1,108
1,235
1,118
TOTAL CURRENT LIABILITIES
3,145
1,235
2,593
TOTAL LIABILITIES
5,326
1,816
3,184
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
7,191
3,581
5,602
Condensed consolidated statement of cash flows 
for the six months ended 30 June 2015
6 months
6 months
Year
to 30 June
to 30 June
to 31 Dec 
2014
2014
2014
Unaudited
Unaudited
Audited
'000
'000
'000
LOSS BEFORE TAXATION
(1,015)
(940)
(2,441)
Adjustments
166
15
261
Net changes in working capital
(285)
102
535
NET CASH USED IN OPERATING ACTIVITIES
(1,134)
(823)
(1,645)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment
(1,316)
(83)
(399)
Assets in the Course of Construction
(282)
-
(1)
Net Proceeds from disposal of fixed assets and subsidiaries
-
-
11
NET CASH USED IN INVESTING ACTIVITIES
(1,598)
(83)
(389)
FINANCING ACTIVITIES:
Gross proceeds from the issue of Ordinary Shares
-
454
2,704
Costs of the share issue
-
(63)
(128)
Gross proceeds from the issue of Loan Notes
2,155
-
-
Cost of loan note issue
(158)
-
-
Interest Paid
(31)
(31)
(69)
NET CASH FROM/(USED IN) FINANCING ACTIVITIES
1,966
360
2,507
Net change in cash and cash equivalents
(766)
(546)
473
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
1,180
707
707
CASH AND EQUIVALENTS AT END OF PERIOD
414
161
1,180
Condensed consolidated statement of changes in equity 
for the 6 months ended 30 June 2015
Share capital
Share premium
Merger relief reserve
Share based payment reserve
Equity Reserve on CLN
Revaluation reserve
Retained earnings
Total
'000
'000
'000
'000
'000
'000
'000
AS OF 1 JANUARY 2015
5,515
9,039
299
141
47
134
(12,757)
2,418
Issue of new shares
135
114
-
-
-
-
-
249
Costs of new share issue
-
-
-
-
-
-
-
-
Arising in the Period
-
-
-
79
134
-
-
213
Share based payments 
-
-
-
-
-
-
-
-
TRANSACTIONS WITH OWNERS
135
114
-
79
134
-
-
462
Loss for the period
-
-
-
-
-
-
(1,015)
(1,015)
AS AT 30 JUNE 2015
5,650
9,153
299
220
181
134
(13,772)
1,865
AS OF 1 JANUARY 2014
4,695
7,123
299
89
144
134
(10,325)
2,159
Issue of new shares
122
551
-
-
-
-
-
67-
Costs of new share issue
-
(67)
-
-
-
-
-
(67)
Arising in the Period
-
-
-
-
(97)
-
-
(97)
Share based payments 
-
-
-
28
-
-
-
28
TRANSACTIONS WITH OWNERS
-
(67)
-
28
(97)
-
-
538
Loss for the period
-
-
-
-
-
-
(930)
(930)
AS AT 30 JUNE 2014
4,695
7,056
299
117
47
134
(11,255)
1,766
AS OF 1 JANUARY 2014
4,695
7,123
299
89
144
134
(10,325)
2,159
Share Based Payments
-
-
-
52
-
-
-
52
Issue of Shares
820
2,112
-
-
-
-
-
2,932
Arising in the Year
-
-
-
-
(97)
-
-
(97)
Cost of other share issues
-
(196)
-
-
-
-
-
(196)
TRANSACTIONS WITH OWNERS
820
1916
-
52
(97)
-
-
2691
Loss for the Period 
 -
-
-
-
-
-
(2,432)
(2,432)
AS AT 31 DECEMBER 2014
5,515
9,039
299
141
47
134
(12,757)
2,418
Notes to the condensed consolidated financial statements 
for the 6 month period ended 30 June 2015
1. General information and nature of operations
Westminster Group Plc (the "Company") and its subsidiaries (together the "Group") design, supply and provide on-going support for advanced technology security, safety, fire and defence solutions to a variety of government and related agencies, non-governmental organisations and mainly blue chip commercial organisations. The Group currently operates through a network of agents located in 48 countries. Agents typically generate sales leads and work with the Group in preparing tender documentation. The majority of the agents are based in the Middle East, the Far East and Africa. The Company was incorporated on 7 April 2000 and is domiciled and incorporated in the United Kingdom and is listed on the AIM Market of the London Stock Exchange.
2. Basis of preparation
These unaudited condensed consolidated interim financial statements are for the six months ended 30 June 2013. The Group has not adopted the reporting requirements of International Accounting Standard (IAS) 34 'Interim Financial Reporting'. They have been prepared following the recognition and measurement of principles of IFRS as adopted by the European Union. The statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2014.
The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements, which were for the year ended 31 December 2013. 
This condensed consolidated interim financial statement for the six months ended 30 June 2013 has neither been audited nor reviewed by the Group's auditors. The financial information for the year ended 31 December 2014 set out in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2014 have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.
3. Going concern
Although the Group incurred trading losses in the 6 month period to 30 June 2015 and in the previous year, the interim financial statements have been prepared on a going concern basis. This is dictated by the following analysis.
The Group has at present two key signed contracts: the airport in West Africa which is fully operational, and the ferry service which is shortly expected to become operational complementing this. The investment phase for these contracts is now over. The financial return from the airport operations is now perceptibly improving. The expected start of the ferry operations at the end of October will provide a steady and highly positive cash flow. In addition, the Technology Division continues to pursue a range of sales prospects with the potential to generate significant income. Owing to their uncertain nature, however, none of the latter has been included in the current analysis.
The Directors have produced a detailed set of financial forecasts for the next 12 months. The Group is also in discussion with several strategic and other investors, both new and existing, with a view to raising additional funds (whether in the form of debt or equity), in the event of a short-term shortfall in working capital. These discussions have already produced oral commitments of up to 0.75 million and other discussions are underway.
For all the above reasons the Directors believe that their judgement of the Group as a going concern is fully justified.
Basis of consolidation
The Group financial statements consolidate those of the Group and its subsidiary undertakings drawn up to 30 June 2015. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from their activities. The Group obtains and exercises control through voting rights. Consolidation is conducted by eliminating the investment in the subsidiary together with the parent's share of the net equity of the subsidiary.
4. Functional and presentational currency
The financial information has been presented in pounds sterling, which is the Group's presentational currency. All financial information presented has been rounded to the nearest thousand.
5. Loss per share
Earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. Only those outstanding options that have an exercise price below the average market share price in the year have been included. For each period the issue of additional shares on exercise of outstanding share options would decrease the basic loss per share and therefore there is no dilutive effect. 
The weighted average number of ordinary shares is calculated as follows:
6 months
6 months
Year
to 30 June
to 30 June
to 31 Dec 
2015
2014
2014
Unaudited
Unaudited
Audited
Issued ordinary shares
Start of period
55,165 
46,999 
46,949
Effect of shares issued during the period
164 
619 
8,196
Weighted and diluted average basic number of shares for period
55,329 
47,618 
55,145 
6. Financing Costs
Financing Charges for the 6 months ended 30 June 2015
6 months
6 months
Year
to 30 June
to 30 June
to 31 Dec 
2015
2014
2014
Unaudited
Unaudited
Audited
'000
'000
'000
Bank Borrowings
-
(3)
(10)
Interest Payable on Convertible Loan Notes
(41)
(34)
(88)
Underlying Finance Costs
(41)
(37)
(98)
Movement in Fair Value of Embedded Derivative
48 
-
-
Adjustment in relation to Amortised Finance Cost on Convertible Loan Notes
(15)
83 
61 
Impact of IFRS on Financing Costs
(8)
83 
61 
Net Finance Costs
(8)
46 
(37)
7. 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 tax to arrive at operating cash flow:
6 months
6 months
Year
to 30 June
to 30 June
to 31 Dec 
2015
2014
2014
Unaudited
Unaudited
Audited
'000
'000
'000
Adjustments: 
Depreciation, amortisation and impairment of non-financial assets 
79
82
167
Finance Charge / (Gain)
8
(46)
37
(Profit) / loss on disposal of non financial assets
-
-
5
Sundry Adjustments
-
(49)
-
Share-based payment expenses 
79
28
52
Total adjustments 
166
15
261
Net changes in working capital: 
Decrease/(increase)in inventories
(24)
20
31
Decrease /(Increase) in trade and other receivables
(813)
308
(628)
(Decrease)/increase in trade and other payables
552
(226)
1,132
Total changes in working capital
(285)
102
535
8. Approval of interim financial statements
The interim financial statements were approved by the Board of Directors on 29 September 2015.
9. Copies of Interim Financial Statements
A copy of the interim financial statement is available on the Company's website, www.wsg-corporate.com and from the Company's registered office, Westminster House, Blacklocks Hill, Banbury, Oxfordshire, OX17 2BS.

This information is provided by RNS
The company news service from the London Stock Exchange
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IR PKCDDPBKDNCB