Half-year Report

RNS Number : 1066J
Westminster Group PLC
15 August 2019
 

 

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')

Interim Results for the six months to 30 June 2019

 

Westminster Group Plc (AIM: WSG), a leading supplier of managed services and technology based security solutions, announces its unaudited interim results for the six months ended 30 June 2019.

 

Financial Highlights:

 

·    Group revenues for the 6 months ended 30 June 2019 up 117% to £5.6m (H1 2018: £2.6m).

·       257% increase in Technology Division sales to £3.1m from £0.9m in H1 2018.

·       47% increase in Managed Services Division sales to £2.5m from £1.7m in H1 2018.

·    Central costs reduced by 23% from H1 2018 and overall aggregated admin expenses maintained at £2.3m despite additional costs from acquisition of Keyguard and increased revenue.

·    Reduction of adjusted EBITDA loss down 88% to £49k (H1 2018: loss restated £402k).

·   Reduction in reported loss before tax to £0.8m including £0.3m relating to a non-cash financing charge associated with the CLN extension (H1 2018: loss restated of £1.2m extension cost £0.3m).

·    Loss per share reduced to 0.58p (H1 2018: 0.97p).

·    Operationally cash positive in first half.

·    £0.5m new equity before expenses raised in February 2019.

·    Convertible loan notes extended in May 2019 to 30 June 2020 at a coupon of 15%.

·    Cash balance of £0.3m at 30 June 2019 (30 June 2018: £0.3m).

·   H1 2019 sales order intake remains strong at £3.9m (H1 2018: £3.9m).   Order book at 30 June 2019 - £3.3m. 

 

Operational Highlights:

 

·   Signed a joint venture agreement with Scanport in Ghana leading to the JV receiving a Letter of Intent regarding the appointment as the sole operator for a major long-term managed services project for container screening services at the new $1.5billion USD Tema Container Port terminal in Ghana.

·  Signed a joint venture agreement with a significant partner in the Kingdom of Saudi Arabia, Hazar International, setting up Westminster Arabia in the Kingdom.

·   Signed a strategic alliance with the Gulf Aviation Academy, a leading provider of professional aviation training in Bahrain and the wider Middle East and North Africa ('MENA') region, greatly expanding our range of services to existing and potential clients.

·   Awarded a $3.48m USD contract for the provision of advanced container screening solutions to two separate ports in an Asian country.

·    Acquisition of Euro Ops in May 2019 widening our ability to sell into francophone countries.

·    West Africa airport operations at record levels.

 

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

"In our 2018 Annual Report I was pleased to report that our business is now in a better position than it has been for some time in terms of management, structure, revenues and prospects and I am pleased to report that continues to be the case.

"The first 6 months of 2019 has been a significant move forward from the same period last year with H1 2019 revenues of £5.6m, more than double that of H1 2018 (£2.6m). Both Managed Services and Technology Divisions have performed ahead of expectations and passenger numbers for our West Africa airport operations for the first six months of 2019 are the highest levels since we commenced operations there.

"In the first six months of 2019 we secured £3.9m in new orders, in addition to our regular contracted managed services and maintenance recurring revenues. We continue to have a healthy and active enquiry bank and we continue to progress a number of large-scale project opportunities around the world.

"In March 2019 we signed a Joint venture agreement with Scanport in Ghana leading to the Scanport-Westminster JV receiving a Letter of Intent in June 2019 regarding the appointment as the sole operator for a new long-term managed services project for container screening services at the new $1.5billion USD Tema Container Port terminal in Ghana. We expect all contracts to be finalised in the coming weeks and the port to be fully operational by the end of Q3 2019 and to be contributing to the Division's results in H2. This large and prestigious project is a major step forward for the Managed Services Division opening up new long-term, recurring revenue streams and opportunities in a new sector.

"We have also signed other important joint venture agreements. We signed a joint venture agreement with a significant partner in the Kingdom of Saudi Arabia, Hazar International, setting up Westminster Arabia in the Kingdom, opening up a number of potential projects and we also signed a strategic alliance with the Gulf Aviation Academy, a leading provider of professional aviation training in Bahrain and the wider Middle East and North Africa ('MENA') region, greatly expanding our range of services to existing and potential clients. Both are important strategic developments for the business.

"Notwithstanding our growing business we have reduced our central costs, which are down by £219k (23%) from H1 2018 and, given the strong H1 performance together with our contracted recurring revenues, a £3.3m order book at the end of June 2019 and contribution from Keyguard and Euro Ops, we expect 2019 revenues to be significantly ahead of 2018."

 

 

For further information please contact:

 

Westminster Group Plc

Media enquiries via Walbrook PR

Rt. Hon. Sir Tony Baldry - Chairman

 

Peter Fowler - Chief Executive Officer

 

Mark Hughes - Chief Financial Officer

 

 

 

S. P. Angel Corporate Finance LLP (NOMAD & Broker)

 

Stuart Gledhill

020 3470 0470

Caroline Rowe

 

 

 

Walbrook (Investor Relations)

 

Tom Cooper

020 7933 8780

Paul Vann

0797 122 1972

 

tom.cooper@walbrookpr.com

 

 

 

Notes to Editors:

 

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

 

In our 2018 Annual Report I was pleased to report that our business is now in a better position than it has been for some time in terms of management, structure, revenues and prospects.

 

The first 6 months of 2019 has been a significant move forward from the same period last year with H1 2019 revenues of £5.6m, more than double that of H1 2018 (£2.6m). As outlined in the Divisional Review below, both Managed Services and Technology Divisions have performed ahead of expectations and passenger numbers for our West Africa airport operations for the first six months of 2019 are the highest levels since we commenced operations there. In the first six months of 2019 we secured £3.9m in new orders, in addition to our regular contracted managed services and maintenance recurring revenues. We continue to have a healthy and active enquiry bank and we continue to progress a number of large-scale project opportunities around the world.

 

Despite our growing business we have reduced our central costs, which are down by £219,000 (23%) from H1 2018 and given the strong H1 performance together with our contracted recurring revenues and a £3.3m order book at the end of June 2019 (which includes our landmark $3.48m Asia port contact from our Technology Division) we look forward to a strong full year performance significantly ahead of 2018, building on our year on year revenue growth.

 

Divisional Review

 

Managed Services Division

 

Our Managed Services Division, and the significant growth opportunities it presents, remains a key focus for the Group. The Division, now incorporating Keyguard, has had a good start to the year with H1 revenues up by 47% to £2.5m (H1 2018: £1.7m).

 

A defining aspect of the period however has been setting up a new long-term managed services project for container screening services at the new $1.5billion Tema Container Port Terminal in Ghana, West Africa, which is set to be one of the leading and most advanced ports in Africa. Following several months of discussions, in March 2019 we entered into a Technical Partnership Agreement with a Ghanaian company, Scanport Ltd. regarding a contract to manage, operate, maintain and upgrade, as necessary, the container screening services at the new Tema Container Port Terminal. Westminster's role as technical partner is to provide the requisite expertise and management of the operation.

 

Following meetings with the port operator and developer, Meridian Port Services (MPS), during May and early June, we were informed that Scanport-Westminster were to be appointed as the sole screening operator.  Due to the large and complex nature of the project and the port opening date of 28 June 2019, we were asked to commence operations immediately and received a Letter of Intent, which we announced on 18 June 2019, whilst definitive contracts were finalised.

 

Scanport-Westminster accordingly established a full scanning operation at the primary scanning stations at both the import and export gates and secondary screening services at the intensive search area for physical inspections. During July 2019, 20,889 Twenty-foot Equivalent Units ('TEU') passed through the port and screening stations whilst port systems were tested, and teething issues ironed out.

 

The new Tema Container Terminal will expand the port's capacity from currently 1 million TEU pa to over 3.5 million pa and incorporates some of the largest and most advanced Ship-to-Shore cranes in the world, designed to accommodate the world's largest container ships, creating a world-class container port operation.

 

Negotiation of contracts is in process and we expect all contracts to be finalised in the coming weeks.  The port will be fully operational by the end of Q3 2019. It is expected that the project will start to make a contribution to the Division's results during H2. This is a large and prestigious project and will be a major step forward for the Managed Services Division opening up new long-term, recurring revenue streams and new opportunities in a new sector.

 

Revenues at our West Africa airport operations were at record levels during H1 2019, an 18% increase over H1 2018, and the trend looks set to continue with July 2019 passenger numbers being the best July since we commenced operations there.

 

In our 2018 Annual Report we announced the opening of our new training facility based at our Headquarters in Banbury, Oxfordshire, and that we have already delivered specialist training for delegates from one of the largest airlines in Europe. We believe this training facility opens up new business opportunities for the Group. This and the expanding nature of our training business to clients around the world has contributed to the 56% rise in training and consultancy revenue.

 

Our Managed Services business has a growing portfolio of opportunities and has, in the period, secured a number of new smaller contract awards for guarding, equipment, training and services to a number of airports around the world and we continue to work towards signing further long term Managed Services contracts in the months ahead, however, as always, there is never certainty as to timing or outcome in these matters. These opportunities represent a major step in the transition of Westminster into a long-term managed services business.

 

Whilst airport security has been and remains a major focus of our business, there are also other equally exciting opportunities, such as port security and other infrastructure security solutions that we are pursuing, as the Ghana appointment and Asia contract this year demonstrate. 

 

We completed the acquisition of French based Euro Ops in May 2019 which is already contributing to the Division's revenues and has not only extended our geographical footprint but has also introduced new niche products in adjacent sectors.

 

Keyguard Ltd., the guarding and risk management company which we acquired at the end of 2018, is progressing and adding to its portfolio of projects including large scale infrastructure projects such as HS2, for which we now have a guarding contract as well as facility management projects which open up cross selling opportunities within the Group.

 

Technology Division

 

Our Technology Division had a good start to the year with H1 revenues up by 257% to £3.1m (H1 2018: £0.9m).

 

The 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.

 

In April 2019, our Technology division announced the award of a $3.48million US Dollar contract for the provision of advanced container screening solutions to two separate ports in an Asian country, which had been under negotiation for several months. Whilst the project is a high priority for the client, we could not commence operations and organise manufacturing until we had received the letters of credit in order to organise project funding - these arrived in mid-July. Following the fundraising on 25 July we have been able to immediately commence production and expect to complete the first installation on schedule in Q3 2019 and the second installation shortly afterwards, subject to any unforeseen delays.

 

Having earlier this year delivered the remainder of the $4.5m US Dollar vehicle screening contract in the Middle East, which the Company secured in 2018, this latest award for container screening in Asia is a testament to Westminster's expertise and global reach.

 

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

 

Joint Ventures

 

In our 2018 Annual Report we announced that as part of our expansion strategy we are looking at both acquisition and strategic joint venture opportunities to complement our many organic growth prospects.

 

This year we have thus far:

 

·    Entered into a Technical Partnership Agreement with Scanport in Ghana to bid for the Tema Port container screening project which has resulted in the letter of intent regarding appointment of the JV as sole operator for the project.

·    Signed a Joint Venture Agreement with a significant partner in the Kingdom of Saudi Arabia, Hazar International.

·    Entered into a Strategic Alliance Agreement with the Gulf Aviation Academy of Bahrain ('GAA') for the provision of aviation and other specialised training services.

 

There are further Joint Venture and Strategic Partnerships currently being negotiated in different parts of the world which we will announce at the appropriate time.

 

Ferry Terminals

 

Following our exit from the ferry operation and a period of negotiation, in June 2019 we handed back the ferry terminals and agreed a termination of our 21-year agreement with no further obligations. The Sierra Queen is on the market and we intend to sell her at the earliest opportunity. The book value is £170,000 and we currently have offers around that price which are being pursued.   The ferry operation is accounted for in discontinued operations.

 

Iranian Contract

 

As previously advised, our Iranian contract remains on hold whilst we continue to closely monitor the geopolitical situation and the future of the Joint Comprehensive Plan of Action and it no longer features in our internal forecasts. In order to preserve the potential of this project without affecting the Group's other business activities, we are investigating putting measures in place to isolate the contract in a dormant German subsidiary. Such measure would mean that should circumstances change in the future, to safely and legally allow the project to go ahead without impact on the rest of our business we would have the option of re-activating it by exchange of board letters with the client.

 

Board Changes

 

We continue to enhance and strengthen our Board.

 

In January 2019 Charles Cattaneo joined the Board as a NED. Charles has been a director of a number of public and private companies and is currently the Chairman of the Midlands Regional Advisory Group of the London Stock Exchange.  His wealth of City and corporate finance knowledge and experience gained from a variety of business sectors, in particular advising AIM 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.   As a Chartered Accountant he has taken over as Chair of the Audit Committee and Chair of the Risk Committee.

Also in January 2019, James Sutcliffe, by agreement, left the Westminster Group Plc board to take on the role as Chairman of the International Advisory Board, where the benefit of his extensive international experience and high-level Government contacts overseas can be of significant value to the Company's business development and expansion going forward. James is already assisting the Company with several large-scale opportunities in Asia and South America.

 

Financial

 

Revenues at £5.6m for the first half year were ahead of the Boards' expectations (H1 2018: £2.6m). Managed Services revenues were £2.5m (H1 2018: £1.7m). The Managed Services revenue increase reflects the acquisition of Keyguard, increasing passenger numbers in our West African Airport, expansion of Training and Consultancy and the benefit from a declining pound.  Technology Division revenues were £3.1m (H1 2018: £0.9m). Technology Division should benefit in the second half from the $3.48m USD Asian Contract announced in April.

 

The Group generated a gross profit of £2.0m (H1 2018: £1.6m) which equates to a gross margin of 36% (H1 2018: 61%).  The reduction in gross margin percent reflects the higher mix of lower margin Technology sales.

 

We are pleased to report that central costs have reduced by £219,000 (23%) in H1 2019 and this has offset the additional administrative overheads from the Keyguard acquisition and additional divisional costs supporting the growth in revenue that has left overall administrative overheads unchanged at £2.3m.

 

Exceptional items amounted to £0.1m (H1 2018: £0.2m). In both H1 2019 and H1 2018 the exceptional items primarily related to the pre-contract costs of the Iranian contract.  As we are now working under the assumption that due to the geopolitical climate this is not going to proceed in the near term, costs associated with this project have ceased.

 

The loss from operations of £0.3m was £0.4m lower than the loss of £0.7m in H1 2018 and the EBITDA loss of £49,000 compares to an EBITDA loss of £402,000 (Restated for IFRS 16) in H1 2018.

 

Our underlying cash interest cost was £0.2m (H1 2018: £0.2m) reflecting primarily the interest on the convertible loan notes. A further £0.3m (H1 2018: £0.3m) of non-cash financing charges arose from the amortisation and extension of the convertible loan notes. In total, the financing costs amounted to £0.5m (H1 2018: £0.5m).

 

Earnings per share were a loss of 0.58 pence (H1 2018: loss of 0.97 pence). Although the number of shares in issue increased, the loss after tax decreased resulting in the reduced loss per share over H1 2018.

 

The 2018 comparative figures have been restated to reflect the effect of the new standard on accounting for leases (IFRS 16) for further details see note 13 below.  Also, the 2018 half year comparative on Goodwill has been restated in line with the treatment in the 2018 annual accounts.

 

Statement of Financial Position and Cash Flow 

 

The Group ended the period with a £0.3m cash balance, and at 14 August 2019 the cash balance was £0.8m, having already paid in early August a £0.5m deposit towards the Asia Port Scanners. The net cash inflow from operating activities was £0.2m (H1 2018: outflow of £0.7m used in operating activities). £0.1m cash was used in investing activities (H1 2018: £0m) and £0.5m cash was generated from raising £0.5m of new equity in February 2019 before expenses (H1 2018: £0.8m equity) for working capital and project development.

 

At the end of the period, the Group had a Convertible Loan Note (CLN) outstanding with a principal of £2.2m (H1 2018: £2.2m). The coupon is 15% payable quarterly in arrears, it has a conversion price of 15 pence and is repayable in June 2020. The conversion price will be 12.5p from 30 September 2019 and 10p from 31 December 2019. It is our intension to redeem the CLN at the earliest opportunity.

 

The Company raised a further £1m of new equity post the period end in July 2019 with the primary purpose for the funds being to part fund the manufacture of the equipment to be shipped and installed under the $3.48m USD contract for container screening solutions to two ports in Asia.

 

The Company had been seeking to raise project or trade finance to fund larger scale projects. However, with timing and outcome of discussions uncertain and the volatility of the share price the Company took the decision to raise funding via the issue of equity which has enabled us to commence the Asia Port project as soon as possible.

 

Brexit

 

The Board has considered the potential risks and impact of the Brexit negotiations on the business. A large portion of our revenues and direct costs are outside of both the UK and EU and conducted largely in US Dollars and potentially Euros. We do not at this time consider that Brexit, in whatever form, will materially affect our ability to conduct our business and our offices in both Germany and France provide us with European bases from which to mitigate some of the potential issues.

 

The one impact that Brexit is having on our business is on exchange rate movement between GBP and USD/Euro. The current weakness in sterling is positively increasing our USD/Euro revenues when translated into GDP. Should Brexit not happen, or a new referendum be called the reverse could happen. The Board continues to monitor the situation.

 

Outlook

 

As reported in our 2018 Annual Report we have delivered steady year on year revenue growth over the past few years with 2018 being 24% up on the previous year.  H1 2019 has continued this progress and commenced on a strong note showing 117% growth over H1 2018 and 37% growth over H2 2018.  We expect this to continue. Based on our current order book and our run rate business, including Keyguard and Euro Ops, we expect 2019 revenues to be significantly ahead of 2018.

 

Our vision is to build a global business with strong brand recognition delivering niche security solutions and long-term managed services to high growth and emerging markets around the world.

 

Whilst operating in emerging markets does carry a higher risk of delays and disruption, is time consuming and involves a degree of frustration and bureaucracy, with perseverance and diligence the potential rewards are substantial.

 

Over the next few months and years we have an opportunity to build on our current achievements and year on year growth with the potential for unprecedented growth from the many prospects we are pursuing, and the Board and I remain committed to delivering on this potential.

 

 

 

Peter Fowler

Group Chief Executive

 

14 August 2019

Consolidated Statement of Comprehensive Income (unaudited)

for the six months ended 30 June 2019

 

 

Note

Six months ended 30 June 2019

Six months ended 30 June 2019

Six months ended 30 June 2019

Six months ended 30 June 2018 Restated

Six months ended 30 June 2018 Restated

Six months ended 30 June 2018 Restated

Year ended 31 December 2018 Restated

Year ended 31 December 2018 Restated

Year ended 31 December 2018 Restated

 

 

Continuing Operations

Discontinued Operations

Total

Continuing Operations

Discontinued Operations

Total

Continuing Operations

Discontinued Operations

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

6

5,610

-

5,610

2,586

-

2,586

6,668

-

6,668

Cost of sales

 

(3,592)

-

(3,592)

(1,012)

-

(1,012)

(3,020)

-

(3,020)

Gross profit

 

2,018

-

2,018

1,574

-

1,574

3,648

-

3,648

Administrative expenses

 

(2,278)

(24)

(2,302)

(2,273)

(14)

(2,287)

(4,832)

149

(4,683)

Operating (loss) / profit

6

(260)

(24)

(284)

(699)

(14)

(713)

(1,184)

149

(1,035)

 

 

 

 

 

 

 

 

 

 

 

Analysis of operating (loss) / profit

 

 

 

 

 

 

 

 

 

 

Add back depreciation and amortisation

 

106

-

106

82

-

82

169

-

169

Add back share option expenses

 

-

-

-

-

-

-

281

-

281

Add back impairment charges

 

-

-

-

-

-

-

-

(170)

(170)

Add back exceptional items

8

105

24

129

215

14

229

380

21

401

EBITDA loss from underlying operations

 

(49)

-

(49)

(402)

-

(402)

(354)

-

(354)

Finance costs

9

(503)

-

(503)

(485)

-

(485)

(333)

-

(333)

(Loss) / profit before taxation

 

(763)

(24)

(787)

(1,184)

(14)

(1,198)

(1,517)

149

(1,368)

Taxation

 

-

-

-

(5)

-

(5)

872

-

872

Total comprehensive (expense) / income for the period

 

(763)

(24)

(787)

(1,189)

(14)

(1,203)

(645)

149

(496)

Loss and total comprehensive loss attributable to:

 

 

 

 

 

 

 

 

 

 

Owners of the parent

 

(738)

(24)

(762)

(1,192)

(14)

(1,206)

(499)

149

(350)

Non-controlling interest

 

(25)

-

(25)

3

-

3

(146)

-

(146)

 

 

 

 

 

 

 

 

 

 

 

Loss and total comprehensive profit / (loss)

 

(763)

(24)

(787)

(1,189)

(14)

(1,203)

(645)

149

(496)

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) per share (pence)

7

(0.56)

(0.02)

(0.58)

(0.96)

(0.01)

(0.97)

(0.50)

0.11

(0.39)

Consolidated Statement of Financial Position (unaudited)

As at 30 June 2019

 

 

 

 

As at 30 June 2019

As at 30 June 2018 Restated

As at 31 December 2018 Restated

 

Note

£'000

£'000

£'000

Goodwill

 

607

397

596

Other intangible assets

 

130

112

100

Property, plant and equipment

 

2,077

1,960

2,112

Deferred tax asset

 

889

-

889

Total Non-Current Assets

 

3,703

2,469

3,697

 

 

 

 

 

Inventories

 

47

42

74

Trade and other receivables

 

1,610

1,256

4,616

Cash and cash equivalents

 

309

318

290

Total Current Assets

 

1,966

1,616

4,980

Assets of disposal groups classified as held for sale

 

170

-

170

Total Assets

 

5,839

4,085

8,847

 

 

 

 

 

Called up share capital

11

13,503

12,503

13,003

Share premium account

 

9,525

9,597

9,568

Merger relief reserve

 

300

299

299

Share based payment reserve

 

858

598

858

Equity Reserve on Convertible Loan Note

 

352

506

222

Revaluation reserve

 

133

134

134

Retained earnings

 

(23,347)

(23,440)

(22,595)

(Deficit)/Equity attributable to

 

 

 

 

Owners of the parent

 

1,324

197

1,489

Non-controlling interest

 

(371)

(197)

(346)

Total Shareholders' Equity

 

953

-

1,143

 

 

 

 

 

Non-current borrowings

12

298

2,233

2,545

Total Non-Current Liabilities

 

298

2,233

2,545

 

 

 

 

 

Current borrowings

12

2,462

12

59

Deferred income

 

432

639

2,438

Trade and other payables

 

1,641

1,049

2,511

Total Current Liabilities

 

4,535

1,700

5,008

Liabilities of disposal groups classified as held for sale

 

53

152

151

Total Liabilities

 

4,886

4,085

7,704

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

5,839

4,085

8,847

Consolidated Statement of Changes in Equity (unaudited)

for the six months ended 30 June 2019

 

 

Called up share capital

Share premium account

Merger relief reserve

Share based payment reserve

Revaluation reserve

Equity reserve on CLN

Retained earnings

Total

Non-controlling interest

Total share-holders' equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

As at 1 January 2019

13,003

9,568

299

858

134

222

(22,595)

1,489

(346)

1,143

Issue of new shares

500

-

-

-

-

-

-

500

-

500

Costs of new share issues

-

(43)

-

-

-

-

-

(43)

-

(43)

CLN extension

-

-

-

-

-

130

-

130

-

130

IFRS 16 adjustment for prior years

-

-

-

-

-

-

1

1

-

1

Other movements in equity

-

 -

-

 -

-

9

9

-

Rounding

-

-

1

-

(1)

-

-

-

-

-

Total transactions with owners

500

(43)

1

-

(1)

130

10

597

-

597

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive expense for the period

-

-

-

-

-

-

(762)

(762)

(25)

(787)

 

 

 

 

 

 

 

 

 

 

 

As at 30 June 2019

13,503

9,525

300

858

133

352

(23,347)

1,324

(371)

953

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2018

12,074

9,226

299

621

134

186

(22,256)

284

(200)

84

Issue of new shares

341

409

-

-

-

-

-

750

-

750

Costs of new share issues

-

(38)

-

-

-

-

-

(38)

-

(38)

CLN extension

-

-

-

-

-

320

-

320

-

320

Warrants exercised

88

-

-

(23)

-

-

23

88

-

88

Total transactions with owners

429

371

-

(23)

-

320

23

1,120

-

1,120

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income / (expense) for the period

-

-

-

-

-

-

(1,207)

(1,207)

3

(1,204)

 

 

 

 

 

 

 

 

 

 

 

As at 30 June 2018

12,503

9,597

299

598

134

506

(23,440)

197 

(197)

-

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2018

12,074

9,226

299

621

134

186

(22,256)

284

(200)

84

Shares issued for cash

841

409

-

-

-

-

-

1,250

-

1,250

Cost of share issues

-

(67)

-

-

-

-

-

(67)

-

(67)

Share based payment charge

-

-

-

237

-

-

-

237

-

237

Exercise of warrants and share options

88

-

-

-

-

-

-

88

-

88

Other movements in Equity

-

-

-

-

-

-

(182)

(182)

-

(182)

Acquisition of Keyguard

-

-

-

-

-

-

195

195

-

195

IFRS 16 Adjustment for Prior Years

-

-

-

-

-

-

(3)

(3)

-

(3)

CLN conversion

-

-

-

-

-

36

36

 -

36

Total transactions with owners

929

342

-

237

-

36

10

1,554

-

1,554

 

 

 

 

 

 

 

 

 

 

Total comprehensive expense for the year         -                   

-

-

-

-

-

(349)

(349)

(146)

(495)

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2018

13,003

9,568

299

858

134

222

(22,595)

1,489

(346)

1,143

 

 

 

Consolidated Cash Flow Statement (unaudited)

for the six months ended 30 June 2019

 

 

 

Six months ended 30 June 2019

Six months ended 30 June 2019

Six months ended 30 June 2019

Six months ended 30 June 2018 (Restated)

Six months ended 30 June 2018 (Restated)

Six months ended 30 June 2018 (Restated)

Year ended 31 December 2018 (Restated)

Year ended 31 December 2018 (Restated)

Year ended 31 December 2018 (Restated)

 

 

Continuing Operations

Discontinued Operations

Total

Continuing Operations

Discontinued Operations

Total

Continuing Operations

Discontinued Operations

Total

 

Note

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

(Loss) / Profit after taxation

 

(763)

(24)

(787)

(1,189)

(14)

(1,203)

(645)

149

(496)

Taxation

 

(872)

(872)

Loss before taxation

 

(763)

(24)

(787)

(1,189)

(14)

(1,203)

(1,517)

149

(1,368)

Non-cash adjustments

10

909

-

909

562

-

562

491

(170)

321

Net changes in working capital

10

157

(98)

59

26

(85)

(59)

(192)

-

(192)

Cash inflow/(outflow) from operating activities

 

303

(122)

181

(601)

(99)

(700)

(1,218)

(21)

(1,239)

Investing activities

 

 

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

(105)

-

(105)

(26)

-

(26)

(58)

-

(58)

Cash inflow / (outflow) on acquisition

 

(16)

-

(16)

-

104

-

104

Cash outflow from investing activities

 

(121)

-

(121)

(26)

-

(26)

46

-

46

Financing activities

 

 

 

 

 

 

 

 

 

 

Gross proceeds from the issue of ordinary shares

 

500

-

500

838

-

838

1,338

-

1,338

Costs of share issues in the period

 

(43)

-

(43)

(38)

-

(38)

(68)

-

(68)

Borrowing repayments

 

-

-

-

-

-

-

176

-

176

Interest paid

 

(498)

 -

(498)

(148)

 -

(148)

(355)

 -

(355)

Cash inflow from financing activities

 

(41)

-

 (41)

652

-

652

1,091

-

1,091

Change in cash and cash equivalents in the period

 

141

(122)

19

25

(99)

(74)

(81)

(21)

(102)

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

 

 

 

290

 

 

392

 

 

392

Cash and cash equivalents at the end of the period

 

 

 

309

 

 

318

 

 

290

Notes to the financial statements 

for the six months ended 30 June 2019

 

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 30 June 2019 consolidate the individual financial information of the Company and its subsidiaries. The Group designs, supplies and provides advanced technology security 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 2019. 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 2018.

 

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 2018, with the exception of the change in accounting policy for Leases to comply with IFRS 16 for further details see note 13 below.

 

The policy applicable from 1 January 2019 for leases is:

 

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

·    the contract involves the use of an identified asset- this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

·    the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

·    the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:

the Group has the right to operate the asset; or

the Group designed the asset in a way that predetermines how and for what purpose it will be used.

 

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

 

 

2.    Basis of preparation (continued)

 

However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

 

For leases, still active, entered into before 1 January 2019 a retrospective approach has been adopted.

 

These consolidated interim financial statements for the six months ended 30 June 2019 have neither been audited nor formally reviewed by the Group's auditors. The financial information for the year ended 31 December 2018 set out in this interim report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006 but is derived from those accounts. The statutory financial statements for the year ended 31 December 2018 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 2019. 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.      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 period are the main operating companies, Westminster Aviation and Westminster International.

 

 

Managed Services Aviation

Technology Division

Group and Central Costs

Ongoing Operations

 

£'000

£'000

£'000

£'000

6 MONTHS TO JUNE 2019

 

 

 

 

Supply of products and solutions

-

2,919

-

2,919

Supply and installation contracts

-

2

-

2

Maintenance and service

-

141

-

141

Airport security fees

1,911

-

-

1,911

Training and consultancy

176

1

-

177

Guarding

460

-

-

460

Revenue

2,547

3,063

-

5,610

Segmental underlying EBITDA

617

84

(750)

(49)

Exceptional items

(129)

-

-

(129)

Depreciation & amortisation

(48)

(15)

(43)

(106)

Segment operating result

440

69

(793)

(284)

Finance cost

(2)

(2)

(499)

(503)

Profit/(loss) before tax for the 6 months to June 2019

438

67

(1,292)

(787)

 

 

 

 

 

 

Managed Services Aviation

Technology Division

Group and Central Costs

Ongoing Operations

 

£'000

£'000

£'000

£'000

6 MONTHS TO JUNE 2018

 

 

 

 

Supply of products and solutions

-

708

-

708

Supply and installation contracts

-

13

-

13

Maintenance and service

-

136

-

136

Airport security fees

1,616

-

-

1,616

Training and consultancy

113

-

-

113

Guarding

-

-

-

-

Revenue

1,729

857

-

2,586

 

 

 

 

 

Segmental underlying EBITDA

610

(43)

(969)

(402)

Exceptional items

(229)

-

-

(229)

Depreciation & amortisation

(39)

(10)

(33)

(82)

Segment operating result

342

(53)

(1,002)

(713)

Finance cost

-

(1)

(484)

(485)

Profit/(loss) before tax for the 6 months to June 2018

342

(54)

(1,486)

(1,198)

  

 

 

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 2019

Six months ended 30 June 2018

 

£'000

£'000

United Kingdom and Europe

1,204

554

Africa

2,085

1,842

Middle East

2,226

3

Rest of the World

95

187

Total revenue

5,610

2,586

 

 

7.      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 period. 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 period 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:

 

 

Earnings per share calculation

Six months ended 30 June 2019

Six months ended 30 June 2018 Restated

Year ended 31 December 2018 Restated

 

'000

'000

'000

Number of issued ordinary shares at the start of period

130,028

120,743

120,743

Effect of shares issued during the period

3,923

3,710

5,409

Weighted average basic and diluted number of shares for period

133,951

124,453

126,152

Earnings

£'000

£'000

£'000

Loss and total comprehensive expense (continuing)

(763)

(1,189)

(645)

Loss and total comprehensive expense (discontinued)

(24)

(14)

149

Loss and total comprehensive expense

(787)

(1,203)

(496)

 

 

 

 

Loss per share

(0.58)

(0.97)

(0.39)

 

 

8.        Exceptional items

 

 

Six months ended

Six months ended

Year ended

 

30 June 2019

30 June 2018

31 December 2018

 

£'000

£'000

£'000

 

 

 

 

Middle East contract pre-contract costs

105

215

294

Ferry closure costs

24

14

21

Other

-

-

86

Total exceptional items

129

229

401

 

 

 

 

 

 

9.        Finance costs

 

 

 

Six months ended 30 June 2019

Six months ended 30 June 2018

Year ended 

31 December 2018

 

£'000

£'000

£'000

Interest received

           -  

   -  

1

Interest payable on bank and other borrowings

(50)

(37)

(41)

Interest expenses on convertible loan notes

(448)

(293)

Total finance costs

(503)

(485)

(333)

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 2019

Six months ended 30 June 2019

Six months ended 30 June 2019

Six months ended 30 June 2018

Six months ended 30 June 2018

Six months ended 30 June 2018

Year ended 31 December 2018

Year ended 31 December 2018

Year ended 31 December 2018

 

Continuing Operations

Discontinued Operations

Total

Continuing Operations

Discontinued Operations

Total

Continuing Operations

Discontinued Operations

Total

Adjustment for non-cash items

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Depreciation, amortisation and impairment of non-financial assets

106

-

106

77

-

77

150

(170)

(20)

Effect of liabilities acquired

-

-

-

-

-

-

(303)

-

(303)

Finance costs

503

-

503

484

-

484

329

-

329

Profit on disposal of non-financial assets

-

-

-

1

-

1

2

-

2

IFRS 16 interest adjustment

(5)

-

(5)

-

-

-

1

-

1

Non-cash accounting for CLN

296

-

296

-

-

-

75

-

75

Other movements in Equity

9

-

9

-

-

-

-

-

-

Share-based payment expenses

 -

 -

 -

 -

237

-

237

Total adjustments

909

-

909

562

-

562

491

(170)

321

 

 

 

 

 

 

 

 

 

 

Net changes in working capital:

 

 

 

 

 

 

 

 

 

Decrease/(increase) in inventories

27

-

27

(3)

-

(3)

(35)

-

(35)

Decrease/(increase) in trade and other receivables

3,006

-

3,006

(562)

-

(562)

(3,923)

-

(3,923)

Increase/(decrease) in trade and other payables

(870)

(98)

(968)

(48)

(85)

(133)

1,328

-

1,328

Increase/(decrease) in deferred income

(2,006)

(2,006)

639

-

639

2,438

 -

2,438

Total changes in working capital

157

(98)

59

26

(85)

(59)

(192)

-

(192)

 

 

11.    Called up share capital

 

Ordinary Share Capital

6 months to

30 June 2019

6 months to

30 June 2018

Year to

31 December 2018

 

Number

£'000

Number

£'000

Number

£'000

 

 

 

 

 

 

 

At the beginning of the period

130,027,511

13,003

120,743,420

12,074

120,743,420

12,074

Arising on exercise of warrants and share options

-

-

875,000

88

875,000

88

Other issues for cash

5,000,000

500

3,409,091

341

8,409,091

841

At the end of the period

135,027,511

13,503

125,027,511

12,503

130,027,511

13,003

 

 

12.    Borrowings

 

 

Six months ended 30 June 2019

Six months ended 30 June 2018

Year ended 31 December 2018

 

 

 

 

 

£'000

£'000

£'000

Current borrowings (due < 1 year)

 

 

 

Convertible loan note

2,401

-

-

IFRS 16 borrowings

61

12

59

Total current borrowings

2,462

12

59

 

 

 

 

Non-current borrowings (due > 1 year)

 

 

 

Convertible loan note

-

2,200

2,216

Convertible unsecured loan note

171

-

171

IFRS 16 borrowings

127

33

158

Total non-current borrowings

298

2,233

2,545

 

 

 

 

Total borrowings

2,760

2,245

2,604

 

 

13. Effect of introducing IFRS 16 Leases

 

IFRS 16 is a new standard on lease accounting.

 

This standard, which is mandatory for periods commencing on or after 1 January 2019, requires lessees to account for all leases on their balance sheets, including those which had previously been treated as operating leases and accounted for in the P&L account as an "in-year" expense. This will include leases of retail and commercial property, equipment and vehicles.

 

The effect on Westminster Group PLC, detail below, is relatively minor as the group only has a small number of leased vehicles.
 

 

13.    Effect of introducing IFRS 16 Leases (continued) - Financial position

 

 

As at

30 June 2018

IFRS 16

As at

30 June 2018 Restated

As at 31 December 2018

IFRS 16

As at 31 December 2018

Restated

 

£'000

£'000

£'000

£'000

£'000

£'000

Goodwill

397

        -  

397

596

-

596

Other intangible assets

112

        -  

112

100

-

100

Property, plant and equipment

1,916

     44

1,960

1,898

214

2,112

Deferred tax asset

            -  

        -  

              -  

889

-

889

Total Non-Current Assets

2,425

      44

2,469

3,483

214

3,697

Inventories

42

        -  

42

74

         -  

74

Trade and other receivables

1,256

        -  

1,256

4,616

         -  

4,616

Cash and cash equivalents

318

        -  

318

290

        -  

290

Total Current Assets

1,616

          -  

1,616

4,980

          -  

4,980

Assets of disposal groups classified as held for sale

            -  

        -  

              -  

170

        -  

170

Total Assets

4,041

44

4,085

8,633

214

8,847

 

 

 

 

 

 

 

Called up share capital

12,503

        -  

12,503

13,003

        -  

13,003

Share premium account

9,597

        -  

9,597

9,568

        -  

9,568

Merger relief reserve

299

       -  

299

299

        -  

299

Share based payment reserve

598

        -  

598

858

        -  

858

Equity reserve on convertible loan note

506

        -  

506

222

         -  

222

Revaluation reserve

134

        -  

134

134

         -  

134

Retained earnings

(23,439)

(1)

(23,440)

(22,592)

(3)

(22,595)

Equity / (Deficit) attributable to

 

 

 

 

 

 

Owners of the parent

198

(1)

197

1,492

(3)

1,489

Non-controlling interest

(197)

        -  

(197)

(346)

        -  

(346)

Total Shareholders' Equity / (Deficit)

1

(1)

0

1,146

(3)

1,143

 

 

 

 

 

 

 

Non-current borrowings

2,200

33

2,233

2,387

158

2,545

Total Non-Current Liabilities

2,200

33

2,233

2,387

158

2,545

 

 

 

 

 

 

 

Current borrowings

-

12

12

-

59

59

Deferred income

639

        -  

639

2,438

        -  

2,438

Trade and other payables

1,049

        -  

1,049

2,511

        -  

2,511

Total Current Liabilities

1,688

12

1,700

4,949

59

5,008

Liabilities of disposal group classified as held for sale

152

        -  

152

151

        -  

151

Total Liabilities

4,040

45

4,085

7,487

217

7,704

Total Liabilities and Shareholders' Equity

4,041

44

4,085

8,633

214

8,847

 

 

 

 

 

 

 

 

 

 

 

 

13. Effect of introducing IFRS 16 Leases - Comprehensive Income

 

Six months ended 30 June 2018

IFRS 16

Six months ended 30 June 2018

Restated

Year ended 31 December 2018

IFRS 16

Year ended 31 December 2018

Restated

 

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

    2,586

       -  

     2,586

   6,668

         -  

     6,668

Cost of sales

(1,012)

       -  

(1,012)

(3,020)

         -  

(3,020)

Gross profit

    1,574

         -  

    1,574

       3,648

         -  

     3,648

Administrative expenses

(2,288)

          1

(2,287)

(4,686)

          3

(4,683)

Operating loss

(714)

          1

(713)

(1,038)

          3

(1,035)

Analysis of operating loss

 

 

 

 

 

 

Add back depreciation and amortisation

         77

          5

          82

           148

        21

        169

Add back share option expenses

            -  

         -  

            -  

            281

         -  

        281

Add back impairment charges

            -  

         -  

            -  

        (170)

         -  

(170)

Add back exceptional items

       229

         -  

        229

           401

         -  

        401

EBITDA (loss) / profit from underlying operations

(408)

6

(402)

(378)

24

(354)

Finance costs

(484)

(1)

(485)

(329)

(4)

(333)

Loss before taxation

(1,198)

         -  

(1,198)

(1,367)

(1)

(1,368)

Taxation

(5)

         -  

(5)

872

-

872

Total comprehensive expense for the period

(1,203)

         -  

(1,203)

(495)

(1)

(496)

Loss and total comprehensive loss attributable to:

 

 

 

 

 

 

Owners of the parent

(1,206)

         -  

(1,206)

(349)

         (1) 

(350)

Non-controlling interest

3

         -  

3

(146)

         -  

(146)

Loss and total comprehensive loss

(1,203)

         -  

(1,203)

(495)

(1)

      (496)

 

The Group leases vehicles that it uses mainly as part of its Service and Maintenance business. The lease terms are between three and five years, after which the Group has an option to purchase the vehicle. Under IAS 17, the Group determined that it was not reasonably certain to exercise these purchase options and classified the leases as operating leases. For the purposes of applying the retrospective approach to these leases, the Group elects to:

 

·    measure the right-of-use asset at an amount equal to the present value of the lease liability at the date of initial application discounted at the rate implicit in the lease;

 

·    apply the practical expedient to apply a single discount rate to a portfolio of leases with similar characteristics; and

 

·    apply the practical expedient to exclude initial direct costs from the right-of-use asset.

 

 

14.    Related Party Transactions

 

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

 

 

15.    Events after the Reporting Period

 

On 25 July 2019 the Company raised £1 million before expenses by means of a Placing which resulted in the issue of 10 million new Ordinary shares ('Placing Shares') at a price of 10p per share representing, in aggregate, approximately 6.9% of the issued share capital of the Company as enlarged by the issue of the Placing Shares. The Company has also issued 1 warrant for every Placing Share, valid for 2 years from the date of issue, exercisable at 12.5p per Ordinary Share.

 

 

16.    Approval of interim financial statements

 

The interim financial statements were approved by the Board of Directors on 14 August 2019.

 

 

17.    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.

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
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