Final Results & Investor Presentation
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 £7.1m (2020: £9.9m).
· Loss after tax £1.9m (2020: loss of £0.7m).
· Total Equity / Net Assets increased from £7.1m in 2020 to £7.5m 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:
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Westminster Group Plc |
Media enquiries via Walbrook PR |
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Rt. Hon. Sir Tony Baldry - Chairman |
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Peter Fowler - Chief Executive Officer |
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Mark Hughes - Chief Financial Officer |
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Strand Hanson Limited (Financial & Nominated Adviser) |
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James Harris |
020 7409 3494 |
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Ritchie Balmer
Arden Partners plc (Broker) Richard Johnson (Corporate) Tim Dainton/Simon Johnson (Broking) |
020 7614 5900 |
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Walbrook (Investor Relations) |
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Tom Cooper |
020 7933 8780 |
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Paul Vann |
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Nick Rome |
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 £7m 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 £300m 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 £5.1m (2020: £4.4m), 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 £2.0m (2020: £5.6m). 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, €24 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 afterMartyn 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 | £7.1m | £9.9m |
Gross Margin | 46% | 40% |
Recurring Revenues | £5.4m | £4.5m |
Days Sales Outstanding | 57 | 19 |
Number of Employees | 241 | 239 |
Average Employee Cost Per Head | £18,129 | £16,264 |
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 (£2.5-£3.5m), solution sales (£3.5m-£4.5m), existing services (3.5m-£4.5m) and new services (£5.5-£6.5m). 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 £7.1m (2020: £9.9m) 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 £5.0m (2020: £4.4m), 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 £2.0m (2020: £5.6m). 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 £5.2m (2020: £4.7m) 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 £141,000 in 2021, which is less than 2020 (£214,000). 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 £1.9m (2020: £0.7m). 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 £1.67m (2020: £0.52m loss).
Reconciliation to EBITDA^from underlying operations | 2021 | 2020 |
| £'000 | £'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 £0.0m (2020: £0.0m), 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 £0.0m (2020: £0.3m).
Earnings Results for the Year
The Group loss before taxation was £1.9m (2020: Loss before tax of £0.8m) 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 £9.3m on 31 December 2021 compared with £9.5m on 31 December 2020. The main movement was a reduction in cash offsetting a £1.6m increase in working capital and funding the losses.
The Group's net current assets amounted to £5.3m on 31 December 2021 (2020: £5.4m) 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 £3.7m (2020: £2.4m). 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 £0.9m at 31 December 2021 compared with £2.1m at 31 December 2020. The decrease is mainly due to losses and an unfavourable movement in working capital.
Trade and other payables were £1.8m (2020: £2.3m) and average creditor days were 43 (2020: 50).
A deferred tax asset of £1.0m (2020: £1.0m) was held at the year end.
Total equity on 31 December 2021 stood at a surplus of £7.5m (2020: £7.1m).
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 in loan notes at principal value £'000 | 2021 | 2021 | 2021 | 2020 | 2020 | 2020 |
| CULN | CLN | Total | CULN | CLN | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'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 of Shares | Price per share | Funds Raised |
|
|
| p | £'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 Price (p) | Issued | Life | Vesting Criteria |
170,455 | S P Angel | 22.0 | 31 January 2018 | 5 | At grant |
3,499,222 | RiverFort | 5.2 | 21 January 2020 | 4 | 6 months after grant: - detachable |
24,872,500 | Various Holders | 7.0 | 22 December 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.
| £'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 £3.3m (2020: outflow £1.9m) which arose from the loss and an unfavourable working capital movement of £1.6m (2020: £1.0m) which was primarily an increase in receivables and investment in the new projects.
During the year, the Group raised £2.51m gross from the issue of new equity (2020: £6.96m).
Reconciliation from adjusted EBITDA^ to normalised operating cash flow | 2021 | 2020 |
| £'000 | £'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 |
|
|
| £'000 | £'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 | £'000 | £'000 | £'000 | £'000 | £'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 subsidiaries | 13 | - | - | - | - | - |
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 groups clasified as held for sale |
| - | - | 170 | - | - |
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 convertible loan notes |
| - | - | 423 | - | - |
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 £2,348,000in 2021, (2020: £2,545,000 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 up share capital |
Share premium account |
Merger relief reserve |
Share based payment reserve |
Revaluation reserve |
Equity reserve on convertible loan note |
Retained earnings |
Total |
Non-controlling interest |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
AS AT 1 JANUARY 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 up share capital | Share premium account | Merger relief reserve | Share based payment reserve | Revaluation reserve | Equity reserve on convertible loan note | Retained earnings | Total | Non-controlling interest | Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
|
|
|
|
AS AT 1 JANUARY 2020 as previously stated | 14,540 | 9,577 | 300 | 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 up share capital |
Share premium account |
Merger relief reserve |
Share based payment reserve |
Revaluation reserve |
Equity reserve on convertible loan note |
Retained earnings |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
AS AT 1 JANUARY 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 | £'000 | £'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 END OF YEAR | 19 | 944 | 2,143 |
Company Cash Flow Statement
For the year ended 31 December 2021
|
| Company | Company |
|
| 2021 | 2020 |
| Note | £'000 | £'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 END 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 £1,931,000 (2020: £730,000), The cash outflow from operating activities during the year was £3,308,000 (2020: Outflow £2,023,000), 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 Services | Technology | Group and Central | Group Total |
2021 | £'000 | £'000 | £'000 | £'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 Services | Technology | Group and Central | Group Total |
2020 | £'000 | £'000 | £'000 | £'000 |
Supply of products | - | 4,237 | - | 4,237 |
Supply and installation contracts | - | 1,039 | - | 1,039 |
Maintenance and services | 4,259 | 312 | - | 4,571 |
Training courses | 98 | - | - | 98 |
Revenue | 4,357 | 5,588 | - | 9,945 |
|
|
|
|
|
Segmental underlying EBITDA^ | 655 | 781 | (1,955) | (519) |
Exceptional items (note 4) | - | - | - | - |
Depreciation & amortisation | (136) | (9) | (80) | (225) |
Segment operating result | 519 | 772 | (2,035) | (744) |
Finance cost | (1) | - | (16) | (17) |
Profit/ (loss) before tax | 518 | 772 | (2,051) | (761) |
Income tax charge | 51 | (2) | (18) | 31 |
Profit/(loss) for the financial year | 569 | 770 | (2,069) | (730) |
|
|
|
|
|
Segment assets | 5,255 | 1,392 | 2,849 | 9,496 |
Segment liabilities | 912 | 694 | 831 | 2,437 |
Capital expenditure | 39 | 10 | 134 | 183 |
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 |
| £'000 | £'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 £1,284,000 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 |
| £'000 | £'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 |
| £'000 | £'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 |
| £'000 | £'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.
| £'000 | £'000 |
| 2021 | 2020 |
Current year | £'000 | £'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 |
| £'000 | £'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 |
| £'000 | £'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 £68,000 during the year (2020: £60,000), and pension contributions totalling £15,000 were outstanding at the year-end (2020: £13,000).
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 £656,000 (2020: £614,000) and the highest paid director received remuneration totalling £196,000 (2020: £196,000).
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 |
| £'000 | £'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 |
|
| £'000 | £'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 and Software | Company Website and Software |
|
|
|
2021 |
|
|
| £'000 | £'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 |
|
|
| £'000 | £'000 |
Cost |
|
|
At 1 January 2020 | 297 | 286 |
Additions | 121 | 121 |
Disposals | (3) | (3) |
At 31 December 2020 | 415 | 404 |
Accumulated amortisation and impairment |
|
|
At 1 January 2020 | 168 | 158 |
Charge for the year | 63 | 62 |
Disposals | (3) | (3) |
At 31 December 2020 | 228 | 217 |
|
|
|
Net book value at 31 December 2020 | 187 | 187 |
11. Property, plant and equipment
Group | Freehold property | Plant and equipment | Office equipment, fixtures and fittings | Motor vehicles | Right of use assets | Total |
|
|
|
|
|
|
|
2021 | £'000 | £'000 | £'000 | £'000 | £'000 | £'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 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Cost or valuation |
|
|
|
|
|
|
At 1 January 2020 | 1,039 | 727 | 998 | 164 | 260 | 3,188 |
Additions | 34 | 40 | 37 | - | - | 111 |
Disposals | - | (1) | (17) | (86) | (96) | (200) |
Revaluation | 6 | - | - | - | - | 6 |
At 31 December 2020 | 1,079 | 766 | 1,018 | 78 | 164 | 3,105 |
|
|
|
|
|
|
|
Accumulated depreciation and impairment |
|
|
|
|
| |
At 1 January 2020 | 38 | 476 | 428 | 160 | 107 | 1,209 |
Charge for the year | 21 | 44 | 41 | 1 | 55 | 162 |
Disposals | - | (1) | (18) | (86) | (62) | (167) |
At 31 December 2020 | 59 | 519 | 451 | 75 | 100 | 1,204 |
|
|
|
|
|
|
|
Net book value at 31 December 2020 | 1,020 | 247 | 567 | 3 | 64 | 1,901 |
Right of use assets (motor vehicles) above have been created in accordance with IFRS 16. Motor vehicles are leased for certain employees for lease terms ranging between 3-5 years with fixed payments. The Group does not purchase or guarantee the future value of lease vehicles.
The freehold property was valued professionally by White Commercial, Chartered Surveyors, as at 31 December 2020, which provided a valuation of £1,020,000. The valuation was made on the basis of recent market transactions on arm's length terms and on an alternative use basis. The Revaluation Reserve is not available for distribution to shareholders. 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 property | Plant and equipment | Office equipment, fixtures and fittings | Right of use assets | Total |
|
|
|
|
|
|
2021 | £'000 | £'000 | £'000 | £'000 | £'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 | £'000 | £'000 | £'000 | £'000 | £'000 |
Cost or valuation |
|
|
|
|
|
At 1 January 2020 | 1,039 | 15 | 195 | 84 | 1,333 |
Additions | 34 | 3 | 25 | - | 62 |
Disposals | - | - | (18) | (8) | (26) |
Revaluation | 6 | - | - | - | 6 |
| 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 £1,020,000. The valuation was made on the basis of recent market transactions on arm's length terms and on an alternative use basis. The 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 |
| £'000 | £'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
All loans relate to cash movements between Group companies and are repayable on demand. Loans and other intercompany accounts are included in the Company's respective current payables or receivables. This is because they are more in the nature of current assets and current liabilities than longer term investments.
Company | 2021 | 2020 |
| Investments | Investments |
Cost | £'000 | £'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 £8,643,000 (2020: £7,915,000) has been recognised in receivables; and £219,000 (2020: £735,000)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 | |
Westminster International Limited | England | Advanced security technology, (Technology Division) | 100 | |
Westminster Services Limited (formerly Longmoor Security Limited) | England | Close protection training and provision of security services (Managed Services) | 100 | |
Westminster Aviation Security Services Limited | England | Managed services of airport security under long term contracts. (Managed Services) | 100 | |
Sovereign Ferries Limited | England | Dormant
| 100 |
|
Westminster Operating Limited | England | Special purpose vehicle which exists solely for listing the 2013 CLN on the CISX. Year end 31 October. Only transactions are intra group
| 100 | |
Keyguard U.K Limited | England | Security and risk management including manned guarding, mobile patrols, risk management and K9 services. | 100 |
|
Longmoor (SL) Limited | Sierra Leone | Security and terminal guarding | 100 |
|
|
|
|
|
|
Facilities Operations Management Limited
| Sierra Leone | Infrastructure management | 100 |
|
Westminster Sierra Leone Limited * | Sierra Leone | Local infrastructure for airport operations | 49 |
|
Westminster Group GmbH | Germany | Dormant | 100 |
|
GLIS Gesellschaft für Luftfahrt- und Infrastruktur-Sicherheit GmbH | Germany | Managed Services | 85 |
|
Westminster Sicherheit GmbH | Germany | Dormant | 85 |
|
Euro Ops SARL | France | Managed Services infrastructure | 100 |
|
Westminster Maritime Services Limited # | England | Dormant | 100 |
|
CTAC Limited | England | Dormant | 100 | |
Longmoor Security Services Limited (formerly Westminster Aviation Security Services (ME) Limited) | England | Dormant | 100 | |
Westminster International (Ghana) Limited | Ghana | Dormant | 90 | |
Westminster Aviation Security Services RDC SARLU | DRC | Managed services of airport security under long term contracts. (Managed Services) | 100 | |
Westminster Liberia LLC | Liberia | Managed services of port security under long term contracts. (Managed 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 |
| £'000 | £'000 | £'000 | £'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 |
£'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 |
£'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 £3,396,000 (2020: £2,557,000). It has recognised a deferred tax asset of £953,000 (2020: £956,000) due to budgeted future profits of the business beyond 2021. There remains £2,443,000 (2020: £1,601,000) 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 |
| £'000 | £'000 |
Opening balance as at 1 January | 956 | 907 |
Credit / (debit) to income statement | (3) | 49 |
Deferred tax asset as at 31 December | 953 | 956 |
17. Inventories
| Group | Group | Company | Company |
| 2021 | 2020 | 2021 | 2020 |
| £'000 | £'000 | £'000 | £'000 |
Finished goods | 681 | 773 | - | - |
| 681 | 773 | - | - |
The cost of inventories recognised as an expense within cost of sales amounted to £1,313,000 (2020: £2,782,000). 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 |
| £'000 | £'000 | £'000 | £'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 £45,000 (2020: £52,000). 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 £1,118,000 (2020: £1,130,000) 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 |
| £'000 | £'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 |
| £'000 | £'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 £574,000 (2020: £307,000) of receivables were denominated in US dollars, £63,000 (2020: Nil) of receivables were denominated in Euros and £269,000 (2020: £167,000) 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 |
| £'000 | £'000 | £'000 | £'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 | £'000 | Number | £'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 | £'000 | Number | £'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 | £'000 | Number | £'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.
Thereduction 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.
| £'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 price £ | Number outstanding | Average life outstanding (years) | 2020 number outstanding | 2020 average life outstanding (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 issue | Number of warrants | Exercise price pence per share | Life in years |
31 January 2018 | Placing Commission | 170,455 | 22.0 | 5 |
22 January 2020 | RiverFort EPSA | 3,499,222 | 5.2 | 4 |
22 December 2020 | £5m Share 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 £Nil (2020: £88,000) 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 |
£5m 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 |
| £'000 | £'000 | £'000 | £'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 |
|
| £'000 | £'000 | £'000 | £'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 £160,000 (2020: £438,000) of payables were denominated in US dollars, £24,000 (2020: £2,000) were denominated in Euros, £21,000 (2020: £1,000) were denominated in Ghanaian Cedi and £23,000 (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 operations | Discontinued operations | Total | Continuing operations | Discontinued operations | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'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 Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'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 |
| £'000 | £'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 £1.5m mezzanine loan under the RiverFort EPSA. At the same time under the EPSA the company issued 14m shares and booked a sundry debt of £1.75m. 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 £985,000 (2020: £936,000) 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 exposure USD | Short-term exposure EUR | Short-term exposure SLL | Short-term exposure GHS |
| £'000 | £'000 | £'000 | £'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 £46,000 (2020: £15,000 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 £4,000 (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 £3,000 (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 £28,000 (2020: £18,000 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 (within 6 months) | 6 to 12 months | Non-current (1-5 years) | Current (within 6 months) | 6 to 12 months | Non-current (1-5 years) |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Trade and other payables | 1,760 | - | - | 2,308 | - | - |
Total | 1,760 | - | - | 2,308 | - | - |
|
|
|
|
|
|
|
Company | Current (within 6 months) | 6 to 12 months | Non-current (1-5 years) | Current (within 6 months) | 6 to 12 months | Non-current (1-5 years) |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Trade and other payables | 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 at 31 December 2019 | Movement in Year | Balance at 31 December 2020 | Movement in Year | Balance at 31 December 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 £ 9,339 (2020: £18,619) 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: £1,600) including VAT.
In the year to 31 December 2021 fees and expenses of £ 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 £1,584 including VAT (2020: £Nil).
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 £183,448 (2020: £182,830).
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) |
|
| |
| Signed accounts as at | Restated as at | |
| 31 December 2020 | Adjustment | 31 December 2021 |
|
|
|
|
Brought forward Reserves | (24,242) | (150) | (24,392) |
|
|
|
|
Minority Interest | (535) | 150 | (385) |
| Signed accounts as at |
| Restated as at |
| 31 December 2019 | Adjustment | 31 December 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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