TIDMWSG
RNS Number : 7621J
Westminster Group PLC
29 April 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014
Westminster Group Plc
('Westminster', the 'Group' or the 'Company')
Final Results for 12 months to 31 December 2021
& Investor Presentation
Westminster Group Plc (AIM: WSG), a leading supplier of managed
services and technology-based security solutions worldwide,
announces Final Results for the 12 months ending 31 December
2021.
Highlights
Operational:
-- Continued to navigate Covid-19 pandemic successfully despite
declining market confidence and delays of Technology Division's
projects.
-- Services Division delivered a robust performance.
-- Recognised for excellence in International Trade with a Queen's Award for Enterprise.
-- Supplied products and solutions to 60 (2020: 78) countries across the world.
-- Secured prestigious contract for the Tower of London.
-- Entered strategic partnership with Covid-19 testing company, Certific.
-- Secured 20-year managed services contract for airport
security in DRC (subject to ratification).
-- Secured 10-year managed services contract for port security in West Africa.
-- Secured $1.7m airport security contract in Southeast Africa.
-- Kept all our employees safe during Covid-19 and maintained
full employment utilising the UK Government furlough scheme, where
appropriate.
Financial:
-- Despite continuing material impact from the effects of
Covid-19, achieved revenues of GBP7.1m (2020: GBP9.9m).
-- Loss after tax GBP1.9m (2020: loss of GBP0.7m).
-- Total Equity / Net Assets increased from GBP7.1m in 2020 to GBP7.5m in 2021.
-- Commenced year debt free and remained so (other than operating lease debt under IFRS 16).
-- Reduction in capital approved and implemented.
Post period End:
-- West African airport ahead of expectations and nearing
pre-pandemic revenue levels, with March 2022 being the highest ever
March figure.
-- Ghana Port performing to expectations and with the fourth
berth opened late 2021, further growth is expected.
-- Training & Guarding businesses recovering well and winning new business.
-- Product and solution sales showing signs of significant
improvement, with several delayed projects once again back in
discussion.
-- Successfully completed Palace of Westminster project (now in 5 year maintenance programme).
-- Westminster Arabia finally established we fully expect to see
KSA provide a material contribution to our 2022 and future
revenues.
-- $1.7m airport security contract secured December 2021
underway and expected to be completed in the year.
-- Continue to work on DRC ratification process, expected to be completed by Q4 2022
-- The logistics, licencing and planning phase of our new 10
year West African port project secured in 2021 is nearing
completion and the operational phase is expected to begin in H2
2022.
-- Closely monitoring US Iranian talks regarding JCPOA.
Commenting, Peter Fowler, Chief Executive of Westminster,
said:
"The defining aspect of 2021 was, of course, the ongoing global
impact of the Covid-19 pandemic, whilst one of the main highlights
of the year was the prestigious Queen's Award for Enterprise in
recognition of Westminster's outstanding contribution to
International Trade, which recognised Westminster's many
achievements, particularly given the challenges presented by the
global pandemic.
"Despite parts of our business being adversely impacted by
lockdowns and travel restrictions, the strength of our business
model, with multiple revenue streams from multiple sources around
the world, together with our global footprint has meant that we
were better placed than many companies to deal with the numerous
challenges created by the Covid-19 pandemic.
"I am proud of how our staff have pulled together and how we
have managed to navigate the crisis. We have continued to keep our
people safe, fully employed (utilising the UK government's furlough
scheme where appropriate) and maintained our global operations,
albeit some on reduced levels.
"We continued to deliver on business opportunities and, in 2021,
we supplied goods and services to 60 countries around the world,
including some notable contract wins. We have continued to invest
in our worldwide business development programmes in order to
deliver on our growth potential, particularly in our long-term
major managed services projects.
"I am pleased to report therefore that, the outlook for 2022 is
looking positive as the worst impact of the global Covid-19
pandemic recedes, travel restrictions are being lifted and business
confidence is beginning to return.
"Building on 2021's recorded revenue we are targeting a number
of incremental revenue growth opportunities for 2022 which, if
delivered, will be a step change for the business. Our West Africa
airport operations are recovering strongly returning to
pre-pandemic levels. Our port security business is growing and we
are targeting new opportunities to be delivered in the year. We are
seeing recovery and anticipate healthy growth in both our guarding
and training businesses. Our enquiries remain buoyant, and we are
targeting material growth both in our product sales and
larger-scale solutions business.
"In conclusion therefore, the recovery we are seeing in existing
revenue streams and new contracts, together with our business model
and the opportunities we have been developing over the years,
despite the challenges and setbacks we have experienced from the
global Covid-19 pandemic, underpin our confidence for the future
growth of our business. Whilst there is still uncertainty in the
world, not least with evolving global events, we remain optimistic
that we can meet 2022 financial year market expectations."
Investor Presentation: 15:00hrs on Tuesday 10 May 2022
The presentation will be hosted through the digital platform
Investor Meet Company at 15:00hrs on Tuesday 10 May 2022. Investors
can sign up to Investor Meet Company for free and add to meet
Westminster Group plc via the following link:
https://www.investormeetcompany.com/westminster-group-plc/register-investor
.
Investors who have already registered and added to meet the
Company will automatically be invited.
Peter Fowler, Chief Executive Officer, and Mark Hughes, Chief
Financial Officer, will review the results for 2021 and update on
prospects for the Group.
Questions can be submitted pre-event to
westminster@walbrookpr.com, or in real time during the presentation
via the "Ask a Question" function.
Annual Report and Accounts - The final results announcement can
be downloaded from the Company's website (www.wsg-corporate.com).
Copies of the Annual Report and Accounts (in addition to the notice
of the Annual General Meeting) will be sent to shareholders on or
before 1 June 2022 for approval at the Annual General Meeting to be
held on 28 June 2022.
For further information please contact:
Westminster Group Plc Media enquiries via Walbrook
PR
Rt. Hon. Sir Tony Baldry - Chairman
Peter Fowler - Chief Executive Officer
Mark Hughes - Chief Financial Officer
Strand Hanson Limited (Financial & Nominated
Adviser)
James Harris 020 7409 3494
Ritchie Balmer
Arden Partners plc (Broker)
Richard Johnson (Corporate)
Tim Dainton/Simon Johnson (Broking) 020 7614 5900
Walbrook (Investor Relations)
Tom Cooper 020 7933 8780
Paul Vann
Nick Rome Westminster@walbrookpr.com
Notes:
Westminster Group plc is a specialist security and services
group operating worldwide via an extensive international network of
agents and offices in over 50 countries.
Westminster's principal activity is the design, supply and
ongoing support of advanced technology security solutions,
encompassing a wide range of surveillance, detection (including
Fever Detection), tracking and interception technologies and the
provision of long-term managed services contracts such as the
management and running of complete security services and solutions
in airports, ports and other such facilities together with the
provision of manpower, consultancy and training services. The
majority of its customer base, by value, comprises governments and
government agencies, non-governmental organisations (NGO's) and
blue-chip commercial organisations.
The Westminster Group Foundation is part of the Group's
Corporate Social Responsibility activities.
The Foundation's goal is to support the communities in which the
Group operates by working with local partners and other established
charities to provide goods or services for the relief of poverty
and the advancement of education and healthcare particularly in the
developing world.
The Westminster Group Foundation is a Charitable Incorporated
Organisation, CIO, registered with the Charities Commission number
1158653.
Chairman's Statement
Overview
2021 was a year of great challenges, but also of great success
for Westminster. We saw the signing of two major managed services
contracts in the Democratic Republic of Congo and West Africa, but
also the frustration of projects right shifting into 2022 and
beyond. Against a difficult year dominated by the uncertainty
caused by the Covid-19 pandemic, I am pleased to present the
Westminster Group PLC Final Results for the year ended 31 December
2021.
In April 2021, Westminster was recognised for its excellence in
International Trade given its outstanding growth in overseas sales
in the last 3 years. It was one of just 205 organisations
nationally for which Her Majesty the Queen has approved the Prime
Minister's recommendation that Westminster be awarded the
prestigious Queen's Award for Enterprise. The significance of this
prestigious award is recognised worldwide and is an indication of
the growth and momentum we have achieved with our world-wide
business over the past few years. To have now been selected for
this distinguished award is an honour, not just for the Company but
for all our employees around the world who have contributed to this
success.
The award was formally presented by the Lord Lieutenant of
Oxfordshire, Sir Tim Stevenson CVO OBE, on behalf of Her Majesty
the Queen, at a ceremony at Westminster House on Friday, 3
September 2021.
I am proud that the Group is recognised globally for its
specialist security and services expertise, operating worldwide via
an extensive international network of agents and offices in over 50
countries. Britain has always been at the forefront of innovation
in security and defence solutions and this Queen's Award accolade
further validates the position Westminster holds in that
marketplace.
The last two years have been dominated by Covid-19, which was
declared a global pandemic in March 2020, creating a worldwide
healthcare crisis with hundreds of millions of citizens infected
and millions tragically losing their lives. Governments around the
world reacted in various ways with many closing borders, some
putting large parts of their populations on lockdown and imposing
travel restrictions. This has had a profound impact on the global
economy and businesses across the globe, the like of which has not
been seen in a generation.
We are a business that operates internationally with staff
around the world, and we are heavily involved in international
travel, as such we have been affected by the impact of the global
disruption caused by the pandemic. During 2021, Covid-19 has had a
profound impact on the global economy with much uncertainty and
many travel restrictions. This did have a negative impact on the
Company, with sales dropping to just under GBP7m and losses
commensurately increased.
Corporate Conduct
As a company whose shares are traded on the AIM market of the
London Stock Exchange, we recognise the importance of sound
corporate governance throughout our organisation, giving our
shareholders and other stakeholders including employees, customers,
suppliers and the wider community confidence in our business. We
endeavour to deliver on our corporate Vision and Mission Statements
in an ethical and sensitive manner irrespective of race, colour or
creed. This is not only a requirement of a well-run public company
but makes good commercial and business sense.
In my capacity as Executive Chairman, I have ultimate
responsibility for ensuring the Board adopts and implements a
recognised corporate governance code in accordance with our stock
market status. Accordingly, the Board has adopted, and is working
to, the Quoted Companies Alliance (QCA) Corporate Governance Code
2018. The Chief Executive Officer (CEO) has responsibility for the
implementation of governance throughout our organisation,
commensurate with our size of business and worldwide
operations.
The QCA Corporate Governance Code 2018 has ten key principles
and we set out on our website how we apply those principles to our
business, and more detailed information is provided in these
accounts.
We operate worldwide with a focus on emerging markets and in a
sector where discretion, professionalism and confidentiality are
essential. It is vitally important that we maintain the highest
standards of corporate conduct. The Corporate Governance Report 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 Chief Executives 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 .
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,
and have put in place processes and safe working practices, with a
number of employees working from home. We also utilised the UK
furlough scheme where appropriate.
In June 2021, Simon Barrell replaced Charles Cattaneo as a
Non-Executive Director and Chairman of the Audit Committee. Simon's
wealth of experience gained from a variety of business sectors, in
particular working in AIM quoted companies and serving on boards of
growing and successful companies, is of great value to our business
as we expand and deliver on our significant potential. He has
worked in groups in adjacent sectors who also serve emerging
markets. This gives him an understanding which will be invaluable
to Westminster in the next stage of its growth.
After several years' valuable service, Lady Patricia Lewis
(Patsy Baker) stepped down from her role as Non-Executive Director
as of 1 November 2021. To replace her, we appointed Major General
(Retired) Graham Binns, CBE, DSO, MC. Graham is a highly decorated
retired British Army officer with over 10 years' experience as a
senior board level executive in the commercial security sector. He
served as General Officer Commanding 1st (UK) Armoured Division and
then Commandant Joint Services Command and Staff College, retiring
in 2010. He had previously commanded the 7th Armoured Brigade (the
Desert Rats) during Operation Telic 1 when the brigade took Basra
in southern Iraq. Following his military career, Graham was
recruited as Chief Executive Officer of Aegis Defence Services Ltd.
providing security services to governments and major corporations
throughout the Middle East and Africa, with revenues of GBP300m and
a staff of over 3,000. Following the acquisition of Aegis by
GardaWorld, the world's largest privately owned security group with
122,000 employees and a turnover of $3 billion, Graham served for
several years as Senior Managing Director of GardaWorld
International Protective Services, and more recently as their
senior advisor on strategic client relationships.
Both Lady Patricia Lewis and Charles Cattaneo stepped down in
order to spend more time on their other commitments. I would like
to thank them both for their dedication and hard work over the past
few years. They made a positive contribution to the Group and were
valued board members.
I would finally like to extend my appreciation to our investors
for their continued support and to our strategic investors who are
bringing their expertise to help deliver value for all.
Rt. Hon Sir Tony Baldry DL
Chairman
Chief Executive Officer's Report
Business Description
The Westminster Group is a global integrated security services
company delivering niche security solutions and long-term managed
services to high growth and emerging markets around the world, with
a particular focus on long term recurring revenue^ business.
Our target customer base is primarily governments and
governmental agencies, critical infrastructure (such as airports,
ports & harbours, borders and power plants), and large-scale
commercial organisations worldwide.
We deliver our wide range of Land, Sea and Air solutions and
services through a number of operating companies that are currently
structured into two operating divisions, Services and Technology,
both primarily focused on international business as follows:
Services Division
Focusing on long term (typically 10 - 25 years) recurring
revenue managed services contracts such as the management and
operation of security solutions in airports, ports and other such
facilities, together with the provision of manpower, consultancy
and training services.
Technology Division
Focussing on providing advanced technology led security
solutions encompassing a wide range of surveillance, detection,
tracking, screening and interception technologies to governments
and organisations worldwide.
In addition to providing our business with a broad range of
opportunities, these two divisions offer cost effective dynamics
and vertical integration with the Technology Division providing
vital infrastructure and complex technology solutions and expertise
to the Services Division. This reduces both supplier exposure and
cost and provides us with increasing purchasing power. Our Services
Division provides a long-term business platform to deliver other
cost-effective incremental services from the Group.
We have a successful track record of delivering a wide range of
solutions to governments and blue-chip organisations around the
world. Our reputation grows with each new contract delivered - this
in turn underpins our strong brand and provides a platform from
which we can expand our business.
Overview
The defining aspect of 2021 was, of course, the ongoing global
impact of the Covid-19 pandemic, whilst one of the main highlights
of the year was the prestigious Queen's Award for Enterprise in
recognition of Westminster's outstanding contribution to
International Trade, which recognised Westminster's many
achievements, particularly given the challenges presented by the
global pandemic.
In January 2021, the UK entered its third national lockdown from
the ongoing Covid-19 pandemic, which lasted until March 2021. Many
areas of the world similarly had ongoing travel restrictions, all
of which impacted large parts of our business. However, with such
restrictions beginning to ease in Q2 2021, the expectation was that
we would see a recovery in H2 2021 and that some of our delayed
projects would once again begin to come on stream. Ultimately, this
was not to be the case. With lockdowns and travel restrictions
continuing in many parts of the world, together with a lack of
business confidence causing many companies to defer capital
expenditure etc., exasperated by the Omicron variant outbreak
sweeping the world in the later part of the year, the events
materially impacted parts of our business for the full year, with
resultant reductions in revenues.
However, I am pleased to report that, despite parts of our
business being adversely impacted by lockdowns and travel
restrictions, the strength of our business model, with multiple
revenue streams from multiple sources around the world, together
with our global footprint has meant that we were better placed than
many companies to deal with the numerous challenges created by the
Covid-19 pandemic and despite the challenges we did manage to
secure a number of notable achievements, not least of which was the
Queen's Award for Enterprise in recognition of Westminster's
outstanding contribution to International Trade.
This prestigious award was formally presented by the Lord
Lieutenant of Oxfordshire, Sir Tim Stevenson CVO OBE on behalf of
Her Majesty the Queen, at an Award Ceremony and Open Day at
Westminster House on Friday, 3 September 2021. The event proved to
be a huge success and was attended by over 100 guests including
many Ambassadors, High Commissioners, Embassy staff and Government
representatives from countries around the world, as well as
customers, partners, and shareholders. In presenting the award Sir
Tim Stevenson said, "The Queen's Award for Enterprise is not an
easy award to achieve, and Westminster's performance has been
extraordinarily impressive demonstrating impressive sales
growth."
^ This is an Alternative Performance Measure - refer to Note 2
of the financial statements for further details
The significance of this prestigious award is recognised
worldwide and is an indication of the growth and momentum we have
achieved with our world-wide business over the past few years.
Given the ongoing worldwide impact of the global Covid-19
pandemic, 2021 has been another challenging year but a year in
which we have still achieved a number of successes to move our
business forward and I am proud of how our staff have pulled
together and how we have managed to navigate the crisis. We have
continued to keep our people safe, fully employed (utilising the UK
government's furlough scheme where appropriate) and maintained our
global operations, albeit some on reduced levels.
Notwithstanding the many challenges, we continued to deliver
important new business and develop new opportunities, with parts of
our business performing well but with other parts, particularly
Technology Division sales, being materially impacted. The Services
Division increased revenues by 16% to GBP5.1m (2020: GBP4.4m),
despite still being impacted by Covid-19 travel and lockdown
restrictions which shows the value of this division, particularly
the long-term managed services, as recovery gets underway. However,
the Technology Division revenues reduced to GBP2.0m (2020:
GBP5.6m). This was largely due to a lack of business confidence and
uncertainty through the Covid-19 pandemic and a reluctance from
many companies to commit to capital expenditure resulting in a
number of expected contract awards being delayed and the ensuing
revenues being delayed.
We have continued to deliver on business opportunities and, in
2021, we supplied goods and service to 60 countries around the
world, including some notable contract wins. We have continued to
invest in our worldwide business development programmes in order to
deliver on our growth potential, particularly in our long-term
major managed services projects.
Divisional Review
Services Division
Our Services Division has performed well and delivered some
notable achievements in the period.
In our 2020 Annual Report, we stated one of our key goals for
2021 was to secure at least one more long-term managed services
contract and in that respect, I am delighted that we have secured
two significant new long-term contract wins.
On 15 June 2021, we signed a 20-year manged services contract to
provide security services to 5 airports in the Democratic Republic
of the Congo ("DRC"), Central Africa. The contract is subject to a
formal ratification process and whilst this process has taken far
longer than anticipated, largely due to the client's internal
procedures, the contract is an exciting development for the
company. There is considerable pressure on the airport authority to
conclude this process and we expect this to be finalised by Q4 this
year. Once the process is completed, it will not only deliver
meaningful long-term revenues but means we will have established an
important presence in a new region of Africa.
In addition, on 16 June 2021, we further announced that we had
signed another long-term managed service contract to provide port
screening services in West Africa for the next 10+ years. We had
been pursuing and developing this opportunity for several years and
it is another important win for the Company that further extends
our global footprint and profile in the port screening sector. The
majority of preliminary works required at the port, such as
acquisition of the required land for the port security operations
and export licencing requirements, have now largely been completed
and we anticipate revenues from this long-term project will
commence in H2 2022.
Furthermore, in early July, we announced that we had been
awarded yet another high-profile contract to supply security
services to help protect the historic Royal Palace and Fortress of
the Tower of London. Security of such a landmark building, which is
open to the public, is paramount and Westminster has been
contracted to provide, inter alia, professional security services
to the pedestrian and vehicular entrances.
These important new contract wins demonstrate our global reach
but, as we have stated on a number of occasions, that large-scale
projects such as these do take time to develop and negotiate and in
securing such contracts, we equally demonstrate that we have the
skills and resources required to successfully deliver on such
opportunities. Together these new contracts alone will add, once
fully operational, several million pounds to our annual revenues
and together with our other managed services and recurring revenue
contracts, underpin confidence in our future forecasts and
growth.
In addition to these important new contracts, we are encouraged
in the recovery and growth of our existing operations during the
latter part of 2021 as the worst of the Covid-19 challenges are
hopefully put behind us.
Our West African Airport managed services operation which, like
aviation across the world, had been severely impacted by lockdowns
and travel restrictions but encouragingly has seen a strong bounce
back through 2021. In January 2021, we were running at 39% of the
pre-Covid-19 pandemic 2019 levels but, by the end of the year in
December 2021, we were running at around 84% of pre-pandemic levels
and I am pleased to say this trend has continued into 2022 with the
first few months of the year ahead of budget expectations and
nearing pre-pandemic levels.
Overall, in 2021, the Services Division revenue achieved around
60% of pre-pandemic revenues and due to the operational gearing of
these projects, most of the 40% lost revenues would have flowed
through to the bottom line and in turn would have materially
improved the performance for the year.
Our port managed services operations in Ghana have not been
materially affected by Covid-19 and continue to perform well. The
4th berth became operational in late 2021 and we expect to see
further growth with this important project.
Both our guarding and training businesses were heavily impacted
by Covid-19 lockdowns and travel restrictions, but we are
encouraged by the recovery we are seeing in both businesses, and we
expect this to continue into 2022 as travel restrictions around the
world continue to ease.
Our guarding business has already secured important new business
in 2021 that will benefit future years and we are currently
pursuing a number of interesting new opportunities which could see
revenues from this business increase dramatically.
We are also pleased to see our training business securing new
contracts from governments and organisations and is now operating
ahead of budget. The global Covid-19 pandemic has demonstrated the
importance of distance and online training and the strategic
decision we took some time ago to invest in building an online
training capability, both in house and through strategic
partnerships, will prove to be very beneficial and we expect this
part of our business to continue to grow.
As the pandemic impacted parts of our business, we continued to
develop new opportunities and initiatives such as our partnership
with Certific in its Covid-19 testing programme for which
Westminster is providing verification services. This new initiative
delivered six figure revenues in 2021 although, as the requirements
for Covid-19 testing reduce, we anticipate this service will cease
to be material going forward.
Technology Division
We continue to experience healthy enquiry levels and during 2021
have secured orders for our products and services from 60 countries
around the world, although effects of Covid-19, including travel
restrictions, have caused some delays in delivery.
The caution on spending by many companies during 2020 continued
into 2021 which meant that purchasing decisions regarding some of
our larger technology project opportunities have been deferred. We
are encouraged however that several of these opportunities are once
again beginning to move forward.
An example of such delayed projects was the $1.7m airport
security contract for two airports in Southeast Africa, which we
announced in December 2021. This contract, which is being funded by
the European Investment Bank, was expected to be announced in early
2021 after a lengthy international competitive tender process and
involves the upgrading of security equipment, including new x-ray
screening and metal detection equipment, an advanced CCTV
surveillance system and new control and command centres at both
airports. Had the contract been awarded, as expected in 2021, it
would have been completed that year, however, it is now expected to
be undertaken and completed in 2022.
In the UK, we were pleased to report the Palace of Westminster
contract, however it is another project that suffered delays due to
the Covid-19 pandemic. It was initially secured in 2020 but could
not be started until later in 2021. The project was successfully
completed in early 2022 and we are already in discussions regarding
extensions to this project.
As previously advised, we have been working on the establishment
of Westminster Arabia in the Kingdom of Saudi Arabia jointly with
our partners Hazar International and this process, which had been
delayed by various lockdowns and restrictions. I am delighted to
report that this has now been completed and we expect Saudi Arabia
to be an important contributor to future revenues with some
substantial project opportunism already being discussed and
pursued.
Our German subsidiary, 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 has secured a
number of important new clients including US military bases and is
developing substantial business opportunities in the region.
In addition, a key project opportunity for the team is the 15
year, EUR24 million per annum contract for airport security at
Tehran International Airport in Iran, which was signed, with the
full support of the British Government, in 2019 but was put on hold
when President Trump unilaterally withdrew from JCPOA. We are
closely monitoring geo-political events with regards to the US and
Iran regarding the JCPOA agreement. We remain in close contact with
our partners and the UK Government regarding current talks
regarding resumption of the JCPOA agreement and potential outcomes.
Should circumstances change and US and international sanctions,
including banking, be lifted, there remains an opportunity for our
German office to revisit this prospect and other opportunities.
Our French business, Euro Ops, which we acquired in May 2019,
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, with some interesting project opportunities being
pursued. Our DRC contract was secured as a direct result of this
enhanced access to Francophone countries and is just one of several
such opportunities in the region we are pursuing.
Summary
On a wider front, despite all the challenges we continued to
face in 2021, we have continued to progress various existing and
new large-scale managed services project opportunities around the
world which can and will provide step changes in growth when
secured. No two opportunities are the same and each can have their
own idiosyncrasies and challenges. As we have previously advised,
project opportunities of this size and nature, particularly in
emerging markets, are not only time-consuming and involve complex
negotiations with numerous commercial and political bodies, but
discussions can ebb and flow over many months, with periods of
intense activity which can be followed by long periods of
inactivity. This has been particularly the case with the added
disruption of the Covid-19 pandemic. It is however precisely
because of such challenges that competition is limited and the
opportunities offer transformational growth opportunities.
Whilst there is never certainty as to timing or outcome of the
many project opportunities we are pursuing, we are making progress
on a number of fronts, and we will provide market updates on
material developments when appropriate and in line with our
regulatory responsibilities.
In summary, despite the ongoing challenges created by Covid-19,
and in some cases because of it, 2021 was a busy year and whilst
our results for the year have been impacted by lockdowns, travel
restrictions and lack of business confidence around the world, we
continued to make progress on a number of fronts, and it was
pleasing that some of our achievements were recognised by the
Queen's Award. We continued to deliver on business opportunities
and during the year supplied goods and services to countries around
the world, including some notable contract wins. We have continued
to invest in our worldwide business development programmes in order
to deliver on our growth potential, particularly in our long-term
major managed services projects. The benefits from these
achievements will begin to be seen in 2022 and beyond and the Board
and I remain excited by our growth prospects.
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 value of this
strategy has been demonstrated during the Covid-19 pandemic where
Westminster has been able to maintain and grow revenues from parts
of the business helping to offset reductions in other parts, such
as its airport security, training and guarding businesses, all of
which were materially impacted by the Covid-19 pandemic.
The Board considers strategy at each regular Board Meeting and
has at least one 'off-site' strategy day each year 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.
The last two years of the global Covid-19 pandemic have
demonstrated the challenges and impact global events can have on
businesses and our flexible and proactive approach to strategy has
helped us mitigate some of the adverse impacts on our business. For
example, in 2020, we took early action to stock up with and market
suitable products and systems, such as fever screening and
sanitisation systems, greatly increasing our sales in this respect
helping to offset other impacted areas of the business. In 2021,
whilst demand for fever screening and certain other Covid-19
related products diminished, our strategic alliances in the field
of Covid-19 testing systems also proved a valuable new revenue
stream offsetting reduction elsewhere.
Covid-19 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, in
2022, 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.
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 have made a good start with
prestigious contracts such as the Tower of London, Palace of
Westminster, Scottish Parliament, HM Prisons, UK Border force, and
we will be looking to materially increase such business through
2022 and beyond.
One initiative we are pursuing regarding building our UK
business relates to the forthcoming new legislation in the UK,
Protect Duty. Protect Duty was born out of Martyn's Law, named
after Martyn Hett, who at 29 years was killed in the Manchester
Arena terrorist attack in May 2017. Martyn's mother, Figen Murry,
has been a tireless campaigner and the force behind Protect Duty,
formally 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.
Protect Duty 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. The Home Office estimates that 650,000 UK businesses
could be affected by Protect Duty, and this offers substantial
business opportunities for Westminster's extensive portfolio of
products and services. The Westminster Group has been working on
this opportunity for over a year, in collaboration with a number of
stakeholders, including public figures, magazines, industry experts
and the police, in readiness for the upcoming legislation and can
not only provide support and consultancy to assist venues
understand the requirements but can provide all the equipment,
training and support services required.
As part of our strategy for growth, we will also continue to
improve and enhance our Board and senior management team and have
made a number of key appointments broadening our range of
experience and expertise. If we are to maximise the substantial
growth opportunities we are developing, particularly with our
managed services operations, it is essential we have the right
strategies, people, processes and systems in place to successfully
deliver such growth.
Given budget constraints for many companies resulting from the
global Covid-19 pandemic, another strategy we are exploring is with
debt funding and leasing providers to transition large scale
projects from a 'capital' purchase to a longer term, 5+ years,
revenue model, which would also include maintenance and training,
along with value-add services such as Big Data acquisition for
applications such as border crossings. Given that some of these
project opportunities can be multi-million dollars in value, we
believe that this model brings added value which sets us apart from
the competition and will be attractive to many potential clients;
indeed, we are already in discussions with a few government bodies
on this basis. With large scale projects such as these, there is
never certainty of outcome or timing, but we are very optimistic
this initiative will lead to material and additional long-term
revenues.
Whilst we continue to pursue our many organic growth
opportunities, we continue to identify potential acquisitions and
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 effective way.
The challenges of the last two years have impacted our
performance against our stated goals and accordingly, the Board has
reset its key goals for 2022 as:
1. Improve ratio of enquiries received/quotations issued by
number and quotations issued/orders received by value;
2. Increase product portfolio and sales achieved;
3. Increase sales in the UK and other first world countries;
4. Secure at least one more long-term managed services contract;
5. Deliver another year of significant recurring revenue growth;
6. Deliver a material improvement in revenue and a move to profitability;
7. Deliver a sustained and material improvement in our share price;
8. Develop a more formal and structured Environment, Social, and Governance (ESG) strategy;
9. Instigate an Investors in People programme; and
10. Deliver on Market Expectations.
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. In this respect, one of our key goals for 2022 is to
develop our existing corporate social responsibility and governance
activities into a more formal and focussed ESG strategy.
Our people are our most valued asset, and we recognise that a
happy and motivated workforce is important. We are an equal
opportunities employer and endeavour to treat all our staff,
equally, fairly and to assist them reach their maximum potential.
We do this by having structured systems to support staff in their
job roles and in providing training programmes to improve their
skills. We hold regular meetings and appraisals with staff and
welcome input and feedback suggestions.
We provide flexible working arrangements, including home working
where possible. We provide free fruit and refreshments, allow gym
time to help keep our staff healthy and provide medical support
where appropriate. We organise team building and social events
across our business units (although this has been challenging over
the past 2 years). We are looking to implement an Investors in
People programme.
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
Equally, 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 lockdown has 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, as the pandemic
subsides, we intend to focus, where possible, of 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 projects, our maintenance and
guarding contracts and this is a key metric being monitored. As
employment costs are the single largest cost base for the Group,
the number of employees and employee costs are also monitored to
ensure best use of resources. Day's sales outstanding is used to
measure the cash conversion of revenue and identifies debtor aging
issues this has returned to more normal levels following an
unusually low 2020 year end position.
The Services Division measures its performance in the four key
areas of its deliverables - passengers served in its airport
operations, vehicles and containers served in its port and border
operations, the number of days training delivered by our training
businesses and the number of guarding hours delivered by our
guarding businesses.
The Technology Division measures its sales activity by reference
to the number of enquiries received per month and the number of
orders received. The number of countries and number of return
customers are monitored to give a view on the performance of the
division. It is pleasing that we are seeing higher levels of return
customers even though overall market activity is down due primarily
to the uncertainty caused by the pandemic.
Group 2021 2020
Revenue GBP7.1m GBP9.9m
---------- ----------
Gross Margin 46% 40%
---------- ----------
Recurring Revenues GBP5.4m GBP4.5m
---------- ----------
Days Sales Outstanding 57 19
---------- ----------
Number of Employees 241 239
---------- ----------
Average Employee Cost Per Head GBP18,129 GBP16,264
---------- ----------
Services Division 2021 2020
Passengers Served ('000) 77 51
---------------------- ---------------------
Vehicles/Containers Served ('000) 1,090 1,003
---------------------- ---------------------
Training Hours Delivered 1,136 1,520
---------------------- ---------------------
Guarding Hours Delivered 29,677 38,962
---------------------- ---------------------
Technology Division 2021 2020
Average Enquiries Per Month 293 356
----- -----
Average Number of Orders Per Month 37 54
----- -----
Number of Countries Supplied 60 78
----- -----
Number of Return Customers 242 70
----- -----
Current Trading & Business Outlook
The outlook for 2022 is looking positive as the worst impact of
the global Covid-19 pandemic recedes and travel restrictions are
lifted in many areas, although we remain mindful that global
outlook remains uncertain, not least with the Russian invasion of
Ukraine.
Building on 2021's Covid impacted revenues, we are targeting a
number of incremental revenue growth opportunities and anticipate
increases in our various services, solutions and product sales
revenue streams. We are targeting growth in product sales
(GBP2.5-GBP3.5m), solution sales (GBP3.5m-GBP4.5m), existing
services (3.5m-GBP4.5m) and new services (GBP5.5-GBP6.5m). These
growth targets are based on the recovery and growth we are seeing
in our various business sectors as shown below.
We are encouraged to see our West African airport operations
have recovered strongly ahead of expectations. The recovery we saw
in the latter part of 2021 has continued into 2022 and we start the
year nearing pre-pandemic levels and with March 2022 passengers
exceeding pre-pandemic levels, being the highest March volume
ever.
Our Ghana port security operations continue to generate healthy
revenues and with the fourth berth having come on stream at the end
of 2021 we expect this to continue, which demonstrates the value of
this long-term managed services contract. In addition, our business
in Ghana is growing and we are now securing other important new
business in the country and are pleased to be the Gold Sponsors of
the Queen's Platinum Birthday Celebration in Ghana on 26 April 2022
organised by the British High Commission, which will be a
high-profile event and an excellent opportunity to expand our
profile.
Due to the delays we have encountered with the DRC ratification
process we now expect revenues will commence in Q4 2022, although
given the momentum we are seeing elsewhere in the business we do
not anticipate this will have a material impact on market
expectations.
The logistics, licencing and planning phase of our new 10 year
West African port project secured in 2021 is nearing completion and
the operational phase is expected to begin in H2 2022.
Our guarding and training businesses continue to recover from
the impact of lockdowns and travel restrictions and both businesses
are not only delivering on existing contracts, such as the Tower of
London, but also winning important new business.
We continue to receive a healthy flow of enquiries for our
products and services and are already seeing improved product sales
and in the first quarter of 2022, we have already supplied goods
and services to 31 countries.
Over the past couple of years, we have not seen any large-scale
solution sales due to the economic impact of Covid-19, however we
are now once again seeing movement in a number of the large-scale
opportunities we have been pursuing and, in this respect, the $1.7m
contract for security solutions at two airports in Southeast
Africa, we secured at the end of 2021, and which will be fully
delivered in 2022 is an encouraging example.
We are pleased to have successfully completed in Q1 2022 the
installation phase of the Palace of Westminster contract and for
which we are now providing maintenance services and we are already
in discussions on other matters and extensions.
We are pleased to report that Westminster Arabia is now finally
established and together with our local partners, Hazar we are
working on a number of exciting project opportunities, and we fully
expect to see Westminster Arabia provide a material contribution to
our 2022 revenues.
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 and
our expectation is that we will secure at least one more long-term
managed services contract in 2022 with the potential to secure
more.
The foregoing, outlining the recovery we are seeing in existing
revenue streams and new contracts, together with our business model
and the opportunities we have been developing over the years,
despite the challenges and setbacks we have experienced from the
global Covid-19 pandemic, underpin our confidence for the future
growth of our business. Whilst there is still uncertainty in the
world, particularly with evolving global events, we remain
optimistic that we can meet 2022 financial year market
expectations.
Peter Fowler
Chief Executive Officer
Chief Financial Officer's Report
Revenue
2021 revenues of approximately GBP7.1m (2020: GBP9.9m) reduced
on 2020 levels because we suffered a full year of Covid-19 pandemic
trading (2020 was 9 months) without the benefit of a surge in fever
detection sales, which happened in 2020. Projects continued to be
delayed awaiting confidence that the world was returning back to
more normal times.
Services revenues increased by 16% to over GBP5.0m (2020:
GBP4.4m), despite being impacted by Covid-19 travel and lockdown
restrictions. This was partly as a result of a strong bounce back
of our West African Airport passenger levels during the year. In
January 2021, we were running at 39% of the pre-pandemic 2019
passenger numbers but by December 2021, we were close to 84%. This
improvement has continued into 2022, reaching just over 100% of
2019 in Q1 2022.
Westminster's Technology Division revenues reduced to GBP2.0m
(2020: GBP5.6m). This was largely due to a lack of business
confidence and uncertainty through the pandemic and a reluctance
from many companies to commit to capital expenditure resulting in a
number of expected contract awards being delayed.
Gross Margin
The higher margin Services Division sales dominated the
Company's 2021 revenue, increasing the Gross Margin Percent to 46%
(2020: 40%). Another reason for the increase in the Gross Margin
for 2021 was the lack of large solutions sales which typically
operate at a lower margin level of approximately 15%. Thus, we had
a better margin mix.
Operating Cost Base
Group administrative costs increased to GBP5.2m (2020: GBP4.7m)
in total. When the Covid-19 pandemic began, the Group made
redundancies and other cost cuts. In 2021 continuing into 2022, we
are "building back better", increasing our sales force to be ready
to take advantage of the expected pent-up demand. However, the long
lead time on our sales cycle means that this investment will not
fully bear fruit until 2022 and beyond. We also benefited from more
government furlough support in 2020.
We have taken advantage of the UK Government furlough scheme,
receiving GBP141,000 in 2021, which is less than 2020 (GBP214,000).
This has meant that we were able to keep key staff such as trainers
employed who had no work due to lockdowns and other restrictions
imposed.
Effect of Covid-19
Whilst Westminster has mitigated certain effects of the Covid-19
pandemic due to its multi revenue stream business model and early
action taken by management to plan for the crisis, there is no
doubt that Covid-19 did have a significant impact on the business
and the performance in 2021.
Operational EBITDA^ from underlying operations
The Group's loss from operations was GBP1.9m (2020: GBP0.7m).
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 continuing and discontinued
operations of GBP1.67m (2020: GBP0.52m loss).
Reconciliation to EBITDA^ from underlying operations 2021 2020
GBP'000 GBP'000
Loss from operations (1,917) (744)
Depreciation, amortisation and impairment charges 244 225
-------- --------
Reported EBITDA (1,673) (519)
Share based expense - -
Exceptional items - -
EBITDA^ from operations (1,673) (519)
======== ========
^ This is an Alternative Performance Measure refer to Note 2 for
further details
Finance Costs
Total finance costs for 2021 were GBP0.0m (2020: GBP0.0m),
because the Group has remained debt free other than the debt
imputed from leased assets under IFRS 16. There was an underlying
cash charge of GBP0.0m (2020: GBP0.3m).
Earnings Results for the Year
The Group loss before taxation was GBP1.9m (2020: Loss before
tax of GBP0.8m) and the loss per share was 0.62p (2020: Loss per
share of 0.45p).
Statement of Financial Position
The Group's gross assets amounted to GBP9.3m on 31 December 2021
compared with GBP9.5m on 31 December 2020. The main movement was a
reduction in cash offsetting a GBP1.6m increase in working capital
and funding the losses.
The Group's net current assets amounted to GBP5.3m on 31
December 2021 (2020: GBP5.4m) for the same reasons as the change in
total Group assets.
The Group's trade and other receivables balance as at 31
December 2021 was GBP3.7m (2020: GBP2.4m). Average days sales
outstanding at the year-end were 57 (2020: 19). This represents a
return to more normal levels of debtor days.
Cash and cash equivalents were GBP0.9m at 31 December 2021
compared with GBP2.1m at 31 December 2020. The decrease is mainly
due to losses and an unfavourable movement in working capital.
Trade and other payables were GBP1.8m (2020: GBP2.3m) and
average creditor days were 43 (2020: 50).
A deferred tax asset of GBP1.0m (2020: GBP1.0m) was held at the
year end.
Total equity on 31 December 2021 stood at a surplus of GBP7.5m
(2020: GBP7.1m).
Key Performance Indicators
The Key Performance Indicators by which we measure performance
of our business are set out in the Chief Executive Officer's
Report.
Convertible Loan Notes (CLN) and Convertible Unsecured Loan
Notes (CULN)
The unsecured CLN's capital was fully repaid on 22 December
2020.
Summary of movements 2021 2021 2021 2020 2020 2020
in loan notes at principal
value GBP'000
CULN CLN Total CULN CLN Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January - - - 171 2,245 2,416
Fair Value adjustment
on Conversion/ Repayment - - - 19 - 19
Conversion - - - - (213) (213)
Repaid - - - (190) (2,032) (2,222)
At 31 December - - - - - -
========== ========= ========= ======== ======== ========
Equity Issues
Date Type Number Price Funds
of Shares per share Raised
p GBP'000
18 June 2021 Equity placing 43,859,649 5.7 2,500
22 October
2021 Warrant Redemption 127,500 7 9
43,987,149 2,509
----------- --------
Summary of Warrants
As at 31 December 2021 the warrants outstanding were:
Number Holder Strike Issued Life Vesting Criteria
Price
(p)
31 January
170,455 S P Angel 22.0 2018 5 At grant
---------------- ------- ------------ ----- -----------------------
21 January 6 months after grant:
3,499,222 RiverFort 5.2 2020 4 - detachable
---------------- ------- ------------ ----- -----------------------
22 December
24,872,500 Various Holders 7.0 2020 2 At grant: - detachable
---------------- ------- ------------ ----- -----------------------
127,500 of the 7p warrants issued on 22 December 2020 were
exercised in October 2021.
For further details on warrants, refer to Note 21.
Capital Reduction
At the AGM on 24 June 2021, the Shareholders voted to approve
reduction of capital. This was subsequently ratified by court order
in November 2021.
The reduction of capital involved a cancellation of the deferred
shares, cancellation of the share premium account, capitalisation
and immediate cancellation thereafter of the share merger reserve
account which then enabled the creation of distributable reserves
in order to enhance the Company's ability to pay dividends and/or
to make other forms of distributions to its shareholders in the
future.
GBP'000
Deferred Shares Cancelation 15,991
Share Premium Cancelation 16,355
Merger Reserve Cancelation 300
Distributable Reserves 32,646
========
Prior Year Adjustment
The 2021 financial statements include restated balances for both
2020 and 2019. A prior year adjustment has been made in respect of
the minority interest in a Sierra Leonean subsidiary, Facilities
Operations Management Limited, which had erroneously been recorded
as being 90% owned but investigations have revealed that it is
wholly owned by the group. Note 28 identifies the changes from the
signed financial statements of 2020 and 2019 to the restated
balances in these financial statements.
Cash Flow Statement
During the year, the Group had an operating cash outflow of
GBP3.3m (2020: outflow GBP1.9m) which arose from the loss and an
unfavourable working capital movement of GBP1.6m (2020: GBP1.0m)
which was primarily an increase in receivables and investment in
the new projects.
During the year, the Group raised GBP2.51m gross from the issue
of new equity (2020: GBP6.96m).
Reconciliation from adjusted EBITDA^ to 2021 2020
normalised operating cash flow
GBP'000 GBP'000
Adjusted EBITDA^ (1,673) (519)
Net changes in working capital (1,632) (1,033)
Movement on tax (11) 31
--------
Net Cash used in underlying operating
activities (3,316) (1,521)
======== ========
Net cash used in underlying operating activities is presented
excluding exceptional items, share options expense, and
depreciation and amortisation.
Mark L W Hughes
Chief Financial Officer
^ This is an Alternative Performance Measure refer to Note 2 for
further details
Westminster Group PLC
Consolidated Statement of Comprehensive Income for the year
ended 31 December 2021
Note 2021 2020
Restated
Total Total
-------------------------------------------------- ----- --------- ----------
GBP'000 GBP'000
REVENUE 3 7,051 9,945
Cost of sales (3,789) (5,974)
-------------------------------------------------- ----- --------- ----------
GROSS PROFIT 3,262 3,971
-------------------------------------------------- ----- --------- ----------
Administrative expenses (5,179) (4,715)
-------------------------------------------------- ----- --------- ----------
(LOSS) / PROFIT FROM OPERATIONS 5 (1,917) (744)
-------------------------------------------------- ----- --------- ----------
Analysis of operating loss
Profit from operations (1,917) (744)
Add back amortisation 10 78 63
Add back depreciation 11 166 162
Add back share-based expense - -
Add back exceptional items - -
----- --------- ----------
EBITDA^ (Loss)/Profit from underlying operations (1,673) (519)
-------------------------------------------------- ----- --------- ----------
Finance costs 4 (3) (17)
LOSS BEFORE TAXATION (1,920) (761)
Taxation 6 (11) 31
----- --------- ----------
LOSS AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR (1,931) (730)
--------------------------------------------------------- --------- ----------
LOSS AND TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE
TO:
OWNERS OF THE PARENT (1,921) (577)
NON-CONTROLLING INTEREST (10) (153)
LOSS AND TOTAL COMPREHENSIVE INCOME (1,931) (730)
-------------------------------------------------- ----- --------- ----------
LOSS PER SHARE 8 (0.62p) (0.45p)
-------------------------------------------------- ----- --------- ----------
The accompanying notes form part of these financial
statements.
^ This is an Alternative Performance Measure refer to Note 2 for
further details
Westminster Group PLC
Consolidated and Company Statements of Financial Position
As at 31 December 2021
Restated Restated
Group Group Group Company Company
2021 2020 2019 2021 2020
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
Goodwill 9 614 614 614 - -
Other intangible
assets 10 150 187 129 120 187
Property, plant and
equipment 11 1,895 1,901 1,979 1,133 1,088
Investment in 13 - - - - -
subsidiaries
Deferred tax asset 15 953 956 907 - -
TOTAL NON-CURRENT
ASSETS 3,612 3,658 3,629 1,253 1,275
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
Inventories 17 681 773 47 - -
Trade and other
receivables 18 3,661 2,438 2,525 9,830 9,147
Cash and cash
equivalents 19 944 2,143 557 380 1,716
----------------------
TOTAL CURRENT ASSETS 5,286 5,354 3,129 10,210 10,863
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
Assets 0f disposal - - 170 - -
groups clasified
as held for sale
Non current
receivable 18 424 484 - - -
---------------------- -----
TOTAL ASSETS 9,322 9,496 6,928 11,463 12,138
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
Called up share
capital 20 331 16,278 14,540 331 16,278
Share premium account - 14,069 9,577 - 14,069
Merger relief reserve - 300 300 - 300
Share based payment
reserve 1,043 1,050 978 1,043 1,050
Equity reserve on - - 423 - -
convertible
loan notes
Revaluation reserve 139 139 133 139 139
Retained earnings:
At 1 January (24,409) (23,830) (22,688) (20,957) (18,468)
(Loss)/profit for the
year (1,921) (577) (1,290) (2,389) (2,504)
Other changes in
retained earnings 32,670 15 148 32,653 15
At 31 December 6,340 (24,392) (23,830) 9,307 (20,957)
---------------------- ----- ------------------
(DEFICIT)/EQUITY
ATTRIBUTABLE
TO:
OWNERS OF THE
COMPANY 7,853 7,444 2,121 10,820 10,879
NON CONTROLLING
INTEREST (390) (385) (232) - -
---------------------- -----
TOTAL
(DEFICIT)/EQUITY 7,463 7,059 1,889 10,820 10,879
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
Lease liability 22 12 29 - 5 13
Borrowings - - 2,510 - -
TOTAL NON-CURRENT
LIABILITIES 12 29 2,510 5 13
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
Contractual
liabilities 23 87 100 73 - -
Trade and other
payables 23 1,760 2,308 2,456 638 1,246
---------------------- ----- ------------------ ---------------
TOTAL CURRENT
LIABILITIES 1,847 2,408 2,529 638 1,246
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
Liabilities of - - - -
disposal group
classified as held
for sale
---------------------- ----- ------------------ --------------
TOTAL LIABILITIES 1,859 2,437 5,039 643 1,259
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
TOTAL SHAREHOLDERS'
EQUITY AND
LIABILITIES 9,322 9,496 6,928 11,463 12,138
---------------------- ----- ------------------ -------------- -------------- ------------------ ---------------
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 GBP2,348,000 in 2021, (2020:
GBP2,545,000 restated loss). The Group and Company financial
statements were approved by the Board and authorised for issue on
28 April 2022 and signed on its behalf by:
Peter Fowler Mark L W Hughes
Director Director
Westminster Group PLC
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Called Share Merger Share Revaluation Equity Retained Total Non-controlling Total
up share premium relief based reserve reserve earnings interest
capital account reserve payment on convertible
reserve loan note
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
AS AT 1
JANUARY 2021
as
previously
stated 16,278 14,069 300 1,050 139 0 (24,242) 7,594 (535) 7,059
--------------- ------------- -------------- --------------- --------------- ------------------- ------------------ ------------- ------------- ---------------- -----------
Prior year
adjustment
(Note
28) - - - - - (150) (150) 150 -
------------------
AS AT 1
JANUARY 2021 16,278 14,069 300 1,050 139 0 (24,392) 7,444 (385) 7,059
--------------- ------------- -------------- --------------- --------------- ------------------- ------------------ ------------- ------------- ---------------- -----------
Shares issued
for cash 44 2,456 - - - - - 2,500 - 2,500
Cost of share
issues - (179) - - - - - (179) - (179)
Lapse of share
options - - - (7) - - 7 - - -
Exercise of
warrants and
share options - 9 - - - - - 9 - 9
Capital
Reduction (15,991) (16,355) (300) - - - 32,646 - - -
TRANSACTIONS
WITH OWNERS (15,947) (14,069) (300) (7) - - 32,653 2,330 - 2,330
--------------- ------------- -------------- --------------- --------------- ------------------- ------------------ ------------- ------------- ---------------- -----------
Total
comprehensive
expense
for the year - - - - - - (1,921) (1,921) (5) (1,926)
AS AT 31
DECEMBER 2021 331 - - 1,043 139 - 6,340 7,853 (390) 7,463
--------------- ------------- -------------- --------------- --------------- ------------------- ------------------ ------------- ------------- ---------------- -----------
Westminster Group PLC
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Called Share Merger Share Revaluation Equity Retained Total Non-controlling Total
up share premium relief based reserve reserve earnings interest
capital account reserve payment on convertible
reserve loan note
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
AS AT 1
JANUARY 2020
as previously
stated 14,540 9,577 300 978 133 423 (23,697) 2,254 (365) 1,889
--------------- ------------- -------------- --------------- --------------- ------------------- ------------------ -------------- -------- ---------------- --------
Prior year
adjustment - - - - - (133) (133) 133
------------------
AS AT 1
JANUARY 2020 14,540 9,577 300 978 133 423 (23,830) 2,121 (232) 1,889
--------------- ------------- -------------- --------------- --------------- ------------------- ------------------ -------------- -------- ---------------- --------
Shares issued
for cash 1,525 5,225 - - - - - 6,750 - 6,750
Cost of share
issues - (733) - - - - - (733) - (733)
Share based
payment
charge - - - 87 - - - 87 - 87
Lapse of share
options - - - (15) - - 15 - - -
Exercise of
warrants and
share
options 213 - - - - - - 213 - 213
Revaluation of
freehold
property - - - - 6 - - 6 - 6
CLN Movement - - - - - (423) - (423) - (423)
TRANSACTIONS
WITH OWNERS 1,738 4,492 - 72 6 (423) 15 5,900 - 5,900
--------------- ------------- -------------- --------------- --------------- ------------------- ------------------ -------------- -------- ---------------- --------
Total
comprehensive
expense
for the year - - - - - - (577) (577) (153) (730)
AS AT 31
DECEMBER 2020 16,278 14,069 300 1,050 139 - (24,392) 7,444 (385) 7,059
--------------- ------------- -------------- --------------- --------------- ------------------- ------------------ -------------- -------- ---------------- --------
Westminster Group PLC
Company Statement of Changes in Equity
For the year ended 31 December 2021
Called Share Merger Share Revaluation Equity Retained Total
up share premium relief based reserve reserve earnings
capital account reserve payment on convertible
reserve loan note
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
AS AT 1
JANUARY 2021 16,278 14,069 300 1,050 139 - (20,957) 10,879
--------------- ------------- ------------- ---------- ------------------- ------------------ ----------------- ------------ ---------
Shares issued
for
cash 44 2,456 - - - - - 2,500
Cost of share
issues - (179) - - - - - (179)
Share based - - - - - -
payment
charge - -
Lapse of Share
Options - - - (7) - - 7 -
Exercise of
warrants
and share
options - 9 - - - - - 9
Capital
Reduction (15,991) (16,355) (300) - - - 32,646 -
TRANSACTIONS
WITH
OWNERS (15,947) (14,069) (300) (7) - - 32,653 2,330
--------------- ------------- ------------- ---------- ------------------- ------------------ ----------------- ------------ ---------
Total
comprehensive
expense for
the year - - - - - - (2,389) (2,389)
--------------- ------------- ------------- ---------- ------------------- ------------------ ----------------- ------------ ---------
AS AT 31
DECEMBER
2021 331 - - 1,043 139 - 9,307 10,820
--------------- ------------- ------------- ---------- ------------------- ------------------ ----------------- ------------ ---------
AS AT 1
JANUARY 2020 14,540 9,577 300 978 133 12 (18,468) 7,072
--------------- ------------- ------------- ---------- ------------------- ------------------ ----------------- ------------ ---------
Shares issued
for
cash 1,525 5,225 - - - - - 6,750
Cost of share
issues - (733) - - - - - (733)
Share based
payment
charge - - - 87 - - - 87
Lapse of Share
Options - - - (15) - - - (15)
Exercise of
warrants
and share
options 213 - - - - - - 213
Revaluation of
freehold
property - - 6 - - 6
CLN Movement - - - - - (12) - (12)
Other
movements in
Equity - - - - - - 15 15
------------
TRANSACTIONS
WITH
OWNERS 1,738 4,492 - 72 6 (12) 15 6,311
--------------- ------------- ------------- ---------- ------------------- ------------------ ----------------- ------------ ---------
Total
comprehensive
expense for
the year - - - - - - (2,504) (2,504)
AS AT 31
DECEMBER
2020 16,278 14,069 300 1,050 139 - (20,957) 10,879
--------------- ------------- ------------- ---------- ------------------- ------------------ ----------------- ------------ ---------
Consolidated Cash Flow Statement
For the year ended 31 December 2021
2021 2020
Total Total
Note GBP'000 GBP'000
(LOSS) / PROFIT AFTER TAX (1,931) (730)
Taxation 11 (31)
-------- --------
(LOSS) / PROFIT BEFORE TAX (1,920) (761)
Non-cash adjustments 24 244 (59)
Net changes in working capital 24 (1,632) (1,033)
-------------------------------------------- ------
NET CASH USED IN OPERATING ACTIVITIES (3,308) (1,853)
-------------------------------------------- ------ -------- --------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment 11 (160) (111)
Purchase of intangible assets 10 (41) (121)
CASH OUTFLOW FROM INVESTING ACTIVITIES (201) (232)
-------------------------------------------- ------ -------- --------
CASHFLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from the issues of ordinary
shares 2,509 6,963
Costs of share issues (179) (733)
Repayment of convertible loan note - (2,222)
Reduction in finance lease debt (17) (69)
Finance cost on lease liabilities (3) (5)
CLN and other interest paid - (262)
Other loan repayments, including interest - (1)
-------------------------------------------- ------
CASH INFLOW FROM FINANCING ACTIVITIES 2,310 3,671
-------------------------------------------- ------ -------- --------
Net change in cash and cash equivalents (1,199) 1,586
-------- --------
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 2,143 557
-------- --------
CASH AND EQUIVALENTS AT OF YEAR 19 944 2,143
-------- --------
Company Cash Flow Statement
For the year ended 31 December 2021
Company Company
2021 2020
Note GBP'000 GBP'000
----------------------------------------- ------ --------------- --------
(LOSS)/PROFIT AFTER TAX (2,389) (2,545)
Other Non-cash adjustments 24 140 583
Net changes in working capital 24 (1,291) (1,811)
------
NET CASH (USED IN) /FROM OPERATING
ACTIVITIES (3,540) (3,773)
----------------------------------------- ------ --------------- --------
INVESTING ACTIVITIES:
Purchase of property, plant and
equipment 11 (111) (62)
Purchase of intangible assets 10 (6) (121)
----------------------------------------- ------ --------------- --------
CASH OUTFLOW FROM INVESTING ACTIVITIES (117) (183)
----------------------------------------- ------ --------------- --------
CASHFLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from the issues
of ordinary shares 2,509 6,963
Costs of share issues (179) (733)
Repayment of convertible loan
note - (190)
Change in lease debt (8) (20)
Finance cost on lease liabilities (1) (2)
Interest paid - (374)
CASH INFLOW FROM FINANCING ACTIVITIES 2,321 5,644
----------------------------------------- ------ --------------- --------
Net change in cash and cash equivalents (1,336) 1,688
----------------------------------------- ------ --------------- --------
CASH AND EQUIVALENTS AT BEGINNING
OF YEAR 1,716 28
----------------------------------------- ------ --------------- --------
CASH AND EQUIVALENTS AT OF
YEAR 380 1,716
----------------------------------------- ------ --------------- --------
The accompanying notes form part of these financial
statements.
Notes to the Financial Statements
1. General information and nature of operations
Westminster Group PLC ("the Company") was incorporated on 7
April 2000 and is domiciled and incorporated in the United Kingdom
and quoted on AIM. The Group's financial statements for the year
ended 31 December 2021 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 International
Accounting Standards. The Parent Company has elected to prepare its
financial statements in accordance with IFRS. The Company has taken
advantage of the exemption under Section 408 of the Companies Act
2006 from presenting its own profit and loss account. This
announcement does not represent the statutory financial statements
of the company. The auditors have reported on the financial
statements and their report is unqualified.
The financial information is presented in the Company's
functional currency, which is British pounds sterling ('GBP') since
that is the currency in which the majority of the Group's
transactions are denominated.
Basis of measurement
The financial statements have been prepared under the historical
cost convention with the exception of certain items which are
measured at fair value as disclosed in the accounting policies
below.
Consolidation
(i) Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries for the year ended
31 December 2021.
(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 GBP1,931,000 (2020:
GBP730,000), The cash outflow from operating activities during the
year was GBP3,308,000 (2020: Outflow GBP2,023,000), which was
partly financed through raising new equity.
The financial statements are prepared on a going concern basis.
In assessing whether the going concern assumption is appropriate,
management have taken into account all relevant available
information about the current and future position of the Group,
including new long-term contracts. As part of its assessment,
management have taken into account the profit and cash forecasts,
the continued support of the shareholders and the Directors' and
management's ability to affect costs and revenues. Management
regularly forecast results, the financial position and cash flows
for the Group.
In 2020, the Directors took timely action implementing
logistical and organisational changes to consolidate the Group's
resilience to Covid-19, including a reduction in costs, risk
assessments, safe working practices and various other measures,
including utilisation of governmental support schemes. The
Directors also took action to expand the Group's range of fever
screening and safety equipment, expanding its supply base and
instigating targeted marketing campaigns which has seen a
significant rise in product sales revenues mitigating reductions
elsewhere in the business. The Directors continue to monitor the
situation and to update its risk assessments and contingency
planning as necessary.
Further details on measures being taken to address the
challenges and opportunities presented by Covid-19 can be found in
the Chief Executive Office's report.
The Directors have reviewed the Group's resources at the date of
approving the financial statements, and their projections for
future trading, which due to winning incremental new business give
a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future, which
for the avoidance of doubt is at least 12 months from the date of
signing the financial statements. Thus, they continue to adopt the
going concern basis of accounting in the preparing the financial
statements.
Business combinations
The consideration transferred by the Group to obtain control of
a subsidiary is calculated as the sum of the acquisition date fair
values of assets transferred, liabilities incurred, and the equity
interests issued by the Group, which includes the fair value of any
asset or liability arising from a contingent consideration
arrangement. Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and
liabilities assumed in a business combination regardless of whether
they have been previously recognised in the acquiree's financial
statements prior to the acquisition. Assets acquired and
liabilities assumed are generally measured at their acquisition
date fair values.
Foreign currency
Items included in the financial statements of the Company are
measured using the currency of the primary economic environment in
which the entity operates - 'the functional currency'. The
functional and presentation currency in these financial statements
is the Great British Pounds (GBP).
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction (spot exchange
rate). Foreign exchange gains and losses resulting from the
settlement of such transactions and from the re-measurement of
monetary items at year-end exchange rates are recognised in profit
or loss. Non-monetary items measured at historical cost are
translated using the exchange rates at the date of the transaction
and not subsequently retranslated.
Foreign exchange gains and losses are recognised in arriving at
profit before interest and taxation (see Note 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 decisions maker to make decisions about
resources to be allocated to the segment and assess its
performance, and
-- For which discrete financial information is available.
Revenue
Revenue recognition
Revenue represents income derived from contracts for the
provision of goods and services, over time or at a point in time,
by the Group to customers in exchange for consideration in the
ordinary course of the Group's activities.
Performance Obligations
Upon approval by the parties to a contract, the contract is
assessed to identify each promise to transfer either a distinct
good or service or a series of distinct goods or services that are
substantially the same and have the same pattern of transfer to the
customer. Goods and services are distinct and accounted for as
separate performance obligations in the contract if the customer
can benefit from them either on their own or together with other
resources that are readily available to the customer, and they are
separately identifiable in the contract.
Transaction price
At the start of the contract, the total transaction price is
estimated as the amount of consideration to which the Group expects
to be entitled in exchange for transferring the promised goods and
services to the customer, excluding sales taxes. Variable
consideration, such as price escalation, is included based on the
expected value or most likely amount only to the extent that it is
highly probable that there will not be a reversal in the amount of
the cumulative revenue recognised. The transaction price does not
include estimates of consideration resulting from contract
modifications, such as change orders, until they have been approved
by parties to the contract. The total transaction price is
allocated to the performance obligations identified in the contract
in proportion to their relative stand-alone selling prices. Given
the nature of many of the Group's products and services, which are
designed and/or manufactured under contract to customers'
individual specifications, there are typically no observable
stand-alone selling prices. Instead, stand-alone selling prices are
typically estimated based on expected costs plus contract margin
consistent with the Group's pricing principles.
Whilst payment terms vary from contract to contract, an element
of the transaction price may be received in advance of delivery.
The Group may therefore have contract liabilities depending on the
contracts in existence at a period end. The Group's contracts are
not considered to include significant financing components on the
basis that there is no difference between the consideration and the
cash selling price.
Revenue recognition
Revenue is recognised as performance obligations are satisfied
as control of the goods and services is transferred to the
customer.
For each performance obligation within a contract the Group
determines whether it is satisfied over time or at a point in time.
Performance obligations are satisfied over time if one of the
following criteria is satisfied:
-- The customer simultaneously receives and consumes the
benefits provided by the Group's performance as it performs;
-- The Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced; or
-- The Group's performance does not create an asset with an
alternative use to the Group and it has an enforceable right to
payment for performance completed to date.
The Group has determined that most of its contacts satisfy the
overtime criteria, either because the customer simultaneously
receives and consumes the benefits provided by the Group's
performance as it performs, or the Group's performance does not
create an asset with an alternative use to the Group and it has an
enforceable right to payment for performance completed to date. For
each performance obligation recognised over time, the Group
recognises revenue using an input method, based on costs incurred
in the period. Revenue and attributable margin are calculated by
reference to reliable estimates of transaction price and total
expected costs, after making suitable allowances or technical and
other risks. Revenue and associated margin are therefore recognised
progressively as costs are incurred, and as risks have been
mitigated or retired. The Group has determined that this method
appropriately depicts the Group's performance in transferring
control of the goods and services to the customer.
If the overtime criteria for revenue recognition is not met,
revenue is recognised at the point in time that control is
transferred to the customer which is usually when legal title
passes to the customer and the business has the right to
payment.
When it is expected that total contract costs will exceed total
contract revenue, the expected loss is recognised immediately as an
expense.
Operating expenses
Operating expenses are recognised in profit or loss upon
utilisation of the service or at the date of their origin.
Expenditure for warranties is recognised and charged against the
associated provision when the related revenue is recognised.
Certain items have been disclosed as operating exceptional due to
their size and nature and their separate disclosure should enable
better understanding of the financial dynamics.
Interest income and expenses
Interest income and expenses are reported on an accruals basis
using the effective interest method.
Goodwill
Goodwill is stated after separate recognition of identifiable
intangible assets. It is calculated as the excess of the sum of a)
fair value of consideration transferred, b) the recognised amount
of any non-controlling interest in the acquiree and c) acquisition
date fair value of any existing equity interest in the acquiree,
over the acquisition date fair value of identifiable net assets. If
the fair value of identifiable net assets exceeds the sum
calculated above, the excess amount (i.e., gain on a bargain
purchase) is recognised in profit or loss immediately. Goodwill is
carried at cost less accumulated impairment losses.
Property, plant and equipment
Plant and equipment, office equipment, fixtures and fittings and
motor vehicles are stated at cost less accumulated depreciation and
any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation
of assets to their residual value over their estimated useful
lives, using the straight-line method, typically at the following
rates. Where certain assets are specific for a long-term contract
and the customer has an obligation to purchase the asset at the end
of the contract they are depreciated in accordance with the
expected disposal / residual value.
Rate
---------------------------- -----------
Freehold buildings 2%
Plant and equipment 7% to 25%
Office equipment, fixtures
& fittings 20% to 33%
Motor vehicles 20%
---------------------------- -----------
Freehold land is not depreciated.
Leases
All leases that fall under IFRS 16 will be recorded on the
balance sheet as liabilities, at the present value of the future
lease payments, along with an asset reflecting the right to use the
asset over the lease term. Rentals payable under operating leases
exempt from IFRS 16 are charged to income on a straight-line basis
over the term of the relevant lease. At inception of a contract,
the Group assesses whether a contract is, or contains, a lease
based on whether the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration.
The Group recognises a right-of-use asset and a corresponding
lease liability at the lease commencement date. The lease liability
is initially measured at the present value of the following lease
payments:
- fixed payments;
- variable payments that are based on index or rate;
- the exercise price of any extension or purchase option if
reasonably certain it can be exercised; and
- penalties for terminating the lease, if relevant.
The lease payments are discounted using the interest rate
implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate for that type of
asset.
The right-of-use assets are initially measured based on initial
amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs.
The right-of-use assets are depreciated over the period of the
lease term using the straight-line method. The lease term includes
periods covered by the option to extend, if the Group is reasonably
certain to exercise that option. In addition, right-of-use assets
may during the lease term be reduced by any impairment losses, if
any, or adjusted for certain remeasurements of the lease
liability.
Impairment on non-financial assets
At each reporting date, the Group reviews the carrying amounts
of its non-current assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). The recoverable amount is the higher of fair value less
costs to sell and value in use. If the recoverable amount of an
asset is estimated to be less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately, unless
the relevant asset is carried at a revalued amount, in which case
the impairment loss is treated as a revaluation decrease. Where an
impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no
impairment loss been recognised for the asset in prior years.
Financial instruments
Financial assets
The Group's financial assets include cash and cash equivalents
and loans and other receivables. All financial assets are
recognised when the Group becomes party to the contractual
provisions of the instrument. All financial assets are initially
recognised at fair value, plus transaction costs. They are
subsequently measured at amortised cost using the effective
interest method, less any impairment losses. Any changes in
carrying value are recognised in the Statement of Comprehensive
Income. Interest and other cash flows resulting from holding
financial assets are recognised in the Statement of Cash Flows when
received, regardless of how the related carrying amount of
financial assets is measured.
The Group recognises a loss allowance for expected losses on
financial assets that are measured at amortised cost including
trade receivables and contract assets. The amount of expected
credit losses is updated at each reporting date to reflect changes
in credit risk since initial recognition.
Cash and cash equivalents comprise cash at bank and deposits and
bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities unless a legally enforceable right to offset
exists.
Financial liabilities
The Group's financial liabilities comprise trade and other
payables and borrowings. All financial liabilities are recognised
initially at their fair value and subsequently measured at
amortised cost using the effective interest method. Financial
liabilities are derecognised when they are extinguished,
discharged, cancelled or expire.
Convertible loan notes with an option that leads to a
potentially variable number of shares, have been accounted for as a
host debt with an embedded derivative. The embedded derivative is
accounted for at fair value through profit and loss at each
reporting date. The host debt is recognised initially at fair
value, and subsequently measured at amortised cost using the
effective interest method.
Convertible loan notes which can be converted to share capital
at the option of the holder, and where the number of shares to be
issued does not vary with changes in fair value, are considered to
be a compound instrument.
The liability component of a compound instrument is recognised
initially at the fair value of a similar liability that does not
have an equity conversion option. The equity component is
recognised initially at the difference between the fair value of
the compound instrument and fair value of the liability component.
Any directly attributable transaction costs are allocated to the
liability and equity components.
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities.
Investments and loans in subsidiaries
Subsidiary fixed asset investments are valued at cost less
provision for impairment. The Group applies the IFRS 9 simplified
approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all investment and loans in
subsidiaries.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs of ordinarily interchangeable items are assigned using
the first in, first out cost formula. Costs principally comprise of
materials and bringing them to their present location. Net
realisable value represents the estimated selling price less all
estimated costs to completion and costs to be incurred in
marketing, selling and distribution.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax. Current and deferred tax are recognised as an
expense or income in profit or loss, except in respect of items
dealt with through equity, in which case the tax is also dealt with
through equity.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated by using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on
material differences between the carrying amount of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit and is accounted
for using the balance sheet liability method. Deferred tax
liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction which affects neither the tax
profit not the accounting profit.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks, other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities
unless a legally enforceable right to offset exists.
Equity, reserves and dividend payments
Share capital represents the nominal value of shares that have
been issued.
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits.
Merger relief reserve includes any premiums on issue of share
capital as part or all of the consideration in a business
combination.
The share-based payment reserve represents equity-settled
share-based employee remuneration until such share options are
exercised or lapse. It also includes the equity settled items such
as warrants for services rendered accounted for in accordance with
IFRS 2.
The revaluation reserve within equity comprises gains and losses
due to the revaluation of property, plant and equipment.
Retained earnings include all current and prior period retained
profits and losses.
Dividend distributions payable to equity shareholders are
included in liabilities when the dividends have been approved in a
general meeting prior to the reporting date.
Pensions
The Group operates a defined contribution pension scheme for
employees in the UK and is operating under auto enrolment. Local
labour in Africa benefit from a termination payment on leaving
employment. The expected value of this is accrued on a monthly
basis.
Share-based compensation (Employee Based Benefits)
The Group operates an equity-settled share-based compensation
plan. The fair value of the employee services received in exchange
for the grant of options is recognised as an expense over the
vesting period, based on the Group's estimate of awards that will
eventually vest, with a corresponding increase in equity as a
share-based payment reserve. For plans that include market-based
vesting conditions, the fair value at the date of grant reflects
these conditions and are not subsequently revisited.
Fair value is determined using Black-Scholes option pricing
models. Non-market based vesting conditions are included in
assumptions about the number of options that are expected to vest.
At each reporting date, the number of options that are expected to
vest is estimated. The impact of any revision of original
estimates, if any, is recognised in profit or loss, with a
corresponding adjustment to equity, over the remaining vesting
period.
The proceeds received when vested options are exercised, net of
any directly attributable transaction costs, are credited to share
capital (nominal value) and share premium.
Share-based payments
The Group has two types of share-based payments other than
employee compensation.
Warrants issued for services rendered which are accounted for in
accordance with IFRS 2 recognising either the cost of the service
if it can be reliably measured or the fair value of the warrant
(using Black-Scholes option pricing models).
Warrants issued as part of Share Issues have been determined as
equity instruments under IAS 32. Since the fair value of the shares
issued at the same time is equal to the price paid, these warrants,
by deduction, are considered to have been issued at nil value.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event which it is
probable will result in an outflow of economic benefits that can be
reliably estimated.
SIGNIFICANT MANAGEMENT JUDGEMENTS IN APPLYING ACCOUNTING
POLICIES
The following are significant management judgements in applying
the accounting policies of the Group that have the most significant
effect on the financial statements.
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The Board has judged that because most of the Group's
costs and a substantial part of its sales are situated in the
UK.
Goodwill
Goodwill (note 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 34%
(2020: 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.
SIGNIFICANT MANAGEMENT ESTIMATES IN APPLYING ACCOUNTING
POLICIES
The following are significant management estimates in applying
the accounting policies of the Group that have the most significant
effect on the financial statements.
Revalued freehold property
The freehold property is stated at fair value. A full
revaluation exercise was carried out in December 2020. The fair
value is based on market value, being the estimated amount for
which a property could be exchanged on the date of valuation
between a willing buyer and a willing seller in an arm's length
transaction after proper marketing wherein the parties had each
acted knowledgeably, prudently and without compulsion. The
Directors are of the opinion that the 2020 valuation has not moved
materially since the last valuation was performed. The valuation
was not materially different to the value the asset is recorded at
the balance sheet date.
New standards, amendments and interpretations
The following new standards have been adopted:
Income Taxes (Amendments to IAS 12)
This implements a so-called 'comprehensive balance sheet method'
of accounting for income taxes which recognizes both the current
tax consequences of transactions and events and the future tax
consequences of the future recovery or settlement of the carrying
amount of an entity's assets and liabilities. Differences between
the carrying amount and tax base of assets and liabilities, and
carried forward tax losses and credits, are recognized, with
limited exceptions, as deferred tax liabilities or deferred tax
assets, with the latter also being subject to a 'probable profits'
test. The amendments are effective for annual reporting periods
beginning on or after January 1, 2023, but have been adopted
early.
Standards amendments and interpretations in issue not yet
effective
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.
Reference to the Conceptual Framework (Amendments to IFRS 3)
The amendments update an outdated reference to the Conceptual
Framework in IFRS 3 without significantly changing the requirements
in the standard. If endorsed this will apply for annual reporting
periods beginning on or after 1 January 2022.
Property, Plant and Equipment - Proceeds before Intended Use
(Amendments to IAS 16)
The amendments prohibit deducting from the cost of an item of
property, plant and equipment any proceeds from selling items
produced while bringing that asset to the location and condition
necessary for it to be capable of operating in the manner intended
by management. Instead, an entity recognises the proceeds from
selling such items, and the cost of producing those items, in
profit or loss. This will apply for annual reporting periods
beginning on or after 1 January 2022.
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37)
The amendments specify that the 'cost of fulfilling' a contract
comprises the 'costs that relate directly to the contract'. Costs
that relate directly to a contract can either be incremental costs
of fulfilling that contract (examples would be direct labour,
materials) or an allocation of other costs that relate directly to
fulfilling contracts (an example would be the allocation of the
depreciation charge for an item of property, plant and equipment
used in fulfilling the contract). If endorsed this will apply for
annual reporting periods beginning on or after 1 January 2022.
Alternative performance measures (APM)
In the reporting of financial information, the Directors have
adopted the APM ' EBITDA profit from underlying continuing and
discontinued operations (APMs were previously termed 'Non-GAAP
measures'), which is not defined or specified under International
Financial Reporting Standards (IFRS).
The Directors also look at recurring revenue as a key
performance indicator. This is revenue arising from multi-year
contracts.
These measures are not defined by IFRS and therefore may not be
directly comparable with other companies' APMs, including those in
the Group's industry.
APMs should be considered in addition to, and are not intended
to be a substitute for, or superior to, IFRS measurements.
Purpose
The Directors believe that this APM assists in providing
additional useful information on the underlying trends, performance
and position of the Group. This APM is also used to enhance the
comparability of information between reporting periods and business
units, by adjusting for non-recurring or uncontrollable factors
which affect IFRS measures, to aid the user in understanding the
Group's performance.
Consequently, APMs are used by the Directors and management for
performance analysis, planning, reporting and incentive setting
purposes and this remains consistent with the prior year.
The key APM that the Group has focused on is as follows: EBITDA
profit from underlying continuing and discontinued operations' :
This is the headline measure used by management to measure the
Group's performance and is based on operating profit before the
impact of financing costs, share based payment charges,
depreciation, amortisation, impairment charges and exceptional
items. Exceptional items relate to certain costs that derive from
events or transactions that fall within the normal activities of
the Group but which, individually or, if of a similar type, in
aggregate, are excluded by virtue of their size and nature in order
to reflect management's view of the performance of the Group.
3. Segment reporting
Operating segments
The Board considers the Group on a Business Unit basis. Reports
by Business Unit are used by the chief decision-makers in the
Group. The Business Units operating during the year are the two
operating divisions; Services and Technology. This split of
business segments is based on the products and services each
offer.
Managed Technology Group and Group
Services Central Total
2021 GBP'000 GBP'000 GBP'000 GBP'000
Supply of products - 1,156 - 1,156
Supply and installation
contracts - 329 - 329
Maintenance and services 4,981 395 - 5,376
Training courses 100 90 - 190
Revenue 5,081 1,970 - 7,051
---------- ------------------- ----------------
Segmental underlying
EBITDA^ 1,106 (365) (2,414) (1,673)
Depreciation & amortisation (97) (9) (138) (244)
Segment operating result 1,009 (374) (2,552) (1,917)
Finance cost - - (3) (3)
----------------------------- ---------- ------------------- ----------------
Profit/ (loss) before
tax 1,009 (374) (2,555) (1,920)
Income tax benefit
/ (charge) (11) - - (11)
-----------------------------
Profit/(loss) for the
financial year 998 (374) (2,555) (1,931)
----------------------------- ---------- ------------------- ----------------
Segment assets 4,785 1,324 3,213 9,322
----------------------------- ---------- ------------------- ----------------
Segment liabilities 1,056 378 425 1,859
----------------------------- ---------- ------------------- ----------------
Capital expenditure 83 1 117 201
----------------------------- ---------- ------------------- ----------------
^ This is an Alternative Performance Measure refer to Note 2 for
further detail
Managed Technology Group and Group Total
Services Central
2020 GBP'000 GBP'000 GBP'000 GBP'000
Supply of products - 4,237 - 4,237
Supply and installation contracts - 1,039 - 1,039
Maintenance and services 4,259 312 - 4,571
Training courses 98 - - 98
Revenue 4,357 5,588 - 9,945
--------------- ------------------- ----------------
Segmental underlying EBITDA^ 655 781 (1,955) (519)
Exceptional items (note 4) - - - -
Depreciation & amortisation (136) (9) (80) (225)
Segment operating result 519 772 (2,035) (744)
Finance cost (1) - (16) (17)
----------------------------------- --------------- ------------------- ----------------
Profit/ (loss) before tax 518 772 (2,051) (761)
Income tax charge 51 (2) (18) 31
--------------- ------------------- ----------------
Profit/(loss) for the financial
year 569 770 (2,069) (730)
--------------- ------------------- ----------------
Segment assets 5,255 1,392 2,849 9,496
----------------------------------- --------------- ------------------- ----------------
Segment liabilities 912 694 831 2,437
----------------------------------- --------------- ------------------- ----------------
Capital expenditure 39 10 134 183
----------------------------------- --------------- ------------------- ----------------
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.
2021 2020
GBP'000 GBP'000
UK and Europe 2,161 2,056
Africa 4,296 4,172
Middle East 122 508
Rest of World 472 3,209
Total 7,051 9,945
======== ========
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 2021.
In 2020 included in revenues arising from the Technology
Solutions in the "Rest of World" are revenues of approximately
GBP1,284,000 for the provision of advanced screening of containers
at ports in Asia.
^ This is an Alternative Performance Measure refer to Note 2 for
further details
4. Finance costs
Group Group
2021 2020
GBP'000 GBP'000
Finance cost on lease liabilities (3) (5)
Interest payable on bank and other borrowings - (1)
Interest paid on convertible loan notes (Note
15) - (262)
Other movement on convertible loan notes - 251
Total finance benefit / (costs) (3) (17)
======== ========
5. Loss from operations
The following items have been included in arriving at the loss
for the financial year
Group Group
2021 2020
GBP'000 GBP'000
Staff costs (see Note 7) 4,369 3,887
Depreciation of property, plant and equipment (see
Note 11) 166 162
Amortisation of intangible assets (see Note 10) 78 63
Operating lease rentals payable
Short term Leases 89 96
Foreign exchange loss/(gain) 132 (43)
Auditor's remuneration
Amounts payable in 2021 years relate to PKF in respect of audit
and other services. The local Audit in Sierra Leone is performed by
Moore Sierra Leone (both years). The local audit in Ghana is
performed by PKF Ghana.
Audit services Group Group
2021 2020
GBP'000 GBP'000
Statutory audit of parent and consolidated financial
statements 46 46
Review of Interim Results 2 2
- Statutory audit of subsidiaries of the company
pursuant to legislation 20 20
Taxation services including research and development - -
tax credits
-------- --------
Total payable to PKF Littlejohn UK 68 68
Local audit in Sierra Leone - Moore Sierra Leone 18 18
Local audit in Ghana - PKF Ghana 1 1
Total fees 87 87
-------- --------
6. Taxation
Analysis of tax charge / (credit) in year
The Finance Act 2020 set the Corporation Tax main rate at 19%
for the financial year beginning 1 April 2020. Deferred taxes at
the balance sheet date have been measured using a 19% tax rate and
reflected in these financial statements.
GBP'000 GBP'000
2021 2020
Current year GBP'000 GBP'000
UK Corporation tax on profits - -
in the year
Potential foreign corporation
tax on profits in the year 8 18
Deferred Tax (Note 16)
Foreign entity deferred tax 3 (49)
Review of expected utilisation - -
of Losses
11 (31)
Group Group
2021 2020
GBP'000 GBP'000
Reconciliation of effective tax
rate
Loss on ordinary activities before
tax (1,920) (761)
============== ==============
Loss on ordinary activities multiplied
by the standard rate of corporation
tax in the UK of 19% (2020: 19%) (365) (145)
Effects of:
Expenses not deductible for tax
purposes 20 (158)
Foreign entity deferred tax movement
(Note 16) 3 (49)
Unrecognised losses carried forward 353 320
Total tax - credit 11 (31)
============== ==============
For further details on Tax refer to Note 16.
7. Employee costs
Employee costs for the Group during the year
Group
2021 2020
GBP'000 GBP'000
Wages and salaries 4,083 3,757
Pension contributions 68 60
Social security
costs 359 284
4,510 4,101
Share based payments - -
4,510 4,101
Job retention
support (141) (214)
Net Cost 4,369 3,887
==================== ====================
The Group operates a stakeholder pension scheme. The Group made
pension contributions totalling GBP68,000 during the year (2020:
GBP60,000), and pension contributions totalling GBP15,000 were
outstanding at the year-end (2020: GBP13,000).
Details of the Directors' remuneration are included in the
Remuneration Committee Report. Key management within the business
are considered to be the Board of Directors. The total Directors'
remuneration during the year was GBP656,000 (2020: GBP614,000) and
the highest paid director received remuneration totalling
GBP196,000 (2020: GBP196,000).
Average monthly number of people (including Executive Directors)
employed
Group 2021 2020
By function:
Sales 10 7
Operations 197 198
Administration 24 24
Management 10 10
241 239
===== =====
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 year.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. Only those outstanding options
that have an exercise price below the average market share price in
the year have been included.
The weighted average number of ordinary shares is calculated as
follows:
2021 2020
'000 '000
Issued ordinary shares
Start of year 286,528 145,403
Effect of shares issued during the year 23,576 17,245
-------- --------
Weighted average basic and diluted number
of shares for year 310,104 162,648
======== ========
2021 2020
GBP'000 GBP'000
Earnings
Loss and total comprehensive expense (1,931) (730)
For the year ended 31 December 2021 and 2020 the issue of
additional shares on exercise of outstanding share options,
convertible loans and warrants would decrease the basic loss per
share and there is therefore no dilutive effect. Loss per share was
0.62p (2020 Loss 0.45p).
9. Goodwill
Group 2021 2020
GBP'000 GBP'000
Gross carrying amount at 1 January 1,377 1,377
Acquisition in year - -
-------------------- --------
1,377 1,377
-------------------- --------
Accumulated impairment at 1 January (763) (763)
Impairment charge for the year - -
-------------------- --------
Accumulated impairment at 31 December (763) (763)
-------------------- --------
Carrying amount at 1 January 614 614
Carrying amount at 31 December 614 614
The goodwill balance relates to the acquisition of Longmoor
Security Limited, Keyguard U.K Limited and Euro-Ops SARL.
The Group tests goodwill annually for impairment, or more
frequently if there are indications that goodwill may be impaired.
The recoverable amounts of the cash-generating unit are determined
from value in use calculations. The key assumptions are discount
rate (5%) future revenues (assumed as flat) derived from the most
recent 2021 financial budgets approved by management. The
projection assumes that the companies are held in perpetuity. A
discount rate of 34% (2020: 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 Company
and Software Website
and Software
2021
GBP'000 GBP'000
Cost
At 1 January 2021 415 404
Additions 41 6
Disposals (56) (46)
At 31 December 2021 400 364
============== ==============
Accumulated amortisation
and impairment
At 1 January 2021 228 217
Charge for the year 78 73
Disposals (56) (46)
At 31 December 2021 250 244
============== ==============
Net book value at 31 December
2021 150 120
2020
GBP'000 GBP'000
Cost
At 1 January 2020 297 286
Additions 121 121
Disposals (3) (3)
At 31 December 2020 415 404
============== ==============
Accumulated amortisation
and impairment
At 1 January 2020 168 158
Charge for the year 63 62
Disposals (3) (3)
At 31 December 2020 228 217
============== ==============
Net book value at 31 December
2020 187 187
11. Property, plant and equipment
Group Freehold Plant Office equipment, Motor Right Total
property and equipment fixtures vehicles of use
and fittings assets
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or
valuation
At 1 January
2021 1,079 766 1,018 78 164 3,105
Additions 47 10 45 34 24 160
Disposals - (8) (5) (3) (15) (31)
Revaluation - - - - - -
At 31
December
2021 1,126 768 1,058 109 173 3,234
======================= ================== ========================= =============== ================ ===========
Accumulated depreciation and
impairment
At 1 January
2021 59 519 451 75 100 1,204
Charge for
the year 22 46 50 5 43 166
Disposals - (8) (5) (3) (15) (31)
At 31
December
2021 81 557 496 77 128 1,339
======================= ================== ========================= =============== ================ ===========
Net book
value at 31
December
2021 1,045 211 562 32 45 1,895
======================= ================== ========================= =============== ================ ===========
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or
valuation
At 1 January
2020 1,039 727 998 164 260 3,188
Additions 34 40 37 - - 111
Disposals - (1) (17) (86) (96) (200)
Revaluation 6 - - - - 6
At 31
December
2020 1,079 766 1,018 78 164 3,105
======================= ================== ========================= =============== ================ ===========
Accumulated depreciation and
impairment
At 1 January
2020 38 476 428 160 107 1,209
Charge for
the year 21 44 41 1 55 162
Disposals - (1) (18) (86) (62) (167)
At 31
December
2020 59 519 451 75 100 1,204
======================= ================== ========================= =============== ================ ===========
Net book
value at 31
December
2020 1,020 247 567 3 64 1,901
======================= ================== ========================= =============== ================ ===========
Right of use assets (motor vehicles) above have been created in
accordance with IFRS 16. Motor vehicles are leased for certain
employees for lease terms ranging between 3-5 years with fixed
payments. The Group does not purchase or guarantee the future value
of lease vehicles.
The freehold property was valued professionally by White
Commercial, Chartered Surveyors, as at 31 December 2020, which
provided a valuation of GBP1,020,000. 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. The Directors are of the opinion that
the valuation has not moved materially since the last valuation was
performed. The valuation was not materially different to the value
the asset is recorded at the balance sheet date.
Company Freehold Plant Office equipment, Right Total
property and equipment fixtures of use
and fittings assets
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 January 2021 1,079 18 202 76 1,375
Additions 47 5 35 24 111
Disposals - - - - -
Revaluation - - - - -
At 31 December 2021 1,126 23 237 100 1,486
---------- --------------- ------------------ -------- --------
Accumulated depreciation
and impairment
At 1 January 2021 59 16 167 45 287
Charge for the year 22 2 17 25 66
Disposals - - - - -
At 31 December 2021 81 18 184 70 353
========== =============== ================== ======== ========
Net book value at 31 December
2021 1,045 5 53 30 1,133
========== =============== ================== ======== ========
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 January 2020 1,039 15 195 84 1,333
Additions 34 3 25 - 62
Disposals - - (18) (8) (26)
Revaluation 6 - - - 6
1,079 18 202 76 1,375
---------- --------------- ------------------ -------- --------
Accumulated depreciation
and impairment
At 1 January 2020 38 15 175 26 254
Charge for the year 21 1 10 19 51
Disposals - - (18) - (18)
At 31 December 2020 59 16 167 45 287
========== =============== ================== ======== ========
Net book value at 31 December
2020 1,020 2 35 31 1,088
========== =============== ================== ======== ========
The freehold property was valued professionally by White
Commercial, Chartered Surveyors, as at 31 December 2020, which
provided a valuation of GBP1,020,000. The valuation was made on the
basis of recent market transactions on arm's length terms and on an
alternative use basis. The Directors are of the opinion that the
valuation has not moved materially since the last valuation was
performed. The valuation was not materially different to the value
the asset is recorded at the balance sheet date. 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.
2021 2020
GBP'000 GBP'000
-------- --------
Historical cost 803 756
Accumulated depreciation
At 1 January 308 293
Charge for the year 16 15
-------------------------- -------- --------
At 31 December 324 308
-------------------------- -------- --------
Net book value as at 31
December 479 448
-------------------------- -------- --------
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
2021 2020
At 1 January 67 158
Additions 24 -
Expensed in the
year (47) (91)
As at 31 December 44 67
===== =========================
Of which
Current Lease 32 38
Non-Current 12 29
44 67
----- -------------------------
13. Investment in subsidiaries
A ll 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 2021 2020
Investments Investments
Cost GBP'000 GBP'000
At 1 January 2020 389 389
Movement in Year - -
At 31 December 389 389
=================== ===================
Accumulated impairment
At 1 January 2020 (389) (389)
Movement in Year - -
At 31 December (389) (389)
=================== ===================
Investment in subsidiaries - -
------------------- -------------------
A sum of GBP8,643,000 (2020: GBP7,915,000) has been recognised
in receivables; and GBP219,000 (2020: GBP735,000) has been
recognised in payables.
14. Subsidiary undertakings
The subsidiary undertakings at 31 December 2021 were as follows
:
Name Country of incorporation Principal activity % of nominal ordinary share
capital and voting rights
held
---------------------------- -------------------------- ---------------------------- ----------------------------
Advanced security
Westminster International technology, (Technology
Limited England Division) 100
Close protection training
Westminster Services and provision of security
Limited (formerly Longmoor services (Managed
Security Limited) England Services) 100
Managed services of airport
security under long term
Westminster Aviation contracts. (Managed
Security Services Limited England Services) 100
Sovereign Ferries Limited England Dormant 100
Special purpose vehicle
which exists solely for
listing the 2013 CLN on
the CISX. Year end
31 October. Only
Westminster Operating transactions are intra
Limited England group 100
Security and risk
management including
manned guarding, mobile
patrols, risk management
and
Keyguard U.K Limited England K9 services. 100
Security and terminal
Longmoor (SL) Limited Sierra Leone guarding 100
Facilities Operations
Management Limited Sierra Leone Infrastructure management 100
Westminster Sierra Leone Local infrastructure for
Limited * Sierra Leone airport operations 49
Westminster Group GmbH Germany Dormant 100
GLIS Gesellschaft für
Luftfahrt- und
Infrastruktur-Sicherheit
GmbH Germany Managed Services 85
Westminster Sicherheit GmbH Germany Dormant 85
Managed Services
Euro Ops SARL France infrastructure 100
Westminster Maritime
Services Limited # England Dormant 100
CTAC Limited England Dormant 100
Longmoor Security Services
Limited (formerly
Westminster Aviation
Security Services (ME)
Limited) England Dormant 100
Westminster International
(Ghana) Limited Ghana Dormant 90
Managed services of airport
Westminster Aviation security under long term
Security Services RDC contracts. (Managed
SARLU DRC Services) 100
Managed services of port
security under long term
contracts. (Managed
Westminster Liberia LLC Liberia Services) 100
Subsidiary company registered addresses:
England Westminster House, Blacklocks Hill, Banbury,
Oxfordshire, OX17 2BS, United Kingdom.
Sierra Leone 60 Wellington Street, Freetown, Sierra Leone.
Germany Chiemseestrasse 25, 83233 Bernau am Chiemsee, Germany.
France 17 Route de Sundhoffen, 68280 Andolsheim. France.
Ghana No.10, Adomi Street (formerly 3rd Close), Airport
Residential Area, Accra.
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
2021 2020 2021 2019
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Trade and other receivables
(note 18) 3,606 2,647 9,774 9,059
Cash and cash equivalents
(note 19) 944 2,143 380 1,716
4,550 4,790 10,154 10,775
-------- -------- -------- --------
Financial liabilities
Borrowings (note 22) 12 29 5 13
Trade and other payables
(note 23) 1,760 2,308 638 1,246
1,772 2,337 643 1,259
-------- -------- -------- --------
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 Convertible Loan Notes were either converted or repaid
during 2020 with the process being completed on 31 December
2020.
2021 2021 2021 2020 2020 2020
GBP'000 CULN CLN Total CULN CLN Total
At 1 January - - - 179 2,233 2,412
Amortised finance cost - - - 20 265 285
Interest paid - - - (9) (253) (262)
Fair Value adjustment on Extension - - - - - -
Repaid in the year - - - (190) (2,032) (2,222)
Converted in the year - - - - (213) (213)
At 31 December - - - - - -
=========== =========== =========== ========== ========== ==========
Analysis of movement in debt at principal value (excluding IFRS
impacts), memorandum only
2021 2021 2021 2020 2020 2020
GBP'000 CULN CLN Total CULN CLN Total
At 1 January - - - 171 2,245 2,416
Fair value adjustment on conversion
/ repayment - - - 19 - 19
Conversion - - - - (213) (213)
Repaid - - - (190) (2,032) (2,222)
At 31 December - - - - - -
=========== =========== =========== ========== ========== ==========
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 31 December 2021, 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 2023.
The Group believes it has a total potential deferred tax asset
of GBP3,396,000 (2020: GBP2,557,000). It has recognised a deferred
tax asset of GBP953,000 (2020: GBP956,000) due to budgeted future
profits of the business beyond 2021. There remains GBP2,443,000
(2020: GBP1,601,000) of unrecognised deferred tax asset.
Deferred tax assets and liabilities have been calculated using
the expected future tax rate of 19% (2020: 19%). Any changes in the
future would affect these amounts proportionately.
2021 2020
GBP'000 GBP'000
Opening b a l ance as at
1 January 956 907
Cr edi t / (debit) to i
n c ome statement (3) 49
Defe rred tax asset as
a t 31 De c e mb er 953 956
======== ========
17. Inventories
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Finished goods 681 773 - -
681 773 - -
======== ======== ============== ================
The cost of inventories recognised as an expense within cost of
sales amounted to GBP1,313,000 (2020: GBP2,782,000). No reversal of
previous write-downs was recognised as a reduction of expense in
2021 or 2020.
18. Trade and other receivables
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables, gross 1,193 759 - 1
Allowance for credit losses (56) (52) - (1)
Trade receivables 1,137 707 - -
Amounts recoverable on contracts 136 135 - -
Intercompany receivables - - 8,643 7,915
Other receivables 1,909 1,321 1,131 1,144
Financial assets 3,182 2,163 9,774 9,059
-------- -------- -------- --------
Other taxes and social security 437 211 46 63
Prepayments 42 64 10 25
--------
Non-financial assets 479 275 56 88
-------- -------- -------- --------
Trade and other receivables 3,661 2,438 9,830 9,147
-------- -------- -------- --------
Non-Current Receivable 424 484 - -
======== ======== ======== ========
The average credit period taken on sale of goods in 2021 was 57
days (2020: 19 days). An allowance has been made for estimated
credit losses of GBP45,000 (2020: GBP52,000). 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 GBP1,118,000 (2020:
GBP1,130,000) 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. However, refer also
note 26 on Contingent Liabilities.
The following table provides an analysis of trade receivables at
31 December. The Group believes that the balances are ultimately
recoverable based upon a review of past payment history and the
current financial status of the customers.
2021 2020
GBP'000 GBP'000
Current 619 463
Not more than 3 months 379 130
More than 3 months 195 166
1,193 759
======== ========
Allowances for Credit Losses 2021 2020
GBP'000 GBP'000
Opening balance at 1 January 52 116
Amounts written off - (48)
Amounts provided 37 46
Written back (no longer required) (33) (62)
Closing balance at 31 December 56 52
======== ========
There are no significant expected credit losses from financial
assets that are neither past due nor impaired.
At 31 December 2021 GBP574,000 (2020: GBP307,000) of receivables
were denominated in US dollars, GBP63,000 (2020: Nil) of
receivables were denominated in Euros and GBP269,000 (2020:
GBP167,000) 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
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and
in hand 944 2,143 380 1,716
Bank overdraft - - - -
Cash and cash equivalents 944 2,143 380 1,716
======== ============== ============== ==============
All the bank accounts of the Group are set against each other
where a right of offset exists in establishing the cash position of
the Group. The bank overdrafts do not therefore represent bank
borrowings, which is why they are presented as above for the
purposes of the cash flow statement and the statement of financial
position.
20. Called up share capital
Group and Company
The total amount of issued and fully paid shares is as
follows:
Ordinary Share Capital 2021 2020
Number GBP'000 Number GBP'000
At 1 January 286,527,511 287 145,402,511 14,540
Arising on exercise of share
options and warrants 127,500 - 2,125,000 213
Issued under the RiverFort EPSA - - 14,000,000 1,400
Share capital reorganisation
to create deferred shares - - - (15,991)
Other issue for cash 43,859,649 44 125,000,000 125
At 31 December 330,514,660 331 286,527,511 287
================= ========== ================= ==========
Deferred share capital 2021 2020
Number GBP'000 Number GBP'000
At 1 January 161,527,511 15,991 - -
Share capital reorganisation
to create deferred shares - - 161,527,511 15,991
Capital Reduction (161,527,511) (15,991) - -
At 31 December - - 161,527,511 15,991
================= ========== ================= ==========
Total Share Capital 2021 2020
Number GBP'000 Number GBP'000
Ordinary Share Capital 330,514,660 331 286,527,511 287
Deferred share capital - - 161,527,511 15,991
330,514,660 331 448,055,022 16,278
================= ========== ================= ==========
During the year, the following equity issues took place
Date Comment Shares Issued Issue price
18 June 2021 Equity placing 43,859,649 5.7
22 October
2021 Warrant Redemption 127,500 7
Capital Reduction
At the AGM on 24 June 2021 the Shareholders voted to approve
reduction of capital. This was subsequently ratified by court order
in November 2021.
The reduction of capital involved a cancellation of the deferred
shares, cancellation of the share premium account, capitalisation
and immediate cancellation thereafter of the share merger reserve
account which then enabled the creation of distributable reserves
in order to enhance the Company's ability to pay dividends and/or
to make other forms of distributions to its shareholders in the
future.
GBP'000
Deferred Shares Cancelation 15,991
Share Premium Cancelation 16,355
Merger Reserve Cancelation 300
Distributable Reserves 32,646
========
21. Share options and Warrants
Options outstanding
Options outstanding as at 1
January 2021 9,577,500
Lapsed during the year (100,000)
Options outstanding as at 31
December 2021 9,477,500
====================
The Company adopted the 2007 Share Option Scheme on 3 April 2007
that provides for the granting of both Enterprise Management
Incentives and unapproved share options (Westminster Group
Individual Share Option Agreements). The main terms of the option
scheme are as follows:
-- Although no special conditions apply to the options granted
in 2007, the model form agreement allows the Company to adopt
special conditions to tailor an option for any particular
employee.
-- The scheme is open to all full-time employees and Directors
except those who have a material interest in the Company.
-- For the purposes of this definition, a material interest is
either beneficial ownership of, or the ability to control directly,
or indirectly, more than 30% of the ordinary share capital of the
Company.
-- The Board determines the exercise price of options before
they are granted. It is provided in the scheme rules that options
must be granted at the prevailing market price in the case of EMI
options and must not be granted at an exercise price that is less
than the nominal value of a share.
-- There is a limit that options over unissued shares granted
under the scheme and any discretionary share option scheme or other
option agreement adopted or entered into by the Company must not
exceed 10% of the issued share capital.
-- Options can be exercised on the second anniversary of the
date of grant and may be exercised up to the 10th anniversary of
granting. Options will remain exercisable for a period of 40 days
if the participant is a good leaver.
The Company adopted the 2017 Share Option Scheme on 21 September
2017 that provides for the granting of both Enterprise Management
Incentives and unapproved share options (Westminster Group
Individual Share Option Agreements). The main terms of the option
scheme are as follows:
-- Although no special conditions apply to the options granted
in 2017, the model form agreement allows the Company to adopt
special conditions to tailor an option for any particular
employee.
-- The scheme is open to all full-time employees and Directors
except those who have a material interest in the Company.
-- For the purposes of this definition, a material interest is
either beneficial ownership of, or the ability to control directly,
or indirectly, more than 30% of the ordinary share capital of the
Company.
-- The Board determines the exercise price of options before
they are granted. It is provided in the scheme rules that options
must be granted at the prevailing market price in the case of EMI
options and must not be granted at an exercise price that is less
than the nominal value of a share.
-- There is a limit that options over unissued shares granted
under the scheme and any discretionary share option scheme or other
option agreement adopted or entered into by the Company must not
exceed 10% of the issued share capital.
-- Options can be exercised on the second anniversary of the
date of grant and may be exercised up to the 10th anniversary of
granting. Options will remain exercisable for a period of 40 days
if the participant is a "good leaver".
Options have subsequently been granted on this basis.
These options are valued by the use of the Black-Scholes model
using a volatility of 70%, interest free rate of 0.5%, dividend of
0% and a life of 5 years.
The Company has the following share options outstanding to its
employees (including those on good leaver terms). The weighted
average exercise price at the reporting date was 18.1p (2020:
18.1p). The average life of the unexpired share options was 5.4
years (2020: 6.4 years).
As At 31 December 2021 31 December 2020
Grant date Exercise Number outstanding Average 2020 number 2020 average
price GBP life outstanding outstanding life outstanding
(years) (years)
28 June 2012 0.365 225,000 0.5 225,000 1.5
01 July 2014 0.510 225,000 2.5 225,000 3.5
10 December
2014 0.285 2,187,500 2.9 2,187,500 3.9
09 October
2015 0.140 40,000 3.8 40,000 4.8
01 June 2018 0.130 6,050,000 6.4 6,150,000 7.4
01 November
2018 0.130 750,000 6.8 750,000 7.8
9,477,500 5.4 9,577,500 6.4
=================== ================== ============= ==================
During the year, no employee options were granted (2020: Nil),
none were exercised (2020: none) and 100,000 lapsed (2020: 93,750).
The weighted average price of the options lapsed in the year was
13.0p (2020: 28.5p). The weighted average exercise price of
exercisable options at the end of 2021 was 18.0p (2020 18.0p).
The Black-Scholes option-pricing model is used to determine the
fair value of share options at grant date. The assumptions used to
determine the fair values of share options at grant dates were as
follows:
For share options granted post IPO the expected share price
volatility was determined taking account of the historic daily
share price movements. Since 2009, the standard deviation of the
share price over the past 3 years has been used to calculate
volatility.
The average expected term to exercise used in the models is
based on management's best estimate for the effects of non-
transferability, exercise restrictions and behavioural conditions,
forfeiture and historical experience. The risk-free rate has been
determined from market yields for government gilts with outstanding
terms equal to the average expected term to exercise for each
relevant grant.
Warrants
The Company has historically issued the following warrants,
which are still in force at the balance sheet date:
Date issued Reason for Number of Exercise Life in years
issue warrants price pence
per share
31 January
2018 Placing Commission 170,455 22.0 5
-------------------- ----------- ------------- --------------
22 January
2020 RiverFort EPSA 3,499,222 5.2 4
-------------------- ----------- ------------- --------------
22 December GBP5m Share
2020 Issue 24,872,500 7.0 2
-------------------- ----------- ------------- --------------
The Warrants issued on 31 January 2018 and 22 January 2020 are
valued in accordance with IFRS 2 that is for equity -- settled
share -- based payment transactions, the Company measures the goods
or services received, and the corresponding increase in equity,
directly, at the fair value of the goods or services received,
unless that fair value cannot be estimated reliably. Warrants are
recorded at fair value at inception and are not remeasured.
The Warrants issued with Share Issues on 22 December 2020 have
been determined as equity instruments under IAS 32. Since the fair
value of the shares issued at the same time is equal to the price
paid, these warrants, by deduction, are considered to have been
issued at nil value.
The fair value of GBPNil (2020: GBP88,000) for the issue of
these warrants was recognised in the year.
Movement in Warrants
As at 1/1/21 Lapsed Redeemed As at 31/12/21
Placing Commission 170,455 - - 170,455
RiverFort EPSA 3,499,222 - - 3,499,222
GBP5m Share Issue 25,000,000 - (127,500) 24,872,500
Share Issue July
2019 9,625,000 (9,625,000) - -
38,294,677 (9,625,000) (127,500) 28,542,177
============= ============ ========== ==========================
22. Lease Liabilities
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Non-current
Non-current lease debt 12 29 5 13
Total non-current lease
liabilities 12 29 5 13
======== ======== ======== ========
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
Current Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 509 688 170 125
Accruals and other creditors 1,219 1,582 226 366
Intercompany payables - - 219 735
Finance lease creditor
(IFRS 16) 32 38 23 20
Financial liabilities 1,760 2,308 638 1,246
-------- -------- -------------- --------------
Other taxes and social - - - -
security payable
Contractual liabilities 87 100 - -
Non-financial liabilities 87 100 - -
-------- -------- -------------- --------------
Total current trade and
other payables 1,847 2,408 638 1,246
======== ======== ============== ==============
Shown on the balance sheet
as:
Contractual liabilities 87 100 - -
Trade and other payables 1,760 2,308 811 1,246
1,847 2,408 811 1,246
======== ======== ============== ==============
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 2021 was 43 days (2020: 50
days). The Directors consider that the carrying value of trade
payables approximates to their fair value.
Contractual liabilities relate to amounts received from
customers at year-end but not yet earned.
At 31 December 2021 GBP160,000 (2020: GBP438,000) of payables
were denominated in US dollars, GBP24,000 (2020: GBP2,000) were
denominated in Euros, GBP21,000 (2020: GBP1,000) were denominated
in Ghanaian Cedi and GBP23,000 (2020: Nil) 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 2021 2021 2021 2020 2020 2020
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Adjustments:
Depreciation, amortisation
and impairment of non-financial
assets 244 - 244 225 - 225
Lease liabilities (3) - (3) (17) - (17)
Revaluation of fixed assets - - - (6) - (6)
Loss on disposal of non-financial
assets - - - 33 - 33
Non-cash accounting for CLN
& CULN - - - (119) - (119)
Conversion of CLN - - - (213) - (213)
(Decrease) / increase in Deferred
Tax Asset 3 - 3 (49) - (49)
Share-based payment expenses - - - 87 - 87
Total adjustments 244 - 244 (59) - (59)
------------ ------------- -------- ------------ ------------- --------
Net changes in working capital: 2021 2021 2021 2020 2020 2020
Continuing Discontinued Total Continuing Discontinued Total
Operations Operations Operations Operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Increase)/Decrease in inventories 92 - 92 (726) - (726)
Decrease in trade and other
receivables (1,223) - (1,223) 128 - 128
Increase in long term receivables 60 - 60 (484) - (484)
Increase/(decrease) in contract
liabilities (13) - (13) 27 - 27
Decrease in trade and other
payables (548) - (548) (148) - (148)
Decrease in assets of disposal
group classified as held for
sale - - - - 170 170
Total changes in working capital (1,632) - (1,632) (1,203) 170 (1,033)
------------ ------------- -------- ------------ ------------- --------
Company Company Restated
Company
2021 2020
GBP'000 GBP'000
Adjustments:
Depreciation, amortisation and impairment
of non-financial assets 139 113
Finance costs 1 376
Revaluation of fixed assets - (6)
(Profit) / loss on disposal of non-financial
assets - 8
Non-cash accounting for CLN (1)
Share-based payment expenses - 87
Other non-cash items - 6
Total adjustments 140 583
----------------- -----------------
Net changes in working capital:
Increase in trade and other receivables (683) (427)
Decrease in trade and other payables (608) (1,425)
Increase in asset held for sale - -
Total changes in working capital (1,291) (1,852)
================= =================
25. Contingent assets and contingent liabilities
In 2020, the company issued 14m ordinary shares and received a
GBP1.5m mezzanine loan under the RiverFort EPSA. At the same time
under the EPSA the company issued 14m shares and booked a sundry
debt of GBP1.75m. The loan was to be repaid and the sundry debt
settled by selling down the shares. The mezzanine loan was fully
repaid in December 2020. As at the 31 December 2021 there remained
shares still to be sold and a residual sundry debt for those
shares. Because of the low share price, had the remaining shares
been sold at the end of 2020 there would have been a loss of
GBP985,000 (2020: GBP936,000) on this debt. However, the shares do
not have to be fully sold at this time; and there is reason to
believe that it will be at a price higher in the future than the 31
December 2021 price level which will be enough to recoup the
losses.
In February 2021, Clydesdale Bank PLC trading as Yorkshire Bank
offered the Group an overdraft and other banking facilities. As a
condition of these facilities the Company entered into a
multilateral charge and guarantee in respect of bank overdrafts and
other facilities of all companies within the Group.
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 Leone (SLL) and Ghanaian Cedi (GHS). The Group's
policy is to match the currency of the order with the principal
currency of the supply of the equipment. Where it is not possible
to match those foreign currencies, the Group might consider hedging
exchange risk through a variety of hedging instruments such as
forward rate agreements, although no such transactions have ever
been entered into.
Group Short-term Short-term Short-term Short-term
exposure exposure exposure exposure
USD EUR SLL GHS
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----------- --------------- ---------------- -----------
31 December 2021
Financial assets 574 63 - 269
Financial liabilities (160) (24) (23) (21)
Total exposure 414 39 (23) 248
----------------------- ----------- --------------- ---------------- -----------
31 December 2020
Financial assets 307 - - 167
Financial liabilities (438) (2) - (1)
Total exposure (131) (2) - 166
----------------------- ----------- --------------- ---------------- -----------
If the US dollar were to depreciate by 10% relative to its year
end rate, this would cause a loss of profits in 2021 of GBP46,000
(2020: GBP15,000 Gain).
If the Euro were to depreciate by 10% relative to its year end
rate, this would cause a loss of profits in 2021 of GBP4,000 (2020:
Minimal Gain).
If the Sierra Leonean Leone were to depreciate by 10% relative
to its year end rate, this would cause a gain of profits in 2021 of
GBP3,000 (2020: Nil).
If the Ghanaian Cedi were to depreciate by 10% relative to its
year end rate, this would cause a loss of profits in 2021 of
GBP28,000 (2020: GBP18,000 Loss).
Exposures to foreign exchange rates vary during the year
depending on the volume of overseas transactions. Nonetheless, the
analysis above is considered to be representative of the Group's
exposure to currency risk. Foreign currency denominated financial
assets and liabilities are immaterial for the Company.
Interest rate sensitivity
There were no material borrowings in 2021. Interest on the cash
holdings of the Group and lease debt noted in note 22 are both not
material and also has fixed interest rates. Therefore, no
calculation of interest rate sensitivity has been undertaken.
Credit risk analysis
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with
creditworthy counterparties and where possible working on a "cash
with order".
The Group has a credit policy in place and the exposure to
credit risk is monitored on an ongoing basis. Credit evaluations
are performed on all customers requiring credit over a certain
amount. In the case of material sales transactions, the Group
usually demands an initial deposit from customers and generally
seeks to ensure that the balance of funds is secured by way of a
letter of credit or similar instruments.
None of the Group's financial assets are secured by collateral
or other credit enhancements. Details of allowance for credit
losses are shown in note 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 31 December 2021, the Group's financial liabilities have
contractual maturities (including interest payments, where
applicable) as summarised below:
2021 2020
Group Current 6 to Non-current Current 6 to Non-current
(within 12 months (1-5 years) (within 12 months (1-5 years)
6 months) 6 months)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
payables 1,760 - - 2,308 - -
----------- ============== =================== ----------- =========== =============
Total 1,760 - - 2,308 - -
=========== ============== =================== =========== =========== =============
Company Current 6 to Non-current Current 6 to Non-current
(within 12 months (1-5 years) (within 12 months (1-5 years)
6 months) 6 months)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
payables 638 - - 1,246 - -
=========== ============== =================== =========== =========== =============
Total 638 - - 1,246 - -
=========== ============== =================== =========== =========== =============
27. Related Party Transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, are listed below:
Balance Movement Balance Movement Balance
at 31 December in Year at 31 December in Year at 31 December
2019 2020 2021
2019 2020 2020 2021 2021
Westminster International
Limited 2,329 (1,483) 846 (719) 127
Westminster Services Limited
(formerly Longmoor Security
Limited) - 10 10 (10) -
Westminster Aviation Security
Services Limited 3,979 6 3,985 777 4,762
Sovereign Ferries Limited 45 503 548 - 548
Westminster Operating
Limited (2,398) 2,156 (242) 68 (174)
Keyguard U.K Limited - 68 68 264 332
Longmoor (SL) Limited - - - (24) (24)
Facilities Operations
Management Limited 192 (6) 186 1,313 1,499
Westminster Sierra Leone
Limited * - (60) (60) 60 -
Westminster Group GMBH 795 63 858 330 1,188
GLIS Gesellschaft für
Luftfahrt- und Infrastruktur-Sicherheit
GmbH - (50) (50) 50 -
Westminster Sicherheit - - - - -
GMBH
Euro Ops SARL 104 104 83 187
Westminster Maritime Services
Limited 1,310 - 1,310 (1,331) (21)
Longmoor Security Services - - - - -
Limited (formerly Westminster
Aviation Security Services
(ME) Limited)
Westminster International
(Ghana) Limited - (383) (383) 383 -
6,252 928 7,180 1,244 8,424
================ ========= ================ ========= ================
The remuneration of the Directors, who are the key management
personnel of the Group, is set out in the Remuneration Committee
report as are details of pension contributions for Directors.
In the year to 31 December 2021 fees and expenses of GBP 9,339
(2020: GBP18,619) plus VAT were accrued to Cattaneo LLP a Limited
Liability Partnership under the control of Charles Cattaneo. On the
31 December 2021 Cattaneo LLP was owed Nil (2020: GBP1,600)
including VAT.
In the year to 31 December 2021 fees and expenses of GBP 1,320
(2020: Nil) plus VAT were accrued to Graham Binns Consulting
Limited, a Limited Liability Partnership under the control of Major
General (Rtd) Graham Binns. On the 31 December 2021 Graham Binns
Consulting Limited was owed GBP1,584 including VAT (2020:
GBPNil).
Certain members of the Fowler family, other than directors, have
been employed by the Group on normal arms-length terms for between
12 and 24 years. Their remuneration, in aggregate, for the year
ended 31 December 2021 was GBP183,448 (2020: GBP182,830).
28. Prior Year Adjustment
It has been clarified that Facilities Operations Management
Limited, one of our Sierra Leonean companies, is actually owned
100% by Westminster, not 90% as stated in previous financial
statements. The effect of this is as follows:
Group statement of financial position
(extract)
Restated as
Signed accounts as at at
31 December 31 December
2020 Adjustment 2021
------------ ----------- ------------
Brought forward Reserves (24,242) (150) (24,392)
============ =========== ============
Minority Interest (535) 150 (385)
============ =========== ============
Signed accounts Restated as
as at at
31 December 31 December
2019 Adjustment 2020
---------------- ----------- ------------
Brought forward Reserves (23,697) (133) (23,830)
================ =========== ============
Minority Interest (365) 133 (232)
================ =========== ============
29. Events after the Reporting Period
There are no reportable events in the period 31 December 2021 to
28 April 2022.
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END
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