Half-year Report

RNS Number : 4984R

Westminster Group PLC

22 September 2017

 

Westminster Group Plc:

Interim Results for the six months to 30 June 2017

Westminster Group Plc ("Westminster", the "Group" or the "Company"), the AIM-listed supplier of managed services and technology based security solutions to governments and government agencies, non-governmental organisations (NGO's) and blue chip commercial organisations worldwide, announces its unaudited interim results for the six months ended 30 June 2017.

Operational Highlights:

·    Significant progress on the previously announced Middle East long-term project opportunity and agreement now reached on key issues. Further announcement expected shortly

·    Managed Services now the key focus of the Group and the pipeline of major long-term project opportunities continues to grow. Discussions in progress with governments and airport authorities in various parts of the world

·    New contract awards for equipment and services to airports around the world including a six-month airport security training programme

·    Strong recovery in West Africa passenger numbers continues, several new airlines commencing services including Turkish Airlines due to commence in Q4 2017

·    Agreement reached with other main ferry operator in Sierra Leone, Sea Coach Express, to offer a combined service. Under the terms of the agreement Westminster will continue to manage and operate the ferry terminals, and Sea Coach Express will manage and operate the Sovereign ferry service, including the Sierra Princess.  More vessels will be added to the Sovereign fleet

·    Board strengthened with the appointment of the Rt. Hon Sir Tony Baldry as Chairman and Martin Boden as Chief Financial Officer from 29 June 2017. Sir Malcolm Ross remains on the Board as Deputy Chairman

Financial Highlights:

·    Group revenues of £2.9m (H1 2016: £2.0m) reflect strong growth in Managed Services and the Technology Division

·    Managed Services revenues up 41% to £1.8m (H1 2016: £1.3m)

·    Technology Division revenues up 41% to £1.0m (H1 2016: £0.7m)

·    Gross margin of 59% (H1 2016: 73%) reflects a negative gross profit from the Ferry operations and the commencement of concession payments to the Sierra Leone Aviation Authority from April 2017

·    Adjusted EBITDA loss of £0.6m (H1 2016: profit £0.2m) primarily a result of losses of £0.4m (H1 2016: nil) on the Ferry operations

·    Reported loss before tax £1.4m (H1 2016: loss of £0.8m)

·    Loss per share 1.4p (H1 2016: 1.2p)

·    £0.6m new equity raised in February 2017 and a further £1.0m raised in April 2017

·    Cash balance of £0.8m at 30 June 2017 and £0.4m at 1 September 2017 (30 June 2016: £0.7m)

Commenting on the results and current trading Peter Fowler, Chief Executive of Westminster Group, said:

"Our financial results for the period show an improved performance by both the Managed Services and Technology Divisions, both of which achieved healthy revenue growth. The ferry operations in Sierra Leone, which commenced services in January 2017, have failed to meet our expectations.

"The first six months of the financial year have been defined by our intense focus, efforts and achievements in developing our Managed Services business which has the potential to deliver transformational growth.

"In this respect, I am pleased to report that certain Board members including the Chairman and myself have now met with, and reached agreement, with the client and other bodies involved on the key points of the Middle East project opportunity and we are now working with them to finalise the commencement programme and scope. As we have said before, with complex projects of this nature there can never be certainty as to timing or outcome, but I look forward to making a further announcement in the near future.

"In view of our focus on Managed Services I am delighted to have reached agreement with Sea Coach Express in Sierra Leone regarding the Sovereign Ferries service which will not only bring the remaining operation more in line with our core business focus but will also be commercially beneficial to the Group. Our airport security business in West Africa is performing well.

 "We expect that we will need to seek funding in Q4 2017 in order to support the anticipated Middle East contract and to support the further growth of the business, for which planning is already in place."

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

For further information please contact:

Westminster Group plc.                                                                               Tel: [phone]

Peter Fowler (Chief Executive Officer)

Martin Boden (Chief Financial Officer)

S.P. Angel Corporate Finance LLP (NOMAD + Broker)                           Tel: [phone]

Stuart Gledhill/Lindsay Mair

Beaufort Securities Limited (Joint Broker)                                               Tel: [phone]

Elliot Hance

Walbrook PR (Financial PR)                                                                         Tel: [phone]

Tom Cooper/Paul Vann                                                                                         07971 221972

                                                                                                                                   [e-mail]  

Notes:

Westminster Group plc is a specialist security and services group operating worldwide via an extensive international network of agents and offices in over 50 countries.

Westminster's principal activity is the design, supply and ongoing support of advanced technology security solutions, encompassing a wide range of surveillance, detection, tracking and interception technologies and the provision of long-term managed services contracts such as the management and running of complete security services and solutions in airports, ports and other such facilities together with the provision of manpower, consultancy and training services. The majority of its customer base, by value, comprises governments and government agencies, non-governmental organisations (NGO's) and blue chip commercial organisations.

Chief Executive Officer's Review

Overview

The first six months of the financial year have been defined by our intense focus, efforts and achievements in developing our Managed Services business which has the potential to deliver transformational growth.

We have been working hard in 2017 to secure the major Middle East project opportunity. Since our AGM on 29^th June 2017 certain Board members, including the Chairman and myself, have now met with, and reached agreement, with the client and other bodies involved on the key points of the project and we are now working with them to finalise the commencement programme and scope. I look forward to making a further announcement in the near future.

The progress we have now made in negotiating this complex project, which is one of several long term managed services contracts that we have been negotiating, is a major step in the transition of Westminster into a long term managed security services business, although with complex projects of this nature there can never be certainty as to timing or outcome.  

Our airport security operations in West Africa performed well in the first half year as passenger numbers continue to rise and several new airlines commence services. Significant in this respect is Turkish Airlines who are looking to commence services in Q4 of 2017. This service is likely to bring in passengers from new regions and bodes well for further growth.

We are securing an increasing number of contracts to assist airport authorities around the world with their equipment and training needs, and have recently secured a six-month airport security training contract at an international airport which further enhances our prospects for our large scale, long term Managed Services opportunities.

The performance of our ferry operations, which commenced in January 2017, is not meeting the Board's expectations and future growth forecasts have been downgraded, partly due to mounting competition, with losses greater in quantum and duration than previously forecast. In view of this and the Group's focus on growing its Managed Services operations, the Board has decided to exit from its ferry operations in a responsible manner. We are very pleased to have reached agreement with Sea Coach Express, the largest ferry operator in Sierra Leone, to offer a combined service with effect from Monday 25 September 2017. Our continuing business focus will be managing and operating the ferry terminals under our 21 year managed services agreement signed with the government in 2014. Sea Coach Express will take over responsibility for management and operation of the ferry service and the Sierra Princess, expanding the Sovereign fleet with several more vessels.

We raised a total of £1.6m of new equity in February and April 2017, and Darwin Capital converted their remaining debt into equity in February 2017. These new funds provided financing for the pre-contract costs of the Middle East project and for the other contracts we are working on. Plans are in place to raise further funds to support the anticipated Middle East contract and other potential new contracts and we expect to complete this exercise in Q4 2017.

Managed Services

The Managed Services Division is now the key focus of the Group, particularly our airport security business, and progress continues to be made. With the ever-increasing global threats to airport security there are numerous opportunities for Westminster to target in emerging markets. Revenues from our airport security operations increased by 41% to £1.8m (H1 2016: £1.3m) with embarking passenger numbers growing by 18% to 57k (H1 2016: 48k). The EBITDA from this division amounted to £0.7m (H1 2016: £0.9m).

Passenger numbers continue to grow across all airlines with the exception of Air France who have reduced flight numbers, with their passengers being picked up by their code-share airline, KLM. Fly Mid Africa launched a new service in July 2017. Air Peace will be commencing flights to Nigeria from September 2017 and Turkish Airlines are planning a new route from Istanbul to Sierra Leone later this year, following a successful trial at the end of August/early September airlifting Hajj pilgrims to the Kingdom of Saudi Arabia.

We continue to grow our pipeline of large scale long term airport and managed services opportunities with three new Memorandums of Understanding (MoU) signed to date in 2017, two in Africa and one in Asia. Contracts of this size and nature are both time-consuming and complex and there is never certainty on timing or outcome. Given the confidential nature of these projects and the time it can take for MoU's and Letters of Intent (LoI) to progress to award of contract, we are no longer announcing any individual MoU or LoI when signed. We will update the market on material developments as appropriate.

During the first half year we have secured contracts to assist airport authorities around the world with their equipment and training needs, and have recently secured a six-month airport security training contract at an international airport. This further enhances our prospects for large scale, long term Managed Services opportunities.

Whilst airport security remains the key focus of our Managed Services Division, there are also other opportunities such as port security and other infrastructure security solutions that we are pursuing.

Ferry Operation

Our ferry services in Sierra Leone, under the branding Sovereign Ferries, commenced formal services in January 2017. In June 2017, we announced that we had secured around 3% of the addressable ferry market, with the market as a whole estimated to be worth around £4 million per annum in revenues and that over the next 12 months we would be seeking to grow our market share to beyond a 14% share (the level at which we anticipated the operation would be providing a positive contribution). However, passenger growth and financial performance are not meeting the Board's expectations, due in part to growing competition. Revenues amounted to £51k (H1 2016: nil) and the EBITDA loss amounted to £0.4m (H1 2016: nil). With future passenger growth forecasts being downgraded, losses would be greater in quantum and duration than previously forecast. The Board have therefore taken the decision to exit the ferry service in a manner which will not adversely affect airport passenger transfer to and from the mainland, which was one of the initial drivers for the ferry service.

We have entered into a formal agreement with Sea Coach Express, the largest ferry operator in Sierra Leone, commencing on Monday 25 September. Under this Agreement, Sea Coach will take over the Sovereign (SL) operations and responsibility for management and operation the ferry service and vessels, including the Sierra Princess, and will expand the Sovereign fleet by several more vessels.

By combining the ferry operations, the enlarged service will be able to offer the travelling public a greatly enhanced service with increased choice, routes, vessels and landing stages.

We will be jointly promoting and marketing the enlarged operation and with more vessels now available, we have cancelled the lease on our second vessel the Sierra Duchess. We will receive a share of revenues on ticket sales made through our own operations, together with a payment for all passengers travelling to and from our terminals.

We will continue to operate and manage the terminals in accordance with our 21 year agreement. We still own the Sierra Queen and given our exit from the ferry operations, we will be reviewing our options for the Sierra Queen at the earliest opportunity.

The Sierra Queen is, at this stage, excluded from the arrangement with Sea Coach. We have commissioned an inspection of the Sierra Queen and options will be considered to monetise the vessel, including a potential sale, at the earliest opportunity.

Technology Division

The Technology Division continues to secure orders for a wide range of products and services delivered to clients all over the world. We are not a manufacturer and are product agnostic, enabling us to deliver the best solution for any given application.

Revenues from the Technology Division increased by 40% to £1.0m (H1 2016: £0.7m), with a gross margin of 18% (H1 2016: 16%).  After costs, the EBITDA result was break even (H1 2016: £0.1m profit). Around 10% of the revenues were from maintenance and service as we continue to build the recurring revenue base of the Technology Division.

We continue to have a strong enquiry bank from our international Agents and from website enquiries. These leads are followed up by our small sales team at the Group Head Office in Banbury.

The expertise of the Technology Division underpins the proposals from our Managed Services Division where we can offer best in class equipment and solutions for our potential customers in emerging markets.

Financial Highlights

Revenues for the first half year were strong at £2.9m (H1 2016: £2.0m) with a 41% growth from Managed Services at £1.8m (H1 2016: £1.3m) and a 41% growth from the Technology Division to £1.0m (H1 2016: £0.7m). The Group generated a gross profit of £1.7m (H1 2016: £1.5m) which equates to a gross margin of 59% (H1 2016: 73%). This gross margin decrease is largely due to a negative gross profit from the Ferry operations and the commencement of concession payments to the Sierra Leone Aviation Authority from April 2017.

Administrative expenses increased by 71% from £1.7m in H1 2016 to £2.9m, with the increase driven by the costs of the Ferry operations (£0.4m, H1 2016: nil), higher Group and central costs amounting to £1.0m (H1 2016: £0.8m), and exceptional items of £0.4m (H1 2016: £0.3m). In H1 2017 the exceptional items primarily relate to the pre-contract costs of the new Middle East contract, in H12016 they were primarily related to lost margin from lower passenger volumes as a result of the EBOLA crisis in West Africa.

The loss from operations of £1.2m was £1.0m higher than in H1 2016 and the EBITDA loss of £0.6m compares to an EBITDA profit of £0.2m in H1 2016.

Our underlying cash interest cost was £0.1m (H1 2016: £0.1m) reflecting the 10% per annum interest on the convertible loan notes. A further £0.1m (H1 2016: £0.5m) of non-cash financing charges arose from the amortisation and revaluation of the convertible loan notes. In total, the financing costs amounted to £0.2m (H1 2016: £0.6m).

Earnings per share were a loss of 1.4 pence (H1 2016: loss of 1.2 pence). Both the number of shares in issue and the loss after tax increased, resulting in the increased loss per share over H1 2016.

Statement of Financial Position and Cash Flow

The Group ended the period with a £0.8m cash balance, and at [1] September 2017 the cash balance was £0.4m. The net cash used in operating activities was £0.7m (H1 2016: £0.1m) with a further £0.1m of cash used in investing activities (H1 2016: £0.6m). £1.4m of cash was generated from financing activities being the £1.6m of new equity raised less costs (H1 2016: £1.2m equity and loan notes).

At the end of the period, the Group had a convertible loan note outstanding with a principal of £2.2m (H1 2016: £2.2m) and an amortised cost balance of £2.1m (H1 2016: £2.1m). The coupon is 10% payable quarterly in arrears, it has a conversion price of 35 pence and is repayable in June 2018.

Plans are in place to raise further funds to support the anticipated Middle East Managed Services contract and other potential new Managed Services contracts and we expect to complete this exercise in Q4. This fundraising will take into account the June 2018 repayment date of the convertible loan notes.

The final convertible loan notes issued to Darwin Capital Limited were converted to equity in April 2017.

At the balance sheet date, shareholders' funds stood at £6.7m (H1 2016: £7.1m).

In September 2017, an agreement was reached to sell the property transferred to the Group as part of the CTAC settlement for $132k net of selling fees. The proceeds are expected to be received in early October and the sale will result in a gain of $132k being recognised in H2 of the 2017 financial statements.

Outlook

We have a strengthened Board and an exciting pipeline of opportunities. The Middle East project opportunity, which is one of several large scale managed services opportunities we are pursuing, is expected be transformational for the Group as and when secured. Both our Managed Services and Technology Divisions are showing strong revenue growth, and the exit from ferry operations should bring us back to achieving a positive contribution from ferry ticket sales and passenger royalties from Q4 2017.

We expect to be investing in the business in 2018 and beyond as we secure new Managed Services contract awards, and the Board remains committed to delivering strong growth from 2018 onwards.

Peter Fowler

Chief Executive Officer

Consolidated Statement of Comprehensive Income (unaudited)

for the six months ended 30 June 2017

	Note	Six months ended 30 June 2017	Six months ended 30 June 2016	Year ended  31 December 2016
		£'000	£'000	£'000
Revenue	6	2,919	2,033	4,406
Cost of sales		(1,208)	(539)	(1,296)
Gross profit		1,711	1,494	3,110
Administrative expenses		(2,864)	(1,675)	(4,499)
Operating profit/(loss)	6	(1,153)	(181)	(1,389)
Analysis of operating loss
Add back depreciation and amortisation		207	113	234
Add back share option expenses		-	36	103
Add back exceptional items	8	305	216	1,077
EBITDA profit/(loss) from underlying operations		(641)	184	25
Finance Costs	6,9	(230)	(649)	(566)
Loss before taxation		(1,383)	(830)	(1,955)
Taxation		-	-	46
Total comprehensive loss attributable to equity shareholders		(1,383)	(830)	(1,909)
Loss per share (pence)	7	(1.37)	(1.21)	(2.46)

All activities derive from continuing operations.

Consolidated Statement of Financial Position (unaudited)

As at 30 June 2017

		As at 30th June 2017	As at 30th June 2016	As at 31st December 2016
	Note	£'000	£'000	£'000
Goodwill		397	397	397
Other intangible assets		173	32	132
Property, plant and equipment		4,488	4,799	4,635
Total Non-Current Assets		5,058	5,228	5,164
Inventories		48	123	198
Trade and other receivables		786	1,040	894
Cash and cash equivalents		759	709	152
Total Current Assets		1,593	1,872	1,244
Total Assets		6,651	7,100	6,408
Share capital	11	11,324	8,311	8,711
Share premium		9,136	9,243	9,169
Merger relief reserve		299	299	299
Share based payment reserve		594	428	569
Equity Reserve on Convertible Loan Note		186	186	186
Revaluation reserve		134	134	134
Retained earnings		(18,155)	(15,569)	(16,772)
Total shareholders' equity		3,518	3,032	2,296
Non-current borrowings	12	-	2,594	3,059
Deferred tax liabilities		-	54	-
Total non-current liabilities		-	2,648	3,059
Current borrowings	12	2,073	-	-
Trade and other payables		1,055	1,411	1,026
Deferred Income		5	9	27
Total current liabilities		3,133	1,420	1,053
Total liabilities		3,133	4,068	4,112
Total liabilities and shareholders' equity		6,651	7,100	6,408

Consolidated Statement of Changes in Equity (unaudited)

for the six months ended 30 June 2017

	Share capital	Share premium	Merger reserve	Share based payment reserve	Equity reserve on CLN	Revaluation reserve	Retained earnings	Total share-holders' equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
As at 1st January 2017	8,711	9,169	299	569	186	134	(16,772)	2,296
Issue of new shares	1,542	84	-	-	-	-	-	1,626
Costs of new share issues	-	(117)	-	-	-	-	-	(117)
Warrants exercised	4	-	-	-	-	-	-	4
CLN conversion	1,067	-	-	-	-	-	-	1,067
Warrants issued in the period	-	-	-	25	-	-	-	25
Total transactions with owners	2,613	(33)	-	25	-	-	-	2,605
Loss for the period	-	-	-	-	-	-	(1,383)	(1,383)
As at 30th June 2017	11,324	9,136	299	594	186	134	(18,155)	3,518
As at 1st January 2016	6,345	9,170	299	258	219	134	(14,739)	1,686
Issue of new shares	1,966	109	-	-	-	-	-	2,075
Costs of new share issues	-	(36)	-	-	-	-	-	(36)
Warrants issued in the period	-	-	-	170	(33)	-	-	137
Total transactions with owners	1,966	73	-	170	(33)	-	-	2,176
Loss for the period	-	-	-	-	-	-	(830)	(830)
As at 30th June 2016	8,311	9,243	299	428	186	134	(15,569)	3,032
As at 1st January 2016	6,345	9,170	299	258	219	134	(14,739)	1,686
Issue of new shares	1,300	-	-	-	-	-	-	1,300
Share options lapsed	-	-	-	(37)	-	-	37	-
Warrants issued in the period	-	-	-	245	-	-	(150)	95
CLN conversion	1,066	-	-	-	(33)	-	(11)	1,022
Share based payment charge	-	-	-	103	-	-	-	103
Loan notes issued	-	(1)	-	-	-	-	-	(1)
Total transactions with owners	2,366	(1)	-	311	(33)	-	(124)	2,519
Loss for the year	-	-	-	-	-	-	(1,909)	(1,909)
As at 31st December 2016	8,711	9,169	299	569	186	134	(16,772)	2,296

Consolidated Cash Flow Statement (unaudited)

for the six months ended 30 June 2017

		Six months ended 30 June 2017	Six months ended 30 June 2016	Year ended  31 December 2016
	Note	£'000	£'000	£'000
Loss before taxation		(1,383)	(830)	(1,955)
Non-cash adjustments	10	437	798	916
Net changes in working capital	10	291	(30)	(638)
Equity settlement payment		-	-	-
Cash outflow from operating activities		(655)	(62)	(1,677)
Investing activities
Purchase of property, plant and equipment		(47)	(568)	(531)
Purchase of intangible assets		(54)	-	(105)
Cash outflow from investing activities		(101)	(568)	(636)
Financing activities
Gross proceeds from the issue of ordinary shares		1,626	990	1,300
Costs of share issues in the period		(117)	(40)	(45)
Gross proceeds from the issue of convertible loan notes		-	475	1,675
Costs associated with the issues of secured and unsecured convertible loan notes		-	(92)	(272)
Borrowing repayments		(34)	(33)	(96)
Interest paid		(112)	(111)	(247)
Cash inflow from financing activities		1,363	1,189	2,315
Change in cash and cash equivalents in the period		607	559	2
Cash and cash equivalents at the beginning of the period		152	150	150
Cash and cash equivalents at the end of the period		759	709	152

Notes to the consolidated financial statements 

for the six months ended 30 June 2016

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 six month period ended 30th June 2017 consolidate the individual financial information of the parent company and its subsidiaries. The Group designs, supplies and provides on-going advanced technology solutions and services to governmental and non-governmental organisations on a global basis.

2.      Basis of preparation

These unaudited condensed consolidated interim financial statements are for the six months ended 30 June 2017. They have been prepared following the recognition and measurement of principles of IFRS as adopted by the European Union. The statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2016.

These consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements, which were for the year ended 31 December 2016.

These consolidated interim financial statements for the six months ended 30 June 2017 have neither been audited nor reviewed by the Group's auditors. The financial information for the year ended 31 December 2016 set out in this interim report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The statutory financial statements for the year ended 31 December 2016 have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified in accordance with Section 495 of the Companies Act 2006.

3.      Going concern

The directors have, at the time of approving this interim report, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

4.      Basis of consolidation

These Group financial statements consolidate those of the Group and its subsidiary undertakings drawn up to 30 June 2017. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from their activities. The Group obtains and exercises control through voting rights. Consolidation is conducted by eliminating the investment in the subsidiary together with the parent's share of the net equity of the subsidiary.

5.      Functional and presentational currency

The financial information has been presented in pounds sterling, which is the Group's presentational currency. All financial information presented has been rounded to the nearest thousand.

6.      Segmental reporting

Operating segments

The Board considers the Group on a Business Unit basis. Reports by Business Unit are used by the chief decision-maker in the group. The Business Units operating during the year are the three main operating companies, Westminster Aviation, Westminster International and Sovereign Ferries. This split of business segments is based upon the products and services each offer.

Six months ended 30th June 2017	Managed Services Aviation	Technology	Managed Services Sovereign Ferries	Group and Central Costs	Group Total
	£'000	£'000	£'000	£'000	£'000
Supply of products and solutions	-	906	-	-	906
Supply and installation contracts	-	15	-	-	15
Maintenance and service	-	99	-	-	99
Airport security fees	1,755	-	-	-	1,755
Training and consultancy	93	-	-	-	93
Ferry ticket sales	-	-	51	-	51
Segment revenue	1,848	1,020	51	-	2,919
Segmental underlying EBITDA	683	(12)	(427)	(885)	(641)
Exceptional items	(255)	-	-	(50)	(305)
Depreciation & amortisation	(73)	(8)	(102)	(24)	(207)
Apportionment of central overheads	(584)	(375)	-	959	-
Segment Operating result	(229)	(395)	(529)	-	(1,153)
Finance cost	-	-	-	(230)	(230)
Segment profit/(loss) for the period before taxation	(229)	(395)	(529)	(230)	(1,383)

Six months ended 30th June 2016	Managed Services Aviation	Technology	Managed Services Sovereign Ferries	Group and Central Costs	Group Total
	£'000	£'000	£'000	£'000	£'000
Supply of products and solutions	-	314	-	-	314
Supply and installation contracts	-	232	-	-	232
Maintenance and service	1,303	179	-	-	1,482
Airport security fees	-	-	-	-	-
Training and consultancy	5	-	-	-	5
Segment revenue	1,308	725	-	-	2,033
Segmental underlying EBITDA	871	82	-	(769)	(184)
Exceptional items	(252)	-	-	-	(252)
Depreciation & amortisation	(47)	(5)	(51)	(10)	(113)
Apportionment of central overheads	(436)	(343)	-	779	-
Segment Operating result	136	(266)	(51)	-	(181)
Finance cost	-	-	-	(649)	(649)
Segment profit/(loss) for the period before taxation	136	(266)	(51)	(649)	(830)

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.

	Six months ended 30 June 2017	Six months ended 30 June 2016
	£'000	£'000
United Kingdom and Europe	489	43
Africa	2,033	1,850
Middle East	129	20
Rest of the World	268	120
Total revenue	2,919	2,033

7.      Loss per share

The loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.  Only those outstanding options that have an exercise price below the average market share price in the year have been included. For each period the issue of additional shares on exercise of outstanding share options would decrease the basic loss per share and therefore there is no dilutive effect.

The weighted average number of ordinary shares is calculated as follows:

		Six months ended 30 June 2017	Six months ended 30 June 2016	Year ended  31 December 2016
		'000	'000	'000
Number of issued ordinary shares at the start of period		87,107	63,455	63,455
Effect of shares issued during the period		13,822	4,946	14,261
Weighted average basic and diluted number of shares for period		100,929	68,401	77,716

8.      Exceptional items

	Six months ended 30 June 2017	Six months ended 30 June 2016	Year ended  31 December 2016
	£'000	£'000	£'000
Middle East contract pre-contract costs	255	-	220
Fall in passenger numbers due to Ebola crisis	-	200	272
Ferry setup costs not capitalised	-	-	585
Other	50	16	-
Total exceptional items	305	216	1,077

9.      Finance costs

	Six months ended 30 June 2017	Six months ended 30 June 2016	Year ended  31 December 2016
	£'000	£'000	£'000
Interest payable on bank and other borrowings	(9)	1	(30)
Cash interest expenses on convertible loan notes	(106)	(112)	(224)
Underlying finance costs	(115)	(111)	(254)
Non cash amortised finance cost on convertible loan notes	(115)	(538)	(312)
Total finance costs	(230)	(649)	(566)

10.    Cash flow adjustments and changes in working capital

The following non-cash items and adjustments for changes in working capital have been made to loss before tax to arrive at operating cash flow:

	Six months ended 30 June 2017	Six months ended 30 June 2016	Year ended  31 December 2016
	£'000	£'000	£'000
Adjustment for non-cash items
Depreciation, amortisation and impairment of non-financial assets	207	113	234
Finance costs	230	649	566
Loss on disposal of non-financial assets	-	-	13
Share-based payment expenses	-	36	103
Total adjustments	437	798	916
Net changes in working capital:
Decrease/(increase)in inventories	150	(66)	(141)
Decrease/(increase) in trade and other receivables	134	(245)	(410)
Increase/(decrease) in trade and other payables	7	281	(87)
Total changes in working capital	291	(30)	(638)

11.    Called up share capital

Ordinary Share Capital	6 months to 30th June  2017		6 months to 30th June 2016		Year to 31st December 2016
	Number	£'000	Number	£'000	Number	£'000
At the beginning of the period	87,107,903	8,711	63,454,538	6,345	63,454,538	6,345
Arising on conversion or convertible loan notes	10,669,227	1,067	6,659,567	666	10,653,365	1,066
Shares issued to Beaufort Securities in settlement of their annual fee	250,000	25	-	-	-	-
Arising on exercise of Share options	55,000	4	-	-	-	-
Other issues for cash	15,161,290	1,517	13,000,000	1,300	13,000,000	1,300
At the end of the period	113,243,420	11,324	83,114,105	8,311	87,107,903	8,711

12.    Borrowings

	Six months ended 30 June 2017	Six months ended 30 June 2016	Year ended  31 December 2016
	£'000	£'000	£'000
Current borrowings (due < 1 year)
Convertible loan note	2,073	-	-
Total current borrowings	2,073	-	-
Non-current borrowings (due > 1 year)
Convertible loan note	-	2,071	2,071
Convertible unsecured loan note	-	472	952
Other	-	51	36
Total non-current borrowings	-	2,594	3,059
Total borrowings	2,073	2,594	3,059

13.    Post balance sheet events

In September 2017, an agreement was reached with Sea Coach Express Limited, to operate the Sovereign Ferries operation in Sierra Leone. This agreement is expected to generate a positive contribution to the Group from the ferry operation, but will require a write down of assets in due course. At the date of this report the write down as not been quantified but the quantum should be known when the full year results to 31 December 2017 are available.

In September 2017, an agreement was reached to sell the property transferred to the Group as part of the CTAC settlement for $132k net of selling fees. The proceeds are expected to be received in early October and the sale will result in a gain of $132k being recognised in H2 of the 2017 financial statements.  

14.    Approval of interim financial statements

The interim financial statements were approved by the Board of Directors on 21 September 2017.

15.    Copies of interim financial statements

A copy of these interim financial statements is available on the Company's website, www.wsg-corporate.com  and from the Company Secretary at the company's registered office, Westminster House, Blacklocks Hill, Banbury, Oxfordshire, OX17 2BS.

 

END

 

 

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